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Swift Transportation Company (NYSE:SWFT)

Annual Investor Day Conference Call

May 10, 2013, 09:00 am ET

Executives

Richard Stocking - President & COO

Ginnie Henkels - EVP & CFO

Jerry Moyes - Founder & CEO

Steve Van Kirk - EVP, Intermodal

Mauricio García - VP, Operations, Mexico

Jason Bates - VP, Finance, IR & Assistant Treasurer

Analysts

Chris Wetherbee - Citigroup

Ben Hartford - Robert W. Baird

Richard Stocking

Well, good morning everyone. Welcome to Swift’s Investor Day. We are very excited to be here at the New York Stock Exchange and have you here with us.

Before we get started I would like to bring to your attention our forward-looking statements and disclaimer. I won’t read through all list; just a couple of items to know. This presentation may contain forward-looking statements and actual results may differ from those set forth in the forward-looking statements and the prices of the company's securities may fluctuate dramatically. The company makes no commitments and disclaims any duty to update or revise any forward-looking statements to reflect future events.

So what I would like to do is start with an agenda. I will tell you what we are going to go over today, but before I do that I would like to make some introductions. To my immediate left here is Ginnie Henkels, our Executive Vice President and Chief Financial Officer; Jerry Moyes, our Founder and CEO; Steve Van Kirk, our Executive Vice President for Intermodal; Mauricio García, who is our Vice President of Operations in Mexico and Jason Bates, our Vice President of Investor Relations and Business Analysis.

So we are excited to be here with you today. I am going to start off with an overview of the organization and to help you see and understand how we are poised and structured for growth. Then as part of that kick-off we will ask Steve to present to you the growth strategy and profitability strategy for Intermodal and then Mauricio will do the same for opportunities in Mexico. And then I will talk a little bit more about our disciplined focus on our asset utilization and driving results in the organization. Ginnie then will come up and do a financial overview and connect the goal alignment with our results and then Jerry will take the balance of the meeting and do a summary at the end. And then we will open it up for questions and answers. So I would ask you to hold your questions and then we will have plenty of time to go over those as we go through the presentation.

So I thought to begin with we would talk about the four different areas of Swift. I think it’s important for you to understand where we've come from, where we are at today and then division for what we have for the organization out to 2017. So the first period is the evolutionary period. This is where Jerry started out with his family with one truck. And it’s a very powerful story if you think about that, driving that truck to the company that we are today and we are extremely excited to have a legend in the industry as part of our Swift team. They started out in flatbed quickly went into temperature control division and then obviously Jerry financed his first owner-operator early in the history of Swift. That same process exists today and we have about 4000 of those vehicle owner-operators within the organization.

Then deregulation happened and then everything started to change. We go into the next period which is the growth period. This is where I joined the organization and it was really a fun time back then really growing and progressing in 1990, the first public offering happened and then we promised the Street that we would grow 15% top and bottomline. As you can see from the slide here, we grew 20% plus on the revenue and 20% on the EBITDA and we did that through an incredible amount of growth, half through acquisitions and half through internal growth.

And I would tell you these acquisitions have been a huge blessing to Swift in many ways. The number one, it helped us in our geographical footprint, but also it helped us with leadership. We still have lots of those leaders from those acquisitions today. And then obviously we started dedicated Mexico and Intermodal which were some growth engines back there in those days and are today and we will describe those in a few minutes.

Then the next phase we call the transformation period. This is a very important period in the history of our company. Jerry took the company back private. We had a fair amount of debt that we had to deal with and here comes the recession. And looking back, we believe that recession was one of the best things that happened to our organization because it really made us look at our processes, our procedures, really our strategies, and how to come up with those proper strategies and more importantly how do we execute off those strategies.

We looked at process improvement through the whole organization and I would tell you the thing that we’ve learned is that we constantly have to go over and over those process because things change, business changes and we want to make sure that we're totally aligned and stay relevant when it comes to process. And I guess the other thing that really happened in this transformation period is discipline. Disciplined thought, disciplined action and disciplined people. Our folks know what the goals and objectives are they know how to affect those goals and so the discipline that we've put in to the organization continues to build and continues to keep us focus on what really matters. And then as you know we went back public again in 2010 and we restructured the balance sheet.

Now really what we want to focus on in this presentation is this next period, the results period. 2012 to 2017; we are going to talk a lot about profitable revenue growth and our goal of 10%, $280 million worth of the business in 2013 and we do that through improved asset utilization, continuous improvement as well as growing our EPS and continue to pay down our debt.

So last May, we started out in our Investor Conference sharing with you how we are going to create value to the stockholders; what we said was we would grow, we are targeting to grow EPS of 20% in 2012 and then 15% CAGR from 2013 to 2017, we did that; we over achieved, right, 27% in 2012. We also said that we would increase our return on net assets by 1%, annual CAGR for the each of the next five years, and we have been able to over achieve in that metric as well. And finally to reduce our leverage, Ginnie has talked about $50 million to $100 million worth of debt repayment which we have been able to exceed for the last couple of years and she will talk more about that in just a minute.

So if you look at 2012 from a topline and bottomline perspective, Swift has had its best year, biggest and best year ever. We are very proud of this; our people are very proud of this, they work very hard to align themselves to do those things that will help us become best in class. Our goal, our vision is to be best in class in every department which means we have a lot of people that we look up to in the industry and are shooting to meet and exceed those numbers.

So let’s talk a little bit about being poised for growth and how we are going to do this. So this is an ATA slide and if you see on the left, you see the truck which includes private and for hire in one bucket on the left and you will also it on the right; you see that it’s growing. We believe that the truck size is growing maybe not so much the private fleet but the truck side and so we have a huge growth goal when it comes to our trucking side of the business.

You also see Intermodal growing and see we’ll talk about that growth, and we believe that the market is there for us to grow and Swift up to 100 customers only 88% of the total revenue comes from those folks and if you look at the entire book of business the private fleet and the other for hire we’re only 0.5% of the market. There is huge opportunities for us to target new customers, so our sales force is out there and working hard to bring on small to medium size and large customers that we don't do business with today. We’ve had great success over the last year and we are going to continue on that objective.

So we also have an opportunity to grow with existing customers. We just took a random selection of customers from different industries and the yellow bars are the opportunities we have right, their freight spend and the blue bars on there are Swift lines up according to that spend, so you can see that we have tremendous opportunity with existing customers as well as bringing new customers into the fold.

So let's talk a little bit about our service offerings which we believe we can touch most parts of the supply chain for our customers. We also have a great equipment selection and additional service offerings that we can generate revenues for the company. So let's talk about our truck load; this is something we are very proud of and as you see on the trucking side we have really done a nice job in producing more revenue and more miles on these trucks. For every hundred miles that we add to the entire fleet of trucks that we have, it’s like adding about 800 full truck equivalents to the industry and so our goal is to continue to grow that utilization. We aren't best in class yet, but we are definitely heading in that right direction and have been one of the only that have improved on utilization.

Also we want to grow our fleet; as we bring on this new business, this revenue, it will require us to grow the fleet and we definitely want to do that. We do this very well. Our customers we developed a lot of trust and confidence with our customers and we believe that that truckload can grow substantially.

The dedicated side, this is an opportunity for us as well. This is good for Swift, good for our customers and our drivers. We believe that our pipeline is very robust and we've had some good wins and we believe that more wins are forthcoming this year and dedicated is a hyper focus for us. Our sales people are constantly looking for opportunities to sell dedicated.

Another growth engine is the Intermodal and Steve is going to talk more about that, but this is a business that our customers have access to get in, have pushed us in this direction, are grateful for another choice and grateful for another company that has this service offering and Steve will walk us through that, but if you look at the opportunity in the market that Swift has we are only 2% of the market and you see how big the market here is on the slide; we believe that there's continued opportunity for double digit growth going forward.

So I'll turn the time over to Steve to walk us through the subject.

Steve Van Kirk

Good morning. My name is Steve Van Kirk and I would like to give you very brief update on our Intermodal plans for the year. And I would categorize Swift Intermodal as really being a small business and stating up in very large company Swift and I think its important when you do that to lay out where you would like to go and that's the reason I am showing this vision statement we shared with our team and the key points on that is we want to be much bigger than we are currently. We want to grow to be a $1 billion business unit. We want to execute well. We want to listen to our customers and create solutions to build value and ultimate choose us to give more business to. As we do that we believe we will be able to drive superior growth and profits.

From the Intermodal domestic standpoint, I would like to just give you a very brief market overview for those who aren’t familiar with the domestic Intermodal marketplace and Intermodal has been growing very, very rapidly in recent years and if you look at the top graph you can see over the last five years its gone from about 5% market share to about 7% to about 40% to 50% growth rate. The whole is very, very small and if you look at the pie graph below the domestic Intermodal segment on the top is very small and really that four higher truck segment in the lower right is the greatest opportunity for Intermodal to continue to shift freight on to the train.

The big opportunity for domestic Intermodal has really evolved over the last decade is really have an opportunity to create shorter leg of haul freight and move it on to Intermodal and when I was working for a shipper about 15 years ago, you know most Intermodal was transcontinental freight going to move primarily from the West Coast such as Southern California to Chicago to Atlanta to the Northeast where people live in this country. And as you can see by the bottom graph there's been a substantial amount of penetration in that over 2000 mile length of haul band. There's still room to grow that, but there's already been a sizeable inroad which has happened.

The real opportunity is in those bands to the West, which are that 500 mile to 2000 mile especially in that shorter length of haul. And the real opportunity we look at is in the East. We do business in both the Norfolk Southern and the CSX which are the two eastern railroads and they have both made substantial infrastructure improvements that we believe are going to set us up for success. Examples are the Crescent Quarter which in Norfolk Southern originally launched which connect to Memphis to the Northeast and the CSX has created an operation such as the Northwest Ohio and what this is doing is creating more origin destination combination that you can serve at a shorter leg to haul in the East.

The other marketplace that we find very attractive in terms of growth is the cross-border business going between the U.S. and Mexico and Canada and many of you are probably very familiar with the Kansas City Southern and we worked with the Kansas City Southern to move our freights into and out of Mexico and it's going to be a tremendous market force for Intermodal and we're doing the same thing in Canada where we have relationships with both Canadian Pacific, Canadian National and also the opportunity to Service Eastern Canada via Norfolk Southern and CSX ramps in New York.

There is really two big factors that I think are really accelerating further growth and it's going to be high fuel prices and driver shortages. And I think it's probably important to maybe start off with the basic position and the Swift Transportation is a trucking company. As a trucking company, it has a relative small, but growing Intermodal division and ultimately our belief is the shippers are going to make modal choice in terms of what mode will present the best value for them when they look at transit time, cost and service. And what we want to do is when a shipper chooses to pick Intermodal as the best value mode, we want to them to take Swift, and when they would pick truckload, we also want to have them picked Swift and having both of those capabilities in our portfolio allow us an aggregate grow our business with the customers and grow the size of our company and grow our profits.

