Investor Meeting April March 2005

Transcription

1 Investor Meeting April 2005 March 2005

2 Forward-looking Statement Disclaimer Today s presentation and discussion will contain forwarding-looking statements within the meaning of the Private Securities Litigation Reform Act of Words such as expects, anticipates, intends, estimates, or similar expressions are intended to identify these forward-looking statements. These statements are based on Swift Transportation s current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. For further information, please refer to Swift Transportation s reports and filings with the Securities and Exchange Commission. 2

3 Swift Transportation's Team Jerry Moyes Chairman and Chief Executive Officer Robert W. Cunningham President and Chief Operating Officer William F. Riley, III Senior Executive Vice President Glynis Bryan Executive Vice President and Chief Financial Officer Sam Cowley Executive Vice President and General Counsel 3

4 Investment Highlights Positive long-term industry outlook History of consistent revenue growth Focused on execution Improving asset utilization Leveraging blue chip customer base with full suite of services Successful acquisition history Operating leverage driving earnings growth Experienced and highly motivated management 4

5 External Issues SEC investigation of selected stock transactions Fully cooperating with the SEC FMCSA safety audit Safety Rating is and always has been Satisfactory First hearing in December

6 Industry Overview

7 $550 Billion Truckload Market ($ in millions) $279,000 Truckload Industry $550 Billion in Revenue for 2003 For-Hire Truckload Private Fleet Truckload $270,000 Top 10 Public Truckload Carriers ($ in millions) Company 2004 Revenue 1. Swift Transportation $2, J.B. Hunt 2, Landstar System 1, Werner Enterprises 1, U.S. Xpress Enterprises 1, Covenant Transport Heartland Express Celadon Knight Transportation P.A.M. Transportation Svcs. 325 Total $12,568 7

8 Positive Long-term Industry Outlook Shippers Favoring Large TL Carriers Improving Industrial Economy Increasing Imports from the Pacific Rim Continuing Truckload Capacity Shortage Ongoing Driver Shortage Private Fleet Conversions Limited Equipment Additions 8

9 Strong Rate and Capacity Dynamics Public Truckload Carrier Average Revenue Per Mile and Total Number of Tractors Fiscal Year Ended December 31, $1.50 $ ,102 53, % CAGR 55,125 56,973 58,053 $ ,000 50,000 Average revenue/mile $1.40 $1.35 $1.30 $1.30 $1.31 $1.32 $ ,000 30,000 20,000 Total number of tractors $ ,000 $ Average revenue per loaded mile Total number of tractors Average revenue per mile and total number of tractors includes: CLDN, CVTI, JBHT, KNX, PTSI, SWFT, TCAM, USAK, WERN and XPRSA. 9

10 Company Overview

11 Strong Foundation for Growth Founded in 1966 by Jerry Moyes Largest publicly traded truckload carrier Approximately 18,700 tractors, 51,600 trailers and 20,000 drivers History of consistent revenue growth 23% CAGR since 1990 IPO Comprehensive North American service network Organized regionally utilizing decentralized management structure Strong management team focused on execution 11

12 Strong Management Team Jerry Moyes Chairman and CEO Bob Cunningham President and COO Glynis Bryan EVP and CFO Jeff Riley EVP Western Region Richard Stocking EVP Central Region Mark Martin EVP Eastern Region Sam Cowley EVP and General Counsel Kevin Jensen EVP Safety & Rec. Dan Beers President Intermodal Bob Lyman VP Mexico Operations VP Maintenance, Equipment and Fuel Purchasing Mike Ruchensky Chief Information Officer Barbara Kennedy Human Resources Seasoned management team highly focused on operational improvements with a combined 200 years of experience 12

13 Reengineered for Results Sales Increase revenue loaded per mile Sell additional service offerings Network Management Manage planning with constant focus on improving utilization Proactive freight selection with use of prioritization tools Customer satisfaction Trailer management Operations Fleet management Utilization improvement - focus on daily truck miles Safety Driver retention Fuel management 13

14 Seamless Execution Drives Shareholder Value Network Management Sales Operations Focus on strategy, innovation and results 14

