Swift's Management Hosts the Acquisition of Central Refrigerated Transportation, Inc. Conference (Transcript)

| About: Swift Transportation (SWFT)

Swift Transportation Company (NYSE:SWFT)

Acquisition of Central Refrigerated Transportation, Inc. Conference Transcript

August 7, 2013 9:00 AM ET

Executives

Ginnie Henkels - Chief Financial Officer

Bill Post - Independent Chairman and Chairman, Special Committee

Richard Stocking - President and COO

Jason Bates - Investor Relations

Analysts

Operator

Good morning. My name is Lindsey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Swift Transportation Conference Call. All lines have been placed on mute to prevent any background noise. (Operator Instructions)

Thank you. Ms. Ginnie Henkels, Swift’s Chief Financial Officer. You may begin.

Ginnie Henkels

Thank you, Lindsey, and good morning, everyone. And welcome to this special conference call for Swift Transportation. I’m very excited to be with you here today as we announce the acquisition of Central Refrigerated Transportation. The slides for today’s presentation have been posted to the front page of our Investor Relations website, at ir.swifttrans.com and they’ve also been posted to the sec.gov website.

We will start today with our forward-looking statement disclosure. This presentation contains statements that may constitute forward-looking statements, which are based on information currently available, usually identified by words such as anticipates, believes, estimates, plans, projects, expects, hopes, intends, will, could, may, or similar expressions, which speak only as of the date the statement was made.

Such forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are inherently uncertain, are based upon current beliefs, assumptions and expectations of the company’s management and current market conditions, which are subject to significant risks and uncertainties, as set forth in the Risk Factors section of our annual report Form 10-K for the year ended December 31, 2012.

As to the company’s business and financial performance, there are many factors that could cause actual results to differ materially from those in any forward-looking statements. You should understand that there are many important factors in addition to those discussed in our filings with the SEC that could impact us financially.

As a result of these and other factors, 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 commitment and disclaims any duty to update or revise any forward-looking statements to reflect future events, new information or changes in these expectations.

In addition, this presentation also includes certain non-GAAP financial measures, as defined by the SEC. The calculation of each measure including a reconciliation of the most closely related GAAP measure are included in the appendix of today’s presentation.

With me today is Bill Post, the Independent Chairman of our Board of Directors and the Chairman of our Special Committee. Also presenting today will be Richard Stocking, our President and Chief Operating Officer.

Bill Post will begin today’s call with the highlights of the transaction. Richard will then present an overview of the Central Refrigerated and the strategic rationale for this acquisition. Bill will then review the rigorous and lengthy process the special committee, management and its independent advisors conducted to complete this acquisition. And then I will wrap up the presentation portion of the call with a summary of the potential value for Swift shareholders.

Similar to our quarterly earnings format, we have requested questions to be submitted in advance via our e-mail to investorrelations@swifttrans.com. We will answer these questions that we received last night upon completion of the prepared presentation.

It is now my pleasure to introduce Bill Post who will start on page four of the presentation.

Bill Post

Thank you, Ginnie, and good morning, everyone. I’m pleased to be with you this morning to announce this exciting acquisition for Swift Transportation. Yesterday, Swift acquired 100% of the outstanding shares of Central Refrigerated Transportation for $225 million total enterprise value, comprised of $189 million in cash and $36 million of assumed debt. The implied transaction multiples are 4.9 times EBITDAR, 4.5 times EBITDA or roughly 10.2 times P/E.

In 2011, when several of our customers expressed interest in having us expand our capacity in the temperature controlled business, the Board of Directors formed a special committee of all the disinterested directors, because Jerry Moyes, the Swift CEO, was the principal owner of Central Refrigerated, one of the larger companies in the refrigerated business.

Our first step was to hire independent legal and financial advisors to assist the special committee in an evaluation process to consider all the viable alternatives that I will discuss in a few minutes, which ultimately resulted in the transaction with Central.

Central is the fifth largest carrier in the refrigerated truckload market, which we estimate to be between $7 billion to $8 billion in total. Central has a comprehensive range of services, a modern fleet of 2,065 tractors and generated $504 million of revenue and $45 million of EBITDA over the 12 months ended June 30 of 2013.

With the acquisition of Central, Swift gains immediate scale in a market where growth is expected to outpace other trucking segments. While this scale and Swift’s existing network, we believe we will be able to provide customers with a service that they desire and facilitate future growth for Swift.

