The Outlook of Refrigerated Trucking: From a Financial Analyst

The Outlook of Refrigerated Trucking:
From a Financial Analyst Perspective
Is 2015 the Peak? And What’s Behind This Year’s Lull?
“A pessimist sees the difficulty in every opportunity; an optimist sees opportunity in every difficulty.”
-Winston Churchill
Agenda:
How the Lull is Playing Out
Is the recent “soft patch” over?
Economy: Beyond the Obvious
Capacity: Across the Modes & Influences
E-Commerce: Think Behavior
Capacity Crunch: How Much?...
…And For How Long?
Source: Cartoon on left from BB&TCM; cartoon on right from Transport Topics
2
The Economy: Stuck Between a “Square Root”
Recovery and a “Hockey Stick” Recovery
The economy is healing in spite of Washington, DC! Falling Oil Prices and a Strong
Dollar are Hurting CapEx in 2015 but there are long-term positives
Source: GDP figures from BEA website; commentary BB&TCM; photos from Microsoft Office 2010
3
Why 2015 is Experiencing a “Lull”
2014 (the “Perfect Storm”)
•
•
•
•
•
•
•
HOS carryover from H2’13
Awful Q1’14 weather
Almost no pricing in 2012-2013
Lousy rail service
Port strike worries and then…
Port congestion and slowdown
Zaniness created by e-commerce
Source: BB&TCM analysis and comments; cartoon from Transport Topics
2015 (“less than perfect”)
•
•
•
•
•
HOS restart to pre-July 2013
Class 8 tractor growth of 4.4% in
last 12 months
The “creeping regulatory crunch”
is pausing until late 2015
Oil’s fall and a strong dollar are
hurting some capital goods
Unlikely to go back to looseness of
2012-2013, but it doesn’t feel as
“fun” as 2014
4
Lull # 1: Industrial Production Slowed Mostly Due to Oil’s Fall
 When IP dips below 3%, freight
volumes get sloppy
 In the five quarters before Q4’13, IP
averaged 2.5% growth, with one
quarter (Q1’13 at 4.2%) subsidizing
that stretch
 IP is more important to freight
creation than GDP
 Example: Q1’14 GDP shrank 2.1%,
but IP grew 3.9%; but Q1’15 IP fell
0.3% and GDP fell 0.2%
 Many GDP components create
minimal freight—e.g., tax, law,
consulting, entertainment, education,
healthcare, etc.
Source: BB&TCM analysis and comments of Federal Reserve Board IP data
Industrial Production
Seas adj.; quarterly changes are at annual rates
5.7%
6%
4.9%
5%
4.1%
3.9%
4%
3%
4.7%
2.5%
2%
1%
0%
-1%
Q3'12Q3'13
Q4'13
Q1'14
Q2'14
Q3'14
Q4'14
Q1'15 Q2'15E
-0.3% -0.2%
5
Lull #2: Exports Have Been Hurt by Strong Dollar
• The strong dollar has hurt the
demand for U.S. exports, making our
products more expensive to overseas
buyers
• Many international economies have
slowed, a separate issue from a strong
dollar
Exports’ Contribution to Real GDP Growth
2.0%
1.5%
1.43%
1.0%
0.61%
0.59%
Q3'14
Q4'14
0.5%
0.0%
• During Q1’15: 91,000 jobs were lost
in the energy industry
Q2'14
-0.5%
-1.0%
Source: BB&TCM analysis of BEA GDP report
Q1'15
-0.79%
6
Lull #3: Class 8 Fleet up 4.4% in Last Year, But…
 This includes all tractors, even
30 year old tractors
 The “true” inter-city fleet
(tractors 12 years old or
newer) grew < 3%
 The US/Canadian fleet is
~3.2M trucks; remainder is
Mexico
 The inter-city fleet had shrunk
~16.5% from 2007-2012
 LTL, tank and private fleet
grew >5%; dry van TL and
reefer were ~+1% to 2%
growth
3,850
3,800
N.A. Class 8 Tractor Fleet (Figs in 000s)
3,820
1.7%
3,750
3,650
3,780
1.4%
3,750
1.5%
3,710
3,700
3,660
2.0%
1.1%
1.1%
1.0%
0.8%
3,600
0.5%
3,550
3,500
Source: BB&TCM commentary; ACT Research and ATA (Transport Topics) for data.