Now the Intermodal value proposition versus truckload will deepen with rising fuel prices and the top graph is really trying to illustrate that and I have chosen the kind of a traditional Intermodal lane going between Southern California and New Jersey and if you go back to when there was $2 a gallon for diesel prices with fuel surcharges in line haul there is a pretty good value preposition and why you want to pick up Intermodal. As you go to that higher price point for fuel $5 and the fuel surcharge differential between trucking intermodal increases, the intermodal value proposition gets better. And if you believe that fuel prices are going to stay relatively high that’s going to mean that we are going to have continued strong growth in Intermodal.

The other key thing is driver shortages and the transit differential between Intermodal and truckload, if you look at the bottom graph has really gotten much closer to each other over the years and that’s been driven by the railroads understanding the need to invest in the infrastructure that’s also driven by the railroad and companies such as Swift understanding if want to deliver truck like service that we need to execute well and open to get our transit closer to the truckload. And the thing I think is important is back when I worked for a shipper and a third party logistics company there was periods we had tight capacity, it was not uncommon to have freight roll from one day to next because you couldn’t find truck. And if you moving to that type of environment again also and that very close transit time between the truckload intermodal transit really the difference being negligible and I think that’s going to really help us grow.

The other thing that’s important is many of you are probably very familiar with the hours of service changes which should be taking place and get implemented in a likelihood later this year and I would argue that there has been really a state of equilibrium between truckload demand and truckload capacity in recent years and assuming that the economy was to continue with about the same level performance it has, you need to think that it upsets capacity that’s available and is going to create challenges for shippers and we really think that Intermodal is going to be a key piece of filling those capacity challenges.

Now in terms of how you can move Intermodal; it’s basically three choices you have and if some of your (inaudible) I apologize to beyond, this is kind of the three ways to attack the marketplace. And the first option is to pick it by the upper picture, trailer and flat car and it is pretty simply you take a over the road trailer you places on the spine car on the rail road and it goes in and basically single stack configuration and advantages of your trucking company is an easy entry point that we try to get it in intermodal. The disadvantages, the rail costs are typically higher than if you are moving with containers and the advantage in this one other things we like about is, you can have a higher pay load; you can typically scale 3,000 to 4,000 pounds more in terms of payload with the trailer and flat car offering versus container-on-flatcar.

Your second option which Swift also participates and it is a private container-on-flatcar and that middle picture shows some of our containers moving double stacked like the BNSF railway; it does require a capital investment, we have to go out and buy containers and make that investment, you rail race is going to be competitive and lower price point than what trail line and flatcar and the advantages you can typically have better operational control in execution and the reason being is that you are being in on control your own equipment, you control on your drivers typically and it gives you the ability to have a service level. The disadvantages is more complex; you need to be very familiar to understand what you are doing to run it successfully.

The final option is rail lines, container-on-flatcar and that is typically the EMP or (inaudible) programs and that case is no investor required for the containers using the rail equipment; you tend to have competitive rail rates and there is a number of assets to rail charges to come with that. The disadvantage from our perspective is you have less control because you rely upon the rail roads to have boxes available to your customers and most companies choose this path tend to use for higher third party trade which isn't always executed as well as what we believe an asset base model.

The pie chart on the bottom really reflects the relative mix between containers and trailers and you can see the container as the dominant form of mobile transport in this country. The competitive landscape I think is worthwhile to at least call out and there clearly as you look at this graph several competitors two in particular that have much larger market share than Swift does. There's also numerous third party logistics companies that are active in Intermodal primarily through the use of rail and equipment. The good news for us is there's only one active legacy rail agreement in place and about several years ago there was three of them and so what that means is the marketplace has become much more leveled in terms of our ability to compete, in terms of having a quality and competitive rail pricing.

We believe the opportunity for Swift is to gain Intermodal market share in a growing marketplace so as that pie gets bigger and more freight converts over the road to Intermodal that will help us. We also believe that we can take our percentage and we can make it get larger and the reason for that is, there's only a handful of truckload carriers that have significant Intermodal capabilities and we are one of them and we think we can create differentiation because we are really committed to both growing our truck load business and our Intermodal business and that's different than some of our competitors have shown.

Now from an evolution of Swift Intermodal we are clearly a later entrant into the Intermodal space and we had been active with different Intermodal options throughout the 90s, but really the date I would call out is 2005 which was the date that we started to make the move into containers and we've grown our container fleet, I'll talk about that a bit further on, but we are clearly moving into containerization model which we believe is going to be the right long term strategic choice in terms of how to approach the domestic marketplace. In terms of Swift Intermodal today, we are asset based Intermodal provider and our focus is to deliver a premium service door to door Intermodal service offering. We have 8700 private containers. In terms of large fleets we have the newest container fleet in the industry. We have satellite tracking all containers and that's the point of differentiation because not everybody has that and it gives us the ability to have better control and better information for our customers. We have access to Swift 53000 trailers and we can use that for trailer on a flat car service and again that's another point of competitive differentiation and we have 400 drivers who are all equipped with satellite communication.

I would like to talk briefly about our business model and what we are offering to our customers are control and premium servers through an asset base Intermodal solution. So real simply Swift containers, Swift trailers, Swift drivers and technology has been integrated into the solution to provide heightened execution capabilities and knowledge of what's going on with our customer shipments because we know where the boxes are, we know where our drivers are and we can help customers understand where the goods are in the supply chain. We are going to focus upon primarily container and flat car with our own boxes and we are going to define an engineered container network and what that means is that we have a plan in terms of how we are going to run our network and that means we are going to focus on gaining external loads in and out of a given rail ramp and we are going to concentrate upon certain lanes. We are going to have buying targets, and by doing that we are going to be able to maximize profitability in our fleet. As we do that and have more of a disciplined execution, we are going to create great density and that's going to allow us to reduce our trade cost. And that's also very, very important in terms of profitability. We are going to be very focused on management’s real time on the street, and real time is a real simple level, is when you take a box out of the rail ramp with a load on it how long does it take you before you get that same box back into the rail ramp with another load going, getting delivered via the train wherever its going to go to and its critical to ultimately increase your turns which you are going to focus upon having a distant sales approach and executions and managing that all time.

We've talked about our use of trailer and flat car before and we will continue to use our TOFC. We're going to use it in a very selective and tactical basis and the thing that I like about TOFC is to build in go in to a customer that has freight intensity heavier and create a heavy payload solution for them and we had success on selling this to customers in the past six months. I also like to have a close look quays dedicated solution with trailers because the key to making money in trailer and flat car is staying balanced. So if you keep staying balanced you have kind of a close, loopier running your trailers and you are running a higher payload, you can make money and deliver great value for customers and that’s what we're going to focus on. We will also focus on those customers that have value flexibility and integration with our truckload solutions. So as an example, if somebody wants to have an expedited service from Los Angeles to Chicago and they have integrated the longer tray (inaudible) team service, once you get to Chicago, that’s something we will pursue. And again that’s a point of differentiation that we can execute but not everyone in this industry can execute. We are going to focus on a high usage of Swift Power and drivers and Swift Power or the use of our tractors, reduce our cost, improves our service reliability. In this past quarter, we were at about 60% pick up in delivery of (inaudible) with Swift Power and our goal is to grow that.

As we finish our bid season lined up, we understand those markets that we're growing and we're going to A, redeploy our fleet or more likely recruit more drivers to fulfill those markets we're having growth because our goal is to make this percentage much larger. We will engage in slips any of our trucks and increase our return on net assets. By slip seating that means you have a driver who is working on the truck today. He hits the end of the shift at the end of the day. He pulls into the park point. Another driver will jump in the same truck and he will drive it throughout the night to get a better return on the capital he invested. We do have light weight tractors and we will deploy those in market places where there is heavy weight freight that’s not going to move via trailers but move via containers, and by doing that we can get another 2,000 to 3,000 pounds above what a typical container solution can do and again create differentiation for a customer and solution for our customers.

We have started to focus more upon the use of owner operators and we experiment with owner operators in Q4 pf last year and I liked the result in terms of how it played out in terms of miles we gain on them and the cost for us. And so we are going to focus our growth of our own trucks through the use of owner operator model for the balance of this year and that has to change more we work, but we think it's a great way to bring in capacity this reliable and not have to invest our capital to do it so that would be focusing on. Then the final thing is we will continue to use third party (inaudible) to really gives us flexibly have more demand and we are going to focus on using third party tray carriers that are EDI capable and what this means is we can have electronic interchange with them, have a better service solution understand, where those carriers are and communicate with them.

Now Swift intermodal really had a turning point and the graph reflects we have done from a container count standpoint and you can see that we basically have doubled our container fleet size in last three years, the projected 2013 number of 8717 containers is likely going to be the number of containers we are going to have through the entire year that’s how many containers we own right now. And we have been growing rapidly but not at the profitability levels we expected ourselves and what we need to do is really move out our call as to speaking in the start up phase and really focused upon, how do we get bigger, how do we get more effective, how do we continue to grow, but how do we reduce our cost and improve our profitability and so to do that we need to go out and really understand what we need to do to establish the system, establish the right organizational structure and were processes to help us standard growth and rapidly improve our profitability.

Now to do that we are going to really focus on developing intermodal expertise and I am believer the results are focused and so what we are going to do is intermodal experts focusing upon intermodal. As an example if you are in a trucking company and you have a customer service perhaps who is handling lot of truck of truck load freight and an occasional intermodal load there is nothing differences in new nuances you need to understand with intermodal you probably not going to be that affective. So the example we are starting to concentrate customer service and in intermodal so we can have enter more expertise to play out of our time that we move a lot for our customer. We are heavily focused on dry execution and cost improvement and we have made several talent improvements for our operations group we have shifted people, we are breaking operators else where in the company in to intermodal because we think that is the key thing that need to do to get so much higher talent level in the operation and that is underway and has been done.

And we are also moving into a single operating system to manage our dray and currently we had made some choices were good choices and we are trying to start the business from scratch, but we’ve hit the point where we are large enough so we need to move in to a different operating system, is going to be lot to be more affective. And so we will have by the end Q3 as our target to have implemented our new operating system will have optimization capability and all our [three] operations going in one system as you get into better position in terms of managing our execution managing our service and managing our cost. Network and revenue management is absolutely critical to the intermodal money making model and we have sources department up that really was we didn't have the department six months ago and we have done some things like shift pricing from a shared service corporate function into intermodal and that is obviously have a better understanding of our cost and reprice business.

We have gone fourth and done a network engineering model and this is really important, Q4 of last year we had a group to help us in terms going and answer a very simple question for us, with 8700 containers how do you maximize profitability, what are the ramps you run and how much buying do you start to push in and out of each ramp and we have conducted that work, and we are using that as basically our sales blue print that would (inaudible) what are the ramps you run and how much buying you are trying to push in and out of each ramp and we’ve conducted that and that will and we are using that as basically blueprint that we've been working on throughout the year and that's a key thing to really drive profitability improvements.

