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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________________________________________________________________________________________________________
FORM 10-Q
_________________________________________________________________________________________________________________________________________________________
☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2023
or
☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-35007
_________________________________________________________________________________________________________________________________________________________
knightswiftlogo2018newa18.jpg
___________________________________________________________________________________________________________________________________
 Knight-Swift Transportation Holdings Inc.
(Exact name of registrant as specified in its charter)
___________________________________________________________________________________________________________________
Delaware 20-5589597
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
2002 West Wahalla Lane
Phoenix, Arizona 85027
(Address of principal executive offices and zip code)
(602) 269-2000
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock $0.01 Par ValueKNXNew York Stock Exchange
_________________________________________________________________________________________________________________________________________________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒  Accelerated Filer☐
Non-accelerated Filer☐  Smaller Reporting Company☐
Emerging Growth Company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No  ☒ 
There were approximately 161,030,000 shares of the registrant's common stock outstanding as of April 26, 2023.

Glossary of Terms
KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I FINANCIAL INFORMATIONPAGE
PART II OTHER INFORMATION
2
Table of Contents
KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.
GLOSSARY OF TERMS
The following glossary defines certain acronyms and terms used in this Quarterly Report on Form 10-Q. These acronyms and terms are specific to our company, commonly used in our industry, or are otherwise frequently used throughout our document.
TermDefinition
Knight-Swift/the Company/Management/We/Us/Our
Unless otherwise indicated or the context otherwise requires, these terms represent Knight-Swift Transportation Holdings Inc. and its subsidiaries.
2017 MergerThe September 8, 2017 merger of Knight Transportation, Inc. and its subsidiaries and Swift Transportation Company and its subsidiaries, pursuant to which we became Knight-Swift Transportation Holdings Inc.
2017 Debt AgreementThe Company's unsecured credit agreement, entered into on September 29, 2017, as amended on October 2, 2020
2021 Debt AgreementThe Company's unsecured credit agreement, entered into on September 3, 2021, consisting of the 2021 Revolver and 2021 Term Loans, which are defined below
2021 Prudential NotesThird amended and restated note purchase and private shelf agreement, entered into on September 3, 2021 by ACT with unrelated financial entities
2021 RevolverRevolving line of credit under the 2021 Debt Agreement
2021 Term LoansThe Company's term loans under the 2021 Debt Agreement, collectively consisting of the 2021 Term Loan A-1, 2021 Term Loan A-2 and 2021 Term Loan A-3
2021 Term Loan A-1The Company's term loan under the 2021 Debt Agreement, which matured on December 3, 2022
2021 Term Loan A-2The Company's term loan under the 2021 Debt Agreement, maturing on September 3, 2024
2021 Term Loan A-3The Company's term loan under the 2021 Debt Agreement, maturing on September 3, 2026
2021 RSAFifth Amendment to the Amended and Restated Receivables Sales Agreement, entered into on April 23, 2021 by Swift Receivables Company II, LLC with unrelated financial entities.
2022 RSASixth Amendment to the Amended and Restated Receivables Sales Agreement, entered into on October 3, 2022 by Swift Receivables Company II, LLC with unrelated financial entities.
July 2021 Term LoanThe Company's term loan entered into on July 6, 2021
ACT
AAA Cooper Transportation, and its affiliated entity
ACT AcquisitionThe Company's acquisition of 100% of the securities of ACT on July 5, 2021
Annual ReportAnnual Report on Form 10-K
ASCAccounting Standards Codification
ASUAccounting Standards Update
BoardKnight-Swift's Board of Directors
BSBYBloomberg Short-Term Bank Yield Index
DOEUnited States Department of Energy
EPSEarnings Per Share
EmbarkEmbark Technology Inc. and its related entities
ESPPKnight-Swift Transportation Holdings Inc. Amended and Restated 2012 Employee Stock Purchase Plan
GAAPUnited States Generally Accepted Accounting Principles
NYSENew York Stock Exchange
LTLLess-than-truckload
MMERAC MME Holdings, LLC. and its subsidiaries, MME, Inc. and Midwest Motor Express, Inc.