0.0%
Q1'14
Q3'14
Q1'15
7
Case Study: Oil’s 67% Slump in ‘85-’86; Parallels for Now?
 Oil fell from $30 to $10 ~ 8 to 9
months in 1985-1986
 Oil’s collapse in 2H’85 and 1H’86
contributed to a slump in industrial
production (IP) those 2 years…but
there were also other factors
 GDP was solid because of the 3-year
phase in of the Reagan tax cuts (19821984), but by 1986 growth was
slowing…
 GDP and IP accelerated in 1987 as the
negative impact of oil on capex wore
off and as new tax cuts (’87) kicked in
 Summary: Expect more stimulus from
the “oil tax cut” in 2016; capex cuts
and energy layoffs a drag in 2015, but
restaurants benefitting now
8%
7%
6%
5%
4%
3%
2%
IP Slumped After Oil Fell 67%
8.9%
7.3%
7%
4.2%
3.5%
1984
$30
9%
5.2%
5.2%
3.5%
4.2%
1985
3%
1%
1.0%
1.2%
5%
1986
GDP
1987
IP
1988
Oil’s Ending Price 1984-1988
$28
$25
$25
$20
$18
$16
$15
$15
Ending Oil Price
$10
1984
1985
1986
1987
Sources: Bureau of Economic Analysis (BEA) and Federal Reserve Board (FRB) for GDP and IP; Bloomberg for oil prices. Commentary is BB&TCM analysis.
1988
8
The Economy: Beyond the Obvious
Source: Microsoft Office 2010 for cartoons
9
But Spending Patterns Have Changed Since 2007
o The three fastest-growing
areas of spending for
Americans create little
freight per se
o Remember the days of a
$40 a month phone bill? For
many families, cell and data
plans today are often $200–
$300
o Some of the leading
decliners for spending are
more “freight intensive”
than other categories
Changes in Spending by Middle-Income Americans
2013 vs. 2007
Home Internet
Cellular Phones
Health Insurance
Homes (Rent)
Health Care
Education
Food at Home
Pets
Total Spending
Income
Furniture
Food Away From Home
Alcohol
Entertainment
Major Appliances
Homes (Owned)
Women's Apparel (16+)
Household Textiles
Residential Phone
81.3%
49.1%
42.1%
26.0%
24.2%
22.9%
12.5%
10.5%
2.3%
0.2%
(3.8%)
(3.8%)
(4.5%)
(5.4%)
(8.3%)
(11.5%)
(17.7%)
(26.5%)
(30.7%)
-60% -40% -20%
Source: BB&TCM commentary; Bureau of Labor Statistics for US middle-income spending data
0%
20%
40%
60%
80% 100%
10
Housing Percolating, but Auto Leveling Off
 70+% of all new jobs in the last
three years are part-time versus a
long-term average of 53%
 The average job created in 2007
paid $60K; today it is $40K; in
2014 more homes over $400K
were sold than under $200K-1st
time ever
Housing Permits
1,500
1,000
1,275
1,015
624
500
0
2011
2013
May
July
Sept
Nov
Jan'14
Mar
May
July
Sept
Nov
Jan'15
Mar
May
 Housing permits are picking up
after a 2-year stall in 2013-2014
 Auto production is up 100% since a
2009 low (and 48% since 2011) but
is beginning to level off; 1%–4%
unit growth from here on out?
N.A. Auto Production
8.8
2010
2012
2014
2016E
0.0
5.0
Source: BB&TCM commentary, US Census Bureau (housing), and Bloomberg (auto production). Housing in 000s; autos in millions
10.0
11.9
13.4
15.0
15.9
16.6
17.6
17.8
18.0
20.0
11
Exploring the Percolating Housing Market
•
U.S. residential permits are up 8.1%
YTD vs. +5.6% in 2014
• May permits of 1.275M highest
since August ’07 at 1.321M
•
But 4 key energy states (~19% of all
permits) are off 3% YTD
•
Houston-by itself-issued 76% of
what all of California did in 2014
•
•
Had these states maintained last
year’s growth, permits would be up
~12%
Watch: personal bankruptcies from
2007-2009 beginning to break out
of 7-year credit freeze
Building Permits Issued
2013
2014
2014 YTD 2015 YTD
U.S.