We also believe that by leveraging Swift’s infrastructure, we have the opportunity to expand margins by achieving cost synergies, although we expect the transaction will be immediately accretive to earnings even before any of these synergies are achieved.

I’ll now turn the call over to Richard Stocking, who is going to review Central in more detail.

Richard Stocking

Thank you, Bill, and good morning, everyone. Again, we’re extremely excited about this acquisition for several reasons, including Central’s scale, their footprint and their customer base.

We think we have great opportunities to combine their strengths with Swift to provide our collective customers with a best-in-class refrigerated service offering. As described on page five, Central has over 1,800 employees, of which 1,300 are company drivers and they have an additional 1,000 plus owner operators under contract and they are the fifth largest temperature controlled carrier in the U.S.

When combined with Swift’s temperature controlled line of business, it creates the second largest refrigerated carrier in the country. Central has a large and growing line-haul business complemented by dedicated brokerage and TOFC intermodal services to operate full range of refrigerated services to our customers.

Like Swift, Central has deep and longstanding relationships with their customer base and they have a nationwide footprint that will enhance our ability to service Swift’s customers’ temperature controlled needs as well.

Central has operated out of four primary terminals and will now have the ability to leverage Swift’s 35 terminals across North America. We believe we have some consolidation opportunities, which will help drive cost synergies as we move through the integration process.

Another reason for our excitement is that this has been a growing and profitable company with revenues in excess of $500 million in the last 12 months and a 92.2 adjusted operating ratio in 2012.

We believe that we can enhance their results by implementing our lean culture and execution disciplines, which has fostered Swift’s improvement in transformation over the last four years.

On page six, we describe why we are interested in expanding our one-way temperature-controlled business. Over the last couple of years, several of our customers have expressed interest in our involvement in a one-way Refeer line of business. We have been offered several opportunities with key customers that we had to turn away due to lack of scale in the irregular route refrigerated business.

We believe the opportunity in this market is great, given the increase in demand and growth in this market by the shippers and the lack of large quality carriers to meet these growing needs.

In addition to our customer feedback, we believe the opportunity in the refrigerated market is roughly $7 billion to $8 billion in revenue and is expected to grow at roughly 4% to 5% per year.

Demand in this market is much more consistent and seasonal and cyclical patterns than the other truckload segments and will -- and should help drive more stability in our overall revenue streams.

The growth in the industry is largely driven by the food and beverage sector, which is experiencing an increase in consumer awareness on food quality and safety. Pharmaceutical, healthcare and consular durables are also boosting the U.S. refrigerated market. We believe this could lead to further opportunities for large stable carriers.

Moving to slide seven, you will see the depth of services for service we are now able to provide in the refrigerated line of business. In 2012, 63% of Central’s revenue was generated in their over-the-road irregular route business.

This complements our large, dedicated business, which is enhanced by bringing in their dedicated account. We are also now able to provide TOFC refrigerated offerings and have expanded our brokerage capabilities in this area as well.

Therefore, combined our pro forma revenue breakdown is on the bottom right of slide seven and with the addition of Central our over-the-road refrigerated revenue is 8% of our total and our dedicated refrigerated is 9%.

We believe we will have additional growth opportunities with new and existing customers that should provide some revenue synergies. If we move to the next slide, you’ll see that we are projecting an additional $20 million to $40 million of revenue synergies on an annualized basis once we are able to align and integrate our operations.

We believe we will have opportunities to streamline our costs as well, particularly in the areas of maintenance, facilities and fuel. We will also look for opportunities to take best practices and streamline our processes as we move forward.

We have an estimate -- we have estimated that we can take approximately $4 million of cost out of the system, which equates to about $0.02 a share. In addition, the anticipated facilities consolidation should generate $8 million to $10 million of cash to repay some of the acquisition debt.

Given the historical relationship between Swift and Central Refrigerated, we believe we can hit the ground running and continue the momentum at both companies. The culture we have instilled in Swift, which has been a large part of our success will be the foundation upon which we’ve come together. We are very excited about the progress we’ve made and the potential we have yet to realize. This acquisition will aid in our future success.

Bill will now provide a more detailed review of the Special Committee process on page nine.

Bill Post

Thank, Richard. As I’ve said earlier, this process began in 2011, when several customers expressed an interest in expanding Swift capacity in the temperature-controlled business. At that time, Swift provided refrigerated service to several key customers but this service was primarily limited to the dedicated space and we did not have ample capacity in the over-the-road temperature-controlled market to meet the demands and desires of some of our key customers.

