What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-02-23 compared with 2022-02-24 · 282 added, 279 removed, 615 unchanged (48% of the section changed)

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Knight-Swift Transportation Holdings Inc.

is one of North America's largest and most diversified freight transportation companies, providing multiple full truckload, LTL, intermodal, and logistics services.

is one of North America's largest and most diversified freight transportation companies, providing multiple full truckload, LTL, intermodal, and other complementary services.

Our objective is to operate our business with industry-leading margins and continued organic growth and growth through acquisitions while providing safe, high-quality, cost-effective solutions for our customers.

Knight-Swift uses a nationwide network of business units and terminals in the US and Mexico to serve customers throughout North America.

In addition to operating one of the country's largest truckload fleets, Knight-Swift also contracts with third-party equipment providers to provide a broad range of transportation services to our customers while creating quality driving jobs for our driving associates and successful business opportunities for independent contractors.

Our four reportable segments are Truckload, Logistics, LTL, and Intermodal.

Our four reportable segments are Truckload, LTL, Logistics, and Intermodal.

Additionally, we have various non-reportable segments.

Refer to Note 1 and Note 25 in Part II, Item 8 of this Annual Report for descriptions of our segments.

Our objective is to operate our business with industry-leading margins and growth while providing safe, high-quality, cost-effective solutions for our customers.

We continue to grow our company organically and through acquisitions.

Refer to Note 1 and Note 4 in Part II, Item 8 of this Annual Report for details regarding our recent acquisitions.

• Our truckload services include irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border transportation of various products, goods, and materials for our diverse customer base.

We primarily generate revenue by transporting freight for our customers through our Truckload segment.

• Our logistics and intermodal operations provide a multitude of shipping solutions, including additional sources of truckload capacity and alternative transportation modes, by utilizing our vast network of third-party capacity providers and rail providers, as well as certain logistics and freight management services.

Revenue in our brokerage and intermodal operations is generated through our Logistics and Intermodal segments.

• Our LTL business, established in 2021 through the ACT and MME acquisitions, provides our customers regional LTL transportation service through our network of approximately 100 service centers in our geographical footprint.

Our LTL service also provides national coverage to our customers by utilizing partner carriers for areas outside of our direct network.

• Our non-reportable segments include Iron Truck Services , (which offers support services provided to our customers and independent contractors including repair and maintenance shop services, equipment leasing, warranty services, and insurance), trailer parts manufacturing, warehousing, and certain driving academy activities, as well as certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and various acquisitions).

• In addition to the revenues earned from our customers for the trucking and non-trucking services discussed above, we also earn fuel surcharge revenue from our customers through our fuel surcharge program, which serves to recover a majority of our fuel costs.

This applies only to loaded miles and typically does not offset non-paid empty miles, idle time, and out-of-route miles driven.

Fuel surcharge programs involve a computation based on the change in national or regional fuel prices.

These programs may update as often as weekly, but typically require a specified minimum change in fuel cost to prompt a change in fuel surcharge revenue.

Key Financial Highlights

During 2022, consolidated total revenue was $7.4 billion, which is a 23.9% increase over 2021.

Consolidated operating income was $1.1 billion in 2022, reflecting an increase of 13.1% from 2021.

Consolidated net income attributable to Knight-Swift increased by 3.8% from 2021 to $771.3 million.

• Truckload — 83.5% operating ratio during 2022, with a 3.5% increase in revenue, excluding fuel surcharge and intersegment transactions, compared to 2021.

• LTL — 88.2% operating ratio during 2022 as a result of continued improvements in yields and efficiencies.

• Logistics — 85.5% operating ratio during 2022.

Operating income improved by 42.6%.

Load count grew by 24.0%, leading to a 14.0% increase in revenue, excluding intersegment transactions.

• Intermodal — 90.1% operating ratio during 2022, a 70 basis point improvement compared to 2021, leading to a 14.5% increase in operating income with revenue growth of 5.9%, excluding intersegment transactions.

• Non-reportable Segments — Revenue growth of 68.6% was supported by the activities within our operating segments of insurance, equipment maintenance, equipment leasing, and warehousing, leading to a 158.9% improvement in operating income to $36.5 million during 2022, compared to 2021.

• Embark — The value of our 2021 initial investment in Embark declined, resulting in an unrealized loss that negatively impacted earnings per diluted share and Adjusted EPS 1 by $0.25 during 2022.

• Liquidity and Capital — During 2022, we generated $1.4 billion in operating cash flows.

Our Free Cash Flow 1 was $818.7 million.

We paid down $212.7 million in long-term debt, $62.1 million in finance lease liabilities, and $42.9 million in cash on our operating lease liabilities, and reduced the outstanding net balances on our revolving credit facilities by $77.0 million.

In 2022, we repurchased approximately $300 million worth of shares, and issued $78.3 million in dividends to our stockholders.

Gain on sale of revenue equipment increased to $92.9 million in 2022, compared to $74.8 million in 2021.

We ended 2022 with $196.8 million in unrestricted cash and cash equivalents, $43.0 million outstanding on the 2021 Revolver, $1.0 billion face value outstanding on the 2021 Term Loans, and $7.0 billion of stockholders' equity.

We do not foresee material liquidity constraints or any issues with our ongoing ability to meet our debt covenants.

See discussion under "Liquidity and Capital Resources" for additional information.

1 Refer to "Non-GAAP Financial Measures" below.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Therefore, many of these programs have a time lag between when fuel costs change and when the change is reflected in fuel surcharge revenue for our Truckload and LTL segments.

Expenses — Our most significant expenses vary with miles traveled and include fuel, driving associate-related expenses (such as wages and benefits), and services purchased from independent contractors and other transportation providers (such as railroads, drayage providers, and other trucking companies).

Maintenance and tire expenses, as well as the cost of insurance and claims generally vary with the miles we travel, but also have a controllable component based on safety improvements, fleet age, efficiency, and other factors.

Our primary fixed costs are depreciation and lease expense for revenue equipment and terminals, amortization of intangibles, interest expense, and non-driver employee compensation.

Operating Statistics — We measure our consolidated and segment results through certain operating statistics, which are discussed under "Results of Operations — Segment Review — Operating Statistics," below.

Our results are affected by various economic, industry, operational, regulatory, and other factors, which are discussed in detail in "Part I, Item 1A.

Risk Factors," as well as in various disclosures in our press releases, stockholder reports, and other filings with the SEC.

Key Financial Highlights and Operating Metrics

Key Financial Data and Operating Metrics

GAAP financial data:

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Net income attributable to Knight-Swift $ 771,325 $ 743,388

Diluted EPS $ 4.45 $ 2.40

Earnings per diluted share $ 4.73 $ 4.45

Operating ratio 85.3 % 83.9 %

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Average trailers 5

Average tractors 613 597

Average containers 11,786 10,847

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Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, and Adjusted Operating Ratio are reconciled to the most directly comparable GAAP financial measures under "Non-GAAP Financial Measures," below.

2 See "Results of Operations — Segment Review — Operating Statistics" in Part II, Item 7 of this Annual Report regarding definitions of these operating data.

3 Our Truckload tractor fleet had a weighted average age of 2.5 years and 2.2 years for 2021 and 2020, respectively.

Average tractors within our Truckload segment includes 16,166 and 16,379 company-owned tractors for 2021 and 2020, respectively.

2 Our tractor fleet within the Truckload segment had a weighted average age of 2.7 years and 2.5 years as of December 31, 2022 and 2021, respectively.

3 Note that average trailers includes 8,249 and 6,388 trailers within our non-reportable operating segments.

Our trailer fleet within the Truckload segment had a weighted average age of 9.9 years and 8.3 years as of December 31, 2022 and 2021, respectively.

4 Our LTL tractor fleet had a weighted average age of 4.3 years as of December 31, 2022, and includes 711 and 667 tractors from ACT's and MME's dedicated and other businesses for 2022 and 2021, respectively.

5 Our LTL trailer fleet had a weighted average age of 8.1 years as of December 31, 2022, and includes 968 and 860 trailers from ACT's and MME's dedicated and other businesses for 2022 and 2021, respectively.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

4 Note that average trailers includes 6,388 trailers related to leasing activities recorded within our non-reportable segments in 2021.

Our Truckload trailer fleet had a weighted average age of 8.4 years and 7.8 years for 2021 and 2020, respectively.

5 Our LTL tractor fleet had a weighted average age of 4.2 years for 2021.

6 Our LTL trailer fleet had a weighted average age of 7.9 years for 2021.

Market Trends and Company Performance

Our Company Trends and Outlook — During 2021, each reportable segment grew revenue while improving margins, leading to consolidated revenue growth of 26.6%, excluding truckload and LTL fuel surcharge.

This contributed to a 71.1% improvement in consolidated operating income to $965.7 million in 2021, as compared to $564.4 million last year.

Net Income Attributable to Knight-Swift increased by 81.3% to $743.4 million.