990,822 1,046,363
+19.4%
+5.6%
4 Key Energy
States
177,057
+9.3%
198,061
+11.9%
320,100
346,100
+8.1%
63,184
61,282
-3.0%
Building Permits as a % of U.S. Permits
20%
15%
Texas
Houston MSA
16.0%
16.0%
14.9%
10%
5%
5.2%
6.1%
5.5%
0%
2013
2014
Source: U.S. Census Bureau; YTD building permit figures are through April for the 4 key energy states (TX, ND, OK, SD) and through May for the U.S.
2015 YTD
12
Households are Deleveraging…
20
14
1980Q1
1981Q1
1982Q1
1983Q1
1984Q1
1985Q1
1986Q1
1987Q1
1988Q1
1989Q1
1990Q1
1991Q1
1992Q1
1993Q1
1994Q1
1995Q1
1996Q1
1997Q1
1998Q1
1999Q1
2000Q1
2001Q1
2002Q1
2003Q1
2004Q1
2005Q1
2006Q1
2007Q1
2008Q1
2009Q1
2010Q1
2011Q1
2012Q1
2013Q1
2014Q1
9
Debt Service Ratio
93%
135%
138%
131%
129%
124%
124%
125%
123%
120%
118%
117%
116%
116%
116%
115%
114%
114%
113%
112%
112%
111%
110%
110%
109%
110%
109%
108%
107%
Q2'14
Q3'13
14.5
Q4'12
15
9.5
40%
Q1'12
15.5
10
60%
Q2'11
16
10.5
Q3'10
11
80%
Q4'09
16.5
Q1'09
17
69%
11.5
100%
2000
17.5
36%
12
120%
1952
18
Financial Obligations Ratio
18.5
12.5
107%
112%
140%
19
13
Debt Service Ratio
160%
19.5
13.5
2006
14
Total Household Indebtedness
Financial Obligations Ratio
Source: Federal Reserve Board (FRB). Both measure household debt in different ways. The right table shows that total household indebtedness as a percent of
disposable income has fallen to 107% from 138% in 2006. Photo from Microsoft Office 2010
13
…And Bank Lending is Improving
2014 (green) & Q1'15
4.0%
Credit cards
2.3%
4.0%
Credit cards
5.2%
Consumer
1.6%
Consumer
5.2%
2.5%
RE loans
3.8%
2.5%
RE loans
12.0%
C&I loans
-20%
2014
-10%
2013
0%
2012
12.6%
12.0%
C&I loans
2011
10%
2010
2009
Source: Federal Reserve Board. C&I = commercial and industrial, RE = real estate
0%
5%
10%
15%
14
Long-Term Positive: Household Formations Trending Up
Household Formation Ratio to Housing Starts
1996
43%
94%
93%
82%
53%
1998
2000
219%
2002
64%
107%
2004
37%
65%
58%
2006
120%
2008
85%
72%
61%
2010
188%
2012
308%
149%
108%
2014
0%
Source: US Census Bureau and BB&TCM analysis; photo from Microsoft Office 2010
100%
200%
300%
400%
15
Capacity: TL, LTL, Intermodal & Other Influences
Source: Microsoft Office 2010 for photo
16
East Coast Ports May Gain Modest Share
70%
65.0%
63.7%
64.0%
59.4%
60%
55.0%
50%
45.0%
40.6%
40%
30%
36.3%
36.0%
35.0%
20%
West Coast
Source: Global Port Tracker North America
Apr'15
Jan'15
Oct'14
Jul'14
Apr'14
Jan'14
Oct'13
Jul'13
Apr'13
Jan'13
Oct'12
Jul'12
0%
Apr'12
10%
Jan'12
 February 2015 survey of
403 shippers and 191 3PLs
indicate they plan to migrate,
on average, 20% of their
volumes from West to East
 40% of shippers using only
the West Coast plan to shift
some to East Coast
 33% of retailers and 25% of
manufacturers will shift
some to the East
 JOC June 2015 survey: 43%
of shippers plan to shift, but
just 5% of volumes
East Coast
17
Shipments: LTL Led in 2014; Reefer Leads in 2015
Total TL Loads
Van
Flatbed
Reefer
LTL
Tank
20%
14.9%
15%
12.8%
12.0%
10%
6.6%
6.1% 6.2%
5%
3.5%
1.1%
0%
-1.5%
-5%
-3.0%
-4.4%
2011
-1.4%
3.0%
2.7%
2.5%
1.3% 1.1%
1.1%
1.1%
2012
2013
6.8%
3.5%
2.4%
1.8% 2.0%
2.2%
1.6%
2014
1.7%
0.7%
2015 YTD
-3.7%
-5.8%
-10%
Source: ATA TRAC report; photo from BB&TCM; YTD is through May 2015; Note: during the first 5 months of 2014, reefer was up 1.4%
18
Reefer is Really Smoking (pun intended)!
