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Knight-Swift Transportation announced Tuesday that President and CEO Dave Jackson has stepped down. He will be replaced by Chief Financial Officer Adam Miller.
The change follows multiple quarters of depressed results, largely due to a prolonged freight recession, but also as the company’s third-party insurance venture has been operating at a loss. The business, which brokers liability coverage to small carriers, has suffered from unfavorable claims developments and has struggled to collect premiums from carriers during the downturn.
The company said on its fourth-quarter earnings call that it initiated a process to exit the business. The unit booked a $71.7 million operating loss during the quarter. Knight-Swift’s adjusted earnings per share fell to $1.72 in 2023 versus a record of $5.03 during the 2022 peak.
Jackson has also left also left Knight-Swift’s (NYSE: KNX) board of directors.
“We are grateful for Dave’s service as CEO over the past nine years, a period that has been transformational for the Company and rewarding for our stockholders,” said Kevin Knight, Knight-Swift’s executive chairman. “Dave will always be part of the Knight-Swift family, and we wish him all the best.”
Miller joined Knight-Swift (NYSE: KNX) in 2002 and has held various roles with increasing responsibilities since. In addition to holding the top finance position, Miller was president at Swift Transportation, and secretary and treasurer of the combined company.
“Adam’s broad strategic, financial, and operating experience during his 22-year career at Knight-Swift has him well-prepared and ready to lead as CEO,” stated Knight in a news release. “During his tenure, he played leading roles in establishing Knight Refrigerated as a major player in its market, integrating Swift after the merger and improving its operations, service and profitability, while overseeing our capital structure and financial performance as Chief Financial Officer.”
Miller said he “will be intently focused on expanding our LTL footprint, improving consolidated margins, and generating free cash flow and stockholder returns.”
Andrew Hess will take over the role of CFO. He was previously the senior vice president of M&A where he was integral in the acquisitions of two less-than-truckload carriers and U.S. Xpress.
Morgan Stanley (NYSE: MS) analyst Ravi Shanker said the “news will likely come as a significant surprise to the Street,” noting the company’s “recent earnings trajectory has no doubt been disappointing,” during what he described as a prolonged downturn.
But Shanker said in the Tuesday note to clients that Jackson “deserves credit” for the company’s diversification into LTL, the U.S. Xpress acquisition and growth in the company’s logistics and intermodal offerings.
“We do not believe this change was precipitated by the discovery of bad news at USX or any other factor that would derail KNX’s current earnings trajectory,” Shanker said. “We believe the sudden and extreme step of a CEO change could be viewed by the Street as the Board showing urgency to put KNX back on a path to normalized EPS, which will be viewed as a positive.”
Satish Jindel, founder and president of ShipMatrix, echoed the sentiment in a statement to FreightWaves.
“I expect this change would lead to greater attention and speed for KNX’s investment in LTL, which has been slow after acquiring AAA Cooper Transportation in July 2021 and MME in December 2021,” said Jindel.
Knight-Swift added 14 terminals since the acquisitions and will be onboarding another 25 locations from defunct carrier Yellow’s (OTC: YELLQ) estate. In total, Knight-Swift could add roughly 35 new service centers to its LTL network this year.
Jackson has been CEO for the past nine years and president for the past 13 years.
“After nearly 24 years at Knight-Swift, it is time for a change and for the next generation to take the baton,” Jackson said. “Adam and Andrew are ready, the timing is right, the company is well positioned, and they have my full support. I look forward to my next chapter and to continuing to make a difference in the community.”
Shares of KNX were down 1.9% Tuesday at 11:52 a.m. EST compared to the S&P 500, which was flat.
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