Knowing that Jerry Moyes owned a refrigerated truckload company but not knowing the best solution for Swift. In May of 2011 the Board of Directors created a Special Committee of disinterested directors to evaluate the full range of alternatives for expansion in the refrigerated space. The Special Committee consists of myself, Richard Dozer, David Vander Ploeg and Glenn Brown.

First, we interviewed and then hired independent legal and financial advisors to ensure the process was thorough, that had followed the highest level of corporate governance standards and that it led to a decision that was in the best interest of Swift.

We selected Baker Botts and Lazard, and together with our management team, not including Jerry, the Special Committee reviewed the feasibility of organic growth, as wells as the attractiveness and availability of acquisition targets.

After discounting organic growth due to the time required to gain the scale we felt it was necessary to meet the demands of our customers, we then considered several other acquisition targets.

After that analysis, the Special Committee focused negotiations to acquire Central Refrigerated because we felt it was best suited to meet the Swift -- meet Swift’s long-term market, revenue and earnings goals.

Those negotiations took over nine months and we believe we have negotiated an acquisition on very favorable terms for Swift. Lazard provided the Special committee with the fairness opinion with respect to the purchase price of the deal and on Monday, the Special Committee voted to -- voted unanimously to recommend the transaction.

Ginnie will now review the opportunity this acquisition provides for our shareholders on slide 10.

Ginnie Henkels

Thank you, Bill. As mentioned earlier, this transaction was value at $225 million on an enterprise value basis. This equates to an EV to EBITDA multiple of 4.5 times. Central uses operating leases to finance some of their equipment, therefore on an EBITDAR basis the multiple equates to 4.9 times. We believe this is an attractive valuation for Swift and as a purchase price that is manageable from a debt and liquidity standpoint.

We funded the acquisition by assuming $36 million of Central’s balance sheet debt, drawing $100 million from or AR facility and additional $89 million from our revolving credit facility. The weighted average incremental cost of this combined debt is 2.2% which is net of the normal commitment fees.

Our leverage ratio increased slightly post transaction from 2.58 at the end of June to 2.73 on a pro forma basis. We anticipate generating roughly $100 million of combined free cash flow between now and year end which we will use to repay a portion of the acquisition financing. This should bring our pro forma leverage ratio back to near 2.5 times by the end of the year.

We will still have ample liquidity available -- with $300 million available to us today including our cash investments in our additional capacity under our revolver. With projected debt reductions and other changes, our liquidity should be back to June levels by the end of the year.

The earnings accretion for 2013 is expected to be roughly $0.10 per share on a full year basis. Giving Jerry had controlling interest in both Swift and Central, common control accounting will be used for the acquisition, which is similar to the old pooling of the interest method rather than standard purchase accounting.

As a result, there will be no markup of assets and intangibles as you would normally see in an acquisition. It also means that we will be combining their financial results with ours on a prospective and historical basis.

Accordingly, our historical financial information in our future filings will be modified to include Central’s results as well. This will cause anomalies for a few reasons.

First, Central was S-Corp prior to the acquisition, therefore the company reported minimal income taxes as these taxes were passed through to the shareholders. This will cause our historical GAAP reported tax rates to be lower than normal.

In addition, upon conversion to a C-Corp, various deferred tax liabilities primarily related to book tax differences associated with the treatment of equipment were reported that will create a one-time hit to the provision in 2013 for GAAP purposes.

Due to these issues for adjusted EPS purposes, where we using a normalized tax rate of 38.5% for 2013 consistent with Swift’s effective tax rate today and we’ll be using 39% for historical periods.

One other difference you will see in our GAAP and EPS -- and adjusted EPS is the impact of the one-time transaction related expenses. We will identify and quantify the one time expenses going forward and exclude them from the adjusted EPS calculations.

One other anomaly you should be aware of although it’s somewhat obvious is the increase in interest expense post transaction. This combination or this combined with some integration expenses is the reason we expect the accretion to adjusted EPS in the first half of 2013 to be roughly $0.06 while the second half is expected to be roughly $0.04.

For 2014, we are currently expecting our adjusted EPS to increase by $0.10 as well, which is inclusive of synergy, integrated related expenses or integration related expenses and a full year of acquisition related interest expense.

So this concludes the prepared portion of our presentation and we will now move on to the Q&A session. Similar to our quarterly earnings call, we requested questions in advance and we’ll be reading these submitted questions and provide answers. In certain cases, we addressed the question to some -- we addressed the answers to some of the questions in the presentation itself, so we will not repeat those questions in the Q&A.