140
7.6%
7.7%
120
6.6%
110
100
101.1
90
% Change
122.7
2.5% 3.5%
1.1%
2.6%
3.1%
5%
0%
-5%
-4.4%
80
-10%
2006
2008
2010
2012
2014
380,000
360,000
337,537
400,000
359,255
373,339
Reefer Trailers Have Grown 5.9% in 7 Years
420,000
400,105
130
136.7 15%
12.8%
125.8
10%
Loads
339,189
• Since the end of 2006, reefer loads
have grown 24.5% but trailers are
up just 5.9%
• Reefer loads have grown ten of the
last eleven years
• Reefer loads have averaged 3.3%
annual growth since the end of 2003
• Reefer trailers grew 2.4% in 2014
but could grow 4+% in 2015
• Factors? Organic food,
demographics (pharmaceuticals,
etc), food safety regs, life sciences,
etc.
Reefer Loads Up 24.5% ’06-’14
340,000
320,000
300,000
2006 2008 2010 2012 2014 2016E 2018E
Source: BB&TCM commentary; ATA for load data; ACT Research for reefer trailers; Microsoft Office 2010 for photo.
19
Case Study in Reefer Trailers: Marten Transport
• Since 2004 MRTN added
1,113 reefer trailers or 35%
growth
• But MRTN added fewer than
200 tractors
• Its LOH fell 41% to 598 miles
• Live loads have gone from
~98% of shipments to ~80%
• Summary: Most of the trailer
growth was to accommodate
shorter LOH, more drop &
hook and TOFC intermodal
(slower turns than OTR)
Marten’s Reefer Fleet Grew 35% …
5,000
1.78
4,500
4,218
4,000
3,500
3,000
2.0
1.85
3,928
4,170
1.76
1.8
4,265
1.6
1.38
3,152
1.4
1.31
1.2
2,500
1.0
Trailers
… But Was It Truly Growth?
1,200
1,000
Trailer/Tractor Ratio
LOH
1,006
937
853
800
655
624
600
598
400
2004
Source: Company reports and BB&TCM
2006
2008
2010
2012
2014
20
180
CPI-U Food and Beverages
Refrigerated Rate per Mile
170
157.7
160
152.0
150
140
134.6
127.3
130
126.4
121.4
120
115.0
122.1
122.3
109.6
110
115.9
104.8
105.4
100.0
Source: Bureau of Labor Statistics and American Trucking Associations (ATA) TRAC report
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2003
2001
1999
1998
1997
90
1996
98.3
99.4
2002
99.9
2000
100
143.1
139.4
2004
Index Value (1996 = 100)
Reefer Rates: Up 6.5% Since 2008; Food CPI Up 13.1%
21
Organic Food Sales Have Grown ~8% Annually Since 2010
• In 1997, sales of organic
foods were just $3.4B; last
year they were $35.9
U.S. Organic Food Sales ($ billions)
40
36.0
35
• Spending on organic foods
represented almost 5% of
total food sales in 2014,
up from 1% in 1997
• Sales of organic fruits and
vegetables grew 12% last
year to $13B while organic
dairy sales rose 11% to
nearly $5.5B.
Source: Organic Trade Association
30
23.6
25
20
15
26.7
29.2
17.2
12.0
10
5
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
22
US-Mexico Food Trade is Growing Rapidly
 Even with the “great
recession”, food trade
between the US and
Mexico has averaged
10.2% annual growth
 3 of 5 years since “great
recession” food trade
has exceeded 16%
 Since 2004, exports
have grown 9.9%
annually while imports
have averaged 10.5%
annual growth
30
25
11.2%
20
11.4%
15
10
16.0% 15.2%
15.6%
12.4%
9.8% 15.8
26.5
17.9
10%
6.3%
10.0
2.8%
5
(2.5%)
US-Mexico Food Trade (Truck Only; $B)
Source: U.S. Department of Transportation, Bureau of Transportation Statistics; YTD 2015 is through April
15%
21.9
12.8
0
20%
17.5%
4.9%
9.8
5%
0%
(5%)
% Chg Yr/Yr
23
HOS Impact: Much Greater than the 3% “Conventional Wisdom”


Conventional wisdom is that solo
operations were impacted by 2.5%–
3%
Team operations were impacted
4%–4.5%
50%
45%
40%

Our survey work suggests those
figures were low

Practically speaking, between the
restart provision and the 30minute break, the 3% figure
didn’t make sense
30%

Given the market tightness, we
believe the 3% figure was low
20%

Suspension of restart could free
up 2%–3% capacity
26%
15%
14%
10%
0% to 2%
3% to 4%
Source: BB&TCM survey of ~100 carriers in August 2014. Measures weekly miles per truck impact. Photo from Microsoft Office 2010.
5% to 8%
Over 8%
24
Driver Miles Equals Driver Smiles
•
•
•
•
•
•
A
Prep time = pre-trip
inspection, fueling, drug
July’13-Dec’14
tests, DOT inspections
HOS: More like
PT = breaks, meals,
communications, route
6.5 hours until
planning, logging
suspension
Time at S/R = inefficient
appointments, paperwork,
check-in, check-out
DTE = holidays, surges,
traffic, day of week booking,
438 (7.3
network changes
UT = appointment times,
hours)
parking issues, fatigue, 70hour rule, planning
uncertainty, day of week
bookings
DT = Most fleets believe they
can add 30–75 minutes with
shipper/receiver help
Driver's 14-Hour Day (840 minutes)
30
Prep Time
90
120
Personal Time
108
Time at
Shipper/Receiver
48
Drive Time Empty
Unused Time
Drive Time
Note: 660 available drive time minutes per day
Source: BB&TCM and a large private fleet, sub-90 OR
25
E-Commerce: Behavior’s Impact on Freight Flows
Source: Microsoft Office 2010 for photos
26
Here’s What’s Being Bought Online
•
5 of the fastest-growing
product sales are diapers,
toiletries, pet food, bottled
water and computer
printing paper!!!
E-Commerce as a Percentage of Overall Spending by
Type of Good (2013)
Books
39%
Electronics
24%
Baby
23%
Toys
22%
Sporting Goods
16%
Appliances
14%
Clothing
Pet
11%
Personal Care
7%
Furniture
4%
Groceries
2%
0%
Source: BB&TCM research of a variety of information
Preliminary
figures:
Groceries are
now at 3.5% &
furniture at 8%
13%
10%
20%
30%
40%
50%
27
Capacity: Prolonged Crunch, or Rolling Headaches in
2014–2017?
Source: BB&TCM/Thom Albrecht for cartoon on left; Transport Topics for cartoon on right
28
Psst…Drivers are Older-Not Just Carrier Rhetoric!
 21 years ago 30% of
the drivers were 25
to 34 years old
 Today, they are less
than 16%
 21 years ago 9% of
drivers were 55 to 64
years old
 Today, they are 20%
35%
30%
25%
20%
15%
10%
5%
0%
20-24 yrs 25-34 yrs 35-44 yrs 45-54 yrs 55-64 yrs
2013 4.9%
15.6%
24.0%
29.3%
20.1%
2003 5.6%
21.7%
28.7%
26.1%
14.0%
1994 9.2%
30.4%
29.5%
20.0%
9.1%
Sources: ATA , ATRI and BB&TCM analysis
65+ yrs
6.1%
2.8%
1.9%
29
It’s Paid to be Almost Anything but a Driver!
$19
Indexed Wage (1999 = 1.0)
$19.68
$22
$21.38
$25
1.6
1.5
$21.96
$28
$24.81
40 Years of Ugly!--Average
Hourly Driver Wages
1.4
1.3
1.2
$16
1.1
$13
1.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
2011
2006
2001
1996
1991
1986
1981
1976
$10
Heavy and Tractor-Trailer Truck Drivers
Construction Laborers
Food Prep and Serving Related Occupations
Automotive Service Technicians and Mechanics
Registered Nurse
Source: BB&TCM analysis, Bureau of Labor Statistics; photo from Microsoft Office 2010. Chart on left is inflation-adjusted.
30
Is the Driver Challenge Worse? Yes and No …
•
•
•
•
Q4’04 tied for worst turnover last cycle, while
Q3’04 was the 3rd worst
Driver turnover was >100% 24 out of 25 quarters
last cycle; it remains below 100% this cycle
No, it’s not different: Pay raises immediately
helped truck count (see right chart)
Yes, it’s different: What constitutes an acceptable
driver hire has totally changed the last ten years
110%
Large TL Turnover
Small TL Turnover
105%
100%
97%
95%
92%
90%
85%
79%
80%
78%
75%
70%
74%
1400
1200
1000
800
97% 96%
600
94% 94% 95%
400
96%
91%
1600
Large Fleet Pay
Raises Began in
Earnest in Q2’14;
Maybe Small Fleets
Couldn’t Keep Up?
13:Q3 13:Q4 14:Q1 14:Q2 14:Q3 14:Q4
200
160%
136%
121%
140%
120%
759
96% 97% 96% 96%
*
589
336 370
0
(16)
-200
Q3'04 Q4'04
80%
60%
40%
Q2'14 Q3'14 Q4'14 Q1'15
20%
-400
-600
100%
(463)
Truck Adds/(Deletions)
0%
Driver Turnover
Source: BB&TCM analysis of public carriers CGI, CVTI, JBHT (truck only), KNX, MRTN, SWFT, WERN and 2 private carriers; photo from BB&TCM; for Q4’14, we estimate that ~1,050 tractor
additions were from acquisitions, implying organic growth of 370 units. Total for the group was 1,435 including acquisitions. Cartoon from Transport Topics.
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Timetable for 7 Key Future Regulations
o ELD rule by September 30, 2015; mandated by Sept. 2017
o NHTSA to publish speed limiters around July 27, 2015
o Carrier safety fitness determination rule to be published on August 17,
2015 (we’ll see)
o CDL drug and alcohol clearinghouse rules to be published Sept. 30,
2015
o Rule prohibiting coercion of drivers by carriers and brokers to be
published by September 10, 2015 (likely to be delayed)
o Minimum insurance proposal likely to be raised; announcement in
the summer or fall?
o Hair follicle test to be discussed by FMCSA; Key #s: at Schneider 120
pre-employment drivers failed drug urine test; 1,400 failed hair
follicle; JBHT: 110 and 3,845!
Source: BB&TCM photo; regulations from the government’s advance notice of public rulemaking (ANPRM)
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Closing Thoughts
“We can’t solve problems by using the same kind of thinking we used when
we created them”
— Albert Einstein
“If You’ve Got the Bucks, We’ve Got the Trucks!”
— overheard at a trade show
“A cynic knows the price of everything and the value of nothing”
— Help your customers not be this person!
When President Obama took office in 2009, there
was one person at DOT making over $170,000
annually
Today, there are 1,800+ people at DOT making over
$170,000. No wonder you have a headache!
Source: Cartoon from Transport Topics
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IMPORTANT DISCLOSURES
To receive price charts on the companies mentioned in this report, please contact BB&T Capital Markets Research at 800-552-7757 x8785.
BB&T Capital Markets rating distribution by percentage (as of July 1, 2015):
All companies
under coverage:
Buy (1)
Hold (2)
Underweight/Sell (3)
Not Rated (NR)
44.63%
53.75%
1.30%
0.33%
All companies under coverage to which it has provided
investment banking services in the previous 12 months:
Buy (1)
23.36%
Hold (2)
21.82%
Underweight/Sell (3)
25.00%
Not Rated (NR)
0.00%
BB&T Capital Markets Ratings System:
The BB&T Capital Markets Equity Research Department Stock Rating System consists of three separate ratings. The appropriate rating is determined by a stock’s estimated 12-month total return potential, which consists of the
percentage price change to the 12-month price target and the current yield on anticipated dividends. A 12-month price target is the analyst’s best estimate of the market price of the stock in 12 months. A 12-month price target
is highly subjective and the result of numerous assumptions, including company, industry, and market fundamentals, both on an absolute and relative basis, as well as investor sentiment, which can be highly volatile.
The definition of each rating is as follows:
Buy (1): estimated total return potential greater than or equal to 10%, Hold (2): estimated total return potential greater than or equal to 0% and less than 10%, Underweight (3): estimated total return potential less than 0%
B: Buy H: Hold UW: Underweight NR: Not Rated NA: Not Applicable NM: Not Meaningful SP: Suspended
Stocks rated Buy (1) are required to have a published 12-month price target, while it is not required on stocks rated Hold (2) and Underweight (3).