• Truckload — 80.9% operating ratio within our Truckload segment for the year, a 380 basis point improvement, supported by continued year-over-year revenue growth, with six consecutive quarters of revenue growth year-over-year.

• Logistic s — 88.5% operating ratio within our Logistics segment this year.

Load count grew by 51.5% , leading to a 118.8 % increase in revenue, excluding intersegment transactions.

• LTL — 92.1% operating ratio, which includes the results of ACT, from July 5, 2021 through December 31, 2021, as well as the results of MME from December 6, 2021 through December 31, 2021.

On a proforma annualized basis, the LTL segment represents approximately 14% of consolidated revenue, excluding truckload and LTL fuel surcharge.

• Intermodal — 90.8% operating ratio within our Intermodal segment, a 940 basis point improvement with year-over-year revenue growth of 17.2%.

We anticipate that depreciation and amortization expense will increase and rental expense will correspondingly decrease, as a percentage of revenue excluding truckload and LTL fuel surcharge, as we intend to purchase, rather than enter into operating leases, for a majority of our revenue equipment in 2022.

With significant tightening in the insurance markets, we may also experience changes in premiums, retention limits, and excess coverage limits in the remainder of 2022.

While fuel expense is generally offset by fuel surcharge revenue, our fuel expense, net of fuel surcharge revenue may increase in the future.

We expect that our acquisitions of ACT and MME will have a significant impact on future financial results, including an overall increase in operating revenues and expenses.

Market Trends and Outlook — On a year-over-year basis, the US gross domestic product, which is the broadest measure of goods and services produced across the economy, increased by 2.1% 1 in 2022, as compared to a 5.7% 1 decrease in 2021.

The year-over-year improvement was primarily driven by an increase in consumer spending, as the economic impacts of the pandemic began to subside and the economy showed signs of recovery.

The year-over-year improvement primarily reflects increases in consumer spending, exports, and inventory investment that were partly offset by a decrease in housing investment.

The national unemployment rate was 3.5% 2 as of December 31, 2022, as compared to 3.9% 2 as of December 31, 2021.

Early estimates of the full-year 2022 US employment cost index indicate a year-over-year increase of 5.1% 2 and a sequential increase of 1.0% 2 .

From a freight market perspective, we are encouraged by the continued strength in freight demand;

however, demand may be difficult to predict for full-year 2022.

Our expectations for the 2022 market include the following:

• Within the full truckload and LTL markets, we expect strong demand and constrained capacity throughout the year.

• Industry capacity expansion continues to be limited by manufacturing constraints.

• Sourcing and retaining drivers will remain challenging and lead to additional driver wage inflation.

• Inflationary pressure on equipment, maintenance, labor and other cost items.

• The above factors should continue to support a favorable rate environment, which we expect will result in double-digit full truckload contract rate increases.

• Strong demand for power-only opportunities.

• Strong used equipment market.

The freight market outlook for 2023 includes the following:

• Continued softness in freight demand with few non-contract opportunities through the first half of 2023 as shippers work through higher inventory levels;

• Freight volumes improve in the second half of the year with a more typical peak season;

• Spot pricing troughs in the first quarter of 2023 and builds throughout the year;

• Demand continues for trailer pools;

• Small carriers continue to exit as a result of lower spot rates and significantly higher operating costs;

• LTL demand pressured but remains more stable than truckload;

• LTL year-over-year improvement in revenue, excluding fuel surcharge, per hundredweight;

• Inflationary pressures ease in many cost areas but remain elevated on a year-over-year basis;

• Demand in the used equipment market weakens as small carriers struggle;

• We expect the driver market to remain competitive throughout 2023.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Results of Operations — Summary

Notes regarding presentation:

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2022 Compared to 2021 — The $27.9 million increase in net income attributable to Knight-Swift to $771.3 million in 2022 from $743.4 million in 2021, includes the following:

• Contributor — $205.9 million increase in operating income within our Truckload segment driven by a 21.1% increase in revenue per loaded mile, excluding fuel surcharge and intersegment transactions, partially offset by a 10.3% decrease in total miles per tractor.

• Contributor — $73.7 million increase in operating income within our Logistics segment driven by a 51.5% increase in load counts, and a 44.4% increase in revenue per load.

• Contributor — $31.2 million of operating income through ACT and MME activities, recognized within our LTL segment in 2021.

• Contributor — $95.4 million increase in operating income from our LTL segment representing ACT's and MME's full year 2022 results, compared to the portion of 2021 following the respective acquisition dates.

• Contributor — $40.0 million increase in operating income within our Logistics segment driven by a 24.0% increase in load count.

• Contributor — $6.1 million increase in operating income within our Intermodal segment driven by a 24.3% increase in revenue per load, partially offset by a 14.8% decrease in load count.

• Contributor — $22.4 million improvement in operating results within our non-reportable segments, driven by revenue growth of 68.6% related to our expanded services to third-party carriers.

• Contributor — $17.7 million improvement in "Other income, net," primarily due to unrealized gains recognized from our investment in Embark and an increase in unrealized gains recognized from other investments within our portfolio.

• Offset — $81.2 million increase in consolidated income tax expense, primarily due to an increase in income before income taxes which was partially offset by a reduction in the state deferred tax liability due to our recent acquisitions and adjustments to state tax rates and apportionment.

All these factors resulted in a 2021 effective tax rate of 23.7% and a 2020 effective tax rate of 26.7%.

• Offset — $37.9 million decrease in operating income within our Truckload segment as a result of a 6.3% decrease in total miles per tractor.

• Offset — $54.9 million decrease in "Other (expenses) income, net," primarily due to unrealized losses recognized from our investment in Embark, compared to a gain during 2021.

• Offset — $18.5 million increase in consolidated income tax expense, primarily due to an increase in income before income taxes.

This resulted in a 2022 effective tax rate of 24.4% and a 2021 effective tax rate of 23.7%.

See additional discussion of our operating results within "Results of Operations — Consolidated Operating and Other Expenses" below.

2021 Liquidity and Capital — During 2021, we generated $1.2 billion in operating cash flows, we paid down $48.2 million in cash on our operating lease liabilities (gross of $73.8 million of lease modifications and leases obtained through acquisitions), paid down our finance lease liabilities by $108.2 million, used $282.0 million for capital expenditures (net of equipment sales proceeds), spent $1.5 billion on four acquisitions (net of cash balances acquired), and returned $57.2 million in share repurchases and $63.5 million in dividends to our stockholders.

We ended the year with $261.0 million in unrestricted cash and cash equivalents, $260.0 million outstanding on the 2021 Revolver, $1.2 billion outstanding on the 2021 Term Loans, and $6.5 billion of stockholders' equity.

We remain committed to a strong capital structure.

We do not foresee material liquidity constraints or any issues with our ongoing ability to meet our debt covenants.

See discussion under "Liquidity and Capital Resources" for additional information.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Results of Operations — Segment Review

The Company has four reportable segments:

Truckload, Logistics, LTL, and Intermodal, as well as certain non-reportable segments.

Truckload, LTL, Logistics, and Intermodal, as well as certain non-reportable segments.

Refer to Note 25 in Part II, Item 8 of this Annual Report for descriptions of our segments.

Refer to Part I, Item 1, "Business – Our Mission and Company Strategy" of this Annual Report for discussion related to our segment operating strategies.

Consolidating Tables for Total Revenue and Operating Income (Loss)

Consolidating Tables for Total Revenue and Operating Income

(Dollars in thousands)

Truckload $ 4,531,115 61.0 % $ 4,098,005 68.3 %

Logistics $ 817,003 13.6 % $ 375,841 8.0 %

LTL $ 1,069,554 14.4 % $ 396,308 6.6 %

Logistics $ 920,707 12.4 % $ 817,003 13.6 %

Intermodal $ 485,786 6.5 % $ 458,867 7.7 %

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Total revenue $ 7,428,582 100.0 % $ 5,998,019 100.0 %

Operating income (loss):

(Dollars in thousands)

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Operating income (Dollars in thousands)

Truckload $ 746,581 68.4 % $ 784,436 81.2 %

Logistics $ 93,920 9.7 % $ 20,245 3.6 %

LTL $ 126,609 11.6 % $ 31,169 3.2 %

Logistics $ 133,942 12.3 % $ 93,920 9.7 %

Intermodal $ 48,167 4.4 % $ 42,060 4.4 %

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Operating income $ 1,091,828 100.0 % $ 965,697 100.0 %

• Our LTL business, which was initially established in 2021 through the ACT Acquisition and later the MME acquisition, provides our customers with regional LTL transportation service through our growing network of approximately 110 facilities and a door count of approximately 4,400.

Our LTL segment operates approximately 3,200 tractors and approximately 8,400 trailers, including equipment used for ACT's and MME's dedicated and other businesses.

The LTL segment also provides national coverage to our customers by utilizing partner carriers for areas outside of our direct network.

• Our Logistics and Intermodal segments provide a multitude of shipping solutions, including additional sources of truckload capacity and alternative transportation modes, by utilizing our vast network of third-party capacity providers and rail providers, as well as certain logistics and freight management services.

