Knight-Swift Transportation Holdings’ operating income was diluted after the company took a big — and voluntary — move to rebrand its Midwest Motor Express and DHE Transportation subsidiaries under the AAA Cooper Transportation name.
The rebranding had a $28.8 million impairment charge in Q3, according to company results released Wednesday. That cost reflects non-cash impairments of trade names, an earnings release said.
“The consolidated branding recognizes that we are already one business, operating seamlessly on one system through one network to present a cohesive solution to our customers, while simplifying administration and communication,” CEO Adam Miller said in the release.
The LTL segment for the company posted an operating loss of $1.7 million for the quarter under generally accepted accounting principles, the earnings results said.
That also meant the company’s overall operating income decreased by 38% to $50 million under GAAP.
But with adjustments, Knight-Swift’s operating income improved 4% to nearly $106 million. Other impairments amounting to $6 million included discontinued software projects in Knight-Swift’s intermodal segment and changes to certain real property leases in its truckload segment, per the earnings release.
By taking into account the rebranding impairment charge, Knight-Swift’s LTL segment instead had an adjusted operating income of $32.1 million, which the company said reflected notable improvement.
“Adjusted operating income increased 10.1%, marking the first year-over-year improvement in five quarters as volumes remain sequentially stable while operational and cost initiatives begin to gain traction,” CFO Andrew Hess said on an earnings call Wednesday.
Hess also noted the Q3 adjusting operating ratio, 90.6%, improved from Q2’s 93.1%, countering a seasonal trend of decline. YoY, the ratio was 89.6%.
The third quarter marks the first full quarter with a year-over-year comparison since adding DHE Transportation to its mix.
Carriers frequently keep the same name of acquired brands for a mix of reasons, such as keeping the subsidiary’s identity and saving costs. But Knight-Swift is seeing further potential as it seeks to expand a nationwide LTL network in-house this year.