BB&T Capital Markets Equity Research Disclosures as of July 1, 2015
BB&T Capital Markets makes a market in the securities of ArcBest Corporation, American Railcar Industries, Inc., Celadon Group, Inc., C. H. Robinson Worldwide, Inc., Con-way Incorporated, Covenant Transportation Group, Inc., Echo
Global Logistics, Inc., The Greenbrier Companies, Inc., Genesee & Wyoming Inc., Heartland Express, Inc., J.B. Hunt Transport Services, Inc., Knight Transportation, Inc., Landstar System, Inc., Marten Transport, Ltd., Old Dominion
Freight Line, Inc., Roadrunner Transportation Systems, Inc., Saia, Inc., Swift Transportation Company, Trinity Industries, Inc., Universal Truckload Services, Inc., Wabtec Corporation, Werner Enterprises, Inc. and YRC Worldwide Inc..
BB&T Capital Markets has managed or co-managed a public offering of securities for Covenant Transportation Group, Inc., Echo Global Logistics, Inc., Heartland Express, Inc. and Trinity Industries, Inc. in the last 12 months.
BB&T Capital Markets has received compensation for investment banking services from Covenant Transportation Group, Inc., Echo Global Logistics, Inc., Heartland Express, Inc. and Trinity Industries, Inc. in the last 12 months.
BB&T Capital Markets expects to receive or intends to seek compensation for investment banking services from ArcBest Corporation, American Railcar Industries, Inc., Celadon Group, Inc., C. H. Robinson Worldwide, Inc., Conway Incorporated,
Covenant Transportation Group, Inc., Echo Global Logistics, Inc., The Greenbrier Companies, Inc., Genesee & Wyoming Inc., Heartland Express, Inc., J.B. Hunt Transport Services, Inc., Knight Transportation,
Inc., Landstar System, Inc., Marten Transport, Ltd., Old Dominion Freight Line, Inc., Roadrunner Transportation Systems, Inc., Saia, Inc., Swift Transportation Company, Trinity Industries, Inc., Universal Truckload Services, Inc.,
Wabtec Corporation, Werner Enterprises, Inc. and YRC Worldwide Inc. in the next three months.
An affiliate of BB&T Capital Markets received compensation from ArcBest Corporation, American Railcar Industries, Inc., Con-way Incorporated, The Greenbrier Companies, Inc., Genesee & Wyoming Inc., J.B. Hunt Transport
Services, Inc., Landstar System, Inc., Old Dominion Freight Line, Inc., Roadrunner Transportation Systems, Inc., Saia, Inc., Swift Transportation Company, Trinity Industries, Inc. and Wabtec Corporation for products or services
other than investment banking services during the past 12 months. The analyst or employees of BB&T Capital Markets with the ability to influence the substance of this report know or have reason to know the foregoing facts.
ADDITIONAL INFORMATION AVAILABLE UPON REQUEST
For valuation methodology and related risk factors on Buy (1)–rated stocks, please refer to the body text of this report or to individual reports on any covered companies referenced in this report.
The analyst(s) principally responsible for preparation of this report received compensation that is based upon many factors, including the firm’s overall investment banking revenue.
Analyst Certification
The analyst(s) principally responsible for the preparation of this research report certify that the views expressed in this research report accurately reflect his/her (their) personal views about the subject security(ies) or issuer(s)
and that his/her (their) compensation was not, is not, or will not be directly or indirectly related to the specific recommendations or views contained in this research report.
OTHER DISCLOSURES
The information and statistics in this report have been obtained from sources we believe are reliable but we do not warrant their accuracy or completeness. We do not undertake to advise the reader as to changes in figures
or our views. This is not a solicitation of an order to buy or sell any securities.
BB&T Capital Markets, a division of BB&T Securities, LLC, member FINRA/SIPC, is a wholly owned nonbank subsidiary of BB&T Corporation. The securities sold, offered or recommended are not a deposit, not FDIC insured, not
guaranteed by a bank, not guaranteed by any federal government agency and may go down in value.
The opinions expressed are those of the analyst(s) and not those of BB&T Corporation or its executives.
34
The Outlook of Refrigerated Trucking:
From a Financial Analyst Perspective