We continue to offer power-only services through our Logistics segment by leveraging our fleet of over 79,000 trailers as of December 31, 2022.

• Our non-reportable segments include support services provided to our customers and third-party carriers including insurance, equipment maintenance, equipment leasing, warehousing, trailer parts manufacturing, and warranty services.

Our non-reportable segments also include certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and various acquisitions).

• In addition to the revenues earned from our customers for the trucking and non-trucking services discussed above, we also earn fuel surcharge revenue from our customers through our fuel surcharge programs, which serve to recover a majority of our fuel costs.

This generally applies only to loaded miles for our Truckload and LTL segments and typically does not offset non-paid empty miles, idle time, and out-of-route miles driven.

Fuel surcharge programs involve a computation based on the change in national or regional fuel prices.

These programs may update as often as weekly, but typically require a specified minimum change in fuel cost to prompt a change in fuel surcharge revenue.

Therefore, many of these programs have a time lag between when fuel costs change and when the change is reflected in fuel surcharge revenue for our Truckload and LTL segments.

Our most significant expenses typically vary with miles traveled and include fuel, driving associate-related expenses (such as wages and benefits), and services purchased from third-party service providers (including other trucking companies, railroad and drayage providers, and independent contractors).

Maintenance and tire expenses, as well as the cost of insurance and claims generally vary with the miles we travel, but also have a controllable component based on safety performance, fleet age, operating efficiency, and other factors.

Our primary fixed costs are depreciation and lease expense for revenue equipment and terminals, non-driver employee compensation, amortization of intangible assets, and interest expenses.

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Operating Statistics

Our chief operating decision makers monitor the GAAP results of our reportable segments, as supplemented by certain non-GAAP information.

Refer to "Non-GAAP Financial Measures" below for more details.

We measure our consolidated and segment results through the operating statistics listed in the table below.

Our chief operating decision makers monitor the GAAP results of our reportable segments, supplemented by certain non-GAAP information.

Refer to "Non-GAAP Financial Measures" for more details.

Additionally, we use a number of primary indicators to monitor our revenue and expense performance and efficiency.

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Total Miles per Tractor Truckload Total miles (including loaded and empty miles) a tractor travels on average

Average Length of Haul Truckload, LTL Average miles traveled with loaded trailer cargo per order

Average Length of Haul Truckload, LTL For our Truckload segment this is calculated as average miles traveled with loaded trailer cargo per order.

For our LTL segment this is calculated as average miles traveled from the origin service center to the destination service center.

Non-paid Empty Miles Percentage Truckload Percentage of miles without trailer cargo

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Average Containers Intermodal Average containers in operation during the period

GAAP Operating Ratio Truckload, Logistics, LTL, Intermodal Measures operating efficiency and is widely used in our industry as an assessment of management's effectiveness in controlling all categories of operating expenses.

GAAP Operating Ratio Truckload, LTL, Logistics, Intermodal Measures operating efficiency and is widely used in our industry as an assessment of management's effectiveness in controlling all categories of operating expenses.

Calculated as operating expenses as a percentage of total revenue, or the inverse of operating margin

Adjusted Operating Ratio Truckload, Logistics, LTL, Intermodal Measures operating efficiency and is widely used in our industry as an assessment of management's effectiveness in controlling all categories of operating expenses.

Adjusted Operating Ratio Truckload, LTL, Logistics, Intermodal Measures operating efficiency and is widely used in our industry as an assessment of management's effectiveness in controlling all categories of operating expenses.

Consolidated and segment Adjusted Operating Ratios are reconciled to their corresponding GAAP operating ratios under "Non-GAAP Financial Measures," below

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Truckload Segment

We generate revenue in the Truckload segment primarily through irregular route, dedicated, refrigerated, flatbed, expedited, and cross-border service offerings, with 13,058 irregular route tractors and 4,961 dedicated route tractors in use during 2021.

Generally, we are paid a predetermined rate per mile or per load for our trucking services.

We generate revenue in the Truckload segment primarily through irregular route, dedicated, refrigerated, flatbed, expedited, and cross-border service offerings, with approximately 13,400 irregular route tractors and approximately 4,700 dedicated route tractors in use during 2022.

Generally, we are paid a predetermined rate per mile or per load for our truckload services.

Additional revenues are generated by charging for tractor and trailer detention, loading and unloading activities, dedicated services, and other specialized services, as well as through the collection of fuel surcharge revenue to mitigate the impact of increases in the cost of fuel.

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These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency, and other factors.

The main fixed costs in the Truckload segment are depreciation and rent expenses from leasing and acquiring revenue equipment and terminals, as well as compensating our non-driver employees.

The main fixed costs in the Truckload segment are depreciation and rent expenses from tractors, trailers, and terminals, as well as compensating our non-driver employees.

2022 2021 2022 vs.

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3 Includes 16,228 and 16,166 company-owned tractors for 2022 and 2021, respectively.

4 Includes 6,388 trailers related to our leasing activities recognized within the non-reportable segments for 2021.

2021 Compared to 2020 — The Adjusted Operating Ratio improved by 430 basis points to 78.7% in 2021, leading to a 32.5% improvement in Adjusted Operating Income.

We grew revenue, excluding fuel surcharge and intersegment transactions by 5.8% in 2021.

Shipping demand remains strong, leading to more project business opportunities this year, which contributed to a 21.1% increase in revenue per loaded mile, excluding fuel surcharge and intersegment transactions.

Total miles per tractor decreased by 10.3%, due in part to a 5.2% shorter length of haul.

4 Average trailers includes 8,249 and 6,388 trailers from our non-reportable operating segments for 2022 and 2021, respectively.

2022 Compared to 2021 — The Truckload segment's Adjusted Operating Ratio increased by 170 basis points to 80.4% in 2022, as compared to 2021.

Revenue, excluding fuel surcharge and intersegment transactions was $3.8 billion, a year-over-year increase of 3.5%.

Revenue per loaded mile, excluding fuel surcharge and intersegment transactions, increased 11.4% year-over-year, while total miles decreased 5.8%, reflecting softer freight demand.

These factors ultimately led to a 3.0% increase in average revenue per tractor.

We continue to add scale by increasing our trailer count, which has grown to approximately 79,000 trailers as of the end of 2022.

We believe this positions us to provide valuable capacity to our customers through our Truckload and Logistics segments.

We remain focused on managing costs and improving utilization, as we expect inflationary pressures in driver-related costs, equipment maintenance, and insurance to continue to affect the freight market in the first half of 2023.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Dothan, Alabama-based ACT and Bismarck, North Dakota-based MME, both acquired in 2021, comprise our LTL segment.

We provide regional direct service and serve our customers' national transportation needs by utilizing key partner carriers for coverage areas outside of our network.

We primarily generate revenue by transporting freight for our customers through our core LTL services.

Our revenues are impacted by shipment volume and tonnage levels that flow through our network.

Additional revenues are generated through fuel surcharges and accessorial services provided during transit from shipment origin to destination.

We focus on the following multiple revenue generation factors when reviewing revenue yield:

revenue per hundredweight, revenue per shipment, weight per shipment, and length of haul.

Fluctuations within each of these metrics are analyzed when determining the revenue quality of our customers' shipment density.

Our most significant expense is related to direct costs associated with the transportation of our freight moves including;

direct salary, wage and benefit costs, fuel expense, and depreciation expense associated with revenue equipment costs.

Other expenses associated with revenue generation that can fluctuate and impact operating results are insurance and claims expense, as well as maintenance costs of our revenue equipment.

These expenses can be influenced by multiple factors including our safety performance, equipment age, and other factors.

A key component to lowering our operating costs is labor efficiency within our network.

We continue to focus on technological advances to improve the customer experience and reduce our operating costs.

In accordance with the accounting treatment applicable to the ACT and MME acquisitions, the LTL segment's reported results do not include the operating results of the acquired entities prior to the respective acquisition dates.

2022 2021 2022 vs.

(Dollars in thousands, except per shipment and per hundredweight data) Increase (decrease)

Total revenue $ 1,069,554 $ 396,308 169.9 %

Revenue, excluding fuel surcharge and intersegment transactions $ 867,292 $ 345,785 150.8 %

Operating income $ 126,609 $ 31,169 306.2 %

Adjusted Operating Income 1

$ 142,539 $ 38,293 272.2 %

Operating ratio 2

88.2 % 92.1 % (390 bps)

Adjusted Operating Ratio 1 2

83.6 % 88.9 % (530 bps)

LTL shipments per day 2

18,642 16,438 13.4 %

LTL weight per shipment 2

1,068 1,111 (3.9) %

LTL average length of haul (miles) 2

520 518 0.4 %

LTL revenue per shipment 2

$ 188.03 $ 161.66 16.3 %

LTL revenue xFSR per shipment 2

$ 152.15 $ 141.57 7.5 %

LTL revenue per hundredweight 2

$ 17.61 $ 14.55 21.0 %

LTL revenue xFSR per hundredweight 2

$ 14.25 $ 12.75 11.8 %

LTL average tractors 2 3

3,176 2,735 16.1 %

LTL average trailers 2 4

8,431 7,413 13.7 %

1 Refer to "Non-GAAP Financial Measures" below.

2 Defined under "Operating Statistics," above.

3 Includes 711 and 667 tractors from ACT's and MME's dedicated and other businesses for 2022 and 2021, respectively.

4 Includes 968 and 860 trailers from ACT's and MME's dedicated and other businesses for 2022 and 2021, respectively.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Our LTL segment operates across approximately 110 facilities with a door count of over 4,400.

