Swift Reports Mixed Fourth-Quarter, But Bright Outlook for 2017
Swift Transportation reported that the fourth quarter has been mixed so far, although there have been gains in volume versus late 2015 in the truckload and dedicated units. But the company is confident about 2017 being a favorable year, executives said Dec. 9 on a conference call for investors.
In the company’s truckload segment, loaded miles per truck per week through November increased 0.8% compared with the same period last year and 1.6% sequentially. Swift reported the average truckload fleet is down about 250 trucks sequentially and 450 year-over-year. The company moved about 100 trucks into the dedicated market last quarter.
“Despite the increase in volumes due to seasonal trends, the pricing environment remains challenging as our quarter-to-date fourth quarter contract pricing is down roughly 1% year-over-year,” CEO Richard Stocking said. “The combination of this contract pricing trend and the year-over-year pressure we’ve seen in the spot market result in our overall truckload revenue excluding fuel surcharge per loaded mile to be down approximately 2.5% quarter to date.”
The dedicated trucking unit fared better with weekly revenue, excluding fuel surcharge, per tractor increasing about 6.2% compared with the same period in 2015.
Swift Refrigerated continued to struggle because the company said the market remains soft, although Stocking noted that demand picked up in certain parts of the country in November.
Revenue per loaded mile, excluding fuel surcharges, is expected to be 3% to 4% lower in the fourth quarter than in 2015, but loaded miles per tractor per week in November went up 6.9% year-over-year, the company said.
Intermodal loads in the fourth quarter are expected to be down about 2% to 3% year-over-year because of the discontinuation of Swift’s trailer-on-flat-car service in 2015, but the company also said that the trends in volume are heading in a positive direction.
“As it relates to pricing, we have experienced additional pressure this quarter, causing our quarter-to-date revenue, excluding fuel surcharge per loaded [mile] metric, to be down roughly 1% year-over-year,” Stocking said. “Although we are not pleased with this trend, we feel it’s safe to say that in regards to pricing, we have outperformed the market as a whole.”
Chief Financial Officer Virginia Henkels also told investors that the company has lowered its expectations on the revenue it will receive from disposing or selling of property and equipment to $1 million from the previous $3 million-to-$4 million estimate.
As a result, the Phoenix-based company, which ranks No. 6 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, believes it will end up at the lower half of its 2016 earnings-per-share forecast, ending the year between $1.09 to $1.19.
However, the outlook for 2017 was more optimistic for the company, which Stocking called a “very, very exciting year for large, well-capitalized, strategically positioned compliant carriers,” referring to the electronic logging mandate in December 2017.
“For those of us in the industry who are already ELD-compliant, we are hoping to see shippers redirect freight volumes our way, which should also assist us in driving utilization improvements,” Stocking said. “Although we are already seeing preliminary signs of this phenomenon taking place, it is likely to meaningfully manifest itself in the back half of next year. It is possible these effects are felt earlier in the year, potentially as early as the second quarter.”
Swift provided a partial 2017 outlook for the company, noting that it would be difficult to provide full-year guidance because of uncertainty around the ELD impact and potential changes to the corporate tax rate in the Trump administration.
However, the company forecast 11 to 16 cents in earnings per share in the first quarter, and 23 to 28 cents in the second quarter.