Jason Bates will act as our moderator. So I will turn the call over to Jason to ask questions.

Question-and-Answer Session

Jason Bates

Great. Thank you, Ginnie. The first series of questions are focused on the transaction process. And so we’ll direct those to Bill. The first was the Central refrigerated sale run as a process i.e. were bids solicited? Did Central consider an IPO? What drove Central to take another route?

Richard Stocking

To our knowledge, Central did not conduct an auction process and we did not participate in one. Our interest in Central grew out of our desire to expand the refrigerated offering. And as I mentioned in my remarks, we considered growing that business organically and through acquisition.

When the special committee chose to focus on the acquisition route, Central was considered among a number of other acquisition candidates. We have no knowledge of what other options Central may or may not have considered.

Jason Bates

Why now? These discussions have gone on for a long time or at least have been rumored to be going on, even through the growing private period. What changed, how hands off was the process in determining that this was an asset that was worth Swift buying?

Richard Stocking

The decision to expand our temperature-controlled offering at this time was driven primarily by customer demand. More and more and even through today our management team is hearing from customers looking for us to meet the refrigerated needs, particularly in one-way routes.

We also see this as a growing business segment that is less subject to seasonal fluctuations. The special committee conducted an independent analysis and reached its own conclusion that expanding into the refrigerated space at this time was the right strategic move for Swift.

Jason Bates

If so bullish on prospects, why was it not done with stock. This seems like a way for Jerry to cash out using Swift. It just creates skepticism when none needed to be there?

Richard Stocking

The special committee considered a number of forms of consideration but ultimately chose a cash transaction because it was far more accretive to Swift and would not result in dilution to our existing shareholders. It causes a minor and temporary increase in leverage, but this was something we felt the company was more than capable of managing. Jerry’s personal financial situation is not something that special committee considered when structuring this transaction.

Jason Bates

If we were to go back to Swift’s Investor Day and include the acquisition of Central Refrigerated, i.e., it was consummated prior or perhaps looking forward to an Investor Day in 2014. How would or does the Reefer business fit into Swift’s long term revenue goals. Both acquisition Reefer will be approximately 17% of revenue of the combined entity. What does the company envision it will grow this percent to in, say, 2017?

Richard Stocking

This is a tough question to answer since it depends on the growth in our other segments as well. But we do expect as a percentage our refrigerated line of business will grow more rapidly than our regular truckload segment given the market dynamics we’ve discussed.

Jason Bates

Does the acquisition change any of the long-term financial targets established at your May 2012 Analyst Day. What base should we be using for the 15% compounded annual growth rate for 2012. And are there any changes to the RONA, debt reduction or leverage ratio targets?

Ginnie Henkels

No. This acquisition does not change any of our long-term targets that we outlined with regard to EPS growth, leverage and RONA. We are still focused on achieving these long-term goals.

With regard to the base EPS for 2012, our adjusted EPS for 2012 was $1, which was a 27% increase over 2011. At the beginning of the year, we said that we were anticipating 10 to 15% growth in adjusted EPS in 2013. And on our second quarter earnings call, we said that we expected to exceed this target for the full year given the outperformance in the first half of the year.

We also said that we expected adjusted EPS in the second half of 2013 to be 10 to 15% higher than last year and this guidance did not contemplate this transaction. Therefore, the $0.04 of expected EPS accretion would be in addition to this guidance.

Jason Bates

Please discuss why refrigerated or temperature controlled is an attractive area for a large acquisition relative to other areas such as intermodal, brokerage or freight forwarding. Does this impact your growth initiatives in other areas or limit the potential for other acquisitions near term?

Bill Post

As we’ve discussed in the presentation, we are very excited about the refrigerated market for a variety of reasons including the stability in the market, growth opportunities and synergy opportunities. This acquisition does not impact our growth goals for brokerage and intermodal. And as we have discussed before, we do not necessarily need to do an acquisition in these areas to achieve those goals.

Jason Bates

How aggressively does Swift expect to be in the acquisition market going forward? Should we be thinking about one to two acquisitions annually, are there other segments that the company would like to grow over time? Are there any other markets that are appealing from an acquirer’s standpoint?

Bill Post

Our comments regarding future acquisitions remains the same. If there are acquisitions that enable to us achieve our goals, we will consider them, but we are not going to get over our Cs. We will remain disciplined and focused on our goals we set forth at the investor conference and we will not make acquisitions for this -- solely for the sake of growth. They must help with us with improving our bottom line through EPS growth, improving our returns and reducing our leverage over time for us to be interested.