We generated $867 million in revenue, excluding fuel surcharge and an 83.6% Adjusted Operating Ratio during 2022 in the LTL segment.

Revenue, excluding fuel surcharge, per hundredweight was $14.25, while revenue per shipment, excluding fuel surcharge, was $152.15.

The ACT and MME teams continue to achieve both customer and cost synergies.

Also, during the fourth quarter, the operational systems were converted to allow freight movement through one connected network across both LTL brands.

While the system conversion impacted volumes at MME for a period of time, we believe we are well-positioned to leverage the freight opportunities across the connected network with existing and new customers.

We expect that our connected LTL network will provide additional opportunities for revenue growth.

During 2022, we increased our door count by over 180 and we expect door capacity to continue to grow in 2023.

We remain encouraged by the strong performance within our LTL segment, and we continue to look for both organic and inorganic opportunities to geographically expand our footprint within the LTL market.

Logistics Segment

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2 Defined under "Operating Statistics" above.

2021 Compared to 2020 — Demand for our logistics service offering continued to grow throughout the year, as we continue to leverage our fleet of approximately 70,000 trailers for our Power-only service offering.

Logistics revenue, excluding intersegment transactions increased 118.8% as we grew load count by 51.5%, while increasing revenue per load by 44.4%.

The Adjusted Operating Ratio improved to 88.1%, resulting in a 367.7% increase in Adjusted Operating Income.

Gross margin was 18.1% in 2021, compared to 14.5% in 2020.

Within our Power-only service offering, which excludes the operations of our intermodal, drayage, and port services, revenue grew by 314.3% as a result of a 104.2% increase in load volumes.

Our Power-only service offering represented approximately 32.8% of brokerage load volumes during 2021.

During 2021, through our Select platform, we digitally matched an average of approximately 5,500 carriers per quarter to available loads.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Our LTL segment was established in 2021 by the ACT and MME acquisitions and consists of regional motor carriers headquartered in Dothan, Alabama and Bismarck, North Dakota.

We provide regional direct service and serve our customers' national transportation needs by utilizing key partner carriers for coverage areas outside of our network.

We primarily generate revenue by transporting freight for our customers through our core LTL services.

Our revenues are impacted by shipment volume and tonnage levels that flow through our network.

Additional revenues are generated through fuel surcharges and accessorial services provided during transit from shipment origin to destination.

We focus on the following multiple revenue generation factors when reviewing revenue yield:

revenue per hundredweight, revenue per shipment, weight per shipment, and length of haul.

Fluctuation within each of these metrics is analyzed when determining the revenue quality of our customers' shipment density.

Our most significant expense is related to direct costs associated with the transportation of our freight moves including;

direct salary, wage and benefit costs, fuel expense, and depreciation expense associated with revenue equipment costs.

Other expenses associated with revenue generation that can fluctuate and impact operating results are insurance and claims expense as well as maintenance costs of our revenue equipment.

These expenses can be influenced by multiple factors including our safety performance, equipment age, and other factors.

A key component to lowering our operating costs is labor efficiency within our network.

We continue to focus on technological advances to improve the customer experience and reduce our operating costs.

(Dollars in thousands, except per shipment and per hundredweight data)

Total revenue $ 396,308

Revenue, excluding fuel surcharge $ 345,785

Operating income $ 31,169

Adjusted Operating Income 1

Operating ratio 2

Adjusted Operating Ratio 1 2

Shipments per day 2

Weight per shipment 2

Average length of haul (miles) 2

Revenue per shipment 2

Revenue xFSR per shipment 2

Revenue per hundredweight 2

Revenue xFSR per hundredweight 2

Average tractors 2 3

Average trailers 2 4

1 Refer to "Non-GAAP Financial Measures" below.

2 Defined under "Operating Statistics," above.

3 Includes 667 tractors from ACT's and MME's dedicated and other businesses for 2021.

4 Includes 860 trailers from ACT's and MME's dedicated and other businesses for 2021.

Our LTL segment operates across approximately 100 facilities with a door count of over 4,200.

We generated $345.8 million in revenue, excluding fuel surcharge and an 88.9% Adjusted Operating Ratio during 2021 within the LTL segment.

Revenue, excluding fuel surcharge, per hundredweight was $12.75, while revenue per shipment, excluding fuel surcharge, was $141.57.

2022 Compared to 2021 — Logistics Adjusted Operating Ratio was 85.1%, with a gross margin of 21.9% in 2022, compared to 18.1% in 2021.

Logistics load volumes increased by 24.0% as we continue to leverage our consolidated fleet of approximately 79,000 trailers as we build out our power-only service.

We continue to innovate with technology designed to remove friction and allow seamless connectivity, leading to services that we expect will capture new opportunities for revenue growth.

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The most significant expense in the Intermodal segment is the cost of purchased transportation that we pay to third-party capacity providers (including rail providers), which is primarily variable and included in "Purchased transportation" in the consolidated statements of comprehensive income.

Purchased transportation varies as it relates to rail capacity, freight demand, and customer shipping needs.

While rail pricing is determined on an annual basis, purchased transportation varies as it relates to rail capacity, freight demand, and customer shipping needs.

The main fixed costs in the Intermodal segment are depreciation of our company tractors related to drayage, containers, and chassis, as well as non-driver employee compensation and benefits.

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Revenue, excluding intersegment transactions $ 485,739 $ 458,583 5.9 %

Operating income (loss) $ 42,060 $ (943) 4,560.2 %

Adjusted Operating Income (Loss) 1 2

$ 42,060 $ (830) 5,167.5 %

Operating income $ 48,167 $ 42,060 14.5 %

Average revenue per load 1

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90.1 % 90.8 % (70 bps)

Adjusted Operating Ratio 1 2

90.8 % 100.2 % (940 bps)

Load count 136,967 160,774 (14.8 %)

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3 Includes 544 and 543 c ompany-owned tractors for 2022 and 2021, respectively.

2021 Compared to 2020 — Revenue grew by 17.2% while the Adjusted Operating Ratio improved from 100.2% in 2020 to 90.8% in 2021, resulting in a $42.9 million increase in Adjusted Operating Income.

Continued rail congestion and rail allocations resulted in a reduction of load count, but contributed to a 21.8% increase in revenue per load.

We anticipate operational improvements in cost structure and network design as we continue to transition to a new western rail partner in the first quarter of 2022.

To position Intermodal for continued growth, we are in the process of growing our container count and plan to add approximately 2,000 containers during the year.

Our long-term structural improvements in the margins of our business are ultimately expected to lead to an Adjusted Operating Ratio in the high-80s to mid-90s.

We expect load volumes to increase in the back half of the year.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

2022 Compared to 2021 — Revenue grew by 5.9% while the operating ratio improved from 90.8% in 2021 to 90.1% in 2022, resulting in a $6.1 million increase in operating income.

Intermodal experienced a 24.3% increase in revenue per load, which was partially offset by a decrease in load count due to softer freight demand and labor challenges across the rail industry.

As a result of our network and improved service offerings, we expect to continue to grow with new customers and expand with existing customers.

To position Intermodal for continued growth, we increased our average container count by approximately 1,600 in 2022.

We remain focused on growing our load count and improving the efficiency of our assets as Intermodal continues to provide value to our customers and is complementary to the many services we offer.

Non-reportable Segments

The non-reportable segments include support services provided to our customers and independent contractors (including repair and maintenance shop services, equipment leasing, warranty services, and insurance), trailer parts manufacturing, warehousing, and certain driving academy activities, as well as certain corporate expenses (such as legal settlements and accruals, certain impairments, and $46.1 million in annual amortization of intangibles related to the 2017 Merger and various acquisitions).

Our non-reportable segments include support services provided to our customers and third-party carriers including insurance, equipment maintenance, equipment leasing, warehousing, trailer parts manufacturing, and warranty services.

Our non-reportable segments also include certain corporate expenses (such as legal settlements and accruals, certain impairments, and $46.4 million in annual amortization of intangibles related to the 2017 Merger and various acquisitions).

2022 2021 2022 vs.

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Total revenue $ 516,735 $ 306,414 68.6 %

Operating income (loss) $ 14,112 $ (33,376) 142.3 %

2021 Compared to 2020 — Strong demand for the services within our non-reportable segments led to 62.2% revenue growth, which resulted in operating income improving by 142.3%.

