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Swift Transportation Company (NYSE:SWFT)

Q2 2012 Results Earnings Call

July 20, 2012 11:00 AM ET

Executives

Jason Bates – Investor Relations

Jerry Moyes – Founder and CEO

Richard Stocking – President and COO

Ginnie Henkels – Executive Vice President and CFO

Analysts

Operator

Good evening. My name is [Roshanda], and I will be your conference operator today. At this time, I would like to welcome everyone to the Swift Transportation Second Quarter 2012 Q&A call. All lines will remain open throughout the conference call. (Operator Instructions)

Thank you. I would now like to turn the call over to Mr. Jason Bates. Sir, you may begin your conference.

Jason Bates

Thank you, [Roshanda]. We’d like to welcome everyone out to the Swift Transportation second quarter 2012 Q&A session. My name is Jason Bates and I oversee our Investor Relations activities.

As a reminder, we posted a comprehensive letter to stockholders summarizing the results of our second quarter and that’s done on the front page of our IR website, which is ir.swifttrans.com. We will start the call today with our forward-looking statement disclosure.

Today’s call contain 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 the current beliefs, assumptions and expectations of company management and current market conditions, which are subject to significant risks and uncertainties as set forth in the risk factor section of our annual report, Form 10-K, for the year ended December 31, 2011.

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 and 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 price 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 to our GAAP results, this presentation also includes certain non-GAAP financial measures as defined by the SEC. The calculation of each measure, including reconciliation to the most closely-related GAAP measure, and the reasons management believes each non-GAAP measure is useful are included in the schedules attached to our letter to stockholders.

So with that out of the way, I’d like to recognize the members of Swift’s management team on the line today. We have Jerry Moyes, our Founder and Chief Executive Officer, who is joining us remotely from one of our terminals; Richard Stocking, our President and Chief Operating Officer; and Ginnie Henkels, our Executive Vice President and Chief Financial Officer. Again, my name is Jason Bates, and I will be moderating today’s Q&A session.

So we appreciate all the questions that were sent in last night. We have grouped them into categories and we’ll try to get through as many of them as possible today.

With that, let’s go and start-off with the few questions on our rates.

Question-and-Answer Session

Jason Bates

Richard, rate improvement of 2.5% was slightly below previous guidance of 3% to 4%. Is this due to softening -- to a softening economic environment? Why did you lower your guidance to 3% to 3.5%? What drove the decline in dedicated pricing per loaded mile?

Richard Stocking

All right. Thanks, Jason, and good morning, everyone. To answer the first question, the lower consolidated rate improvements were actually a result of business mix and in economic environment that was less robust than we had originally anticipated.

As we mentioned in the letter, we achieved rate improvements of 3.3% in the over-the-road linehaul service and we also lowered our guidance to 3%, 3.5% now that we had two quarters of actual results under our belt and have better perspective on the trends, as well as the mix impact of growing our dedicated service offering for the remainder of the year and the decline in dedicated rates was also a result in a change of business mix within the dedicated service offering.

Jason Bates

Can you provide some color on how rates trended throughout the second quarter on a monthly basis?

Richard Stocking

Yeah. Well, again, we don’t disclose the monthly details behind our rate per mile. I can say that the trend was positive and that it built throughout the quarter and we will continue to work on that momentum for the remainder of the year.

Jason Bates

What is your view on spot pricing? Are there any regions that pricing has been weaker or stronger?

Richard Stocking

Yeah. As we’ve stated in the past, we really don’t participate very much in the spot market. However, we do provide a service to our customers that’s more in line with repositioning, which we actually charge extra to reposition those trucks.

And we have seen that market remain relatively consistent on a year-over-year basis and we strongly believe that the repositioning need that our customers have will continue in the third and fourth quarter as it did last year.

Jason Bates

Okay. So there were quite a few questions that came in as it relates to volumes and utilization and trends. First one here, 2012 freight has demonstrated more typical seasonality thus far? Do you think that that continues?

Richard Stocking

We do. We believe that we’re experiencing a more typical seasonal pattern relative to years passed and the continuation of this trend will obviously depend on several factors, consumer confidence, as well as what’s going to happen in the economic environment and political environment. But we believe that this trend will be typical of years passed going into Q3 and Q4.

Jason Bates

How much of a drag on total utilization was the shift from linehaul to dedicated, should we expect this trend to continue?