Our network team has been built out and their job is to really have some analyst to go in and look at our execution, truck execution after you pull off a rail ramp and understand how can you drive empty miles out of an operation, how can you put different loads together, your better loader ratio and its all about finding ways to improve our cost and so we've had some great work so we can start to resource that teams at the end of Q1 and we are starting to see them identify opportunity we are working on right now to improve that trade cost. We also have some analysts who are going in and their sole job is to look at freight and assess are we making the money we should be making on it and it falls into pretty simple things, are you running the business the way you priced it. If not start running the way you price it. Are there opportunities to reduce our costs, are there opportunities to book different pieces of business together. Its all focused on making sure that we thought a piece of business may have 8% margins we are getting at least 8% margins and being very analytical in terms of what our opportunities are to improve that.

Container turns and chassis cost absolutely essential and we bought about 2500 containers from last year and we are not going to add new containers as of right now in ’13 I don't see a change in that position at all off the balance of the year and the reason being is we can move at least 35% more freight with the container fleet we have and so what we need to do is take the investments that we've made we need to fill it up with freight and ultimately use that to drive our container trends up and as we do that our chassis costs which are basically wheels that go underneath the container, those costs go down because we have the boxes on the train more versus being on chassis on the streets which is the key part of reducing the cost. The final thing I think is important to call out is real cost and you need to absolutely have a good real contract in place if you are going to compete in Intermodal make money and the good news is that we do have favorable contracts and favorable rates in place of all rail providers and that pieces really that core foundational aspect that needs to be their in order to be successful with Intermodal.

Our objectives for 2013 for us and I've touched upon some of these framework so I'll be relatively brief. But we need to focus on revenue growth with our existing containers and this is what I would affectionately call good season and we've a lot of bid activity underway and we are still waiting for some of the awards that should be finalized but so far the initial awards we've received are very favorable. And so we feel very good about we are doing from a growth standpoint and getting ourselves on the freight that would allow you know make money and run our business effectively. We have a shared services sales team approach and by that it means that our sales team is selling truck load dedicated Intermodal and other Swift services and what we are going to do especially is that third point and hours of service starts to takes place is we intend it to use our truckload capability and capacity and use that to leverage our way in to persuade our customers to give us more Intermodal volume. We've been doing that already and we are starting to have success with them and that's something we want to build upon. The question is absolutely essential to profitability and I would argue that the price is probably the single most large determiner about whether you are going to make money or not make money and we are going to be extremely disciplined than we have been in the marketplace in terms of understanding what is the price point that we need to be at to make money and we are being disciplined in our approach to bids, we've disciplined in the marketplace and that is going to be a key factor in improving our results.

And then the final thing is cost and you improved your costs and improved container velocity, buying growth and through execution. And so it’s very simple formula to make money and very (inaudible) focus upon doing right now. So to sum things up we are clearly growing and on the right track. We've made a sizeable equipment investment and it has been completed. We are going to get the return that we expect all the investment. We are going to continue to refine our work system and work processes so that we could run effectively in a low cost manner and we are going to focus upon profitable growth which means understanding price, understanding volume flows and control on the costs so we can deliver the profit that you all and we expected ourselves.

Ginnie Henkels

Alright. Thank you, Steve. As you can see, we're excited about this line of business. I am very excited to have Steve on the team. He has brought a lot of talent in to the operation for intermodal and we should see marked improvement going forward with the plan. The next thing that we're very excited about is Mexico. Jerry and I were in Mexico. I believe it was the end of January and we called on about 50 plus customers in a short period of time and it really opened our eyes to the power of their GDP assembly product in Mexico as well as the ports that are sending northbound business and so we're very, very excited about this opportunity. We run a very, very good trucking company down there. Excited to have Mauricio come up and share more about our organization down there but if you look at the crossing in and at the market, we're only 2%, again of the market. So there is huge opportunities down there and we believe with our technology, with our safety and security, with our talent and people and our customer base on both sides of the border that this is an incredible opportunity for us and we will turn the time to Mexico or to Mauricio to talk to Mexico.

Mauricio García

Thank you. Good morning. My name is Mauricio Garcia I am in charge for operations in Mexico for Swift Transport. And we're going to talk about this morning about the opportunities we're facing right now in the Mexican market. Okay, the agenda will be, (inaudible) will now show some numbers about the United States and Mexico trade statistics. United States and Mexico also transportation statistics, presentation risk about Trans-Mex and also follow for statistic and our customer base. Why it's important to mention first of all that Mexico the third largest trade partner that United States have for Mexico United States is the first trade partner. And if we look at the amount of the trading 484 billion, but if we go to the amount of EMA, if we go to the amount of goods that Mexico buy from United States is basically the second trade partner that United States has. We go to the next slide, as we can see on the last six years, the amount of trade goods between United States and Mexico has been growing year-over-year for last six years about 49% since 2006 to 2012. All this trade is basically the clear majority of it is done through trucks over the road, 53.8% of the trade between Mexico and the US is done by truck and then through containers, rail and some other transportation methods.

In all this trade during the past year 2012, there were over a 5 million trailer across between Mexico and the US, 88% of it is divided in six point of entries the first two of them are in Texas, but the first six borders are mentioned it’s here. (Inaudible) has operations in terminals in all those borders. Okay, if we go to next slide is that we are going to talk about Trans-Mex. Trans-Mex is a company 100% owned by Swift with this Swift kind of the only US basic carrier to own a Mexican carrier basically of this size of over 600 trucks. Currently we have 664 in our entire fleet and we expect to add between a 100 and 150 more trucks before the end of the year. Trans-Mex also had been successful already year-over-year is such in 2009 of course as mention already Unites States is the first trade partner for Mexico so we were affected by that also not as much of the statistics on the country but as a company we are doing very well and year-over-year has been growing enough revenue.

On the next slide, excuse me, all the terminal we have 11 terminals all over Mexico and we are the only company that have presence coast to coast between the main port of entries between Mexico and United States. All over the border we have terminal the same terminal we have the same operations and the same systems in both sides of the border. And of course we have in opening in Mexico City which is an industrial area for Toluca and also with that for dedicated onsite personnel and trucks and trailers in different other places on the country.

Okay. The services we offer Mexico is full truckload; we have flat beds we have temperature controls wafers, Intermodal of course. We offer also body crossing services at the main part of entries. Customer brokerage, driver wage services, management, B1 drivers and of course hazardous materials which is specialized.

We probably about (inaudible) during 2012 we performed over a 107,000 trailers crossing both sides of the borders. This represents 2.1% of the total market so rest of the market between Mexico and United States. However, well we have all these terminals, best in class safety and security, state of the art facilities everywhere in every single terminal that we have in Mexico; we have robust security and safety procedures. We go the extra mile than our personal certification and of course with all of this we have the strongest structure with a weight capacity and we are prepared for the robust Mexican economy to grow.

On this slide, we have a general explanation about regular operation on north bound, once a customer is scheduled to require a pick up and into the Mexican and this case there no run out of the Mexico City market; once they schedule it we pick up the load, take it to the border. We keep it arrival right to our border security or secure facilities of the border and wait for the customs clearance. Then after we cross trailer into our facility on the US side and then it will be scheduled according to our customer requirements. This process it might take across the border it might take minutes, it might take a few hours that depend on the customer and also on the custom broker clearance and after that there is the schedule delivery between the 48 continental states and also Canada.

The next slide is for customers we serve in Mexico, between Mexico and United States. Next slide have our summary about Trans-Mex; Trans-Mex is 100% home Swift competition; we have 664 trucks and we expect to grow to 750 to 800 trucks by the end of this year. We have a long terminal for all Mexico, first in class maintenance and loading facility. We also have satellite communication that creates seamless visibility between US and Mexico 24/7. We are C-PAT certified. We have expedited border crossings. We have commitment to future growth in conjunction with our customers. We have a very high significant opportunity for future growth by the implementation of Swift guiding principles we have developed great, team of great leaders for the challenge of today and tomorrow. Thank you.

Richard Stocking

Thank you, Mauricio. So again, the takeaway here is that there is huge opportunity in Mexico. We have a tried and trusted and true executive team, leadership team down in Mexico. Our security is second to none down there. We are able to single source a lot of customers because of that security, because of those processes, because of these leadership leaders. I would tell you there is few people that are as trusted as much as Mauricio and his team in the country of Mexico and that really helps us when we look at changing their process to match the processes that we have at Swift and they have the same transformation, the same Lean Six Sigma disciplines of execution and leadership trend that we have on the U.S. sites. We're very excited about the Mexico opportunity, both on the truck side and the intermodal side as Steve has talked about.

So let’s go up north and talk little bit about Canada. Canada is a very small piece of our business which I will show you in just a second, but great opportunities for us going forward. You can see that we're only less than 0.5% of the market today. We have three fleets that run from the U.S. borders in to Canada and load freight there to come back to Swift trucks on the other side. So we can’t have the same process we do in Mexico up in Canada. However, we just started to hire sales presence in the country of Canada, we want some very good business with key customers in to Canada and we're backhauling that now out of those provinces. And so we're very excited about the opportunity that presents itself there, as more and more of our customers are moving to Canada and setting up shops. So Canada is another opportunity that we have to grow.

The other, the next one would be logistics and this is another exciting opportunity for us as well, we sold our stake in Transplace a while back and was then able to re-establish our brokerage and our freight under management systems within the organization. You can see that we are barely a blip on the map, but I will tell you that to our customers are very excited to have a asset based provider have these logistics opportunities and this software and technology to help them out, whether it's brokering a single load or taking over the full transportation department from OTM to kind of a lighter platform on brokerage, so just talk a little bit about that.

So if you look at the growth of GDP versus the (inaudible) growth over the last decade it's outperforming two or three times, and we are excited about this and see that growth opportunity within Swift. So Swift logistics, our purpose than to provide this value or this service offering to the customer; we want to be a $1 billion in revenues in 2017. Now we are going to do that two ways, we are going to do that through the total transportation solution, as we have bought a TMS system, so we can broker a freight, we can send out bids, we can pay carriers, we can do all these types of things, they can actually go and pick and choose different items that they want from this system, that we can actually help them with. The other obviously is to pick-up opportunities from over booked markets and put those on third party carriers.

So the 2013 outlook is aligning our people and our processes; we have hired some very good talent in this division and we are seeing that start to pay dividends; great industry knowledge that helps us to get very organized not only with the third party carriers, but really the systems the processes and the mental model for the brokerage and the OTM. So we want to at least close to that 60% growth, our on time average with our third party carriers is 98% to 99% on time, so we have very good quality and we won’t do business with folks that have multiple CSA alerts or unclear delivery problems or so on and so forth, so we are very focused on a very pure fleet and we hold them to the standards that we hold our own trucks and our own operators too.

So phase one is to focus on the low hanging fruit, which we are, we are bringing in the lot of business through the brokerage side and we are currently selling the transportation management system, the OTM system to our customers as we speak today. We have a very good pipeline that we are working and expect the growth in that area. We also are hiring the right people; if we understand leadership and we understand putting people in the right seats and we understand helping them align themselves and we’ve done a very good job over the couple of months there. Phase two is the expansion, excuse me to grow and we want to help differentiate ourselves through our services our hope of portfolio and our network which we believe is very robust and I’ll show you in just a second.