Operating income $ 36,529 $ 14,112 158.9 %

2022 Compared to 2021 — Operating income improved by 158.9% as a result of a 68.6% increase in revenue.

The revenue growth was primarily related to expanded services to third-party carriers (including insurance through Iron Truck Services ), increased demand for our equipment leasing services, and revenue improvement within our warehousing activities.

In 2020, profitability was negatively impacted by the $6.7 million of expense associated with the change in fair value of a deferred earnout related to the 2020 acquisition of a warehousing company and a $4.0 million impairment of an investment related to alternative fuel technology.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Results of Operations — Consolidated Operating and Other Expenses

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Therefore, we believe that revenue, excluding truckload and LTL fuel surcharge is a better measure for analyzing many of our expenses and operating metrics.

In accordance with accounting treatment applicable to each of our recent acquisitions, Knight-Swift's reported results do not include the operating results of the acquired entities prior to the respective acquisition dates.

In accordance with the accounting treatment applicable to each of our recent acquisitions, Knight-Swift's reported results do not include the operating results of the acquired entities prior to the respective acquisition dates.

Accordingly, comparisons between the Company's 2022 results and prior periods may not be meaningful.

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% of revenue, excluding truckload and LTL fuel surcharge 33.4 % 32.0 % 140 bps

Salaries, wages, and benefits expense is primarily affected by the total number of miles driven by company driving associates, the rates we pay our company driving associates, and employee benefits, including healthcare, workers' compensation and other benefits.

Salaries, wages, and benefits expense is primarily affected by the total number of miles driven by and rates we pay to our company driving associates, and employee benefits including healthcare, workers' compensation, and other benefits.

To a lesser extent, non-driver employee headcount, compensation, and benefits affect this expense.

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Several ongoing market factors have reduced the pool of available driving associates, contributing to a challenging driver sourcing market, which we believe will continue.

Having a sufficient number of qualified driving associates is our biggest headwind, although we continue to seek ways to attract and retain qualified driving associates, including heavily investing in our recruiting efforts, our driving academies, technology, our equipment, and terminals that improve the experience of driving associates.

We expect driving associate pay to remain inflationary, which we expect will result in additional driving associate pay increases in the future, thereby increasing our salaries, wages, and benefits expense.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

2021 Compared to 2020 — The increase in consolidated salaries, wages, and benefits includes $222.8 million from the results of ACT.

The remaining increase pertained to driving associate pay rates and non-driver salaries and wages, partially offset by an 11.6% decrease in miles driven by company driving associates, excluding ACT.

Having a sufficient number of qualified driving associates is a significant headwind, although we continue to seek ways to attract and retain qualified driving associates, including heavily investing in our recruiting efforts, our driving academies, technology, our equipment, and our terminals that improve the experience of driving associates.

We expect labor costs (related to both driving associates and non-driver employees) to remain inflationary, which we expect will result in additional pay increases in the future, thereby increasing our salaries, wages, and benefits expense.

2022 Compared to 2021 — The increase in consolidated salaries, wages, and benefits includes a $309.6 million increase from the results of ACT and MME for the full year 2022, compared to the portion of 2021 following the respective acquisition dates.

The remaining increase pertained to driving associate pay rates, and an increase in non-driver headcount, resulting in higher non-driver salaries, wages, and benefits.

These increases were partially offset by a 6.2% reduction in miles driven by company driving associates, excluding ACT and MME.

2022 2021 2022 vs.

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% of revenue, excluding truckload and LTL fuel surcharge 13.8 % 9.9 % 390 bps

Fuel expense consists primarily of diesel fuel expense for our company-owned tractors and fuel taxes.

Fuel expense consists primarily of diesel fuel expense for our company-owned tractors.

The primary factors affecting our fuel expense are the cost of diesel fuel, the fuel economy of our equipment, and the miles driven by company driving associates.

Our fuel surcharge programs help to offset increases in fuel prices, but apply only to loaded miles and typically do not offset non-paid empty miles, idle time, and out-of-route miles driven.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Our fuel surcharge programs help to offset increases in fuel prices, but generally apply only to loaded miles for our Truckload and LTL segments and typically do not offset non-paid empty miles, idle time, or out-of-route miles driven.

Typical fuel surcharge programs involve a computation based on the change in national or regional fuel prices.

These programs may update as often as weekly, but typically require a specified minimum change in fuel cost to prompt a change in fuel surcharge revenue for our Truckload segment.

These programs may update as often as weekly, but typically require a specified minimum change in fuel cost to prompt a change in fuel surcharge revenue for our Truckload and LTL segments.

Therefore, many of these programs have a time lag between when fuel costs change and when the change is reflected in fuel surcharge revenue.

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We continue to utilize our fuel efficiency initiatives such as trailer blades, idle-control, management of tractor speeds, fleet updates for more fuel-efficient engines, management of fuel procurement, and driving associate training programs that we believe contribute to controlling our fuel expense.

2021 Compared to 2020 — The increase in consolidated fuel expense includes $33.7 million of fuel expense from ACT's results.

The remaining difference is primarily due to an increase in the average DOE fuel price to $3.29 per gallon in 2021 from $2.56 per gallon in 2020, partially offset by an 11.6% reduction in the total miles driven by company driving associates, excluding ACT.

2022 Compared to 2021 — The increase in consolidated fuel expense includes a $71.8 million increase from the results of ACT for the full year 2022, compared to the portion of 2021 following the acquisition date.

The remaining difference is primarily due to an increase in the average DOE fuel price to $5.01 per gallon in 2022 from $3.29 per gallon in 2021, partially offset by a 6.2% reduction in the total miles driven by company driving associates, excluding ACT.

2022 2021 2022 vs.

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Operations and maintenance expense consists of direct operating expenses, such as driving associate hiring and recruiting expenses, equipment maintenance, and tire expense.

Operations and maintenance expenses are primarily affected by the age of our company-owned fleet of tractors and trailers and the miles driven.

We expect the driver market to remain competitive in 2022, which could increase future driving associate development and recruiting costs and negatively affect our operations and maintenance expense.

We expect to continue refreshing our fleet in the coming quarters to maintain or improve the average age of our equipment.

2021 Compared to 2020 — The increase in consolidated operations and maintenance expense includes $18.8 million in operations and maintenance expense from ACT's results.

The remaining increase was attributed to higher driving associate hiring expenses and was partially offset by the decrease in miles driven by company driving associates discussed above.

Operations and maintenance expenses are typically affected by the age of our company-owned fleet of tractors and trailers and the miles driven.

We expect the driver market to remain competitive throughout 2023, which could increase future driving associate development and recruiting costs and negatively affect our operations and maintenance expense.

We expect to continue refreshing our tractor fleet in the coming quarters, subject to availability of new revenue equipment, to maintain or improve the average age of our equipment.

2022 Compared to 2021 — The increase in consolidated operations and maintenance expense includes a $29.3 million increase from the results of ACT for the full year 2022, compared to the portion of 2021 following the acquisition date.

The remaining increase was attributed to higher maintenance expenses due to an increase in the average age of our fleet, higher port per diem expenses as we navigate a backlog of shipping containers at ports, and increased hiring expenses as we work to improve our seated truck count.

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In future periods, our higher self-insured retention limits or lower excess coverage limits may cause increased volatility in our consolidated insurance and claims expense.

2021 Compared to 2020 — Consolidated insurance and claims expense increased partially due to the inclusion of $15.8 million of insurance and claims expense from ACT's results.

The remaining increase was primarily due to insurance reserves incurred through our third-party carrier insurance program.

2022 Compared to 2021 — Consolidated insurance and claims expense increased partially due to the inclusion of $18.4 million of insurance and claims expense from the results of ACT for the full year 2022, compared to the portion of 2021 following the acquisition date.

The remaining increase was primarily due to insurance reserves incurred through our expanded third-party carrier insurance program in 2022.

2022 2021 2022 vs.

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% of revenue, excluding truckload and LTL fuel surcharge 1.7 % 1.8 % (10 bps)

Operating taxes and licenses include state franchise taxes, state and federal highway use taxes, property taxes, vehicle license and registration fees, fuel and mileage taxes, among others.

Operating taxes and licenses include state franchise taxes, state and federal highway use taxes, property taxes, vehicle license and registration fees, and fuel and mileage taxes, among others.

The expense is impacted by changes in the tax rates and registration fees associated with our tractor fleet and regional operating facilities.

2021 Compared to 2020 — The increase in c onsolidated operating taxes and licenses expense is primarily due to the inclusion of $13.5 million of operating taxes and licenses expense from ACT's results.

2022 Compared to 2021 — The increase in consolidated operating taxes and licenses expense is primarily due to the inclusion of operating taxes and licenses expense from ACT's and MME's results for the full year 2022, compared to the portion of 2021 following the respective acquisition dates.

2022 2021 2022 vs.

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Communications expense is comprised of costs associated with our tractor and trailer tracking systems, information technology systems, and phone systems.

