- Knight-Swift’s non-reportable segment delivered $17.79 million in operating income in Q2, as the historically loss-producing unit surpassed the company’s intermodal segment.
- Non-reportable includes the carrier’s third-party insurance, maintenance and equipment leasing services, which saw a 615% YoY increase in operating income last quarter. An investor presentation showed a switch from negative operating income to profitability last year.
- “This non-reportable segment hasn't been a great focus of analysts ... or investors over the years, but it is now building as one of our fastest-growing segments,” Knight-Swift CEO Dave Jackson said on a Q2 earnings call July 20.
Knight-Swift’s non-reportable business areas have been building, maintaining profitability since Q2 2021, as the company seeks to diversify its revenue streams. Jackson said that segment is projected to generate $500 million in revenue this year with operating income of over $40 million.
“We found tremendous interest in our offerings from third-party carriers that are interested in purchasing insurance and maintaining their equipment in our nationwide shop network or leasing equipment and leveraging our buying power to purchase fuel,” Jackson said on the call.
Knight-Swift representatives didn’t respond to messages seeking comment, making it unclear which non-reportable segment service was leading the growth or the extent to which services drove the increase. Its quarterly report said there was “[s]trong demand for our insurance, equipment maintenance, equipment leasing, and warehousing services.”
Knight-Swift Non-Reportable Segment Becomes Profitable
The company’s non-reportable segment includes support services provided to independent contractors and third-party carriers — including warranty services, legal settlements and more, according to annual reports. That includes insurance and maintenance services, which it began offering in 2020 and branded and bundled as Iron Truck Services in 2021.
Swift Transportation, which is larger than its Knight brand, has touted its repair shop rates. Talking with owner-operators in early 2022, Swift’s marketing and recruiting director, Ian DeGrey, said the company’s labor rate for repairs at $80 per hour undercuts other shops’ rates of $150 to $200 per hour.
Other carriers have also reported growth in third-party services, which can provide a buffer in a volatile freight market. Penske Transportation Solutions experienced strong demand in commercial rental trucks and full-service leasing, according to a quarterly report from July. Penske Automotive Group, one of the business’ three owners, expected “continued resilient performance” in 2022.