Swift Transportation Company’s board of directors earlier this week also approved the repurchase of up to $100 million of the company’s outstanding Class A common stock.
Swift Transportation Company has revised downward its full year 2015 earnings per share guidance by about 12.8 percent, according to a statement from the company.
The largest truckload provider in North America downgraded its EPS projection from between $1.64 and $1.74 per share to between $1.43 and $1.52 per share for the full year.
Despite the decreased expectation, earnings at the lower end of the range would still represent a 3.5 percent increase from the previous year. Swift reported full year earnings per share of $1.38 in 2014.
The company gave a laundry list of causes for the guidance adjustment including:
- The development on prior year accident and workers’ compensation claims and the corresponding impact to reserves, which is expected to have a negative $0.07 impact on EPS in the third quarter of 2015;
- The settlement of a class action lawsuit and related items, expected to have a negative $0.02 impact on Q3 EPS;
- The settlement of a previous lawsuit, which resulted in a $0.03 negative impact on Q2 2015 EPS;
- The additional carrying expense associated with the large volume of new tractors received late in the second quarter due to delivery delays and the catch up throughout the third quarter that has resulted in a significant backlog of tractors being processed for trade or sale, expected to have an negative impact of between $0.05 and $0.06 in the second half of 2015;
- And a reduction in expected volumes of seasonal project business in the fourth quarter of 2015 due to customers’ recent logistical changes, which negatively impact EPS between $0.05 and $0.06.
Meanwhile, Swift’s board of directors earlier this week approved the repurchase of up to $100 million of the company’s outstanding Class A common stock. According to transportation industry analysts at the investment firm Stifel, the share repurchase program is a significant development given that Swift’s banks “had not allowed this before, preferring debt reduction until now.”
The company said it would not implement the program, which will be carried out using a variety of methods, including open market purchases, block trades, or the implementation of a 10b5-1 plan, until after the company’s third quarter letter to stockholders in late October.
“The timing, prices and volume of purchases will depend upon prevailing stock prices, the Company’s leverage ratio, general economic and market conditions and other considerations,” said Swift. “The repurchase program does not obligate the Company to acquire any particular amount of common stock and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. The repurchase program is expected to be funded through free cash flow, a reduction in planned capital expenditures, and borrowings on the Company’s existing credit facilities.”
“Although we are not satisfied with these developments, we are encouraged by many of the underlying operating trends we are experiencing in our business model,” President and COO Richard Stocking said of the revised EPS projections and share repurchase program. “The benefits we are seeing with the new equipment and expect to realize over the next several years should far outweigh the short-term costs we are experiencing.”
“Continued hard work across the organization is making a difference with driver satisfaction and turnover,” added Stocking. “This focus combined with the new technology we are implementing is having a favorable impact on our recent safety trends. We have a tremendous opportunity regarding the utilization of our fleet. This will be an area of hyper-focus for us as we move forward. In addition, we are focused on servicing our customers to ensure we are meeting and exceeding their needs and continuing to create win-win solutions to facilitate future growth in any environment.”