An investor's guide to Swift Transportation Company (Part 2 of 16)
History of profitable growth
Swift Transportation (SWFT) was founded in 1966. It was a small startup with just one truck. It was primarily operated by the owner, Jerry Moyes. It grew slowly until 1990. In 1990, the trucking industry was deregulated. Taking advantage of this situation, the company issued an initial public offering, or IPO, in 1990. From 1990 to 2006, the company witnessed a CAGR (compound annual growth rate) of more than 20% in its revenue.
During this period, the company made 12 acquisitions. In 2001, the acquisition of M.S. Carriers expanded the company’s service offerings. Swift added the Dedicated and Intermodal segments to its service offerings.
Intermodal transportation means transporting freight in containers or vehicles. The containers or vehicles can use different transport modes—like rail, ship, and truck—without handling the goods.
From 2007 to 2011, Swift saw huge transformations when the recession hit its profitability. The company faced losses. In 2007, its leveraged buyout of Interstate Equipment Leasing, or IEL, added to its high debt and interest expenses. The company made changes to its strategies. It focused on process improvements. In 2010, the company restructured its balance sheet. Then, it issued an IPO.
After 2012, Swift started reaping benefits. It had profitable revenue growth and improved asset utilization. As a result of continuous debt reduction, the company also saw growth in earnings per share, or EPS, and return on assets.
Sustained revenue growth through the years
For the past two decades, Swift successfully grew its revenue year-over-year, or YoY, at a CAGR of 12.5%. You can see its growth in the above chart.
The adjusted operating income also kept pace with the growth in revenue. Annually, it grew at a CAGR of 23.4%. The company’s growth was due to internal growth and acquisitions made over the years. The acquisitions diversified its offerings.
Other trucking companies in the US are YRC Worldwide (YRCW), J.B. Hunt Transport (JBHT), and Werner Enterprises (WERN). These companies are part of the iShares Transportation Average ETF (IYT).
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