Knight-Swift Transportation has completed its previously announced acquisition of the Chattanooga-based U.S. Xpress Enterprises, which company officials said this week should lead to improved profits for the combined company in the future.
But in a report Wednesday announcing the completion of the $808 million purchase of U.S. Xpress, the Phoenix-based Knight-Swift warned its results this year are likely to be below previous forecasts as freight markets weaken.
“Management anticipates that consolidated second-quarter results will be lower than previously expected,” Knight-Swift CEO Dave Jackson said in a statement Wednesday. “This decline in operating performance is largely driven by the full truckload market, where persistently soft demand has caused volumes and pricing to be under greater pressure than originally anticipated, while costs remain stable on a sequential basis.”
Jackson’s earnings warning drove the price of Knight-Swift shares down on Wednesday by 3.3%, although the company’s shares were up slightly on Thursday.
Despite the weaker outlook this year, Jackson predicts the purchase of U.S. Xpress should add to earnings next year.
“Against the current backdrop of a particularly difficult business environment, the chance to add one of the largest brands in our industry, with a significant opportunity to improve earnings, gain customers and reach more professional drivers, is a compelling part of our plan to drive higher highs and higher lows across successive truckload freight cycles,” Jackson said in a statement announcing the completion of the U.S. Xpress acquisition. “As we have engaged with more of the U.S. Xpress organization since the announcement, we have even more confidence that our combined efforts will lead to the achievement of the profitability targets we communicated.”
Shareholders of U.S. Xpress approved the sale of the company to Knight-Swift last week and the deal was completed Saturday when U.S. Xpress was delisted as a separate company on the Nasdaq exchange.
U.S. Xpress generated $2.2 billion in operating revenue in 2022 while serving its customer base through a network of approximately 14 facilities. U.S. Xpress’s fleet includes about 7,200 tractors and 15,000 trailers, including tractors provided by 900 independent contractors.
Swift executives Tim Harrington and Josh Smith, who played key roles after the merger, will lead U.S. Xpress as president and chief financial officer, respectively. Eric Fuller, the former CEO of U.S. Xpress, is resigning from the company to become an executive in residence for The Company Lab in Chattanooga.
U.S. Xpress, which reported an adjusted net loss of $32 million last year after earning $8 million in 2021, has seen its stock price fall since it went public in 2018 at $16 per share. The company registered its last trade Friday at $6.14.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.