Richard Stocking

Yeah. Well, it’s a good question. We don’t disclose specific amounts at this time. However, as we’ve discussed in our letter that we sent, our loaded utilization in the over-the-road linehaul service offering was up 110 miles per truck per week, which we’re very proud of.

Historically, our dedicated service offering has yielded a lower utilization figure, but comparable on the revenue per truck per week and we expect this trend to continue. But it will ultimately depend on the type of dedicated customers that we add, as well as we retain on a go-forward basis.

Jason Bates

So what percent of your truck revenue today is dedicated versus a year ago? How does these impact yields, utilization, margins, et cetera?

Richard Stocking

Again, we don’t break that out or segment that at this time at that level of detail. However, we have shifted trucks from our over-the-road linehaul service offering to our dedicated service offering as we have gained new dedicated contracts and awards throughout the year and throughout the quarter.

Doing so gives us the opportunity to shed some less efficient lanes in our over-the-road network, and bolster and build our dedicated line of business

Jason Bates

What was the year-over-year percent change in total loaded miles during the second quarter?

Richard Stocking

Loaded miles were down 2.5% year-over-year due to a 3.7% reduction in our average operational fleet that was offset by 1.2% improvement in our loaded utilization. And a point of clarification, keep in mind that we define utilization as loaded miles per truck per week, and I believe others may define utilization as revenue per truck per week.

Jason Bates

Okay. Thanks. Can you discuss volume trends throughout the quarter? Throughout the quarter you guys had commented that volumes were good but not great. Can you provide a little color on that comment and then has July started out softer than normal or are you concerned with the current economic environment?

Richard Stocking

Yeah. Jason, volumes in the second quarter were softer than we would have hoped but they weren’t concerning. We remain cautiously optimistic about the overall economic environment.

If you look at the month-to-month trends, we were consistent throughout the quarter of Q2 and July is following normal seasonal trends, so again softer in Q2 but not concerning.

Jason Bates

Okay. With the transition to a larger dedicated mix what level of mileage increase per tractor is the management team targeting for the next few quarters?

Richard Stocking

Again, we don’t disclose certain targets. However, as we’ve said in the past, our long-term goal is to improve return on our net assets and one of the best ways our organization knows to do this is to increase our utilization per tractor and that remains a major key focus or while an important goal for us, and we have several initiatives that are helping us make progress to that goal.

Jason Bates

With the recent decline in broad measures of consumer, business and market sentiment, what impact has the environment had on your shipper base? Have customers become reluctant to commit to peak shipping capacity? Can management provide us with an update on where broad levels of demand and supply are in the truckload market?

Richard Stocking

Sure. We believe that the market is close to equilibrium and I believe that manifests itself as market -- markets improve and capacity tightens very quickly. Customers are still concerned about the peak season as it relates to obtaining sufficient capacity for their business needs, so much so they are currently willing to negotiate search pricing and capacity commitments going forward.

So, it’s also a situation where it’s fight to quality as well and we feel as a, just as you look at Swift, as they use more of our suite of services, we have more opportunity to gain that share.

Jason Bates

Okay. As far as improving utilization and trends -- utilization and deadhead, can you discuss the role of the network engineers that you now have in place? What tools do they have at their disposal? How far along in the process are we and do you have any specific internal targets around utilization and deadhead?

Richard Stocking

Yeah. We are very excited about our network engineers, the progress we’re making and we still have more to obtain here within those goals and initiatives relative to engineering our entire network.

But they monitor and analyze our balance, our headhaul, backhaul markets throughout the network. They also develop solutions to match load volumes with our truck availability. They look at seasonal demands.

We have equipped our network engineers with several tools, including freight maps, load optimization software, inbound, outbound balancing reporting and lane privatization tools among others to help us achieve those numbers that we’ve achieved so far and the goals that we have set for ourselves going forward.

Jason Bates

Can management provide us an update on the Plus One initiative, as well as give some examples of benefits the company has achieved to date?

Richard Stocking

Yeah. The Plus One initiative was a contributing factor in our ability to grow that 110 miles per truck per week in our linehaul service offering. In addition, it has helped to increase our drivers W2 as a results and then running more miles, which then helps our retention and then our cost control, so it all hooks together.

Jason Bates

What percent of your volumes relate to consumer goods that are purchased during new house construction? Can you reposition your trucks to take advantage of the improvement in housing starts?