Quarterly ReportQuarterly Report on Form 10-Q
RSURestricted Stock Unit
SECUnited States Securities and Exchange Commission
SOFRSecured overnight financing rate as administered by the Federal Reserve Bank of New York
USThe United States of America
U.S. XpressU.S. Xpress Enterprises, Inc.
UTXL
UTXL Enterprises, Inc.
3
Table of Contents Glossary of Terms
KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.
PART I FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets (Unaudited)
March 31, 2023December 31, 2022
(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents$191,245 $196,770 
Cash and cash equivalents – restricted204,348 185,792 
Restricted investments, held-to-maturity, amortized cost4,076 7,175 
Trade receivables, net of allowance for doubtful accounts of $27,836 and $22,980, respectively
800,415 842,294 
Contract balance – revenue in transit15,097 15,859 
Prepaid expenses105,429 108,081 
Assets held for sale48,259 40,602 
Income tax receivable30,221 58,974 
Other current assets43,546 38,025 
Total current assets1,442,636 1,493,572 
Gross property and equipment5,840,683 5,740,383 
Less: accumulated depreciation and amortization(1,960,593)(1,905,340)
Property and equipment, net3,880,090 3,835,043 
Operating lease right-of-use-assets197,950 192,358 
Goodwill3,519,339 3,519,339 
Intangible assets, net1,760,561 1,776,569 
Other long-term assets142,428 134,785 
Total assets$10,943,004 $10,951,666 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$214,574 $220,849 
Accrued payroll and purchased transportation154,471 171,381 
Accrued liabilities81,952 81,528 
Claims accruals – current portion342,530 311,822 
Finance lease liabilities and long-term debt – current portion72,875 71,466 
Operating lease liabilities – current portion39,409 36,961 
Total current liabilities905,811 894,007 
Revolving line of credit— 43,000 
Long-term debt – less current portion1,016,261 1,024,668 
Finance lease liabilities – less current portion335,582 344,377 
Operating lease liabilities – less current portion153,336 149,992 
Accounts receivable securitization383,601 418,561 
Claims accruals – less current portion196,045 201,838 
Deferred tax liabilities906,577 907,893 
Other long-term liabilities10,197 12,049 
Total liabilities3,907,410 3,996,385 
Commitments and contingencies (Notes 3, 7, 8, and 9)
Stockholders’ equity:
Preferred stock, par value $0.01 per share; 10,000 shares authorized; none issued
— — 
Common stock, par value $0.01 per share; 500,000 shares authorized; 161,009 and 160,706 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively.
1,610 1,607 
Accumulated other comprehensive loss(1,346)(2,436)
Additional paid-in capital4,401,276 4,392,266 
Retained earnings2,623,373 2,553,567 
Total Knight-Swift stockholders' equity7,024,913 6,945,004 
Noncontrolling interest10,681 10,277 
Total stockholders’ equity7,035,594 6,955,281 
Total liabilities and stockholders’ equity$10,943,004 $10,951,666 
See accompanying notes to condensed consolidated financial statements (unaudited).
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Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 Quarter Ended March 31,
 20232022
(In thousands, except per share data)
Revenue:
Revenue, excluding truckload and LTL fuel surcharge$1,450,293 $1,647,878 
Truckload and LTL fuel surcharge186,639 179,111 
Total revenue1,636,932 1,826,989 
Operating expenses:
Salaries, wages, and benefits536,742 536,056 
Fuel187,759 190,489 
Operations and maintenance99,311 95,883 
Insurance and claims138,039 98,192 
Operating taxes and licenses25,890 29,037 
Communications5,749 5,870 
Depreciation and amortization of property and equipment155,966 145,044 
Amortization of intangibles16,183 16,166 
Rental expense15,068 13,401 
Purchased transportation280,729 386,446 
Impairments— 810 
Miscellaneous operating expenses30,709 11,509 
Total operating expenses1,492,145 1,528,903 
Operating income144,787 298,086 
Other (expenses) income:
Interest income5,049 461 
Interest expense(23,091)(6,680)
Other income (expenses), net9,703 (14,405)
Total other (expenses) income, net(8,339)(20,624)
Income before income taxes136,448 277,462 
Income tax expense32,735 69,174 
Net income103,713 208,288 
Net loss attributable to noncontrolling interest571 49 
Net income attributable to Knight-Swift104,284 208,337 
Other comprehensive income (loss)1,090 (372)
Comprehensive income$105,374 $207,965 
Earnings per share:
Basic$0.65 $1.26 
Diluted$0.64 $1.25 
Dividends declared per share:$0.14 $0.12 
Weighted average shares outstanding:
Basic160,915 165,377 
Diluted161,900 166,499 
See accompanying notes to the condensed consolidated financial statements (unaudited).