15 North American Regional Network Facilitates Service Execution Nationwide Services Dry Van Refrigerated Flat Bed Heavy Haul Dedicated Intermodal Container Major Facility Extensive network of service, fuel and repair centers enables the Company to develop personal relationships with customers and drivers 15

16 Strategic Direction

17 Plan for the Future Continue to Improve Profitability Optimize profitability through freight selection Continued focus on cost management Sales and Marketing Efforts Aggressively grow higher margin traffic Capture cross-selling opportunities by expanding: Dedicated Intermodal, and Mexico Safety Safety is a top priority Continue to implement best safety practices and incentives Accelerate EPS Growth Driver Retention Competitive compensation Comfort zones, mentor program, road ready program Opportunistic Acquisitions / Investment Strategy Built in growth opportunities Low risk investment strategy 17

18 Increasing Asset Utilization Improve Operating Ratio Replace Unprofitable Business Prioritization Tools Profitability by Lane Profitability by Load Identify Profitable Customers Pricing discipline recently exited $30+ million contract due to pricing 18

19 Improving Asset Utilization Revenue / Tractor / Week 3,000 2,800 2,600 2,400 2,851 2,638 2,532 2,342 2,200 2,000 Q1 Q2 Q3 Q Excludes fuel surcharge. 19

20 Customer Base Facilitates Growth Revenue by End Market Fiscal Year Ended December 31, 2004 Customer Concentration Fiscal Year Ended December 31, 2004 Automotive 7% Expedited 2% Chemical 1% Top 5 Customers 32% Manufacturing 10% All Other Customers 42% Grocery Products 23% Retail 57% Next 20 Customers 26% Combined consumer products account for 80% of total portfolio 20

21 Leveraging Key Accounts with Full Suite of Services Continuing to leverage our partnerships with world class customers by providing additional services 21

22 Dedicated to Our Customers Dedicated services provide benefits to our customers Consistent capacity Leverage for surge needs Eliminates capital requirements Experienced execution in providing: Drivers Systems Management Dedicated services provide benefits to Swift Consistent revenue base Higher margins Driver retention Leverage for over-the-road business 22

23 Increase Intermodal Services New organization established late 2004 Many current customers utilize intermodal services Only 1% of 2004 revenue was intermodal related Vast terminal network to support door-todoor service Direct relationships with all Class 1 railroads Anticipate adding equipment in

24 Mexico A land of opportunity Locations include: Guadalajara Mexico City Monterrey Nogales Nuevo Laredo Tijuana Our Mexico operations are poised for growth 24

25 Safety Safety is a top priority We are achieving results Accident frequency in Q1 was down 18% as compared with the average of the prior four years 25

26 Effective Driver Retention 125% Driver Turnover Fiscal Year Ended December 31 and First Quarter Ended March 31, 115% 117% 115% 105% 102% 95% 89% 93% 87% 85% 75% Q Q Focused on improving already low driver turnover 26

27 Successful Acquisition History Cooper Motor Lines 1988 Accretive Kaibab 1990 Arthur H. Fulton 1991 West s Best Freight Systems 1993 East-West Transportation 1994 Missouri-Nebraska Express 1994 Navajo Shippers 1996 Direct Transit 1997 Cardinal Freight Systems 2001 M.S. Carriers 2001 Merit Distribution Services 2003 Trans-Mex 2004 Higher Margin Right Price Acquisition Strategy Complementary Disciplined Approach Low Risk Acquired $1.2B revenue since 1988 ~45% of 2004 operating revenue 27

28 Financial Overview

29 Consistent Revenue Growth ($ in millions) Operating Revenue Fiscal Year Ended December 31, $3,500 $3,000 $2,826 $2,500 $2,000 23% CAGR $1,689 $1,974 $2,112 $2,101 $2,398 $1,500 $1,000 $500 $156 $190 $233 $458 $366 $277 $562 $873 $714 $ Excludes fuel surcharge. 29