The other thing we have brokerage, onsite brokerage in some of our customer service centers and looking for Greenfield brokerage locations across the country as well we expand this and not just in U.S. but also Mexico and Canada. And then our line shippers; I need to mention that, I mean if we get into the warehousing piece and those types of things we have very good partners that, we have relationships with that will help us to that front. And then finally phase three, this is another area where we have a $1 billion growth goal, right. I don't know if Steve mentioned it but we have a $1 billion growth goal on the intermodal over the next few years, a $1 billion growth goal in logistics over the next few years and we believe that we are positioning ourselves and we are poised to take advantage of that growth.

All right something near and dear to Jerry’s heart, the teams; we plan to grow 300 additional teams this year in 2013. These teams will be HAZMAT certified that can haul for customers that require that HAZMAT certification. We are on our way and right on plan for the first four months of the year in this growth and we have a person that set aside their in Phoenix who is leading this charge; who has accountability and control centrally of all these teams throughout the country.

Okay. Now we go on to the next slide. This is customer care. This is something that we don't take for granted. We understand that the customer has to have outstanding experience when they deal with us. From the time they pick up the phone and call or they send an email, an email or its on time pick up and deliveries, spending good profile courteous drivers to really coming to them with value added opportunities, not just that we have the power, the trailers or the trucks, but really how do we optimize their network and use our network to really build win-win solutions, best in class transportation solutions.

They are looking for that, they are looking to sit down eyeball to eyeball and create that relationship. They want trust and what that trust is really the integrity and the intent as well as the capabilities and the results that you've produced and so we are hyper focused on that so that we can move along. We feel like when we have that trust with these customers and we are performing for them that we grow very quickly with those folks and when you don't have that trust and you don't have the capabilities or the results or the intent or the integrity you start going back the other way.

So our terminal network; this is something that really sets us apart in the industry. We are very close to our customers. We can respond in a very quick fashion to their needs, to the trader pool needs to sitting down, having them come and visit the terminals and see what we are all about as well as we are close to our drivers and where they live and we, this infrastructure helps us keep our retention higher than maybe most. We look at industry average. We look at where we are at and we feel like we are doing an incredible job on retaining our drivers and we want to continue to utilize the network for our shippers and our driver customers.

Now this is fun snapshot and this is in time, this is every dot on there is one of our trucks. So you can see we have a very dense network. When you think of customer service if the load goes down and you have a mechanical issue you know that there's other trucks within the area that can then come in and pick that load up, drop and swap loads and that load continues on to service the customer. So this network is very advantageous to us to take advantage of spikes and also trader pools as well to get our drivers home.

All right, so our strategic focus teams, I talked earlier about how we as an executive team look at strategy in a different way. We bring these strategies back to the strategic focus teams and they take them to fruition and implementation and so everybody is involved; we have folks at all different kind of levels within the company and also all over the country that help with the strategic initiatives. So one of the teams is to improve our driver recruitment and if you think of a funnel, we have huge amounts of drivers at the top of the funnel and the time they go through all of the process and get down to the end, it's amazing how many drivers have fallen out of that funnel and we're finding that was because of some of our issue. We had an online system that was very cumbersome and clunky and lots of people gave up and certain other items all the way down through the funnel. Well, this strategic focus team is working on streamlining that process and speeding up that process to help the drivers get in and get in quickly and so and appropriate weather items that they are doing relative to driver recruitment.

On the other side, we have a strategic focus team that’s focused on retaining our drivers, creating a friendly driver touch point of every step of the way. From the phone call, to the QUALCOMM messages, the communication inside the truck to the regions that they run, to predictability and their home time and their paychecks and those types of things, to incentive programs and we're really finding that we're able to hang on to a lot of our drivers. We had a celebration the other day of our diamond drivers throughout the country and the amazing thing that we've seen afterwards is just the flood of emotion and excitement and pride that these folks have being the elitist Swift and as the new folks come in, they want to reach that status, because when you reach that status you get a lot of different things and they produce great results for the organization.

The next team would be to increase our revenue. We said 10%, $275 million to $280 million, how do we do that? So in addition to just a couple of these items there are 15 other items that this strategic focus team has come up with that we have now sub teams working on to increase these revenue. As we have talked down through the different lines of business and the different opportunities associated to revenue these teams are actively engaged in helping us achieved those results.

So let’s talk about our targeted growth and we shared this slide before, but back in 1990, we were truck, right. We grew and we added dedicated intermodal and we did have some logistics before we combined to form Transplace; but 2012, this is where we ended up, you see our truck pie, you see the red intermodal, red dedicated, the green intermodal and the purple is logistics. Now as we go forward and work with our customers and grow in 2017, this is the pie that we want to have. Now trucking grows, but so does these other service offerings in a major way, so that’s where we’re headed, that’s our vision.

Alright I have got five or six slides left here. So this is the steps. These are the steps that we are taking towards revenue growth. We know the market that the fragmented; we know that the market is growing, we are targeting new customers, we are very proud of our sales force and their mindset to really go out and bring on new business and not just keep the existing focus going. We also believe that there is tons of opportunities, if you take your mind back to that slide of our existing customers, tons of opportunity to continue to grow with them and to improve our asset utilization.

We have talked about fleet growth and how do we do that. We do that through utilization of the existing fleet, we also do that through truck additions. We talked through the different lines of business that we have and teams, acquisitions, something we didn’t mentioned. At the beginning, we talked about acquisitions being part of our and in our DNA and part of our growth back in the 1990s. We are constantly looking for opportunities that are out there for acquisitions; could that be in Canada, could that be in Mexico, could it be, as the temperature control our business several different areas that we would looking at to grow and build out and continue to build out. So acquisitions someday could happen again here in Swift, and then I leave this up to that 10%, so these are the steps that our team throughout the organization are working on.

The three pillars okay, we talked about this slide as well, so I won't spend a whole lot of time here, but profitable revenue growth. If you lead with anything I understand that our foundation is built. We now understand that how we can grow and grow profitably. We are going to grow that through our existing customers and new customers. We are also going to make sure that we are leveraging that those suite of services that Steve talked about to fill out areas where we need to work on. We have a whole team, network team that have the studies around the country of where we should go, how we score card everything right from, never mind I tell you all of them, because there is a lot but, we know from the velocity to do the weekend freight to so on and so forth every area and so every customer, every lane and we are getting very, very disciplined in helping that bottom 20%, 30% of our business elevate right, so you increase your rates that way, and improve your velocity and your lane flow, your seasonality that kind of thing.

We are going to grow the assets like businesses that we have talked about today. And then the customer care option there. The middle is to improve our asset utilization. This has been fun, because we've shattered the old mental model that this is all one truck can do in a day, correct we talk about innovation and it maybe even disruptive innovation in different lines of or departments in our company to help us move more miles on these trucks and not get focused in on what's happened to the last 50 years. There's a new way, there's a better way and we are exploiting that. also the owner operator program as I said Jerry is very passionate about this program, these drivers drive very safely, they drive lots of miles, they give great customer service and we have a very good process and a career path for these drivers. We believe that sets us apart in a lot of different ways. On the right is our continues improvement, that's the other thing I would like to leave with today is that we will never stop improving or innovating. We believe that the best ideas haven't been thought of yet. We have people that are constantly looking at processes and constantly looking at ways to improve.

We think that as we keep innovating and really understand disruptive innovation a little bit better. We will set new heights when it comes to best-in-class and we are talking best in class in every department right and that's hard to do and that's a bold statement and we understand that. But we are committed and we have the power and belief within our organization. I think several of you and I have heard from a couple of you today have talked about meeting some of our people at lower levels in our organization. And they could stand up here and say exactly what I'm saying today. The water has gotten to the end of the road. They understand our vision and they understand how they can, what they can do to help us improve and I would challenge any view if you see any of our folks asking these questions. That’s the power that's going to move us forward. We believe we are going to get to where we want to go and when you look back to that revenue growth, that EPS growth in the (inaudible) and the leverage and what we told you we would do and we backed it up and we over exceeded. We are going to continue that focus going forward. We are fanatically disciplined on our execution.

The last three slides here I want to show you that, its worked right, so if you see the change in weekly revenue excluding fuel surcharge and you see the blue line of Swift and we have a red line that's an average of few competitors. We've been able to outperform on the weekly revenue. Are we satisfied? We are not. We are dissatisfied in a good way. We want to continue to push forward there. Same with weekly loaded miles, right, utilization, you know we are able to increase our drivers’ paychecks by helping them run more mile. It’s not just rate that you give them, it’s the miles that they can run while they are out there working and you can see we've outperformed with these loaded miles. The next slide is the dead head percentage. On the top line is the competitors and on the bottom line is Swift and you can see that we through our network engineering and loading our trucks where they land and making sure they are going to the right directions right at the head haul markets you can see that we've done a great job in reducing our costs, reducing the empty miles that we are not paid for.

Now this is pretty powerful right because our people see these results and believe they can do more. So it’s exciting to see the results come from all of the work that we do. This is my last slide and I just kind of want to mention a little bit about our process here. We believe that it’s important that we build leaders within our organization at all levels. So first to inspire trust, okay that confidence and character we talked about earlier, the integrity, the intent, the results and capabilities, we also believe that there's nothing faster than the speed of trust and there's true economics that come from trust. We also believe that we should be very hyper focused on our purpose and our purpose needs to be hooked to a job to be done. Whatever that is in the organization, we understand that job to be done and hooks to those strategies that we talked about which hooks to our money making model and we top our folks are money making model. So if you see a team purpose in the middle, picture job to be done, strategic link and the money making model and that’s what our people are focused on that purpose and then we believe to a align systems, to focus on the most important, to act on the lead measures that you can influence every week and are predictive of future results and scorecards. It's funny how people play differently when there is a scorecard sitting right outside or where they get their work done and the one thing that we've done and discipline is we have, we provided a cadence of a accountability every week to help move towards our goals and objectives and then we understand how to solve problems within the organization.

We taught our people, when you see an issue like Steve talked about in intermodal, this is how we solve those problems and so now we have thousands and thousands of problem solvers out there every day and we have lent them the trust to get those things done. So our foundation is built. The theme here is that we're ready and we're positioned to grow. I think you saw that in the fourth quarter when there was a ton, a freight that came in. We were really able to handle that freight in a very good way and produce some very good results. We think we can continue to do that as we get a little bit of help in the economy. And then again just to reiterate, our goals, 15% CAGR between now and 2017 on EPS, improvement on our RONA and our deleveraging opportunities which we've exceeded in all those area base. And with that, we will turn it over to Jennifer for financial summary.

