Swift Transportation Co. tumbled the most since its 2010 initial public offering, after the trucking company forecast third-quarter profit that trailed analysts’ estimates as a shortage of drivers hurts margins.
Earnings per share in the current period will be 33 cents to 37 cents, the Phoenix-based company said yesterday, missing the 40-cent average of analysts’ estimates compiled by Bloomberg. The shares slumped 18 percent to $21.20 at the close in New York, the biggest daily drop since the December 2010 IPO.
Swift said that it was “constrained” by a challenging driver market in the second quarter and that turnover was higher than anticipated.
“There has been a driver shortage that has been getting incrementally worse as the economy improves and they have to fight for employees with the housing sector,” Lee Klaskow, an analyst with Bloomberg Intelligence, said in an interview. “You see some carriers passing on rate increases to drivers but for whatever reason Swift has had a harder time attracting and retaining drivers.”
The company said in a letter to shareholders yesterday that it plans “improved productivity and enhanced pay packages” to help retain drivers.
“We want Swift to be the carrier of choice for drivers across this industry,” Chief Operating Office Richard Stocking said on a conference call today. “We want drivers to start with Swift in our schools and remain with Swift until they retire.”
Swift expects its measures “will help improve our retention; our recruiting; our utilization, as we have fewer unseated trucks; our safety and our other customer service, as we have more tenured drivers,” Stocking said.
Second-quarter earnings per share totaled 33 cents, matching analysts’ estimates, as revenue rose 4.5 percent. Its core truckload revenue shrank 2.2 percent in the period.
John Larkin, an analyst at Stifel Financial Corp. in Baltimore, reduced his annual profit estimates through 2016 as Swift works to improve productivity. Larkin has a hold rating on the shares.
Swift returned to the stock market in December 2010, more than three years after co-founder Jerry Moyes took the company private in a leveraged buyout valued at $2.7 billion.