Knight-Swift Transportation Holdings Inc.KNX
Knight-Swift Transportation Holdings Inc. Fair Value Disclosure
Fair Value Measurement
ASC 820, Fair Value Measurements and Disclosures, requires that the Company disclose estimated fair values for its financial instruments. The estimated fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for the asset or liability. Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Changes in assumptions could significantly affect these estimates. Because the fair value is estimated as of December 31, 2025 and 2024, the amounts that will actually be realized or paid at settlement or maturity of the instruments in the future could be significantly different.
The estimated fair values of the Company's financial instruments represent management's best estimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. The estimated fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the estimated fair value measurement reflects management's own judgments about the assumptions that market participants would use in pricing the asset or liability. These judgments are developed by the Company based on the best information available under the circumstances.
The following summary presents a description of the methods and assumptions used to estimate the fair value of each class of financial instrument.
Equity Method Investments — The estimated fair value of the Company's equity method investments are privately negotiated investments. The carrying amount of these investments approximates the fair value.
Pension Plan Assets — The estimated fair value of ACT's pension plan assets are based on quoted prices in active markets that are readily and regularly obtainable.
Debt Instruments and Leases — For notes payable under the 2025 Revolver, the 2025 Term Loans, the 2023 Term Loan, the 2021 Revolver, the 2021 Term Loans, the 2021 Prudential Notes, and the revenue equipment installment notes, fair value approximates the carrying value due to the variable interest rate. The carrying value of the 2023 RSA approximates fair value, as the underlying receivables are short-term in nature and only eligible receivables (such as those with high credit ratings) are qualified to secure the borrowed amounts. For finance and operating lease liabilities, the carrying value approximates the fair value, as the Company's finance and operating lease liabilities are structured to amortize in a manner similar to the depreciation of the underlying assets.
Contingent Consideration — The estimated fair value of the Company's contingent consideration owed to sellers is calculated using applicable models and inputs for each acquired entity.
Other — Cash and cash equivalents, restricted cash, net accounts receivable, income tax refund receivable, and accounts payable represent financial instruments for which the carrying amount approximates fair value, as they are short-term in nature. These instruments are accordingly excluded from the disclosures below. All remaining balance sheet amounts excluded from the below are not considered financial instruments, subject to this disclosure.
Fair Value Hierarchy — ASC 820 establishes a framework for measuring fair value in accordance with GAAP and expands financial statement disclosure requirements for fair value measurements. ASC 820 further specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy follows:
•Level 1 — Valuation techniques in which all significant inputs are quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.
•Level 2 — Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices from markets that are not active for assets or liabilities that are identical or similar to the assets or liabilities being measured. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.
•Level 3 — Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The following table presents the carrying amounts and estimated fair values of the Company's major categories of financial assets and liabilities:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||
| Consolidated Balance Sheets Caption | Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| Financial Assets: | |||||||||||||||||||||||||||||
Equity method investments 1 | Other long-term assets | 112,042 | 112,042 | 104,640 | 104,640 | ||||||||||||||||||||||||
| Financial Liabilities: | |||||||||||||||||||||||||||||
2021 Term Loan A-2, due September 2026 1 2 | Long-term debt – less current portion | — | — | 349,149 | 350,000 | ||||||||||||||||||||||||
2021 Term Loan A-3, due September 2026 1 2 | Long-term debt – less current portion | — | — | 779,411 | 780,000 | ||||||||||||||||||||||||
2023 Term Loan, due September 2026 1 3 | Long-term debt – less current portion | — | — | 249,459 | 250,000 | ||||||||||||||||||||||||
2025 Term Loan A-1, due July 8, 2030 1 4 | Long-term debt – less current portion | 698,136 | 700,000 | — | — | ||||||||||||||||||||||||
2025 Term Loan A-2, due January 8, 20271 4 | Long-term debt – less current portion | 299,369 | 300,000 | — | — | ||||||||||||||||||||||||
| 2021 Revolver, due September 2026 | Revolving line of credit | — | — | 232,000 | 232,000 | ||||||||||||||||||||||||
| 2025 Revolver, due July 8, 2030 | Revolving line of credit | 626,000 | 626,000 | — | — | ||||||||||||||||||||||||
Revenue equipment installment notes 5 | Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion | 106,619 | 106,619 | 192,255 | 192,255 | ||||||||||||||||||||||||
2021 Prudential Notes 1 6 | Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion | 8,121 | 8,121 | 16,611 | 16,621 | ||||||||||||||||||||||||
2023 RSA, due October 2025 1 7 | Accounts receivable securitization – current portion | — | — | 458,983 | 459,200 | ||||||||||||||||||||||||
Mandatorily redeemable contingent consideration 8 | Other long-term liabilities | 132,287 | 132,287 | 132,287 | 132,287 | ||||||||||||||||||||||||
Contingent consideration 8 | Other long-term liabilities | 5,203 | 5,203 | 5,203 | 5,203 | ||||||||||||||||||||||||
1Level 2 inputs used to estimate the fair value.