30 Consistent Revenue Growth ($ in millions) $800.0 Net Revenue First Quarter Ended March 31, $700.0 $676.2 $600.0 $500.0 $400.0 $ % Growth $ % Growth $ % Growth $300.0 $200.0 Q Q Q Q ($ millions) Operating Revenue $ $ $ $ Less: Fuel Surcharge Revenue Net Revenue $ $ $ $ Excludes fuel surcharge. 30

31 Effective Yield Management Average Revenue Per Loaded Mile Fiscal Year Ended December 31 and First Quarter Ended March 31, Revenue per loaded mile $1.60 $1.55 $1.50 $1.45 $1.40 $ $1.41 $ $1.45 $ $ $ Average length of haul $ Q Q Excludes fuel surcharge. Revenue per loaded mile Average length of haul 31

32 Utilization Improvements Continuous focus on productivity gains Weekly Truck Miles Per Tractor Fiscal Year Ended Dec 31 and First Quarter Ended Mar 31, Deadhead Percentage Fiscal Year Ended Dec 31 and First Quarter Ended Mar 31, 2,200 2,150 2,100 2,050 2,084 2,049 2,123 2,142 2,029 2, % 15.0% 14.5% 14.0% 13.5% 13.0% 15.1% 14.1% 13.8% 12.8% 13.3% 13.1% 2, % 12.0% 1, Q Q % Q Q

33 Strong Operating Momentum Improving margins driving rapid earnings growth Operating Ratio Fiscal Year Ended Dec 31 and First Quarter Ended Mar 31, Net Income Fiscal Year Ended Dec 31 and First Quarter Ended Mar 31, ($ in millions) 99.0% 97.0% 95.0% 95.9% 224 basis points 94.4% 94.1% 93.6% 97.6% 95.8% $125.0 $100.0 $ % CAGR $59.6 $79.4 $ % $50.0 $25.0 $27.2 $6.4 $ % $ Q Q Q Q

34 Q1 Operating Expenses Salaries, Wages and Employee Benefits First Quarter Ended March 31, Operating Supplies & Expenses First Quarter Ended March 31, 40.0% 39.0% 38.0% 38.7% 39.4% 12.0% 11.0% 10.0% 11.0% 11.2% 9.9% 37.0% 36.8% 9.0% 36.0% 8.0% 35.0% 7.0% 34.0% 6.0% 33.0% Q Q Q % Q Q Q % of Net Revenue % of Net Revenue 34

35 Fuel Impact Fuel Expense First Quarter Ended March 31, Operating Ratio and Fuel Expense 20.0% 18.4% 19.0% 99.0% 15.0% 10.0% 5.0% 15.4% 14.3% 12.6% 12.6% 11.4% Q Q Q Fuel as a Percent of Revenue 17.0% 15.0% 13.0% 11.0% 9.0% 7.0% 5.0% Q Q Q Q Q Q Q Q Q % 95.0% 93.0% 91.0% 89.0% 87.0% 85.0% % of Total Revenue % of Revenue excl. Fuel Surcharge Fuel as a % of Revenue Operating Ratio ($ millions) Q Q Q Fuel Surcharge Revenue $ 66.4 $ 26.3 $ 23.1 Less: Owner-Operator Fuel Surcharge Revenue $ (15.1) $ (5.6) $ (4.9) Net Company Fuel Surcharge Revenue $ 51.3 $ 20.7 $ 18.2 Fuel Expense $ $ 89.0 $ 84.7 Less: Company Fuel Surcharge Revenue $ (51.3) $ (20.7) $ (18.2) Net Fuel Expense $ 85.0 $ 68.3 $

36 Q1 Operating Expenses Purchased Transportation First Quarter Ended March 31, Rent Expense, Depreciation & Amortization First Quarter Ended March 31, 17.5% 17.0% 16.5% 16.0% 16.3% 17.1% 16.6% 12.0% 10.0% 8.0% 6.0% 10.4% 10.4% 6.5% 6.9% 9.6% 7.1% 15.5% 4.0% 15.0% 14.5% 14.0% Q Q Q % 0.0% 3.9% 3.5% 2.5% Q Q Q % of Net Revenue Rental Expense Depreciation & Amortization % of Net Revenue ($ millions) Purchased Transportation $ 91.3 $ $ Less: Owner-Operator Fuel Surcharge Reimb (4.9) (5.6) (15.1) Tractors Q Q Q Owned 7,220 9,587 11,341 Leased 5,586 4,971 3,782 Total Tractors 12,806 14,558 15,123 % Owned 56% 66% 75% Net Purchased Transportation $ 86.4 $ $ Total Equipment Sales in Q1 ($ thousands) # of Units Tractors 731 Trailers 196 Total Gain $208K 36