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Condensed Consolidated Statements of Cash Flows (Unaudited)
 Quarter Ended March 31,
 20232022
(In thousands)
Cash flows from operating activities:
Net income$103,713 $208,288 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment, and intangibles172,149 161,210 
Gain on sale of property and equipment(20,879)(34,801)
Impairments— 810 
Deferred income taxes(1,316)4,246 
Non-cash lease expense10,651 9,490 
(Gain) loss on equity securities(1,364)20,849 
Other adjustments to reconcile net income to net cash provided by operating activities14,777 11,380 
Increase (decrease) in cash resulting from changes in:
Trade receivables35,614 (28,007)
Income tax receivable28,753 692 
Accounts payable11,960 22,074 
Accrued liabilities and claims accrual8,194 89,289 
Operating lease liabilities(10,489)(9,267)
Other assets and liabilities(6,604)607 
Net cash provided by operating activities345,159 456,860 
Cash flows from investing activities:
Proceeds from maturities of held-to-maturity investments3,620 1,881 
Purchases of held-to-maturity investments(525)(4,372)
Proceeds from sale of property and equipment, including assets held for sale59,345 60,532 
Purchases of property and equipment(260,339)(164,974)
Expenditures on assets held for sale(360)(43)
Net cash, restricted cash, and equivalents invested in acquisitions(275)(1,291)
Other cash flows from investing activities1,229 (1,920)
Net cash used in investing activities(197,305)(110,187)
Cash flows from financing activities:
Repayment of finance leases and long-term debt(22,946)(48,843)
Repayments on revolving lines of credit, net(43,000)(95,000)
Repayment of accounts receivable securitization(35,000)— 
Proceeds from common stock issued1,086 1,220 
Repurchases of the Company's common stock— (144,881)
Dividends paid(22,983)(20,137)
Other cash flows from financing activities(11,748)(15,608)
Net cash used in financing activities(134,591)(323,249)
Net increase in cash, restricted cash, and equivalents13,263 23,424 
Cash, restricted cash, and equivalents at beginning of period385,345 350,023 
Cash, restricted cash, and equivalents at end of period$398,608 $373,447 
See accompanying notes to condensed consolidated financial statements (unaudited).



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Condensed Consolidated Statements of Cash Flows (Unaudited) — Continued
 Quarter Ended March 31,
 20232022
(In thousands)
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest$21,920 $5,928 
Income taxes1,295 1,778 
Non-cash investing and financing activities:
Equipment acquired included in accounts payable$15,232 $11,643 
Financing provided to independent contractors for equipment sold2,349 1,536 
Transfers from property and equipment to assets held for sale40,666 16,986 
Purchase price adjustment on acquisition— 2,163 
Right-of-use assets obtained in exchange for operating lease liabilities16,281 3,314 
Property and equipment obtained in exchange for finance lease liabilities7,174 — 

Reconciliation of Cash, Restricted Cash, and Equivalents:March 31,
2023		December 31,
2022		March 31,
2022		December 31,
2021
(In thousands)
Consolidated Balance Sheets
Cash and cash equivalents$191,245 $196,770 $242,860 $261,001 
Cash and cash equivalents – restricted 1
204,348 185,792 128,774 87,241 
Other long-term assets 1
3,015 2,783 1,813 1,781 
Consolidated Statements of Cash Flows
Cash, restricted cash, and equivalents$398,608 $385,345 $373,447 $350,023 
________
1    Reflects cash and cash equivalents that are primarily restricted for claims payments.
See accompanying notes to condensed consolidated financial statements (unaudited).