Richard Stocking

Yeah. Great question. Our trucks are positioned across the country because of our infrastructure terminal network and we’re ready to take advantage of any improvements relative to this type of business.

If you think about the tile and the carpet that comes out of Southeast or the insulation and windows out of the Midwest or whatever, our fleet is positioned to take advantage of that opportunity. However, we don’t break out specific revenue related to housing starts.

Jason Bates

Okay. Thanks, Richard. There were also a lot of questions with regard to CapEx and our fleet overall, it looks like you made the decision to lease the new tractors instead of purchase. Is this the reason why your net cash CapEx guidance was reduced to $190 million to 220 million? Will this continue to be your decision moving forward for the rest of 2012 as you look at Tractor acquisitions? Are operating leases included in the leverage ratio?

Ginnie Henkels

At the beginning of the year, we gave net cash CapEx guidance of $250 million. As we discussed in the past, we’re trading or selling our trucks today based primarily on mileage rather than age. So when we put our CapEx plans together for 2012, at the end of 2011, we used an algorithm to project the miles by truck and determine how many trucks we’re expected to trade.

Now, that we are halfway through the year, we’ve been successful in managing our trucks and our applications, meaning putting higher mile trucks and lower mileage applications. And we have been able to keep these trucks longer than originally anticipated.

Therefore we’ve been able to push out some of the orders to next year, which has reduced our total CapEx needs for 2012, which is why the guidance was reduced. We will continue to lease trucks in the second half of the year as well and the current split is estimated to be roughly 40% to 45% purchase with the rest leased, either through capital or operating leases which depends on the economics at the time of financing.

And then with regard to the leverage ratio, our leverage ratio as defined in our credit agreement does not include operating leases as debt but the rent does decrease our EBITDA used in that calculation.

Jason Bates

So how should we be thinking about 2013 net cash CapEx levels?

Ginnie Henkels

We have not finalized our CapEx plans for 2013 yet but I would expect that net cash CapEx would be similar to 2012?

Jason Bates

So kind of following up on the comment about the fleet, how do you feel about the current age and composition of the fleet and what targets do you have for fleet count moving forward?

Ginnie Henkels

We’re happy with the current age of our fleet. Our average company’s sleeper per fleet is 2.8 years but as I just discussed, we’re trading our trucks based on mileage not age. So the age will vary as a result of what those mileage factors are.

And with regards to the fleet count, as we mentioned in the letter, we are expecting to increase between 50 to 100 units on average in both Q3 and Q4.

Jason Bates

And finally, how robust is the used equipment market at this point in time?

Ginnie Henkels

The used truck market is softening just a little bit. As you can see from our gains, it’s still pretty strong.

Jason Bates

Okay. And then with regard to the owner-operator fleet, what are your goals with regard to expansion in that arena this year?

Richard Stocking

Yeah. Originally we were targeting as you well know our owner-operator growth of 200 to 300 for the year. Unfortunately, we haven’t seen that growth. This is the contributing factor into our recently announced owner-operator banded pay program, which we believe will help our retention and the growth of the fleet.

Jason Bates

Okay. There were also few questions around debt and leverage and interest. It says that you show on page one of the letter that you paid $48 million of debt yet you show only $36 million reduction in net debt. Why the difference? Was it the growth in the revolver or royalties?

Ginnie Henkels

The difference between the debt and the net debt is unrestricted cash meaning that unrestricted cash is netted against debt to drive net debt. But the $12 million difference represents $12 million reduction in our unrestricted cash balance.

Jason Bates

What should we expect for interest expense for the remainder of 2012? Do you have plans to pay down additional debt in the third and fourth quarters?

Ginnie Henkels

With regard to interest expense, a portion of our debt is based on LIBOR. So obviously, our interest expense will depend on those trends but we are currently expecting interest expense excluding the amortization associated with the terminated interest rate swaps to be between $28 million and $29 million per quarter.

And then as for additional debt repayment, yeah, we are expecting to make additional payments this year. We have reduced our gross debt by $119 million so far this year and over $72 million on a net debt basis. And as we’ve stated since our IPO, our goal is to reduce our net debt by a minimum of 100 -- $50 million to $100 million a year. And we expect to be at the top end or above this range for 2012.

Jason Bates

When is the next schedule prepayment on the term loan?