Jason Bates

What is Jerry’s relationship with Central Freight? Would Swift consider buying Central Freight, next?

Ginnie Henkels

Jerry no longer holds an ownership interest in Central Freight. At this time, Swift is not interested in exploring or entering the LTL market.

Jason Bates

What is the customer concentration percentage of Central for the top customers listed? How does that overlap with Swift’s existing customer base?

Bill Post

80% of Central’s revenue comes from theor top 30 customer accounts. Of those top 30, approximately a third are customer Swift and Central have in common.

Jason Bates

What does this acquisition indicate for your largest customers like Wal-Mart? Do they scale too large as a percentage of revenues?

Bill Post

Central’s largest customer is one of our smaller accounts. And Swift’s largest customer’s one of Central’s smaller accounts. So when you combine everything, it actually reduces the percentage of total revenue on both sides. For example, even though we increase our total gross revenue with Wal-Mart via this transaction. Their percentage of our total revenue is actually reduced by approximately 250 basis points.

Jason Bates

What type of price increases has Central been able to generate over the last 12 months. What does the pricing environment in Refeer look like going forward?

Richard Stocking

Central has been able to generate between 2.5% and 3.5% increases in the revenue per loaded mile over the past year depending on the quarter. Going forward, we would expect them to be in the 2% to 3% range depending on the supply and demand balance in the industry and the overall strength of macro environment.

Jason Bates

Where does Central statistic feet with Swifts in terms of asset utilization like miles per tractor, revenue per tractor per week, dead head et cetera? And how does the adjusted operating ratio of 92.2 compare to Swift’s core? i.e., what are the adjustments here put it on an apples-to-apples basis?

Richard Stocking

All right. Regarding the first part of the question, when compared to our truckload segment, Central’s loaded utilization is comparable with their debt head and loaded rate per mile being slightly higher, which causes the revenue per truck per week to be higher as well.

Our goal is to provide a historical three year quarterly breakdown of the key statistics of the new reportable segment in conjunction with our third quarter earnings release. Regarding the second part of the question, we have provided a reconciliation at the end of the posted presentation for the adjusted operating ratio.

However, the full year 2012 adjusted operating ratio for Central of 92.2 is comparable to the full year of 2012 adjusted operating ratio of 86.3 for our truckload segment for the definition of adjusted operating ratio.

Having said that, the majority of Central’s trucks are on operating leases, which causes the operating ratio to be inflated by approximately 200 basis points. Given that the financing costs are embedded in the lease payment and captured above the line in rent expense.

Jason Bates

What was the June 2013 LTM operating ratio of Central?

Ginnie Henkels

92.1.

Jason Bates

And what is the likely revenue growth and/or capacity growth you expect at Central in 2014?

Ginnie Henkels

We believe their revenue growth could be in the 7% to 9% range for 2014.

Jason Bates

Do you expect to shrink Central’s fleet from the current 2,065 tractors and 3,394 trailers, or will it be increasing. Based on the presentation, is the correct breakout approximately 1,000 owner operators and 1,000 company trucks and will that ratio change over time?

Richard Stocking

We do not expect to shrink Central’s fleet of tractors and trailers. Once, we complete the integration we will be aggressively selling the service offering with the intent to grow it further.

Regarding the composition of company and owner/operator drivers, at this point in time, we do not anticipate that mixed change. But that will depend on a variety of factors, many of which maybe out of our control, including availability of drivers and owner/operators, financing options, the general freight, et cetera.

Jason Bates

Fellower trucker Knight Transportation has noted that the refrigerated market is a tough market right now. What are your thoughts?

Richard Stocking

All markets go through periods of strength and weakness. Regarding Knight, they have made acquisitions in this area as well, have been growing and are operating at attractive margins. So it seems like a good business in spite of periods of toughness.

Jason Bates

Does the $0.04 of EPS accretion include any of the expected revenue synergies?

Ginnie Henkels

No. We have not assumed any revenue synergies for 2013.

Jason Bates

The identified $4 million in cost savings, what does that entail? What is the timeline on fully realizing these synergies and cost savings?

Ginnie Henkels

The primary drivers of the cost savings are in the areas of maintenance, facilities consolidation, fuel and some personnel. We don’t expect many of the synergies to occur in 2013. We do expect that they will phase in over the course of 2014 and will be at a full run rate in 2015.