2As of December 31, 2024, the carrying amounts of the 2021 Term Loan A-2, and 2021 Term Loan A-3 are net of $0.9 million and $0.6 million in deferred loan costs, respectively.
3As of December 31, 2024, the carrying amount of the 2023 Term Loan is net of $0.5 million in deferred loan costs.
4As of December 31, 2025, the carrying amounts of the 2025 Term Loan A-1 and 2025 Term Loan A-2 were net of $1.9 million and $0.6 million in deferred loan costs, respectively.
5As of December 31, 2025, the carrying amount of the revenue equipment installment notes included $0.2 million in fair value adjustments. As of December 31, 2024, the carrying amount of the revenue equipment installment notes included $0.6 million in fair value adjustments.
6As of December 31, 2025, the carrying amount of the 2021 Prudential Notes is net of $0.3 million in fair value adjustments. As of December 31, 2024, the carrying amount of the 2021 Prudential Notes is net of $10,000 in deferred loan costs and $0.6 million in fair value adjustments.
7The carrying amount of the 2023 RSA is net of $0.2 million in deferred loan costs as of December 31, 2024.
8Refer to Note 4 for information regarding the contingent consideration related to the U.S. Xpress Acquisition.
Recurring Fair Value Measurements (Assets) — As of December 31, 2025 and December 31, 2024, the Company had no major categories of assets estimated at fair value that were measured on a recurring basis.
Recurring Fair Value Measurements (Liabilities) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate the fair value of liabilities measured on a recurring basis as of December 31, 2025 and 2024.
| Fair Value Measurements at Reporting Date Using | |||||||||||||||||||||||||||||
| Estimated Fair Value | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Gain (Loss) | |||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| As of December 31, 2025 | |||||||||||||||||||||||||||||
Mandatorily redeemable contingent consideration 1 | $ | 132,287 | $ | — | $ | — | $ | 132,287 | $ | 1,820 | |||||||||||||||||||
Contingent consideration 1 | 5,203 | — | — | 5,203 | |||||||||||||||||||||||||
| As of December 31, 2024 | |||||||||||||||||||||||||||||
Mandatorily redeemable contingent consideration 1 2 | $ | 132,287 | $ | — | $ | — | $ | 132,287 | $ | 1,820 | |||||||||||||||||||
Contingent consideration 1 | 5,203 | — | — | 5,203 | 35,656 | ||||||||||||||||||||||||
1The Company measures contingent consideration liabilities at fair value each reporting period using significant unobservable inputs classified within Level 3 of the fair value hierarchy. The Company uses a probability weighted value analysis as a valuation technique to convert future estimated cash flows to a single present value amount. The significant unobservable inputs used in the fair value measurements are forecasted operating income and net income over the earnout period, and the probability outcome percentages assigned to each scenario. Significant increases or decreases to either of these inputs would result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent earnout liabilities. Ultimately, the liability will be equivalent to the amount settled, and the difference between the fair value estimate and amount settled will be recorded in earnings for business combinations.
The following is a rollforward for the summary of changes in the fair value of the Company's contingent consideration liabilities, which are measured at fair value on a recurring basis utilizing Level 3 assumptions:
| 2025 | 2024 | ||||||||||
| Beginning balance | $ | 137,490 | $ | 174,966 | |||||||
Change in fair value of contingent consideration (a) | — | (36,617) | |||||||||
Settlement of contingent consideration (b) | — | (859) | |||||||||
| Ending balance | $ | 137,490 | $ | 137,490 | |||||||
(a)The fair values of the mandatorily redeemable contingent consideration and other contingent consideration related to the U.S. Xpress Acquisition are based on Monte Carlo simulations that measure the present value of the expected future payments to be made in accordance with the provisions outlined in the purchase agreement, which is a Level 3 fair value measurement. In determining fair value, the Company estimates the future performance using financial projections developed by management about operating income and net income and the volatility associated with operating income and net income. As of December 31, 2025, the Company used volatility rates of 31.0% and 42.0% for operating income and net income, respectively. The Company estimates future payments using the earnout formula and performance targets specified in the purchase agreement and these financial projections. These payments are discounted to present value using a risk-adjusted rate that takes into consideration market-based rates of return that reflect the ability of U.S. Xpress to achieve the targets. As of December 31, 2025 the Company used a discount rate of 5.4%. Changes in financial projections or the risk-adjusted discount rate, would result in a change in the fair value of contingent consideration. As of December 31, 2024, the Company used volatility rates of 38.0% and 41.0% for operating income and net income, respectively and a discount rate of 5.7%.