37 Q1 Operating Expenses Insurance and Claims First Quarter Ended March 31, Communications, Utilities, Taxes & Licenses First Quarter Ended March 31, 7.0% 6.0% 5.4% 6.0% 4.0% 5.0% 4.0% 3.0% 4.1% 4.3% 4.1% 4.2% 2.0% 1.9% 2.5% 2.5% 2.0% 1.3% 1.3% 1.2% 1.0% 0.0% 0.0% Q Q Q Q Q Q % of Net Revenue % of Total Revenue % of Net Revenue Communications & Utilities Op Taxes & Licenses 37

38 Capitalization ($ millions) As of Dec 31, March 31, Cash $ 19.1 $ 28.2 $ 18.6 Debt (1) Equity , ,123.4 Treasury Stock (108.8) (361.3) (361.3) Total Stockholders' Equity Total Capitalization $ 1,303.1 $ 1,360.3 $ 1,341.0 Tractors (as of period end) Owned 9,339 65% 11,046 74% 11,341 75% Leased 5,005 35% 3,852 26% 3,782 25% Total Tractors 14,344 14,898 15,123 Debt / EBITDA 1.4x 1.6x 1.6x Debt to Total Capital 32.1% 45.7% 43.2% (1) Includes current portion of long-term debt, current portion of obligations under capital leases, securitization of accounts receivable, borrowings under revolving credit agreement, senior notes and long-term debt. 38

39 Significant Operating Leverage EPS Sensitivity to Change in Operating Ratio 45% (EPS Change Per 100 Bps OR Movement) 40% 35% 30% 25% 20% 15% 10% 5% 0% 3% 4% 5% 9% 11% 12% 18% 21% 39% LSTR HTLD KNX JBHT WERN QLTY SWFT CLDN XPRSA Source: Each 1 cent increase in RPLM = ~$12M in earnings or $0.16 EPS Each ½ point reduction in deadhead = ~$10M in earnings or $0.14 EPS 39

40 Potential Operating Leverage Impact on EPS Potential OR Improvement Impact on EPS $3.00 $2.50 $2.00 $1.59 $1.85 $2.11 $2.36 $2.62 $1.50 $ % 92.0% 91.0% 90.0% 89.0% Assumes $3.1 billion revenue, $25 million interest expense, 39.5% tax rate and 73 million diluted shares. Each 100 bps of OR improvement adds approximately $0.26 to EPS 40

41 Summary

42 Investment Highlights Positive long-term industry outlook History of consistent revenue growth Focused on execution Improving asset utilization Leveraging blue chip customer base with full suite of services Successful acquisition history Operating leverage driving earnings growth Experienced and highly motivated management 42

43 Continuous Improvement in EPS $1.80 $1.78 $1.60 $1.51 $1.40 $1.29 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.16 $0.19 $0.22 $0.13 $0.40 $0.40 $0.47 $0.64 $0.85 $1.02 $0.82 $0.32 $0.69 $0.94 $ *Analyst Consensus as of 4/19/05 Swift only EPS through 2000 (excl. MS Carriers); All numbers adjusted for stock splits C* 2006C* 43

44 A Growing Industry Q1 Revenue Growth Q1 EPS Growth 25% 20% 16% 19% 250% 200% 225% 15% 150% 10% 100% 5% 50% 47% 0% 0% Major Carriers Swift Major Carriers Swift Revenue and EPS for major carriers includes the following companies: CLDN, CVTI, HTLD, JBHT, KNX, LSTR, USAK, and WERN. 44

45 Questions and Answers