Swift Transportation Company (SWFT) shares fall more than 4% in trading Friday, setting a new two-year low, after it said it is reducing its 2015 guidance due to various workers compensation claims, settlements of lawsuits and lower expected volumes in the second half of the year. Recently, shares were down on heavy volume of 5.3 million shares. Earlier shares hit $15.75, setting a new two-year low. The transportation services company said it now expects adjusted earnings between $1.43 and $1.52 per share compared to the previous guidance range between $1.64 and $1.74 and well below the $1.70 average estimate from analysts polled by Capital IQ.
Swift said the change was due to the development on prior year accident and workers’ compensation claims and the corresponding impact to reserves which is expected to be a $0.07 in Q3; the settlement of a class action lawsuit of $0.02 in Q3; the settlement of a previous lawsuit resulting in a $0.03 charge in Q3, expenses on new tractors received late in Q2 due to delivery delays, resulting in a significant backlog of tractors being processed for trade or sale which is expected to have an impact of approximately $0.05-$0.06 in the second half of 2015; and a reduction in expected volumes of seasonal project business in Q4 due to customers’ recent logistical changes which could have an impact of $0.05-$0.06.
In Q3 adjusted EPS is now expected to be $0.30-$0.33 compared to the $0.43 average estimate in a Q4 it is expected to be $0.48-$0.54 compared to the $0.59 estimate.
“Although we are not satisfied with these developments, we are encouraged by many of the underlying operating trends we are experiencing in our business model,” chief operating officer Richard Stock said in a statement. “The benefits we are seeing with the new equipment and expect to realize over the next several years should far outweigh the short-term costs we are experiencing.”
Meanwhile, Swift said its board has approved the buyback of up to $100 million of shares.