Ginnie Henkels

As we make the voluntary prepayments on the term loan, they are applied against these scheduled payments. Currently, we have made all of the scheduled payments on the term loan B-1 through June of 13. So the next payment scheduled on the term loan B-1 is for $5.25 million in September of 2013.

On the B-2, we have made all of the scheduled -- all the scheduled payments through September of 2016. And we will likely continue to make these payments well in advance.

Jason Bates

What about the rating agencies? Have you revisited with Moody’s and when do you expect them to potentially take a look at revising credit ratings?

Ginnie Henkels

This is a good question. As you know, in mid-February, they did change our outlook to positive and they must do a review at least annually. Our performance has continued to improve but I do not know if and when they will make a change.

Jason Bates

Okay. There were a lot of questions about driver availability, driver pay increases, owner-operator pay increases. Can you provide more clarity around the driver and owner-operator pay increase? What do you think the impact will be on EPS and what improvements in operations do you expect as a result of the increase?

Richard Stocking

As we have previously disclosed, we implemented a driver bonus program beginning July 2, 2012, that pays drivers based on the achievement of certain performance metrics. We expect the impact of this change to be approximately $0.01 per mile on total miles driven by our company drivers.

For our owner-operators, we’ve implemented a new banded pay structure to encourage them to participate in all of our freight regardless of length of haul. This banded pay program provides a higher rate per mile for a shorter length of haul, which covers the extra time required for pick-up and delivery into more fair program for the owner-operators.

The program is designed to incent them to be indifferent with regards to the length of haul for any load that is given through our load optimization matching software. We expect this change will increase our purchased transportation expense by roughly a penny to two pennies per loaded mile driven by the owners.

This $0.01 increase for company drivers and the $0.01 to $0.02 for the owner operators is the impact before the consideration of the potential positive impacts, which include improvements in our retention, our deadhead, our utilization, our unmanned truck percentage, safety and service to our customers.

Jason Bates

Please elaborate on the potential benefit to deadhead from the initiative to get owner-operators to participate in all freight regardless of the length of haul.

Richard Stocking

Okay. The primary purpose of this program is to aid in owner-operator retention, as I mentioned before. So that we can continue to grow the number of owners that we have at Swift. Any operational improvements such as the deadhead percentage would simply be an added benefit.

While the impact will be relatively small to our consolidated deadhead percentage, we do believe this program can enable us to better manage our network and reduce deadhead miles driven by the company drivers. The program is designed to incent the closest truck, whether company or owner-operator to haul the nearest available freight, regardless of the length of haul for that load.

Historically, our owners have preferred the longer length of haul, thus requiring a company driver to deadhead further in certain situations to pick up the shorter load.

Jason Bates

Okay. Thank you. Approximately what portion of your company driver population will receive the pay increase you described in the letter? Is the increase you mentioned a penny per loaded mile or a penny per total mile?

Richard Stocking

The majority of our drivers will receive an increase but the amount will vary between the drivers. The overall impact is expected to be approximately one penny per total company mile. And this is -- the reason why it varies is the difference between each driver and the results that they produce on those metrics that we’ve discussed.

Jason Bates

Last quarter you mentioned that though you still struggled with driver recruitment and student driver recruitment, you suffered less than your peers. This quarter you’ve identified drivers as an issue more prominently than you have in the past. Can you describe Swift’s current situation in regard to the driver market and what has been done to attract more drivers?

Richard Stocking

Right. This morning we have 1,266 students in our pipeline, that’s up from 1,150 just a -- just a week ago. And this pipeline consists of students in our academies as well as those on our mentor trucks. This is a couple hundred below where we would like it to be.

And we believe our structure and our processes will continue to bring not only experienced drivers, but also attack students into our academies. And we’re having a better success as we move forward with our initiatives in our pay incentives.

We are further encouraged by the recent trends in our retention levels as we continue to create a driver friendly environment at every touch point within our organization for our drivers.

Jason Bates

So following up on the driver market. Did you notice whether or not the shortage became significantly more acute in the second quarter?

Richard Stocking

Yeah. As many of our peers have discussed the driver market has been an increasing area of focus for our entire industry and our company is no different. This is one of the contributing factors for the implementation of the incentive, bonus program for the company drivers and the banded pay for the owners. This is an area we will continue to monitor closely as we move forward.

Jason Bates

You noted that your turnover of drivers is below the industry average. Can you detail to what level?