Jason Bates

When is the $8 million to $10 million positive cash flow impact from the asset sales expected to occur? Are these sales related to just revenue equipment or does it include facilities and/or corporate offices?

Ginnie Henkels

The $8 million to $10 million of positive cash flow impact is all from facilities, not from revenue equipment. We expect to realize this over the next 12 to 18 months as we consolidate and then sell certain facilities.

Jason Bates

Do you regard this transaction as an internal vote of confidence in your capital structure?

Ginnie Henkels

Yeah. As we discussed at our Investor Day in May, we have made great progress with our catalyst structure and at a point where we are comfortable with its temporary increase in leverage for strategic reasons. With that said, we are not straying from our goal to reduce leverage to 1.5 times in 2017.

With the progress we have made through June of this year, we were ahead of the path we laid out for ourselves. This minor setback will not change our plans for our ultimate goal.

Jason Bates

Does this change your expectations for net debt reduction in 2013 as discussed on your second quarter of 2013 conference call?

Ginnie Henkels

On our second quarter earnings call, we said that we expected to pay down an additional $50 million to $100 million of debt in the second half of the year. We believe we will be able to pay down the high end of this range, roughly $100 million between now and the end of the year. Net debt will not be reduced by this amount given the increase in debt of $225 million for the acquisition.

Jason Bates

What has Central’s average net CapEx been over this past refreshment cycle?

Ginnie Henkels

Central has historically leased most of its equipment with either operating leases or capital leases. Therefore, their net cash CapEx has been minimal. We have modeled them using the same assumptions, but we will be evaluating the cash flow and other impacts of their financing decisions as we move forward and may adjust this as time goes on. We will inform you of any changes to our CapEx plan.

Jason Bates

What type of rates does Central currently have on its capital leases? How long in duration are the capital leases? Can you provide an updated schedule of capital lease payments and operating lease payments of the combined entity?

Ginnie Henkels

Central’s capital leases are around 4% interest rate. They generally lease tractors for four years and trailers for seven years. We will provide a schedule of the capital lease and operating lease payments with our 10-K.

Jason Bates

What does the deal add to your expected free cash flow for full-year 2013? Can you give any color on free cash flow goals for full year 2014 or debt reduction targets for full year 2014?

Ginnie Henkels

We are expecting the deal to add roughly $10 million of free cash flow for 2013. For 2014, we expect to be at the high end of our $50 million to $100 million net debt reduction range.

Jason Bates

What are the longer term cash costs if any, associated with the deferred tax liabilities being created by this transaction?

Ginnie Henkels

We expect the deferred tax liabilities to be roughly $6 million to $8 million in total. And this will be paid out over the next several years. This cash flow impact was factored into the evaluation analysis. In addition, we believe that as we integrate them into our purchasing methods and our lifetime exchange program, we could generate incremental deferred tax liabilities going forward.

Jason Bates

What does the total average age of the combined entities tractor and trailer fleet look like?

Ginnie Henkels

As we discussed on our earnings call, the average age of Swift sleeper fleet is 2.1 years. Incorporating their 2,000 trucks with an average age of 1.7 years, this would take the total for Swift down slightly to two years on average. We do not disclose the average age of our trailer fleet for reasons discussed on our earnings call but their trailer fleet is newer than ours.

Jason Bates

Will refrigerated be reported as a separate segment? If not, will it be split between truckload and dedicated?

Ginnie Henkels

We are currently evaluating our management structure, which will determine our financial reporting segmentation going forward. We are hoping to have that finalized by the time we report our third quarter earnings.

Jason Bates

Swift appeared to purchase Central Refrigerated at a very attractive multiple. What did multiples look like on other refrigerated carriers?

Ginnie Henkels

This is obviously a difficult question and one that the Special Committee and Lazard took into their evaluation analysis. The easiest comparison is Martin given that they are public and at the end of June, their EBITDA multiple was around five times and that does not include a controlled premium.

Bill Post

All right. So that concludes our call for today. We just wanted to reiterate that we are very excited about this acquisition. We’ve been working on this for over two years. We feel like this is a great company. It has wonderful, great people who have led this organization. It’s got a great customer base and has been stated a new fleet.

This is a business we feel very strongly about. We believe that we can help our customers in their supply chain needs with this acquisition. We’re very excited that it’s going to be accretive right away. And there are several synergies that we are excited to take advantage of. We’re excited about our future and I appreciate your continued support.

Jason Bates

Thank you, everyone.

Operator

This concludes today’s conference call. You may now disconnect.

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