Based on the Company’s ongoing assessment of the fair value of the contingent consideration, no adjustment was recorded to the estimated fair value of such liabilities during 2025. During 2024, the Company recorded a net decrease in the estimated fair value of such liabilities of $36.6 million. These were recognized as a gain and are recorded in in the Company's consolidated statement of comprehensive income.
(b)Refer to Note 4 for information regarding the initial measurement of the contingent consideration related to the U.S. Xpress Acquisition.
2As of December 31, 2024, the call option has expired and the mandatorily redeemable contingent consideration is now in the put option period.
Nonrecurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate the fair value of assets measured on a nonrecurring basis as of December 31, 2025 and 2024:
| Fair Value Measurements at Reporting Date Using | |||||||||||||||||||||||||||||
| Estimated Fair Value | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Loss | |||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| As of December 31, 2025 | |||||||||||||||||||||||||||||
Buildings 1 | $ | — | $ | — | $ | — | $ | — | $ | (8,147) | |||||||||||||||||||
Operating lease right-of-use assets 2 | — | — | — | — | (15,444) | ||||||||||||||||||||||||
Software 3 | — | — | — | — | |||||||||||||||||||||||||
Intangible Assets 4 | — | — | — | — | |||||||||||||||||||||||||
Equipment 5 | — | — | — | — | (436) | ||||||||||||||||||||||||
Goodwill 6 | — | — | — | — | |||||||||||||||||||||||||
| As of December 31, 2024 | |||||||||||||||||||||||||||||
Buildings 7 | $ | — | $ | — | $ | — | $ | — | $ | (288) | |||||||||||||||||||
Operating lease right-of-use assets 8 | — | — | — | — | (5,974) | ||||||||||||||||||||||||
Equipment 9 | — | — | — | — | (12,750) | ||||||||||||||||||||||||
1Reflects non-cash impairments related to certain real property (within the Truckload segment).
2Reflects non-cash impairments related to certain real property leases (within the Truckload segment).
3Reflects non-cash impairment of discontinued software projects (within the Intermodal Segment).
4Reflects non-cash impairment of tradenames associated with the decision to rebrand the MME and DHE brands of our LTL businesses under the AAA Cooper brand (within the LTL Segment), and intangible assets associated with Abilene as a result of the decision to cease its operations and combine it into the Swift business (within the Truckload segment).
5Reflects non-cash impairment of revenue equipment (within the Truckload segment)
6Reflects non-cash impairment of goodwill associated with Abilene as discussed above.
7Reflects the non-cash impairment of building improvements (within the Truckload segment and the All Other Segments).
8Reflects the non-cash impairment related to the market value of a facility lease (within the Truckload segment).
9Reflects the non-cash impairment of certain revenue equipment held for sale and other equipment (within the Truckload segment and the All Other Segments).
Nonrecurring Fair Value Measurements (Liabilities) — As of December 31, 2025 and 2024, there were no liabilities included in the Company's consolidated balance sheets at estimated fair value that were measured on a nonrecurring basis.
Fair Value of Pension Plan Assets — The following table sets forth the level within the fair value hierarchy of ACT's pension plan financial assets accounted for at fair value on a recurring basis. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. ACT's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of these assets and their placement within the fair value hierarchy levels.
| Fair Value Measurements at Reporting Date Using: | |||||||||||||||||||||||
| Estimated Fair Value | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| As of December 31, 2025 | |||||||||||||||||||||||
| Fixed income funds | $ | 33,236 | $ | 33,236 | $ | — | $ | — | |||||||||||||||
| Cash and cash equivalents | 748 | 748 | — | — | |||||||||||||||||||
| Total pension plan assets | $ | 33,984 | $ | 33,984 | $ | — | $ | — | |||||||||||||||
| As of December 31, 2024 | |||||||||||||||||||||||
| Fixed income funds | $ | 33,399 | $ | 33,399 | $ | — | $ | — | |||||||||||||||
| Cash and cash equivalents | 389 | 389 | — | — | |||||||||||||||||||
| Total pension plan assets | $ | 33,788 | $ | 33,788 | $ | — | $ | — | |||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 17, 2017 | |
| 2015 | Feb 22, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.