2021 Compared to 2020 — The increase in c onsolidated communications expense is primarily due to the inclusion of $2.0 million of communications expense from ACT's results.

2022 Compared to 2021 — The increase in consolidated communications expense is primarily due to the inclusion of $2.2 million of communications expense from ACT's and MME's results for the full year 2022, compared to the portion of 2021 following the respective acquisition dates.

This increase was partially offset by the implementation of new technology on our revenue equipment.

Table of Contents Glossary of Terms

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% of revenue, excluding truckload and LTL fuel surcharge 9.1 % 9.4 % (30 bps)

Depreciation relates primarily to our owned tractors, trailers, buildings, ELDs, other communication units, and other similar assets.

Changes to this fixed cost are generally attributed to increases or decreases to company-owned equipment, the relative percentage of owned versus leased equipment, and fluctuations in new equipment purchase prices, which have historically been precipitated in part by new or proposed federal and state regulations.

Depreciation relates primarily to our owned tractors, trailers, buildings, electronic logging devices, other communication units, and other similar assets.

Depreciation can also be affected by the cost of used equipment that we sell or trade and the replacement of older used equipment.

Management periodically reviews the condition, average age, and reasonableness of estimated useful lives and salvage values of our equipment and considers such factors in light of our experience with similar assets, used equipment market conditions, and prevailing industry practice.

2021 Compared to 2020 — The increase in consolidated depreciation and amortization of property and equipment includes $24.8 million of expense from ACT's results.

The remaining increase is primarily due to an increase in owned versus leased equipment.

We expect consolidated depreciation and amortization of property and equipment to increase both in total and as a percentage of consolidated revenue, excluding truckload and LTL fuel surcharge, as we currently do not plan to use operating leases as a primary means of funding our equipment purchases in 2022.

2022 Compared to 2021 — The increase in consolidated depreciation and amortization of property and equipment includes a $34.7 million increase of expense from ACT's results for the full year 2022, compared to the portion of 2021 following the acquisition date.

The remaining increase is primarily due to an increase in owned versus leased equipment and higher depreciation for capital improvements made to our terminals.

2022 2021 2022 vs.

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See Note 4 in Part II, Item 8, of this Annual Report for more details regarding our acquisitions.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

2022 2021 2022 vs.

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The primary factors affecting the expense are the size of our revenue equipment fleet and the relative percentage of owned versus leased equipment.

2021 Compa red to 2020 — The decrease in consolidated rental expense was primarily due to increasing our ratio of owned versus leased equipment.

2022 Compa red to 2021 — The increase in consolidated rental expense was primarily due to a $4.7 million increase in expense from ACT's and MME's results for the full year 2022, compared to the portion of 2021 following the respective acquisition dates.

This increase was partially offset by increasing our ratio of owned versus leased equipment.

We expect consolidated rental expense to continue to decrease both in total and as a percentage of consolidated revenue, excluding truckload and LTL fuel surcharge, as we currently do not plan to use operating leases as a primary means of funding our equipment purchases in 2023.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

2022 2021 2022 vs.

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Additionally, as fuel prices increase, payments to third-party capacity providers and independent contractors increase.

2021 Compared to 2020 — The increase in consolidated purchased transportation expense is primarily due to payments made to third-party carriers, partially offset by a 14.0% decrease in miles driven by independent contractors.

We expect consolidated purchased transportation will increase as a percentage of revenue if we grow our logistics and intermodal businesses faster than our full truckload and LTL businesses.

2022 Compared to 2021 — The increase in consolidated purchased transportation expense is primarily due to increased load volumes within our logistics business and inflationary pressures related to services provided by our third party carriers.

Purchased transportation expense also includes a $14.0 million increase in expense from ACT's and MME's results for the full year 2022, compared to the portion of 2021 following the respective acquisition dates.

We expect that consolidated purchased transportation will increase as a percentage of revenue if we grow our logistics and intermodal businesses faster than our full truckload and LTL businesses.

The increase could be partially offset if independent contractors exit the market due to regulatory changes.

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Impairments $ 810 $ 299 170.9 %

2021 Compared to 2020 — In 2021, we incurred impairment charges associated with revenue equipment held for sale and trailer tracking systems (within our Truckload and non-reportable segments).

During 2020, impairments were related to investments in certain alternative fuel technology (within the non-reportable segments), certain tractors (within the Truckload segment), certain legacy trailers (within the non-reportable segments) as a result of a softer used equipment market, and trailer tracking equipment (within the Truckload segment).

2022 Compared to 2021 — In 2022, we incurred impairment charges associated with building improvements (within our non-reportable segments).

In 2021, we incurred impairment charges associated with revenue equipment held for sale and trailer tracking systems (within our Truckload and non-reportable segments).

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

2022 2021 2022 vs.

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Miscellaneous operating expenses primarily consists of legal and professional services fees, general and administrative expenses, and other costs, net of gain on sales of equipment.

2021 Compared to 2020 — Net consolidated miscellaneous operating expenses includes $16.9 million of additional expense in 2021 from ACT's operating results.

Excluding the results of ACT, the expense decreased by $66.5 million, primarily due to a year-over-year increase in gain on sales of equipment.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

2022 Compared to 2021 — The increase in net consolidated miscellaneous operating expenses includes $20.7 million of additional expense in 2022 from ACT's and MME's results for the full year 2022, compared to the portion of 2021 following the respective acquisition dates.

Net consolidated miscellaneous operating expenses also include a net increase in legal settlements expense of $3.3 million, and higher operating expense associated with increased travel time and return to work programs.

These increases were partially offset by an $18.1 million year-over-year increase in gain on sales of equipment, including a $2.3 million increase from ACT reflected in the net increase noted above.

Consolidated Other Expenses, net

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Interest expense $ 50,803 $ 21,140 140.3 %

Other income, net $ (28,905) $ (11,254) 156.8 %

Other expenses (income), net $ 25,958 $ (28,905) (189.8 %)

Income tax expense $ 249,388 $ 230,887 8.0 %

Interest income — Interest income includes interest earned from financing revenue equipment to independent contractors, as well as interest earned from our investments.

2021 Compared to 2020 — The decrease in consolidated interest income is primarily due to the rebalancing of our portfolio to cash and cash equivalents investments, due to lower yields from other types of short-term investments during 2021.

2022 Compared to 2021 — The increase in consolidated interest income is primarily due to the higher balances in our interest yielding cash accounts, coupled with an increase in interest rates during 2022.

Interest expense — Interest expense is comprised of debt and finance lease interest expense as well as amortization of deferred loan costs.

2021 Compared to 2020 — Consolidated interest expense increased due to higher overall debt balances from the 2021 Debt Agreement which was entered into on September 3, 2021 and replaced the July 2021 Term Loan and 2017 Debt Agreement.

2022 Compared to 2021 — Consolidated interest expense increased due to higher overall debt balances and an increase in interest rates during 2022.

See Note 15 in Part II, Item 8 of this Annual Report for further information related to the 2021 Debt Agreement and related interest rates and deferred loan costs.

Other income, net — Other income, net is primarily comprised of income from unrealized gains and (losses) from our various equity investments, including our Embark and TRP investments, as well as certain other non-operating income and expense items that may arise outside of the normal course of business.

See Note 6 in Part II, Item 8, of this Annual Report.

2021 Compared to 2020 — The increase in consolidated other income is primarily due to unrealized gains recognized from our investment in Embark and an increase in unrealized gains recognized from other investments within our portfolio.

Other expenses (income), net — Other expenses (income), net is primarily comprised of losses and (gains) from our various equity investments, including our investment in Embark, as well as certain other non-operating income and expense items that may arise outside of the normal course of business.

2022 Compared to 2021 — The unfavorable change in consolidated other expenses (income), net is primarily due to unrealized losses recognized from our investment in Embark, compared to a gain during 2021.

Income tax expense — In addition to the discussion below, Note 13 in Part II, Item 8 of this Annual Report provides further analysis related to income taxes.

2021 Compared to 2020 — The increase in consolidated income tax expense was primarily due to an increase in income before income taxes which was partially offset by a reduction in the state deferred tax liability due to our recent acquisitions and adjustments to state tax rates and apportionment.

All these factors resulted in a 2021 effective tax rate of 23.7% and a 2020 effective tax rate of 26.7%.

2022 Compared to 2021 — The increase in consolidated income tax expense was primarily due to an increase in income before income taxes.

This resulted in a 2022 effective tax rate of 24.4% and a 2021 effective tax rate of 23.7%.

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Non-GAAP Financial Measures

The terms "Adjusted Net Income Attributable to Knight-Swift," "Adjusted EPS," "Adjusted Operating Income," "Adjusted Operating Ratio", and "Free Cash Flows," as we define them, are not presented in accordance with GAAP.

The terms "Adjusted Net Income Attributable to Knight-Swift," "Adjusted EPS," "Adjusted Operating Income," "Adjusted Operating Ratio," and "Free Cash Flow," as we define them, are not presented in accordance with GAAP.