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Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
 Common StockAdditional
Paid-in Capital		Retained EarningsAccumulated
Other
Comprehensive Loss		Total Knight-Swift Stockholders' EquityNoncontrolling
 Interest		Total
Stockholders’ Equity
 SharesPar Value
(In thousands, except per share data)
Balances – December 31, 2022160,706 $1,607 $4,392,266 $2,553,567 $(2,436)$6,945,004 $10,277 $6,955,281 
Common stock issued to employees282 3 43 46 46 
Common stock issued under ESPP21 — 1,040 1,040 1,040 
Shares withheld – RSU settlement(11,748)(11,748)(11,748)
Employee stock-based compensation expense7,927 7,927 7,927 
Cash dividends paid and dividends accrued ($0.14 per share)
(22,730)(22,730)(22,730)
Net income104,284 104,284 (571)103,713 
Other comprehensive income1,090 1,090 1,090 
Investment in noncontrolling interest975 975 
Balances – March 31, 2023161,009 $1,610 $4,401,276 $2,623,373 $(1,346)$7,024,913 $10,681 $7,035,594 
 Common StockAdditional
Paid-in Capital		Retained EarningsAccumulated
Other
Comprehensive Loss		Total Knight-Swift Stockholders' EquityNoncontrolling InterestTotal
Stockholders’ Equity
 SharesPar Value
(In thousands, except per share data)
Balances – December 31, 2021165,980 $1,660 $4,350,913 $2,181,142 $(563)$6,533,152 $10,298 $6,543,450 
Common stock issued to employees364 3 408 411 411 
Common stock issued under ESPP14 — 809 809 809 
Company shares repurchased(2,723)(27)(144,854)(144,881)(144,881)
Shares withheld – RSU settlement(15,608)(15,608)(15,608)
Employee stock-based compensation expense8,759 8,759 8,759 
Cash dividends paid and dividends accrued ($0.12 per share)
(19,913)(19,913)(19,913)
Net income208,337 208,337 (49)208,288 
Other comprehensive loss(372)(372)(372)
Balances – March 31, 2022163,635 $1,636 $4,360,889 $2,209,104 $(935)$6,570,694 $10,249 $6,580,943 
See accompanying notes to condensed consolidated financial statements (unaudited).

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Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1 — Introduction and Basis of Presentation
Certain acronyms and terms used throughout this Quarterly Report are specific to the Company, commonly used in the trucking industry, or are otherwise frequently used throughout this document. Definitions for these acronyms and terms are provided in the "Glossary of Terms," available in the front of this document.
Description of Business
Knight-Swift is a transportation solutions provider, headquartered in Phoenix, Arizona. During the quarter ended March 31, 2023, the Company operated an average of 18,152 tractors (comprised of 16,262 company tractors and 1,890 independent contractor tractors) and 79,490 trailers within the Truckload segment and leasing activities within the non-reportable segments. The LTL segment operated an average of 3,163 tractors and 8,387 trailers. Additionally, the Intermodal segment operated an average of 607 tractors and 12,829 intermodal containers. As of March 31, 2023, the Company's four reportable segments were Truckload, LTL, Logistics, and Intermodal.
Basis of Presentation
The condensed consolidated financial statements and footnotes included in this Quarterly Report include the accounts of Knight-Swift Transportation Holdings Inc. and its subsidiaries and should be read in conjunction with the consolidated financial statements and footnotes included in Knight-Swift's 2022 Annual Report. In management's opinion, these condensed consolidated financial statements were prepared in accordance with GAAP and include all adjustments necessary (consisting of normal recurring adjustments) for the fair statement of the periods presented.
With respect to transactional/durational data, references to years pertain to calendar years. Similarly, references to quarters pertain to calendar quarters.
Changes in Presentation
Beginning in the second quarter of 2022, the Company separately disclosed "(Gain) loss on equity securities" in the condensed consolidated statement of cash flows. Accordingly, the amounts presented in the Company's year-to-date March 31, 2022 condensed consolidated statement of cash flows were reclassified from "Other adjustments to reconcile net income to net cash provided by operating activities" to "(Gain) loss on equity securities" to align with the current year presentation.