Richard Stocking

Yeah. Unfortunately, we don’t disclose our specific turnover levels but we feel comfortable and happy where we are at. And we believe we can further improve those levels.

Jason Bates

Has the driver wage increase alleviated the driver situation?

Richard Stocking

It was just implemented July 2 and why we’re very encouraged by the trends over the past couple of weeks, it’s really too early to quantify the impact.

Jason Bates

Do you anticipate the driver market continuing to tighten? Will additional pay increases be needed at some point later in the year?

Richard Stocking

As we’ve mentioned before, we believe there will be a seasonal improving trends in volumes that will help drive utilization improvements which when coupled with our recently announced incentive bonus program should translate into larger W2s for our drivers, which we’re excited about and as a result, we do not believe we will need to provide any additional wage increases for this year.

Jason Bates

You talked a little bit about deadhead, there was a question. What should we expect with deadhead on a go-forward basis?

Richard Stocking

Okay. We’ve made a lot of improvements over the past several quarters and this continues to be a major focus for us. However, on a consolidated basis, the future year-over-year improvements maybe masked as a result of growth in our dedicated Mexico and intermodal dray businesses, which typically have more deadhead miles.

Jason Bates

Okay. There were a lot of questions about expenses and expense management and how to project expenses. One of which was in the release, lower workers compensation is listed as a driver of the lower labor expense within the quarter. Was any of the reduction related to accrual adjustments?

Ginnie Henkels

There were no significant prior year adjustments in the quarter for our workers compensation expense. The reduction was primarily due to higher expense last year.

Jason Bates

So, insurance cost declined materially in the second half of 2011 versus the first half. What are you expecting for the second half of this year within your guidance?

Ginnie Henkels

Yeah. As we discussed last quarter, without any positive or negative impacts from prior year claims we expect our insurance and claims expense to be between 3.8% to 4% of net revenue.

Jason Bates

Will operating supplies and expenses continue to see upside pressure from the expansion of intermodal? What is a good run rate for this expense line moving forward?

Ginnie Henkels

Yeah. We do have some chassis related and other expenses related to intermodal that are recorded in the operating supplies and expense line and these expenses will increase as our container fleet grows. Although, in total they are relatively small portion of that operating supplies and expense line, well below 10% of that number.

Jason Bates

There were some questions about some of the other service offerings. One related to Mexico, how are the cross-border revenues with Mexico improving?

Richard Stocking

Yeah. Jason, while we do not disclose specific details around our Mexico service offering. I will say that we are very happy with our team in Mexico as they continue to build relationships with our customers and suppliers. If you look on a year-over-year basis, we grew close to 100 bucks in that service offering.

Additionally, we are focusing on growing our intermodal presence in Mexico as we’ve talked in the quarters past and that is progressing very well and we’re pleased with the growth in profitability and revenue we’ve seen with the intermodal as well.

Jason Bates

Yeah. So on intermodal, there were some questions about that line of business or that service offering in the direction we’re going there. The first one, other revenue mainly intermodal, experienced a material increase year-over-year. Is your growth goal still 20% to 25% for the full year 2012, or has that target increased, and how should we think about growth in 2013?

Richard Stocking

Yeah. As you mentioned, Jason, our stated goal here is 20% to 25%. We are very pleased with our ability to grow the topline of this business more than 35% in the first quarter, which was a function of several wins with new and existing customers.

While, we hope to continue to realize stronger than anticipated year-over-year revenue growth, we will be pleased if our full year growth rates falls within the previously stated range for 2012.

For 2013 revenue growth, we have not provided specific details as of yet. However, we expect to finish 2012 with 2,500 more containers than we had at the beginning of the year, which should lead to further revenue expansion into 2013. And again, we’re very pleased with the awards that we’ve received from our customers and the growth that we’ve experienced thus far.

Jason Bates

So how much of the 35% COFC revenue growth in the second quarter was from volume growth versus pricing? What is your container turns during the second quarter and what is your expectation for the remainder of the year?

Richard Stocking

COFC volumes were up approximately 33% year-over-year. The remaining increase was due to pricing, as well as an increase in our fuel surcharge revenue is relative to the container turns. We don’t disclose those -- break that out at this time.

Jason Bates

Can you quantify roughly what portion of total intermodal revenues are COFC versus TOFC?