These financial measures supplement our GAAP results in evaluating certain aspects of our business.

We believe that using these measures improves comparability in analyzing our performance because they remove the impact of items from our operating results that, in our opinion, do not reflect our core operating performance.

Management and the Board focus on Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, Adjusted Operating Income, Adjusted Operating Ratio, and Free Cash Flows as key measures of our performance, all of which are reconciled to the most comparable GAAP financial measures and further discussed below.

Management and the Board focus on Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, Adjusted Operating Income, and Adjusted Operating Ratio as key measures of our performance, all of which are reconciled to the most comparable GAAP financial measures and further discussed below.

Management and the Board use Free Cash Flow as a key measure of our liquidity.

Free Cash Flow does not represent residual cash flow available for discretionary expenditures.

We believe our presentation of these non-GAAP financial measures is useful because it provides investors and securities analysts the same information that we use internally for purposes of assessing our core operating performance.

Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, Adjusted Operating Income, Adjusted Operating Ratio, and Free Cash Flows are not substitutes for their comparable GAAP financial measures, such as net income, cash flows from operating activities, operating income, operating margin, or other measures prescribed by GAAP.

Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, Adjusted Operating Income, Adjusted Operating Ratio, and Free Cash Flow are not substitutes for their comparable GAAP financial measures, such as net income, cash flows from operating activities, operating income, or other measures prescribed by GAAP.

There are limitations to using non-GAAP financial measures.

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Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis.

Pursuant to the requirements of Regulation G, the following tables reconcile GAAP consolidated net income attributable to Knight-Swift to non-GAAP consolidated Adjusted Net Income attributable to Knight-Swift, GAAP consolidated earnings per diluted share to non-GAAP consolidated Adjusted Earnings per Diluted Share, GAAP consolidated operating ratio to non-GAAP consolidated Adjusted Operating Ratio, GAAP reportable segment operating income to non-GAAP reportable segment Adjusted Operating Income, and GAAP reportable segment operating ratio to non-GAAP reportable segment Adjusted Operating Ratio.

Pursuant to the requirements of Regulation G, the following tables reconcile GAAP consolidated net income attributable to Knight-Swift to non-GAAP consolidated Adjusted Net Income attributable to Knight-Swift, GAAP consolidated earnings per diluted share to non-GAAP consolidated Adjusted EPS, GAAP consolidated operating ratio to non-GAAP consolidated Adjusted Operating Ratio, GAAP reportable segment operating income to non-GAAP reportable segment Adjusted Operating Income, GAAP reportable segment operating ratio to non-GAAP reportable segment Adjusted Operating Ratio, and GAAP cash flow from operations to non-GAAP Free Cash Flow.

Note regarding presentation:

A discussion in changes in our results of operations from 2019 to 2020 has been omitted from this Annual Report, but may be found in "Item 7.

A discussion of changes in our results of operations from 2020 to 2021 has been omitted from this Annual Report, but may be found in "Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations" of our 2021 Annual Report filed with the SEC on February 24, 2022 .

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64,843 55,299

Change in fair value of deferred earnout 2

Impairments 2

Legal accruals 3

(2,481) 6,160

COVID-19 incremental costs 5

Transaction fees 4

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Provision for income tax expense at effective rate (265,585) (244,680)

(244,680) (169,910)

Adjusted Net Income Attributable to Knight-Swift $ 821,196 $ 788,181

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Amortization of intangibles 1

Change in fair value of deferred earnout 2

Impairments 2

Legal accruals 3

COVID-19 incremental costs 5

Transaction fees 4

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1 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger, the July 5, 2021 ACT Acquisition, and other acquisitions.

2 "Change in fair value of deferred earnout" reflects the expense for the change in fair value of a deferred earnout related to the acquisition of a warehousing company, which is recorded in "Miscellaneous operating expenses."

2 "Impairments" reflects the following non-cash impairments:

• During 2021, impairments related to certain revenue equipment held for sale (within the non-reportable segments and the Truckload segment);

• During 2020, impairments related to investments in certain alternative fuel technology (within the non-reportable segments), certain tractors (within the Truckload segment), certain legacy trailers (within the non-reportable segments) as a result of a softer used equipment market, and trailer tracking equipment (within the Truckload segment).

• 2022 impairment of building improvements (within our non-reportable segments);

• 2021 impairments related to certain revenue equipment held for sale (within the non-reportable segments and the Truckload segment).

3 "Legal accruals" are included in "Miscellaneous operating expenses" in the consolidated statements of comprehensive income and reflect the following:

• During 2022, the Company decreased the estimated exposure related to certain accrued legal matters previously identified as probable and estimable in prior periods based on recent settlement agreements.

Additional 2022 legal costs relate to certain lawsuits arising from employee and contract related matters.

• During 2021, the reversal of an accrued legal matter previously identified as probable in 2019 was based on a recent decision of the appellate court, resulting in a change to a remote likelihood that a loss was incurred.

Additional 2021 legal costs relate to certain class action lawsuits arising from employee and contract related matters.

• During 2020, costs related to certain class action lawsuits arising from employee and contract related matters.

5 "COVID-19 incremental costs" reflects costs incurred during 2020 that were directly attributable to the pandemic and were incremental to those incurred prior to the outbreak.

These include payroll premiums paid to our driving associates and shop mechanics, additional disinfectants and cleaning supplies, and various other pandemic-specific items.

The costs are clearly separable from our normal business operations and are not expected to recur once the pandemic subsides.

4 "Transaction fees" consisted of legal and professional fees associated with the acquisitions of UTXL, ACT, and MME.

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(64,843) (55,299)

Change in fair value of deferred earnout 2

Impairments 2

(299) (5,335)

Legal accruals 3

2,481 (6,160)

COVID-19 incremental costs 5

Transaction fees 4

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Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 4.

5 See Non-GAAP Reconciliation:

Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 5.

6 See Non-GAAP Reconciliation:

Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 6 .

Table of Contents Glossary of Terms

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Impairments 2

COVID-19 incremental costs 3

Adjusted Operating Expenses 3,063,693 2,895,499

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Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 2.

3 See Non-GAAP Reconciliation:

Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 5 .

Table of Contents Glossary of Terms

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Logistics Segment

GAAP Presentation (Dollars in thousands)

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Total revenue $ 1,069,554 $ 396,308

Intersegment transactions (18,314) (10,742)

Revenue, excluding intersegment transactions 798,689 365,099

Fuel surcharge (202,262) (50,523)

Revenue, excluding fuel surcharge and intersegment transactions 867,292 345,785

Total operating expenses 942,945 365,139

Adjusted for:

Intersegment transactions (18,314) (10,742)

Fuel surcharge (202,262) (50,523)

Amortization of intangibles 1

(15,930) (7,124)

Adjusted Operating Expenses 724,753 307,492

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Adjusted Operating Ratio 83.6 % 88.9 %

1 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the UTXL acquisition.

1 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified with the ACT Acquisition and MME Acquisition.

Logistics Segment

GAAP Presentation (Dollars in thousands)

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Total revenue $ 920,707 $ 817,003

Fuel surcharge (50,523)

Revenue, excluding fuel surcharge and intersegment transactions 345,785

Intersegment transactions (10,098) (18,314)

Revenue, excluding intersegment transactions 910,609 798,689

Total operating expenses 786,765 723,083

Adjusted for:

Fuel surcharge (50,523)

Intersegment transactions (10,098) (18,314)

Amortization of intangibles 1

(1,336) (765)

Adjusted Operating Expenses 775,331 704,004

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Adjusted Operating Ratio 85.1 % 88.1 %

1 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified with the ACT Acquisition and MME Acquisition.

1 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the UTXL acquisition.

Table of Contents Glossary of Terms

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Total operating expenses (437,619) (416,807)

Operating income (loss) $ 42,060 $ (943)

Operating income $ 48,167 $ 42,060

Operating ratio 90.1 % 90.8 %

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Intersegment transactions (47) (284)

COVID-19 incremental costs 1

Adjusted Operating Expenses 437,572 416,523

Adjusted Operating Income (Loss) $ 42,060 $ (830)

Adjusted Operating Income $ 48,167 $ 42,060

Adjusted Operating Ratio 90.1 % 90.8 %

1 See Non-GAAP Reconciliation:

Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 5.

Non-GAAP Reconciliation:

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Availability under 2021 RSA, due April 2024 2

Availability under 2021 Prudential Notes, issuance ending October 2023 3

Total unrestricted liquidity $ 1,275,356

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1 As of December 31, 2022, we had $43.0 million in borrowings under our $1.1 billion 2021 Revolver.

We additionally had $64.0 million in outstanding letters of credit (discussed below), leaving $776.0 million available under the 2021 Revolver.

2 Based on eligible receivables at December 31, 2021, our borrowing base for the 2021 RSA was $400.0 million, while outstanding borrowings were $279.0 million.

We additionally had $65.3 million in outstanding letters of credit (discussed below), leaving $55.7 million available under the 2021 RSA.

