Connecting The Dots: TFII flash read-through – KNX and LSTR results highlight solid pricing outlook
Our view: postiive
Our take. Knight-Swift and Landstar last night reported robust Q1 results. While Q1 results were strong, key in our view was commentary on the outlook pointing to strength in TL and LTL contract rates as well as LTL demand – a key positive read through for TFII. Our view is that pricing and demand conditions in line commentary from Knight-Swift and Landstar would drive significant upside at TFII on both an organic and a TForce Freight integration basis. With the shares now yielding 9% on consensus 2022E FCF, we believe an attractive entry point is emerging ahead of the quarter. TFII reports results next Thursday after close (see our Q1 preview note here).
What happened? Key highlights from US trucking companies Q1 results below:
• Knight-Swift
2022 outlook / guidance:
Double digit truckload contract rate increases while spot rates moderate year-over-year
Declining spot rates, historically high used equipment market, limited availability to new equipment and high fuel costs increase barriers to entry
LTL demand remains strong with increases in revenue per hundredweight remaining in the double digits
Sourcing and retaining drivers remains challenging • Landstar Q2/22 outlook:
Currently, overall truck revenue per load is trending at levels similar to March.
Management expects a relatively stable revenue per load environment to continue throughout Q2 ... expects revenue per load on loads hauled via truck in Q2 to be up in a mid-teen percentage range y/y
Expects the number of loads hauled via truck to increase in Q2/22 y/ y in a range of 11% to 13% percent