Richard Stocking

Yeah. Again, we don’t disclose a specific percentage splits between the COFC and TOFC. However, we have stated in the past that the TOFC is much smaller percentage of the total intermodal revenue.

Jason Bates

How did the growth of your intermodal business affect its profitability in the quarter? Do you expect it to be profitable for the year?

Richard Stocking

Again, we don’t disclose specific profitability for any of the service offerings at this time. We have not segmented yet.

Jason Bates

Will you talk about growth of your logistics and intermodal service offerings and/or the returns profile versus your more asset intensive truckload business.

Richard Stocking

Yeah. As we previously discussed our logistics and intermodal business is a key focus for us this year. As we strive to improve our return on our net assets. Both of these services have lower margins than our traditional truckload businesses but can have a higher return on our net assets, because it require less capital investment. As we grow both of these services you should expect to see a higher consolidated operating ratio, but better return on our net assets.

Jason Bates

So what happened to the truck brokerage service offering during the quarter? Can you discuss the specific trends? Is the balance freight market still a challenge for that segment?

Richard Stocking

Yeah. This business is still relatively small for us and we have invested in tools and processes to help us grow this service offering going forward. Regarding balance, freight and softer market it becomes more challenged for brokerage or logistics opportunities. However, we are still excited about the long-term growth potential.

Jason Bates

How confident are you that you’ll be able to fit 2000 new containers into your network in the second half of the year? Do you run the risk of getting your network out of balance?

Richard Stocking

We are very confident in our timing of in servicing these new containers, obviously coming in the third quarter. These new containers will be used to support new awards and volume growth that we have recently received.

Jason Bates

Okay. There were some questions about adjusted EPS. Specifically, why did you share count fall in the second quarter and what should we model for the second half of 2012?

Ginnie Henkels

Our basic share count was consistent year-over-year, but our diluted share count did go down. The diluted share count is impacted by stock options and whether or not they are in the money and by how much. Since, our stock price is down at the end of the period the effective dilution from the options decrease thus decreasing the diluted share count.

Jason Bates

Can you quantify how much lower on a sequential basis you expect the third quarter of 2012 EPS to be versus the second quarter of 2012 EPS?

Ginnie Henkels

Yeah. Assuming we have a stable fuel environment, meaning no significant increases or decreases in fuel. We expect our adjusted EPS in the third quarter to be below the second quarter of 2012 and it will likely be down year-over-year as well as we observed the much deserved increases we’ve given to our hard working drivers and owner-operators. But as we highlighted in the letter, we are still expecting 20% growth in our full year adjusted EPS.

Jason Bates

So to obtain a 20%, adjusted EPS growth on -- for the full year, there will be quite a step up from third quarter to fourth quarter. What do you expecting for improvement in the fourth quarter?

Ginnie Henkels

First, we are expecting to have continued sequential improvements in our revenue per loaded mile that Richard talked about earlier and this will help cover the cost of the driver and owner-operator increases.

Also, we are expecting to have seasonal special services in the fourth quarter like we experienced last year and years prior. This includes staging, repositioning and other special services for our customers that we provide or that provide additional income for us in the fourth quarter.

Jason Bates

Okay. Thank you. And our final question here was with regard to the growth target of 20% for the 2012 EPS and the question is, what could help drive upside to that 20% year-over-year EPS growth target?

Richard Stocking

What can affect that is a more robust economy and increased consumer sentiment, which can lead to improvements in volumes and rates, further reduction in fuel prices would affect that improvement -- continued improvement on our safety and claims management.

I guess, I would say, we feel like we’ve got great momentum with our internal initiatives. We are working towards the vision that we set for this organization. We continue to drive discipline in every avenue and stage of our goals and objectives. We are focused and have focused on really what matters most.

We’re focused on those lead measures to help us get there. Now, we’ve got great scorecards to help us keep on track. We are building our leadership and helping them lead our initiatives and manage -- lead our people and manage our initiatives and our processes.

The moral within the organization is very strong. So we’re very excited about the momentum that we feel like we have within Swift and we feel like we’re walking or talking and doing the things that we said that we would do and produce results going forward. So we’re very excited about the opportunities of our business transformation and our continued progress toward our goals.

Jason Bates

Great. Well, that concludes the questions that we’ve received. We want to thank all of you for dialing in and [Roshanda] thank for hosting the call today. Thank you.

Operator

This does conclude today’s conference call. You may now disconnect.

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