Seasonality
In the full truckload transportation industry, results of operations generally follow a seasonal pattern. Freight volumes in the first quarter are typically lower due to less consumer demand, customers reducing shipments following the holiday season, and inclement weather. At the same time, operating expenses generally increase, and tractor productivity of the Company's Truckload fleet, independent contractors and third-party carriers decreases during the winter months due to decreased fuel efficiency, increased cold weather-related equipment maintenance and repairs, and increased insurance claims and costs attributed to higher accident frequency from harsh weather. These factors typically lead to lower operating profitability, as compared to other parts of the year. Additionally, beginning in the latter half of the third quarter and continuing into the fourth quarter, the Company typically experiences surges pertaining to holiday shopping trends toward delivery of gifts purchased over the Internet, as well as the length of the holiday season (consumer shopping days between Thanksgiving and Christmas). However, as the Company continues to diversify its business through expansion into the LTL industry, warehousing, and other activities, seasonal volatility is becoming more tempered. Additionally, macroeconomic trends and cyclical changes in the trucking industry, including imbalances in supply and demand, can override the seasonality faced in the industry.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED
Note 2 — Recently Issued Accounting Pronouncements
Date IssuedReferenceDescriptionExpected Adoption Date and MethodFinancial Statement Impact
March 2023
ASU No. 2023-01: Leases (ASC 842), Common Control Arrangements
The amendments in this ASU require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements and that leasehold improvements associated with common control leases be accounted for as a transfer between entities under common control through an adjustment to equity if the lessee no longer controls the use of the asset.January 2024, Prospective or retrospectiveCurrently under evaluation, but not expected to be material
Note 3 — Acquisitions
U.S. Xpress
On March 21, 2023, the Company announced an agreement under which Knight-Swift will acquire U.S. Xpress for a total enterprise value of approximately $808 million, excluding transaction costs. The transaction has been unanimously approved by the Board and a special committee of the independent directors of the U.S. Xpress board of directors. Work continues to complete this process, with closing now anticipated to occur early third quarter of 2023, subject to customary closing conditions.
The Company did not complete any other material acquisitions during the quarter ended March 31, 2023.
Note 4 — Income Taxes
Effective Tax Rate — The quarter ended March 31, 2023 and March 31, 2022 effective tax rates were 24.0% and 24.9%, respectively.
Valuation Allowance — The Company has not established a valuation allowance as it has been determined that, based upon available evidence, a valuation allowance is not required. Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.
Unrecognized Tax Benefits — Management believes it is reasonably possible that a decrease of up to $1.7 million in unrecognized tax benefits relating to federal deductions may be necessary within the next twelve months.
Interest and Penalties — Accrued interest and penalties related to unrecognized tax benefits were approximately $0.2 million as of March 31, 2023 and December 31, 2022.
Tax Examinations — Certain of the Company's subsidiaries are currently under examination by Federal and various state jurisdictions for tax years ranging from 2014 to 2021. At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company's effective tax rate. Years subsequent to 2017 remain subject to examination.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED
Note 5 — Accounts Receivable Securitization
On October 3, 2022, the Company entered into the 2022 RSA, which further amended the 2021 RSA. The 2022 RSA is a secured borrowing that is collateralized by the Company's eligible receivables, for which the Company is the servicing agent. The Company's receivable originator subsidiaries sell, on a revolving basis, undivided interests in all of their eligible accounts receivable to Swift Receivables Company II, LLC ("SRCII") who in turn sells a variable percentage ownership in those receivables to the various purchasers. The Company's eligible receivables are included in "Trade receivables, net of allowance for doubtful accounts" in the consolidated balance sheets. As of March 31, 2023, the Company's eligible receivables generally have high credit quality, as determined by the obligor's corporate credit rating.
The 2022 RSA is subject to fees, various affirmative and negative covenants, representations and warranties, and default and termination provisions customary for facilities of this type. The Company was in compliance with these covenants as of March 31, 2023. Collections on the underlying receivables by the Company are held for the benefit of SRCII and the various purchasers and are unavailable to satisfy claims of the Company and its subsidiaries.