3 As of December 31, 2021, we had $45.0 million outstanding principal on our shelf notes issued under our $125.0 million 2021 Prudential Notes, leaving $80.0 million available for issuance under the 2021 Prudential Notes.

We additionally had $15.8 million in outstanding letters of credit (discussed below) issued under the 2021 Revolver, leaving $1.0 billion available under the 2021 Revolver.

2 Based on eligible receivables at December 31, 2022, our borrowing base for the 2021 RSA was $456.4 million, while outstanding borrowings were $419.0 million, leaving $37.4 million available under the 2021 RSA.

3 Restricted cash and restricted investments are primarily held by our captive insurance companies for claims payments.

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However, we believe the combination of our expected cash flows, financing available through operating and finance leases, available funds under our accounts receivable securitization, and availability under the 2021 Revolver will be sufficient to fund our expected capital expenditures for at least the next twelve months.

Refer to Note 18 in Part II, Item 8 of this Annual Report for additional discussion of our short-term and long-term

Refer to Note 18 in Part II, Item 8 of this Annual Report for additional discussion of our short-term and long-term contractual payment obligations related to purchase commitments.

Table of Contents Glossary of Terms

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

contractual payment obligations related to purchase commitments.

Principal and Interest Payments — As of December 31, 2022, we had debt, accounts receivable securitization, and finance lease obligations of $1.9 billion, which are discussed under "Material Debt Agreements," below.

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Letters of Credit — Pursuant to the terms of the 2021 Debt Agreement and the 2021 RSA, our lenders may issue standby letters of credit on our behalf.

When we have letters of credit outstanding, it reduces the availability under our 2021 Revolver or 2021 RSA.

When we have certain letters of credit outstanding, it reduces the availability under our 2021 Revolver or 2021 RSA.

Standby letters of credit are typically issued for the benefit of regulatory authorities, insurance companies and state departments of insurance for the purpose of satisfying certain collateral requirements, primarily related to our automobile, workers' compensation, and general insurance liabilities.

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Working Capital

We had working capital surpluses of $339.5 million as of December 31, 2021 and $83.7 million as of December 31, 2020, due to an increase in trade receivables, the April 2021 refinance of our accounts receivable securitization (resulting in a reclassification to a noncurrent liability), partially offset by the reclassification of our 2021 Term Loan A-1 to a current liability (due December 2022).

We had working capital surpluses of $599.6 million as of December 31, 2022 and $339.5 million as of December 31, 2021.

The $260.1 million increase was primarily due to the maturity and repayment of our 2021 Term Loan A-1 in December 2022.

Material Debt Agreements

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• $199.8 million:

2021 Term Loan A-1, due December 2022, net of $0.3 million in deferred loan costs

• $199.6 million:

2021 Term Loan A-2, due September 2024, net of $0.2 million in deferred loan costs

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Other, net of $0.1 million in deferred loan costs

As of December 31, 2020, we had $913.6 million in material debt obligations at the following carrying values:

As of December 31, 2021, we had $2.1 billion in material debt obligations at the following carrying values:

• $199.7 million:

2017 Term Loan, due October 2022, net of $1.1 million in deferred loan costs

2021 Term Loan A-1, due December 2022, net of $0.3 million in deferred loan costs

• $199.6 million:

2018 RSA outstanding borrowings, due July 2021, net of $0.1 million in deferred loan costs

2021 Term Loan A-2, due September 2024, net of $0.4 million in deferred loan costs

• $798.4 million:

2021 Term Loan A-3, due September 2026, net of $1.6 million in deferred loan costs

• $278.5 million:

2021 RSA outstanding borrowings, due April 2024, net of $0.5 million in deferred loan costs

• $306.2 million:

Finance lease obligations

• $260.0 million:

2017 Revolver, due October 2022

2021 Revolver, due September 2026

• $52.3 million:

Other, net of $0.1 million in deferred loan costs

Key terms and other details regarding our material debt obligations and finance leases are discussed in Notes 14, 15, and 16 in Part II, Item 8 of this Annual Report, and are incorporated by reference herein.

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Net cash used in investing activities (646,184) (1,816,733) 1,170,549

Net cash provided by (used in) financing activities 779,326 (443,884) 1,223,210

Net cash (used in) provided by financing activities (754,347) 779,326 (1,533,673)

Net Cash Provided by Operating Activities

2021 Compared to 2020 — The $270.5 million increase in net cash provided by operating activities was primarily due to $214.0 million in additional net cash provided by ACT's operating activities in 2021.

2022 Compared to 2021 — The $245.7 million increase in net cash provided by operating activities was primarily due to a $126.1 million increase in operating income and a non-cash increase in depreciation and amortization of property and equipment of $81.9 million.

These increases were related to the addition of ACT's and MME's results for the full year 2022, compared to the portion of 2021 following the respective acquisition dates.

The remaining increase is due to various changes in working capital and was partially offset by a $122.1 million increase in taxes paid.

Factors affecting the increase in operating income are discussed in "Results of Operations — Consolidated Operating and Other Expenses."

Net Cash Used in Investing Activities

2021 Compared to 2020 — Net cash used in investing activities increased by $1.3 billion, as we spent $1.5 billion on acquisitions in 2021, compared to $46.8 million in 2020.

Net Cash Provided By (Used in) Financing Activities

2021 Compared to 2020 — Net cash related to financing activities increased by $1.2 billion, primarily due to the $1.2 billion in proceeds from the 2021 Debt Agreement.

2022 Compared to 2021 — The $1.2 billion decrease in net cash used in investing activities was primarily due to a $1.5 billion decrease in net cash invested in acquisitions and was partially offset by a $335.1 million increase in net cash capital expenditures, including 2022 investing activities of ACT and MME.

Net Cash (Used in) Provided by Financing Activities

2022 Compared to 2021 — Net cash used in financing activities increased by $1.5 billion, primarily due to a $1.2 billion reduction in debt proceeds, a $267.0 million increase in net repayments on our 2021 Revolver, and a $242.8 million increase in repurchases of our common stock.

Most of our operating expenses are inflation-sensitive, with inflation generally leading to increased costs of operations.

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We have also experienced inflation in insurance and claims cost related to health insurance and claims as well as auto liability insurance and claims.

Prolonged periods of inflation could cause interest rates, fuel, wages, and other costs to increase as well.

Prolonged periods of inflation have recently and could continue to cause interest rates, fuel, wages, and other costs to increase as well.

Any of these factors could adversely affect our results of operations unless freight rates correspondingly increase.

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Our critical accounting estimates include the following:

Claims Accruals — Insurance and claims expense varies as a percentage of total revenue, based on the frequency and severity of claims incurred in a given period, as well as changes in claims development trends.

The actual cost to settle our self-insured claim liabilities may differ from our reserve estimates due to legal costs, claims that have been incurred but not reported, and various other uncertainties, including the inherent difficulty in estimating the severity of the claim and the potential judgment or settlement amount to dispose of the claim.

Table of Contents Glossary of Terms

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

claims development factors that are based upon historical experience had increased by 10%, our claims accrual as of December 31, 2021 would have potentially increased by $36.3 million.

The actual cost to settle our self-insured claim liabilities, as well as our third-party claim liabilities, may differ from our reserve estimates due to legal costs, claims that have been incurred but not reported, and various other uncertainties, including the inherent difficulty in estimating the severity of the claim and the potential judgment or settlement amount to dispose of the claim.

If claims development factors that are based upon historical experience had increased by 10%, our claims accrual as of December 31, 2022 would have potentially increased by $70.1 million.

Refer to Note 12, in Part II, Item 8 of this Annual Report for discussion about the changes in the claims accrual balance.

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Estimating fair value includes several significant assumptions, including future cash flow estimates, determination of appropriate discount rates, and other assumptions that management believed reasonable under the circumstances.

Changes in these estimates and assumptions could materially affect the determination of fair value and/or impairment.

Refer to Note 23, in Part II, Item 8 of this Annual Report for discussion about the changes in long-lived assets and the impact on our results for 2021 and 2020.

Table of Contents Glossary of Terms

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Changes in these estimates and assumptions could materially affect the determination of fair value and/or impairment.

Refer to Note 23, in Part II, Item 8 of this Annual Report for discussion about the changes in long-lived assets and the impact on our results for 2022 and 2021.

Income Taxes — Significant management judgment is required in determining our provision for income taxes and in determining whether deferred tax assets will be realized in full or in part.

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Stock-based Compensation — We issue several types of stock-based compensation, including awards that vest, based on service conditions, performance conditions, or a combination of service and performance conditions.

Determining the appropriate amount to expense in each period is based on likelihood and timing of achievement of the stated targets for performance-based awards, and requires judgment, including forecasting future financial results and market performance.

The estimates are revised periodically, based on the probability and timing of achieving the required performance targets, and adjustments are made as appropriate.

4 unchanged sentences

See Note 3 in Part II, Item 8 of this Annual Report, which is incorporated herein by reference, for recently issued accounting pronouncements that could have an impact on our consolidated financial statements.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis