Boyd Bros. Transportation Inc. Business Information, Profile, and History

Company Perspectives:

Boyd Bros. Transportation will be the recognized leader in the flatbed industry by providing the best service. We will grow the company aggressively, providing an excellent return to our stockholders. We will operate safely and legally. We will meet or exceed all agreed upon commitments to all internal and external customers. We will continually improve service, cost management, and productivity through innovation and the use of technology. We will hire, develop, train, invest in, empower, recognize, and trust committed, competent associates. We will do what we say we will do.

History of Boyd Bros. Transportation Inc.

Boyd Bros. Transportation Inc. is a flatbed trucking company headquartered in Clayton, Alabama. The firm operates in the eastern two-thirds of the country, where it maintains ten regional service centers. Its major terminals are in Clayton and Birmingham, Alabama; Greenville, Mississippi; and Springfield, Ohio; it also has six smaller, satellite service centers in Kentucky; Virginia; Maine; Arkansas; Maryland; and Wisconsin. These service centers permit the company to re-dispatch equipment terminating at one center to another point, recruit drivers, and help drivers get home on a more regular basis. Boyd's principal customers are high-volume, time-sensitive steel and building material shippers who require on-schedule deliveries. The company maintains a fleet of more than 1,100 tractors and 1,450 flatbed trailers. The trucks, equipped with two-way satellite systems and computers, are monitored constantly through the use of Qualcomm communications technology. Qualcomm's OmniTracs allows the company to record various data instantly and provide up-to-the-minute snap shots of a shipment's status, which it makes available to its customers via the Internet. Boyd's wholly-owned subsidiary, Welborn Transport Co., based in Tuscaloosa, Alabama, is a short-haul trucking company specializing in the transport of building materials to delivery points within a 400-mile range. It maintains several locations in the Southeast, from which it dispatches over 350 company owned or driver owned and operated trucks. With the acquisition of Welborn in 1997, Boyd Bros. became one of the largest flatbed trucking companies in the nation. Although Boyd Bros. is a public entity, chairman and founder Dempsey Boyd still owns about 37 percent of the company. His daughter, Gail B. Cooper, is the firm's president and CEO.

1956-89: A Growing Family Business

In 1956, Dempsey Boyd and his brothers founded Boyd Bros. Transportation Inc. as a small, regional, family-owned flatbed-trucking operation. To a large extent, it would remain under the Boyd family control until the end of the century, despite going public. In 1972, Dempsey Boyd's daughter, Gail B. Cooper, joined the company and worked in various positions that gave her familiarity with all phases of the business. She would eventually become president and CEO of the company, with her father as chairman of the board.

Boyd's initial fleet consisted of three tractors. Its specialty was hauling flatbed, open trailers for customers who needed delivery on time. Most of the freight it hauled consisted of steel products and building materials. It slowly added trucks and regional centers, creating a network that by 1989 had extended its range of operations across the eastern two thirds of the United States. Throughout its development into the early 1990s, Boyd hired its drivers and provided both the tractors and trailers for them to use. That policy would later change.

During its early history, Boyd established its corporate headquarters and principal service center on a 17.9 acre tract in Clayton, Alabama. On this site, it built facilities consisting of some 22,000 square feet of office area, 12,000 square feet of equipment repair space, and three acres of parking area.

1990-96: Going Public and Facing Challenges

Starting in the 1990s, Boyd Bros. began adapting new technologies to its operations. By the end of 1990, the company had installed a Qualcomm provided satellite-based OmniTracs system in each of its tractors. Because it permitted on-the-road truckers and service center dispatchers to establish instantaneous communications, the system greatly improved both the efficiency and quality of the company's operations. It also allowed Boyd to provide customers with up-to-the minute information on the status and anticipated delivery time of their shipments.

Over the next couple of years, Boyd also installed Qualcomm's Sensortracs on-board computer systems in all its tractors. This equipment monitored various kinds of data and generated reports that helped Boyd assess the performance of both its vehicles, particularly their fuel efficiency, and their drivers. The data were also used to assess the effectiveness of the company's driver-training programs.

The company went public in 1994, at which time it boasted a $50 million fleet made up of about 400 tractors and 700 flatbeds domiciled at 12 terminals. The transition caused some adjustment problems. Although Boyd's revenue climbed to $59.1 million from $50.3 the year before, it reported a net loss of $2 million. The next year it fared better. It reduced its employees from 713 to 633, and it restored the profitability it had enjoyed in 1993, despite the fact that, in general, 1995 was a bad year for the trucking industry, which was plagued by a severe economic downswing that forced some companies into bankruptcy. At the end of its 1996 fiscal year, the company had revenues of $65.5 million ($4.5 million short of its projections) and 807 employees. Its net profit margin dropped from 3.4 percent in 1995 to 1.2 percent, with a net income of about $800,00, hence slipping again.