The following table summarizes the key terms of the 2022 RSA (dollars in thousands):
2022 RSA
(Dollars in thousands)
Effective dateOctober 3, 2022
Final maturity dateOctober 1, 2025
Borrowing capacity$475,000 
Accordion option 1
$100,000 
Unused commitment fee rate 2
20 to 40 basis points
Program fees on outstanding balances 3
one month SOFR + credit adjustment spread 10 basis points + 82.5 basis points
1The accordion option increases the maximum borrowing capacity, subject to participation of the purchasers.
2The 2022 RSA commitment fees rate are based on the percentage of the maximum borrowing capacity utilized.
3As identified within the 2022 RSA, the lender can trigger an amendment by identifying and deciding upon a replacement for SOFR.
Availability under the 2022 RSA is calculated as follows:
March 31, 2023December 31, 2022
(In thousands)
Borrowing base, based on eligible receivables$396,700 $456,400 
Less: outstanding borrowings 1
(384,000)(419,000)
Availability under accounts receivable securitization facilities$12,700 $37,400 
1Outstanding borrowings are included in "Accounts receivable securitization" in the condensed consolidated balance sheets and are offset by deferred loan costs of $0.4 million as of March 31, 2023 and December 31, 2022. Interest accrued on the aggregate principal balance at a rate of 5.6% and 5.1% as of March 31, 2023 and December 31, 2022, respectively.
Refer to Note 12 for information regarding the fair value of the 2022 RSA.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED
Note 6 — Debt and Financing
Other than the Company's accounts receivable securitization as discussed in Note 5, the Company's long-term debt consisted of the following:
March 31, 2023December 31, 2022
(In thousands)
2021 Term Loan A-2, due September 3, 2024, net 1 2
199,792 199,755 
2021 Term Loan A-3, due September 3, 2026, net 1 2
798,793 798,705 
Prudential Notes, net 1
27,955 35,960 
Other2,527 3,042 
Total long-term debt, including current portion1,029,067 1,037,462 
Less: current portion of long-term debt(12,806)(12,794)
Long-term debt, less current portion$1,016,261 $1,024,668 
March 31, 2023December 31, 2022
(In thousands)
Total long-term debt, including current portion$1,029,067 $1,037,462 
2021 Revolver, due September 3, 2026 1 3
— 43,000 
Long-term debt, including revolving line of credit$1,029,067 $1,080,462 
1Refer to Note 12 for information regarding the fair value of debt.
2As of March 31, 2023, the carrying amounts of the 2021 Term Loan A-2 and 2021 Term Loan A-3 were net of $0.2 million and $1.2 million in deferred loan costs, respectively. As of December 31, 2022, the carrying amounts of the 2021 Term Loan A-2 and 2021 Term Loan A-3 were net of $0.2 million and $1.3 million in deferred loan costs, respectively.
3The Company also had outstanding letters of credit of $11.4 million and $15.8 million under the 2021 Revolver, primarily related to workers' compensation and self-insurance liabilities at March 31, 2023 and December 31, 2022, respectively. The Company also had outstanding letters of credit of $177.9 million and $173.1 million under a separate bilateral agreement which do not impact the availability of the 2021 Revolver as of March 31, 2023 and December 31, 2022, respectively.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED
Credit Agreements
2021 Debt Agreement — On September 3, 2021, the Company entered into the $2.3 billion 2021 Debt Agreement (an unsecured credit facility), with a group of banks, replacing the 2017 Debt Agreement and the July 2021 Term Loan. The following table presents the key terms of the 2021 Debt Agreement:
2021 Term Loan A-22021 Term Loan A-3
2021 Revolver 2
2021 Debt Agreement Terms(Dollars in thousands)
Maximum borrowing capacity$200,000$800,000$1,100,000
Final maturity dateSeptember 3, 2024September 3, 2026September 3, 2026
Interest rate margin reference rateBSBYBSBYBSBY
Interest rate minimum margin 1
0.75%0.88%0.88%
Interest rate maximum margin 1
1.38%1.50%1.50%
Minimum principal payment — amount$—$10,000$—
Minimum principal payment — frequencyOnceQuarterlyOnce
Minimum principal payment — commencement dateSeptember 3, 2024September 30, 2024September 3, 2026
1The interest rate margin for the 2021 Term Loans and 2021 Revolver is based on the Company's consolidated leverage ratio. As of March 31, 2023, interest accrued at 5.46% on the 2021 Term Loan A-2 and 5.59% on the 2021 Term Loan A-3 and 2021 Revolver.
2The commitment fee for the unused portion of the 2021 Revolver is based on the Company's consolidated leverage ratio, and ranges from 0.1% to 0.2%. As of March 31, 2023, commitment fees on the unused portion of the 2021 Revolver accrued at 0.1% and outstanding letter of credit fees accrued at 1.0%.
Pursuant to the 2021 Debt Agreement, the 2021 Revolver and the 2021 Term Loans contain certain financial covenants with respect to a maximum net leverage ratio and a minimum consolidated interest coverage ratio. The 2021 Debt Agreement provides flexibility regarding the use of proceeds from asset sales, payment of dividends, stock repurchases, and equipment financing. In addition to the financial covenants, the 2021 Debt Agreement includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the 2021 Debt Agreement may be accelerated, and the lenders' commitments may be terminated. The 2021 Debt Agreement contains certain usual and customary restrictions and covenants relating to, among other things, dividends (which are restricted only if a default or event of default occurs and is continuing or would result therefrom), liens, affiliate transactions, and other indebtedness. As of March 31, 2023, the Company was in compliance with the covenants under the 2021 Debt Agreement.
Borrowings under the 2021 Debt Agreement are made by Knight-Swift Transportation Holdings Inc. and are guaranteed by certain of the Company's material domestic subsidiaries (other than its captive insurance subsidiaries, driving academy subsidiary, and bankruptcy-remote special purpose subsidiary).
ACT's Prudential Notes — The 2021 Prudential Notes allow ACT to borrow up to $125.0 million, less amounts currently outstanding with Prudential Capital Group, provided that certain financial ratios are maintained. The 2021 Prudential Notes have interest rates ranging from 4.05% to 4.40% and various maturity dates ranging from October 2023 through January 2028. The 2021 Prudential Notes are unsecured and contain usual and customary restrictions on, among other things, the ability to make certain payments to stockholders, similar to the provisions of the Company's 2021 Debt Agreement. As of March 31, 2023, ACT had $98.6 million available for issuance under the agreement.
Fair Value Measurement — See Note 12 for fair value disclosures regarding the Company's debt instruments.
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Note 7 — Defined Benefit Pension Plan
Net periodic pension income and benefits paid during the quarters ended March 31, 2023 and 2022 were immaterial.
Assumptions
A weighted-average discount rate of 4.65% was used to determine benefit obligations as of March 31, 2023.
The following weighted-average assumptions were used to determine net periodic pension cost:
Quarter Ended March 31,
20232022
Discount rate4.92 %2.55 %
Expected long-term rate of return on pension plan assets6.00 %6.00 %
Refer to Note 12 for additional information regarding fair value measurements of the Company's investments.
Note 8 — Purchase Commitments
As of March 31, 2023, the Company had outstanding commitments to purchase revenue equipment of $912.9 million in the remainder of 2023 ($622.1 million of which were tractor commitments), and none thereafter. These purchases may be financed through any combination of finance leases, operating leases, debt, proceeds from sales of existing equipment, and cash flows from operations.
As of March 31, 2023, the Company had outstanding commitments to purchase facilities and non-revenue equipment of $40.0 million in the remainder of 2023, $14.7 million from 2024 through 2025, $0.9 million from 2026 through 2027, and none thereafter. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.
Note 9 — Contingencies and Legal Proceedings
Legal Proceedings
The Company is party to certain legal proceedings incidental to its business. The majority of these claims relate to bodily injury, property damage, cargo and workers' compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters. We record a liability when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated.
Information is provided below regarding the nature, status, and contingent loss amounts, if any, associated with pending legal matters that may be material to the Company. There are inherent uncertainties in these legal matters, some of which are beyond management's control, making the ultimate outcomes difficult to predict. Moreover, management's views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop. Cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies.