Ginnie Henkels

Let me start with thank you all very much, we really appreciate your time here today. For those on the phone we appreciate your time as well. We really appreciate your support at Swift. We are going to start today by talking about these long term financial goals that Richard just mentioned and how they are aligned to with your goal to create shareholder value as well as how they are design to work together and what we look at internally. So we think of these goals at years and are the execution of our strategies, all those strategies that Richard just talk about are the lever that turn these gears, so when we look at our earnings per share growth and what we do internally, that revenue growth helps us get to that earnings per share. The discipline in the cost control that Richard talked about enable us to expand our earnings per share as well as asset utilization, all of these things together enable us to achieve that 15% earnings per share that Richard mentioned and expand our net income.

By expanding our net income and continuing to focus on our assets, looking at every dollar we spend and ensuring that there is a return on that investment that we are able to improve that return on that asset that also enables us to generate free cash flow. That additional free cash flow were then able to continue to reduce our debt and our leverage position and then also helps us actually reduce our interest expense as well, which then continues to turn the earnings per share growth gear. So these are all intertwined they are all working together and they are all something that we are focusing on. And you can say there is a lot there is but one of the keys we think to maintaining this momentum is by making sure that we are aligned and our goals are aligned with each one of these major levels.

So if you look at our earnings per share growth, our internal cash bonuses are tied to revenue growth that 10% that what you talk about is earnings for share growth so this is not just really executive team this is for our first family throughout the organization, everyone is tied their cash bonus is tied to this two metric. On the front side we don't want to just focus on the P&L and we want to make sure that we are looking at those assets and managing those assets and the investments that were placing in the business, so Richard talk about our well the important goals swift is our return on net asset so what that means is that every person in our organization has the goal that within their circle of influence is something that they can work on everyday, something they can influence and they can measure. And our those individual goal are line we do a pretty detail process to make sure that all things are lined to improving our return on net assets, and as Richard mention as well we have weekly cadence on accountability so we are hoping ourselves the cannibals are making progress on our this goals.

So we will leave that with the focus we put on here that we have aligned ourselves and we are making improvements and we have this gears of emotion Richard talked about, and so our goal now is to keep that momentum going. My next few slides we are going to talk about leverage and my key take away here is that we have made tremendous progress on our leverage and I think we need to pause for a moment and understand how much progress we have actually made. So when we look at our leverage ratio here, we actually have reduced our leverage from 6.35 times in 2008, to 2.64 by the end of the first quarter of 2013, so a significant reduction in our leverage ratio and I would say if we just look at 2.64 there's many companies across this country that you target 2.64 or something in that range as their ideal leverage ratio so that is their part of their capital strategy. And I would say you know there's portfolio management of investors out there that you probably have companies that you are investing in today that has this type of leverage ratio and it’s not even a concern for you.

So when we look at that I think Swift has a perception issue that we have people here at Swift they think leverage. And I think we need to recalculate that perception because we have made so much progress in such a quick period of time that we need to pause for a moment and say is this really an issue and I would argue that its not. So if we look at our debt position we had $2.6 billion of debt in 2008. We ended the first quarter with just over $1.4 billion. So we've reduced our debt position by 40% and if we look at where it was actually going on in 2008 and 2009 and I'm sure you all can vividly remember this right so 2008 we had $2.6 billion of debt. Our revenues were declining and GDP was negative in 2009. So we were able to manage that debt and I would say manage it quite well even given the environment that we were given.

So we have now as I said reduced our debt by 40% and we are in a much more stable environment. So GDP is growing, its not as robust as we would like but it is growing in a much more stable and the debt we have today is more than manageable. And the thing is true for interest expense so with the repricing that we did in the first quarter as well as with the debt repayment that we made our run rate for interest expense is roughly $100 million. So this is less than a third of where we were a few years ago so when we think about that and we think about the additional free cash flow that that gives us, we have ample opportunities to continue to repay the debt or invest for future growth.

One other topic on the debt that I wanted to address is our covenant. We do have two financial covenants in our credit agreement, one is maximum leverage ratio the other is a minimum interest coverage ratio. As I mentioned our leverage ratio is 2.64 at the end of the first quarter and given where the covenant was set in the first quarter we actually have 27% EBITDA cushion. So in numbers that's a $150 million of EBITDA cushion and do our leverage ratio maximum does step down over time but even if we took where we were at the end of the first quarter we would still have well over 20% cushion in this ratio. The same is true for interest coverage ratio. We actually had 42% cushion in this particular metric. It does continue to step up over time as well but again given our position of where we were in the first quarter apply to that tighter covenant we would still have over $230 million of EBITDA cushion and $75 million of interest expense cushion in these metrics.

So we believe that these covenants are not an issue. Our cash flow is not an issue and it’s something that we really need to consider when you are considering Swift and whether or not the leverage is an issue for you. So one other thing before I summarize I wanted to spend a moment on a question that we are often asked and that is whether we were consider showing equity to use the equity part in our senior notes to be able to take a portion of those out. Our answer for the last year and half or so while we've been asked this question is that we believe to be in the high teens for us to even consider that. So this is some pretty simplistic math. Obviously, there is some other things that you would consider here but this shows that that transaction would be $0.04 dilutive at the average stock price in April. And so given what I just talked about with regard to our leverage position, this is not something that we would consider given just to be able to reduce our leverage. So we're not going to do something that is a dilutive transaction solely for the purpose of improving our leverage position.

We have plenty of free cash flow; we're able to do that. Just through the operations, we don’t need to do this type of transaction. Especially when you consider that in May of 2014, these notes are callable and if we call them at that point in time, and just do that just swapping out the debt refinancing that with the term loan, it is very accretive and so I understand that there is much more that we need to go to in to an analysis and a transaction. These are sort of the end post. They are not an apples-to-apples comparison. There is other things like interest rate risks and other things that we would need to consider but the key point here is we're not going to do something that is dilutive or helpful for our shareholders solely for the sake of reducing the leverage. We will consider as we have been, all options that are available to us but we will only do something if and when it makes sense.

And so as Richard talked about, we have been making great progress on lot of our operational targets, our utilization is improving, our debt had is decreasing and there is many, many other things going on within the organization. That are helping us achieve our results, you can see here this is similar to slide Richard shows, but this is our adjusted earnings per share year-over-year, the year-over-year growth percentage compared to our peers and we are outperforming on the bottom line as well, as a result of the execution of our strategy. So to summarize I want to leave you with the few thoughts. The first is that our incentives in our focus are aligned with your goal. Secondly our leverage should not be an issue, our cash flow should not be an issue, our covenants should not be an issue and anything we worth to do with the senior notes should not be an issue.

Our financial performances improving, our return on net assets is improving, we are making progress on our stated goal, and yeah, we still continue to trade at a discount. So I ask the favor of you and that is as you leave here today and you are pondering various things over the weekend, think about whether or not this discount is warranted because I would tell you that the thousands of people we have in our organization across the country who are working hard day-in and day-out to achieve this results, do not think so. And so with that I give it to Jerry for a summary.

Jerry Moyes

Hi thanks Ginnie, just in summary, we have talked about from 1990 those to ‘07 during that period we grew 20% top line as well as bottom line. This company knows how to add shareholder value, if you had bought our stock to that period you could have an 1800% increase in those 17 years. From ‘09 to 2010 it was tough environment going through a public offering, taking things private and then since our IPO in 2010 we had dramatic operational improvement very good growth and earnings per share.

This is time first time since growing public we talked about growth, we can add 10% growth to new customers probably most important areas existing customers, we have huge opportunities with the existing customers. Our intermodal, some of the sold timers in the room and I won’t say anything about John but I remember this conventions when JV hunt was up there and they would say if you just get out of that stupid in the mobile business and focus on trucking, what are you doing with that well liquid they are today and we are the new comer in this mobile. We have only been in the four and five years, but we think we have got great opportunity in it, it’s a long term strategy that we are going to get there and we are very excited about that was Steven’s group is doing. I really want to compliment Mauricio he is a little nervous skin up this morning but he did the great job well thank you very much Mauricio.

And for you our Collins folks I can tell you, when Richard and I went to Mexico as he talked about we have the right people on the bus stand and we got them in the right seats, we have great people in Mexico going along with our great customers. And one thing keep in mind in Mexico when Mauricio talked about 83 million of revenue in Mexico that is only 30% because 70% of that is on US side. And keep in mind we have zero debt when we drop and pick up at [RENO], so this is very, very important and our goal is really excited. Richard talked a lot about logistics been in a big assets carrier yes we are, and with our new systems that we bought, I can tell you we are very excited about getting more and more involved in the logistics business.

We talked about EPS and growth and EPS and we told you our goal is 15% per year CAGR. I don't get hung up on these quarter-to-quarter-to-quarter, whether the fuel is going to go up and missed a quarter a penny or whatever it is. I can tell you we are long term growth you know if you are looking for a stock that's got long term orientation, this is kind of to be in. We talked about Arona; every person in this company is very, very focused on (inaudible) and Ginnie has done a great job in talking about our leverage. One other thing is keep in mind its public information that me and my family have about 50 million shares of this stock. One thing that hasn't come out is our management team has options with over 4 million shares of this stock and I can tell you that we have all, we all have exactly the same goal as you do and that is to maximize the value of the stock.

So with that, we will turn it over for questions. Yes. Ginnie is going to say something further.

Ginnie Henkels

So real quick we know we are going to get certain questions, so I just wanted to address it first so you don't have to bother asking and that is with regard to the IFS report. So you are probably aware that the IFS issued a report on April 22nd with a recommendation as a four vote for all of the proposals that we had on our proxies. The team serves issued a letter or actually published a letter that they sent to us, you know, the following week and then IFS changed their position with regard to our directors excluding Jerry and recommended a withhold vote for our four independent directors. The issues raised were regarding related party transactions as well as pledge our pledging policy.

You know some of the information in the team’s letter was inaccurate and we are in the process of addressing that letter today and we have contacted IFS to understand why they changed their position. We were pretty shocked by this change in their position as well as just trying to understand what the basis for it was. They have not yet responded to our phone calls.

And so just to clarify we have trading policy that does limit our pledging transactions to 20% and then as a policy, all of our governance policies were put in place when we went public back in 2010 and it was all disclosed in our perspective at that point in time. Everything has been disclosed all the related parties everything else has been disclosed from the perspective and each SEC report going forward, so its no new information, nothing has changed within those policies. It is standard practice.

So we do have a pretty robust related party transaction approval process as well. Those transactions need to be brought to myself and our General Counsel for approval and then it goes on to all the independent directors of the board to ensure that there aren't -- that there's no favorable treatment there and all of that. So I just wanted to clarify that first, just to explain that there is no change, everything as always been fully disclosed and we are not sure why IFS changed their position, but we will continue to pursue that.

Richard Stocking

So I believe we have a microphone in the back that we can hand to people who are asking the questions so that people who have dialed in can hear. So wait till you get the mic so people on the phone can hear your questions. Go ahead we can start with one.

Question-and-Answer Session

Unidentified Analyst

(Question Inaudible)

Jerry Moyes

Let me start; one thing that is a good question, how to grow 10% at 2% GDP. Keep in mind that our customers are growing pretty dramatically, but keep in mind, as a rule of thumb we potentially could haul every load three times. We haul a load raw materials into a manufacturing facility like Proctor & Gamble. We haul the finished product to a Costco distribution center and from there we haul to a Costco store as an example. So we could haul the same traffic three times. So growing, we are aligned with customers that are growing faster than GDP and we could have a multiplier effect on the driving.

Richard Stocking

Well, I mean to reiterate what Jerry said plus, you know, we have specific goals on the rate utilization, you know, those types of things to help us get there, but more importantly we're forecasting with our customers that we’ve sat down with those folks in different lines of business as we talked about and we set goals to get to this year with several of those customers now. We're not all the way there yet obviously. We've gone through bids. We understand what we want, what's coming in to the hopper this quarter and going forward. We've been pretty darn successful in these bids. We've also gotten freight back that we may have lost some in the first quarter because we held true on our rate or increased and the customer experience with a different provider didn’t work out, so they came back at our rates and we believe that we will continue work with some of that going forward as well.

Unidentified Analyst

(Question Inaudible)

Richard Stocking

Yeah. So pricing is tough. We will tell you that, you really have sell value right, so I would say it's little bit of both I think we do things inside of Swift that are helping us win some market share, but I will tell you that the pricing is tough out there; we are seeing some pricing activity with some companies out there that we don't like, can't understand why they are doing that? But we do know that the value is sell to some of our customers, we are able to get rates maybe that are higher than what a low borrowing rate would be.

Jerry Moyes

We think the supply in the band is pretty even right now at trucks and volume and we think if we give just a little bit growth in the economy, some of the stuff that we have lost over, we have had higher rates that’s going to come back and we are seeing that already, so it brings here a little pick-up in third and fourth quarter, we think a lot of that will be coming back.

Richard Stocking

And we would say that April was okay, but May started off a bit better than April, so and some of our bid activity, some of rewards coming and other things that we are doing and seeing in the marketplace, so it's little bit stronger, now we had funky weather in April and parts of the West; [IED] we shutdown two or three times those types of things, but we were seeing momentum as what we are saying.

Chris Wetherbee - Citigroup

Chris Wetherbee from Citi. I guess a question about deleveraging, I just want to make sure, I understand the comments; as you think about it as part of the next five years in the EPS growth, how much deleveraging should we expect or you thinking that takes a little bit of back seat to growth I guess that just want make sure I understand how you are thinking about that?

Ginnie Henkels

So we said, our target is to be at 1.5 times of leverage by the end of 2017, we are as Richard said ahead of that goal, so we will want to continue to delever depending on what happens; it might come up a little bit, but then we will continue to make progress down, so I think the answer to your question is both and so we believe we can handle on both.

Chris Wetherbee - Citigroup

And just any thoughts on CapEx in the shorter term, I guess 2013?

Ginnie Henkels

We said our target for the CapEx for 2013 is $250 million; it may not be probably that high, if you look to the appendix there is the nice little slide in there that explains that a little bit and (inaudible) now, and but we are around 225 and 250 somewhere in that range.

Unidentified Analyst

(Inaudible) When you talked about returning to growth here, maybe you could delve into a little bit of price versus utilization as you move forward, you don't want to give up a little bit more on that utilization to focus more on that prices I just want to understand how that can translate into and what you are anticipating on the operating ratio, should we continue to see that improve and then on that same growth phenomenon that’s big number of $1 billion in intermodal maybe you can talk about after not seeing that growth, how you get there?

Jerry Moyes

Yeah, so we are not willing to sacrifice utilization [Kent]; we are going to continue to grow that utilization and I think in ways that maybe different than normal, so yes we are going to grow the utilization before we add trucks to the fleet. So that was the first part of your question and second was intermodal, yeah so last year we had incredible percentage as far as growth goes; this year I think its very double digits, its very respectable and we see in the marketplace opportunities that we haven't taken advantage of. Steve talked about network study that was done and we are executing off of that study and that was a paradigm shift or slightly change on the way we did business and so we believe that with that knowledge that over the years we will get to that goal.

Unidentified Analyst

[Rob Simon, Deutsche Bank]. Could you talk a little bit with regard to the Intermodal as we look out what sort of profit improvement goals you have there and ways you expect to kind of get that segment to a more profitable level?

Steve Van Kirk

From a profitability standpoint our goal is to get into the mid 90s number by the end of the year and its driven primarily by two things the increased fleet utilization getting our containers turned at the target levels we need to get to and really just control factors that we control which is primarily (inaudible) cost.

Unidentified Analyst

[Jason Simon, Cowen Securities]. This goes back a little bit so that long term growth target for both Intermodal and logistics and the mention of acquisitions that Richard I think that you mentioned earlier; how big a part between now and 2017 are going to be acquisitions for both Intermodal and logistics?

Richard Stocking

We don't know. We are constantly looking for opportunities out there. We haven't found the perfect fit, but if we do obviously they would be a part. They are part of our history. We know how to do them. That's the thing right so we've done 12 of them. We understand the integration. We understand the leadership and the people, the customers, more importantly the drivers and that and all the pitfalls that go along with an acquisition so we think we have the knowledge and the skill, we just have to have the right opportunity.

Jerry Moyes

But keep in mind that you know through that growth period if we head up through ’07 about 50% of our growth comes from acquisitions, so we are not, don't getting hung up on 50% but as Richard said you know we are -- very acquisitions is in our DNA.

Unidentified Analyst

And when I think about your container fleet, the size of your container fleet that $1 billion that you had set out for 2017, how big should we think your container fleet is going to be by then?

Richard Stocking

Well, that $1 billion growth goal could be past that ’17 year, but Steve, any thoughts on container, number of containers he is asking or a $1 billion worth of revenue?

Steve Van Kirk

I didn't do the math, before you asked the question. You know it’s really getting a target number of turns and you know for me a fair number to enforce about two turns per container and I figure you are up in (inaudible) that way.

Richard Stocking

And it goes back to Kent’s point right and to Steve’s earlier that we won't grow or add containers until we get the utilization and turns on that equipment, the return on that asset going forward. So we think we have some runway as far as growth this year.

Unidentified Analyst

So I wanted to pose one kind of broader question for either Jerry or Richard and then I got an Intermodal follow-up if I can. What's your view on the multi year basis in the truckload market, how it evolves, you think that there will be a period where the market’s strong enough to see growth in fleet again or should we consider maybe volatility on the economy primarily, driver, pricing and you know in terms of pricing you think we can get the mid single digits pricing if the economy strengthen, how would you view that in terms of fleet capacity growth for the industry relative to pricing opportunity?

Jerry Moyes

Well, I think you've got to look at the industry you know nobody is adding any capacity. I think Kevin says you might have a couple of hundred trucks but there's no capacity being added to this industry and if the economy starts to pickup just a little bit we don't need a lot more help than what we've got you know this is going to get pretty tight. I think for the first time in this industry, you know, everybody’s got tremendous amount of discipline that we're not going to run out and buy 20%. I remember sat down, in our heyday, we just add 20% new trucks every year and don’t think about it but nobody said any capacity and I think there is tremendous discipline. So I think that’s what's going to happen and the other issue is you got, four, five bigger size carriers out there that are in pretty serious trouble but we’re just following up, some consolidation. You know, there hasn’t been a lot of consolidation in this industry in the last few years. Steve picked up some smaller companies, but I think you know, there are some pretty right things over the next four five years from an acquisition standpoint. Don't know if that answer anything Tom, I am not sure.

Unidentified Analyst

So I think maybe a couple of years ago, coming out of the last downturn, there was a sense of you know, if you get mid single-digit pricing as the economy picks up and maybe then there is an upside scenario to get high single digit, we haven't really seen that play out over the last few years. What would you think is realistic if the economy strengthens, you know, you get mid single-digit pricing. How do you look at that magnitude?

Jerry Moyes

Probably low single; you know, if we can get 3%, 4%. And we're not there today. Don’t get me wrong. Last year we ended up at, last year our truckload is 3.1% and that’s pretty good last year and so you know, it's going to depend on the market Tom, but if can settle the growth, we can get to that 3%, 4%, hopefully 5%.

Richard Stocking

So to Jerry’s point, we're equilibrium, right; and you see the attitudes change very quickly should when you have a month, six weeks worth of tightness and improvement in the economy with the shipper and if we just had steadiness, that tightness for a quarter, you would see things change rapidly. But I take you back to what Jerry is just saying, when you talk about fleet growth, in my view, even outside of the economy growing, we are 0.5%. There is so much opportunity out there for our sales people to sale properly and to grow on the fleet side. So we have look at this a little differently there is huge market share and opportunity in the truck side for us to grow. We just have to have the attitude to get out there and sell that properly and bring the value to the customer, so it doesn’t mean that just because of the economy doesn’t grow that we won’t grow on the truck side, I am firm believer that we can take more on market share. I believe we can earn more market share at good pricing.

Unidentified Analyst

Okay. And just a quick one for Steve, what kind of timing is realistic in terms of involving initiatives you have and focus you have on utilization, grades utilization and implementing the new system and so forth as it translates to margin, if we come back in another year and half a meeting will you say, hey we are pretty close to a margin that you had in mind, or is it some multi-year to really get those initiatives to translate into operating margin performance? Thank you.

Steve Van Kirk

It’s something to catch attraction more quickly, I think you are going to see some of those efforts really trying to show results moving into tail end of this year, you mentioned about the operating system change and that’s really a quick wide on and if we are successful and gain that implemented running like I think it's going to by the end of Q3 we shall a very positive impact as we move into Q4 timeframe.

Unidentified Analyst

[Don Broaden, Avondale Partners]. You laid out some very aggressive goals on growing both logistics intermodal and given your deleveraging goals not asset, light asset based things growing, that makes all sense that it fits together. You obviously have internally some margin goals for those businesses, given what you are doing right now slowing down growth in intermodal. So can you share to us whether it's in 2016, it's 2019, whatever it is you get to this billion dollar both of these business, what are you margin goals for those businesses?

Richard Stocking

Just before Jerry jumps in here, we are not slowing the growth down on Intermodal, maybe the number of boxes, we have some run rate right, on the COC side 30% to 35% growth opportunity before we add, so it’s not like we are holding back on the growth I just want to make sure.

Unidentified Analyst

I understand.

Steve Van Kirk

You probably saw utilization, yet boxes you focus on utilization, I understand there is a balancing act going on out there.

Richard Stocking

I think Ginnie’s line is we don't disclose that, so better say shut off but our goal is continuous improvement in all intermodal division. On the logistics, we’re pretty new in that but we got a good line in that business and (inaudible)……

Unidentified Analyst

Guys, I just need something first stupid sell side map I can put……

Richard Stocking

We understand, but to reiterate what Jerry is saying our logistics side of the business is very exciting profitable and growing.

Unidentified Analyst

Okay, well then let me ask a follow on then; the leverage ratio goals also outstanding aggressive am I right assume that your leverage ratio goals that you’re going to hit by 2017 do not include op balance sheet, operating leases type activity?

Ginnie Henkels

The leverage ratio that we disclose externally matches with our covenant compliance and so people can track that as well; we do track our leverage ratio internally including operating leases and we have own internal target set, similar decline that include the operating…….

Steve Van Kirk

It’s obviously also a dramatically lower cost of borrowing, operating lease……

Ginnie Henkels

That’s right, an economic decision based on that, but again we want to reduce the total leverage including those weakness as well. So we measure that internally about we don't again external metric related to our covenant.

Unidentified Analyst

Thank you. Couple of questions here, it’s a little surprising maybe given some of the pent up demand that may have built up here due to the elongation of the winter that customers are being so tough on price especially in light of the fact that the hours of service rule changed. It looks like its going to go into effect on July 1. Do you think their unwillingness to really take rate increases today is their way of saying that the hours of service rule changed really wont tight up supply and demand at the 4% to 6% rate that you are talking about in the appendix or some of them said it might even tighten supply had been more than that.

Steve Van Kirk

Yeah the answer is they are very concerned. We had five or six in just recently customers that is and that's a very, very hot topic. We've called in a lot of customers here recently and they are concerned. So I know that doesn't match up with the comments on pricing being tough but there are folks out there that are pricing properly which gives them maybe a false sense of hope there. I will tell you though that we just recently had a customer that put freight out to auction and it just backfired in a way that they did their rates actually went up and they closed the auction and are going back to a different bid so our hope is that things start to change the mental model gets serious about what this impact could be to utilization and I think long term Jerry talked about think about us long term I was trying to make sure that our customers are thinking that way too and not just getting a quick hit in the quarter.

Mauricio García

And we are hoping third and quarter as I said earlier it will come back. I mean we had one facility; we just got a 4.5% increase on one of our major customer. So they are out there, its just when you look at the big average.

Steve Van Kirk

And in addition to that the bottom 20 John that we talked about bottom 30% and improving elevating that business, that's where we are going to see additional (inaudible).

Unidentified Analyst

Could you talk a little bit about your fuel sourcing program how much you do with pilot flying J and whether you are confident that they have dealt with you in a scrupulous manner.

Jerry Moyes

We do about a very high percentage pilot flying jet people. We've been 60% to 70% of our purchase come from there. We are very, very comfortable today that we are not involved in what you are doing. We have a very sophisticated system first of all our agreement with them is very complicated but we have a great system in place to watch it on a daily basis and then we have a optimizing system that compares them to [love] and TA and the other truck stop so you know its not only and our internal bulk so you know the optimizer sends our trucks to where the best value the low cost is. So if they are not the low cost it could go to (inaudible) to our facilities but we believe that we are okay on that, we've done extensive research on it John. We think we are okay with that.

Ginnie Henkels

So Jerry mentioned we have a very sophisticated system. We actually have an independent third party that costs our fuel at the point of sale so regardless of where it is whether its our facility or whatever trucks out there that it is, it gets costed from ground up according to our contract signed independent third-party and so we're paying our negotiated rates at point sale. So it's a little bit different than what you saw in some of the other carriers I had issue.

Unidentified Analyst

Do you think there is a need to have a backup plan if something we to happened to pilot if they were to have a huge judgement brought against them and for example they will have the downsize would other vendors be able to handle the demand?

Jerry Moyes

Yeah, John (inaudible) keep in mind that we have 35 of our own facility. We have bulk fuel and plus at least 12 offsite that I think of right off hands. So we got plenty of capacity. One-time we were spooling 85% of our fuel at our own facilities and so we got plenty of capacity here on and loves and TAs.

Unidentified Analyst

And just one final one; there has been a lot of talk in the industry lately about because of the yield management that was featured part of selling on Analyst Day which was held here just a few days ago. You said you got 3.1% revenue per loaded mile last year. It's less than that now. How much of what you are getting is a function of sort of better decision making in terms of what loads you accept, your length of hall decisions, empty mile management and tradeoffs and those sort of things versus peer price increases.

Steve Van Kirk

Yeah, I don't know if I can give you an exact percentage there but yield management is very important to us in our network engineering and going through all of those different metrics that I didn’t share with you that I create on each lane, we're definitely aggressive there. So and that’s a pretty big portion and then obviously the rate (inaudible).

Jerry Moyes

Below 20%.

Steve Van Kirk

Yeah, so the elevate program that we have, we really grade these things on, I think it's like 18 different metrics and every lane, every area of the country Mexico, Canada and we define what those issues are and then we are able to sit down with the customer and have a very mature discussion on changes that need to be made and it's not all about pricing, if there is opportunity for us to increase the velocity on a load, which then helps the driver make more money, we make more money in our assets are turned faster than that’s one thing, if it's situation where they can give us the code to a lock to pick-up weekend business, the net is that’s wonderful and then we were able to bring value to them as they bring value to us. So it is a intensely hyper-focused area in this yield that we believe we will strengthened over the next three, four quarters, we have got a great foundation there, great people on processes that are finally aligned. And I think you will start to see some marked improved in our yield.

Unidentified Analyst

Matt (inaudible) at Longbow, a question how tight currently is the driver market and do you think it could impede your ability to add truck this year?

Jerry Moyes

The driver market, we have always done a good job in the driver market I mean we are in good shape drivers license, historically when we have had real challenge within the industry we have done pretty good. So, we are in good shape today and we have a great driving school, we got a great pipeline of drivers and we feel (inaudible) from a driver standpoint.

Unidentified Analyst

Has turnover ticked up, has it gotten more difficult recently to find and retain drivers at this point?

Steve Van Kirk

Yeah. So our turnover ticked up some but not materially, we are well below industry average, but I would tell you that to Jerry’s point, we have an infrastructure set in place. It's not just on the schools, but outside schools as well and the trick is to make that you streamline the process so you can bring more of those drivers in and then keep them once they are there through that training period that is the critical time the quarter eventually, right. So we really focused on the quarter eventually making that a more smooth process driver friendly process and I think we have the leg up in several those areas and that why we may not be having some of the issues that you are hearing from others.

Unidentified Analyst

And one question on inner motor and one of service, on intermodal I just want to make sure I heard this right, obviously there is a lot to do with margin but with a flat box count, can you get did I hear you say, you still think you can get double digit revenue growth and obviously that has to do with assets turns and pricing and can you talk a little bit about how you get there?

Steve Van Kirk

We are absolutely confident that we can get about 35% at least 35% more loads move to container fleet that we currently have. How cyclical that hits the double digit number that you are asking about and there is obviously inability or desire to increase price also.

Unidentified Analyst

Thank you. and the on average of the service side a couple of question, first I realize that this is guess but if you have handicap beyond of just going into affect in July what do you think those arms are now?

Jerry Moyes

I think it can happen. It’s going to happen.

Unidentified Analyst

Okay, if it’s happening I would think and talking with a shippers that there is a great opportunity here for a process driven company like you’ve become to work with shippers to improve everything you are doing with them and no question, where are you in that process if its July when do you start talking to your customers and what kind of things are you talking about where is your drivers I guess?

Steve Van Kirk

We already have been talking for last year about this anticipation that it was coming so in our sales call like I said today they are very animated over this issue and they are bringing it up today and trying to find what the impact is going to be and what the potential solutions are so we've already been working with them Ed and we believe that it goes into effect we are right back there with them executing off of the solutions that we've provided them prior to July 1.

Unidentified Analyst

And how about drivers, is there something you can do with your drivers and when do you do that.

Jerry Moyes

I think we've just got to educate the drivers on what the new hours of service is and how can they maximize their miles under the rules we have and I think we are doing a good job of that adding. We will get through that I think.

Steve Van Kirk

The great thing about our internal infrastructure and some of the other process we have already is we can help mitigate some of that issue for the driver and to Jerry’s point we just need to continue to train them on that process so that they can help themselves.

Unidentified Analyst

So net-net do you think we see a drag in utilization that shows up in the third quarter as a result of this or is it something that can be mitigated or net of the pricing you get, how do you think about that.

Steve Van Kirk

We are going to do the very best to mitigate everything that we can, going into the third quarter. Will it have an impact? There's different types of fleets, right the dedicated fleet is going to be impacted differently than the OTR fleet and the dry fleets, the local fleet. So to answer that questions it’s kind of a popery of an answer depending on what fleet it is but there maybe some impact but I think within our organization our infrastructure is with the terminals. We are going to better than we can to mitigate it.

Jerry Moyes

And we should not have a reduction in utilization in third quarter because of hours of service.

Unidentified Analyst

Last question just directionally when you think of the different fleets Dedicated and Dry van and flatbed even Mexico are there some that are more impacted, how would you rank where the greater impacts could be?

Steve Van Kirk

Probably in Dedicated and different types of Dedicated are going to be impacted more so. I think we will be fine Mexico and to Jerry’s point again we are going to do everything we can. We've talked a lot about this to our shippers and so they understand that the impacts in so and so forth and that's going to require some rate but I know that's kind of a vague answer but every Dedicated operation is not created equal so its going to affect them differently.

Unidentified Analyst

I think you Todd (inaudible) KeyBanc Capital Markets. The $1 billion of logistics revenue can you talk about kind of the composition of that. Is that going to look like traditional brokerage revenue that we see from a CH Robinson. It sounds like there's a TMS component of that and so how do you think about the split of that and can you also talk about how that revenue comes online and how you see that growing, not just this year but as we get into ’14 and ’15.

Steve Van Kirk

Yeah so its going to both ways right, when you take over a transportation management system it’s a large chunk of revenues that comes with that and the brokerage is bills right. So today this year we are we've been successful and will be successful going forward on both sides of that next year I think you will probably see more of the revenue as a percentage come from the TMS.

Jerry Moyes

There's new TMS system we've got, we just got it in place a few months ago so its really going to be and it’s a long process to get this in the pipeline and we've got a very full pipeline so I think a lot of (inaudible) going to see in ’14 you know we've hopefully see some in ‘13.

Steve Van Kirk

We will see some this year?

Jerry Moyes

Yeah. Some ‘13 but it's probably ‘14.

Ben Hartford - Robert W. Baird

Ben Hartford with Baird. Steve, when you think about that $1 billion revenue target in intermodal, can you talk about an order of magnitude, how much of it do you expect to come from converted earning share but existing intermodal freight bus converting new.

Steve Van Kirk

You know, there is always going to be, yeah, there is obviously a well known set of customers who are bigger intermodal users and we're going to battle to get out of their share, that freight. And we're going to do that being price disciplined. I think the real opportunity we're very much more focused on is how do we find a guy out there who is moving the freight truckload that we can convert to intermodal. And if you buy in to the thesis, you know, drivers are going to be harder to come by, hours of service is going to impact driver productivity. We think that over the road conversion opportunities is absolutely critical and that’s what (inaudible) from my perspective, typically get that freight to higher price point than you can deal with a shipper who has gone through years and years of bidding that same freight intermodal by this over and over again.

Ben Hartford - Robert W. Baird

So if I think about that split, can I think 50-50 or would have been skewed more toward one side of the equation?

Steve Van Kirk

I think 50-50 is probably a safe assumption right now. It's not a net aspect. It's not a question I thought through all that much. I will tell you that. The engineering study that we did this past year was heavily focused on OTR conversion and we used our third-party data sources on both volumes and pricing and there is a (inaudible) with you all before but there is a tremendous amount of freight out there which is eligible to be (inaudible) intermodal, we just need it from a sales standpoint to go (inaudible).

Jerry Moyes

With our truckers had on, keep in mind our average length of haul is only 450 miles length of haul. So some of the longer length of haul stuff is going to go rail but the majority of our businesses is 400-500 mile length of haul, it's just probably not going to go rail. So I don't know if you showed this slide, Richard that the trucking industry is going to continue to grow as is the intermodal, so intermodal is not going to grow at the expense of truckload they are both growth engine.

Richard Stocking

So I had mentioned there in these things through that. There is a lots new customers, we are bringing on board that we are not doing business with today intermodal business with today that we haven’t been privy to the intermodal bids today that we are starting to get and they were seeking so I would say, I would skew it towards that side of the fence, with the discipline that we are focused on there. Also say that in the east is a great opportunity for us, the crescent corridor and all of the east really it's an area for us to really gain market share we are smaller player there and growing. So I would tend to shift it towards that first.

Ben Hartford - Robert W. Baird

And then Richard could I ask you the same perspective on the billion dollar target in logistics, the source of that growth?

Richard Stocking

Yeah. Now the source of that is our existing customers and as we are bringing on new customers that they have same opportunity but for right the business that we are bringing on was within our top 200.

Jason Bates

Any other questions?

Steve Van Kirk

And then Jason we have one over here.

Unidentified Analyst

Two I think one for Jerry, you guys have been early testers on that gas leads, can you just gives us an update on how you are thinking about that? And then Ginnie and maybe just an update with the growth targets how you think about CapEx longer term?

Jerry Moyes

We are little disappointed on natural gas today, we have been messing around with it over two or three years. We are testing 10 of the nine point later in (inaudible) today in Southern California, having some problems with them in the fuel economy that we would like, and we are testing four of the 12 leader and actually a 5 more coming as we speak and kind of same situation. The biggest problem is the manufactures are literally holding up the trucking companies. I could buy a few trucks for $172,000 for day (inaudible) but I can’t buy 2000.

Steve Van Kirk

I can buy two.

Jerry Moyes

I can buy two is that what they said. But these manufacturers for commons to charge what they are doing with this 12 liter engine is old technology. It has no ETR, is run on SER, it’s an old turbo that was in place 10 years ago it’s a cheaper engine than what we are using the day and for them to charge extra for just makes absolutely no sense and it goes right down the line the manufacturers tac in on a price and we found out the everyday the dealers even tac in on more money. So unless the supply chain of getting us the truck becomes more efficient and greed comes out the system the natural gas probably is going to work but $170,000 a truck, the savings we get on natural gas is about four to five year savings and for us it’s not working, and the other issue is we are seeing tremendous improvement in fuel economy on these new engines. Our 2014 engine, 2014 trucks we are taking delivery of today and we are getting very, very good fuel economy, so we are doing lot better than what we are doing and there is a lot of hindrance in the natural gas, so go ahead Ginnie.

Ginnie Henkels

On the CapEx the 225 to 250 that I mentioned it does assume the 500 truck growth that we have been talking about as well for this year. So we also have 3000 or so contained trailers in that number. We do lease as we’ve talked about and as you see in our disclosures about half of our equipment our truck I should say and so that factors into that as well. So you can see as I mentioned in the appendix there is kind of a build on maintenance CapEx and growth CapEx that gets you to that 225 number. So you know I think obviously as we talked about we have heavier years with regards to trucks and lighter years we have plenty of opportunity and our free cash flow and our model that we have today will be able to facilitate any growth with regard to containers or otherwise. Does that answer your question or were you looking for…

Unidentified Analyst

(Question Inaudible)

Ginnie Henkels

Correct, that's right. So in case everyone didn't hear that Scott asked if over time our growth was coming in intermodal and in logistics does our CapEx as a percentage of revenue come down over time and the answer is yes.

Steve Van Kirk

That's percentage revenue, right.

Unidentified Analyst

You know I just your two numbers that you threw out there the $1 billion on intermodal and logistics are big growth numbers so I just want to delve into intermodal for a second and the logistics. On intermodal what did you learn on the box turns a few years ago, so you bought [Burlington] boxes, you kind of hired into that I thought the focus there was trying to improve the turns. I know the boxes all ended up getting driven and buying new boxes but we also went through this space where you ran up to FC, you decreased to FC and that was supposed to be such a small portion as you are ramping this up so fast at least numerically to get to that $1 billion, what experience have you had on that turnover for the boxes and what can you literally what do we need to see on the boxes or what do you need to do with the customer to improve those turnovers.

Richard Stocking

The question is really what's our plan to increase the turns.

Unidentified Analyst

Yeah, ultimately just obviously you've had experienced at this, you've been at this for a while, I presume that was something you are already working on right as you grew the boxes but now you've shut down the growth to focus on the turn again.

Richard Stocking

I would say we had a little bit different mindset early on and it was growth kind of at all cost. I think since Steve has been hearing I'll hand the mike over to him. We've really become disciplined on the yield. And so we don't want the yo-yo. We want to make sure that what we are bringing on hence the network study and the changes these made in the lengths, we will have to go backwards, where before we were maybe little jumpy when it came to price and those turns. Now Steve is very focused on those turns on the dry costs on the chassis cost and the load matching and all those types of things since he brought that discipline, number one and number two he has brought a lot of talent into the department that we didn't have before. So I would say that's the change because Steve wasn’t here back in that time and I'll let you roll from there.

Steve Van Kirk

I've been with Swift for about eight months and my previous experience had been with another bimodal competitor and you know further to your C part you know here's the challenge with TOC its really two-fold. If you are not balanced you end up depleting a trailer market that impacts your truckload operations and you may think you are making money but actually deplete that marketplace downward you haven't made money, and you have to kind of build the credit pool back up. The other thing is having a trailer and container mix has typically an adverse impact upon your dray cost. And its pretty simple because if you think about a dray truck that's out on street, if you look at one piece of equipment all the time you can see a Swift container parked across the street you can go grab it and you get it powered up and move your next load.

But if you see a bunch of containers across the street and you are looking for a trailer you maybe driving a lot more miles to find that trailer so what it does is it builds in inefficiencies there. You know the best example I'll give you if you were a retailer It's really easy they have a fishing operation going so one skew in your store. If you have more skews, you have more risk of auto stocks, more complexity. So what we're really trying to do is decomplexify our operations because going out there and running the tray efficiently is about discipline, it's about having the simple operating structure and being disciplined enough to not get lured off a simplified operating structure. That's really where we're focused on.

Now the TOFC we're going to do, when I went through our my presentation, I talked about running kind of quasi dedicated fleet operation and really you can make money with TOFC if you are balanced and you can really make money if you are balancing. Always going to (inaudible) the same locations and so that's we're doing and so we like TOFC where we can create a great customer solution, move a higher way and we can make money doing it. I would see a more limited set of TOFC opportunities versus container opportunities and that’s why you are going to see our focus being upon containers.

Jerry Moyes

I think when Steve come on board, you know our key product was pretty good in size, in numbers and we're doing some things that didn’t make sense. So we kind of went down to zero and now we're building it back up we just started $20 million of movement, is pretty balanced and I think you will see that grow but Steve said not to the extent of the sea product will.

Steve Van Kirk

I just want to follow up. I was just going to change to logistics, so if you wondered about (inaudible). On the logistics side, I understand that the TMS is adding on with existing customers but is this something that we should look to see you scale 100 of employees growing solid to go get additional brokerage opportunities. Is there something? I mean to get to a $1 billion, we're kind of (inaudible).

Richard Stocking

Sure. The billion dollar revenue would definitely require more people. We feel like we're particularly aligned with headcount today with the revenues are doing on that. And then the last thing I want to mention, I didn’t tell you this but we also have a huge goal when it comes to the trucking side. Right, so we don’t want you to forget about that and it's large as the others overtime, so that pie chart in 2017 shows trucking growing by a fair amount and we believe that because of our results that we are producing there that can be very advantages to our growth, so it's a shining star just like these other two.

Unidentified Analyst

Elizabeth (inaudible) from UBS. On intermodal can you talk a little bit more about your specific intermodal strategy for the cross-border Mexico market how do you think about your relationships with the relevant well carriers and how do you think about leveraging your position of having obviously a sizable dry fleet here in the US as well as decent size south of the border with Trans-Max?

Steve Van Kirk

Okay. In terms of Mexico, Mexico a great intermodal market place and the primary reason I say that is I think the best intermodal market place is our imbalance market places, where there is more demands versus the inbound which Mexico is. And so our strategy for Mexico is we have a good relationship with the Kansas City serving and the (inaudible) has done a great job to make investment in the infrastructure and they are running good operation. Our job is really grow that Mexican business is to generate [KSPS] to Mexico because North (inaudible) not all that terrible difficult, so we are going to add try to drive as much inbound as we can, we are going to have a repositioning strategy to allow us get into the market places, we have a lower cost repositioning into Mexico to create more in, outbound capabilities.

In terms of using our existing infrastructure in Mexico, we have a strong sales presence in Mexico which is important and we have a strong sales presence in the US because so much the cross-border freight that you going to win it you need work both sides of the border to be effective from the sales standpoint and our core analysis of the market place is truck operations down that Mauricio’s team brings to us we think is a major point of differentiation and so we are going to really go upon the strong side of execution from the trade standpoints, we have good security result, we have good service results, we are turning our equipment as quickly as possible once you get to New Mexico, heading back North of (inaudible).

Unidentified Analyst

Thank you. And one quick follow up relating to that. when you think about that $1 billion longer term into motor that being your target about what contribution do you expect in the cross boarder of Mexico market?

Steve Van Kirk

That is a more difficult question and I don’t know Richard you want to take it, but clearly I think its linked with how successful you are showing and my impression is that the key of that is going on could it move into that 5% to 10% portion of business, I think that is potentially dual point.

Jerry Moyes

Yeah, I mean we are excited growth and this is the last gateway really for growth and we have that hugely is going down there we got strong customer base for sales presence. The operations leadership is going to be a bigger, I think it will be bigger than kind of what Steve is talking about overtime because there is a lot of business that is happening there in both truck and intermodal and we are playing just pretty small, so I think it could grow past what he is talking about.

Jason Bates

Any other questions.

Jerry Moyes

So we want to thank all of you that are here and those of you that they are on the webcast that bring Steve and Mauricio in I hope it shows you the quality and the balance of people we have we got a great organization its very, very deep and those of you that are shareholders the stock just to $16 so congratulations and thank you for coming.

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