The Company has made accruals with respect to its legal matters where appropriate, which are included in "Accrued liabilities" in the condensed consolidated balance sheets. The Company has recorded an aggregate accrual of approximately $9.6 million, relating to the Company's outstanding legal proceedings as of March 31, 2023.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED
EMPLOYEE COMPENSATION AND PAY PRACTICES MATTERS
California Wage, Meal, and Rest Class Actions
The plaintiffs generally allege one or more of the following: that the Company 1) failed to pay the California minimum wage; 2) failed to provide proper meal and rest periods; 3) failed to timely pay wages upon separation from employment; 4) failed to pay for all hours worked; 5) failed to pay overtime; 6) failed to properly reimburse work-related expenses; and 7) failed to provide accurate wage statements.
Plaintiff(s)Defendant(s)Date institutedCourt or agency currently pending in
John Burnell 1
Swift Transportation Co., Inc
March 22, 2010
United States District Court for the Central District of California
James R. Rudsell 1
Swift Transportation Co. of Arizona, LLC and Swift Transportation Company
April 5, 2012
United States District Court for the Central District of California
Recent Developments and Current Status
In April 2019, the parties reached settlement of this matter. In January 2020, the court granted final approval of the settlement. Two objectors appealed the court’s decision granting final approval of the settlement. The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of March 31, 2023.
1    Individually and on behalf of all others similarly situated.
Note 10 — Share Repurchase Plans
On April 25, 2022, the Company announced that the Board approved the repurchase of up to $350.0 million of the Company's outstanding common stock (the "2022 Knight-Swift Share Repurchase Plan"). With the adoption of the 2022 Knight-Swift Share Repurchase Plan, the Company terminated the 2020 Knight-Swift Share Repurchase Plan, which had approximately $42.8 million of authorized purchases remaining upon termination.
The following table presents the Company's repurchases of its common stock under the respective share repurchase plans, excluding advisory fees:
Share Repurchase PlanQuarter Ended March 31, 2023
Board Approval DateAuthorized AmountSharesAmount
(shares and dollars in thousands)
April 19, 2022 1
$350,000— $— 
Quarter Ended March 31, 2022
Board Approval DateAuthorized AmountSharesAmount
(shares and dollars in thousands)
November 24, 2020$250,0002,723 $144,881 
1    $200.0 million remained available under the 2022 Knight-Swift Repurchase Plan as of March 31, 2023 and December 31, 2022.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED
Note 11 — Weighted Average Shares Outstanding
Earnings per share, basic and diluted, as presented in the condensed consolidated statements of comprehensive income, are calculated by dividing net income attributable to Knight-Swift by the respective weighted average common shares outstanding during the period.
The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding:
Quarter Ended March 31,
 20232022
(In thousands)
Basic weighted average common shares outstanding160,915 165,377 
Dilutive effect of equity awards985 1,122 
Diluted weighted average common shares outstanding161,900 166,499 
Anti-dilutive shares excluded from earnings per diluted share 1
7 239 
1    Shares were excluded from the dilutive-effect calculation because the outstanding awards' exercise prices were greater than the average market price of the Company's common stock for the periods presented.
Note 12 — Fair Value Measurement
The following table presents the carrying amounts and estimated fair values of the Company's major categories of financial assets and liabilities:
 March 31, 2023December 31, 2022
Condensed Consolidated Balance Sheets CaptionCarrying
Value		Estimated
Fair Value		Carrying
Value		Estimated
Fair Value
(In thousands)
Financial Assets:
Equity method investments
Other long-term assets$104,300 $104,300 $103,517 $103,517 
Investments in equity securities
Other long-term assets2,968 2,968 1,668 1,668 
Convertible noteOther current assets11,637 11,637 11,341 11,341 
Financial Liabilities:
2021 Term Loan A-2, due September, 2024 1
Long-term debt – less current portion199,792 200,000 199,755 200,000 
2021 Term Loan A-3, due September 2026 1
Long-term debt – less current portion798,793 800,000 798,705 800,000 
2021 Revolver, due September 2026Revolving line of credit— — 43,000 43,000 
2021 Prudential Notes 2
Finance lease liabilities and long-term debt
– current portion,
Long-term debt – less current portion		27,955 28,000 35,960 36,014 
2022 RSA, due October 2025 3
Accounts receivable securitization383,601 384,000 418,561