In 1996, in response to the company's faltering, Boyd Bros. began what its CFO Richard Bailey termed an 'aggressive restructuring program.' The move involved some layoffs and the resignation of Christopher Healy, the company's COO, with whom other executive officers had some 'philosophical differences.' Baily, who had joined the company as CFO in 1992 and had become a director in 1995, spearheaded the restructuring with the support and help of Gail B. Cooper, who had served as the company's secretary since the 1970s.

According to the company, the mid-decade operations downturn from 1994 to 1996 resulted from Boyd's overemphasis on technology and internal systems. Although this focus added personnel and programs, it led to a decline in productivity and growth. To get back on track, Boyd returned to its basic operation, concentrating on "sales, service, driver retention, and cost control." The move paid off, producing a significant upswing in 1997.

1997 and Beyond: Restructuring

Two major changes came in that same year. First, in June, Boyd started its owner-operator program. At that time it began contracting independent tractor owners to provide service for the company's customers. The program allowed such owner contractors having at least one year's experience to bring their own tractors to Boyd Bros. The company also initiated a lease-purchase program that gave its regular drivers the option of buying their own tractors through a lease-purchase arrangement with the company. Under the program's terms, drivers leased tractors from Boyd and, in turn, leased the use of tractors and their services back to Boyd. Because drivers would have the option of purchasing their leased tractors, Boyd's management believed the program would help reduce driver turnover and improve the company's chances of meeting its growth projections because it would attract additional contractors and safe, professional drivers.

Next, on December 8, 1997, Boyd acquired Welborn Transport, Inc. as an independently operating, wholly owned subsidiary. W. Miller Welborn had established Welborn in 1989 with co~founder Steven S. Rumsey. Its operational hub was Tuscaloosa, Alabama, where it was founded, but it dispatched its short-haul trucks from several southeastern locations. Like Boyd Bros., Welborn trucked building materials such as roofing and sheetrock, but only at an average hauling distance of under 400 miles. When acquired, at a cost of $6.63 million, Welborn had some 330 tractors and over 350 flatbed trailers, with annual sales of over $30 million. However, all but 50 of the tractors were owned by their operators, who were paid by Welborn on a revenue percentage basis. Also, over 50 percent of Welborn's loads were booked through agents rather than directly with their customers, whereas Boyd Bros. traditionally contracted directly with its customers. Still, Welborn's short-haul trucking provided a good complement to the longer trekking done by the Boyd Bros.' fleet of trucks.

The acquisition of Welborn led to further management changes. Initially, W. Miller Welborn joined Boyd Bros. as vice-president. He became acting CEO in July 1998, then CEO in 1998. Later, in 2000, he would become Boyd Bros.'s vice-chairman and vacate his posts as president and CEO, relinquishing these to Cooper.

At the end of 1997, Boyd Bros. had 54 owner-operators and contractors in its programs, but over the next two years that figure increased to 230. Its lease-purchase program permitted experienced drivers to enter the program without any down payment, taking between two-and-a-half and four years to buy the tractor that they drove for the company. Under the terms of their lease contracts, the drivers had the option to purchase the tractors at a fair market value or upgrade into a new tractor.

In 1998, as part of its growth strategy, Boyd Bros. announced plans to construct a $3 million "super terminal" in North Birmingham and began aggressively recruiting truck drivers by increasing pay for experienced drivers. The company also announced its intentions of acquiring Ruel Smith Transportation Services, Inc., a privately owned, Houston-based flatbed trucking company, and its affiliate, RSTS Logistics Corp., a marketer of freight brokerage services. Ruel Smith provided both short- and long-haul flatbed trucking services throughout North America, and in 1998 had a fleet of 150 tractors and 164 trailers. The company was profitable and would have immediately enhanced Boyd's earnings. However, in early 1999, the deal fell through when the two companies failed to reach "mutually acceptable terms."

In 1999, Boyd Bros. had record high revenue and earnings, despite a dropping off in the fourth quarter. Its revenue for the year climbed to $133 million, a rise of 13 percent over the previous year, even through in the fourth quarter its earnings per share fell off from 20 cents in the same quarter of 1998 to 12 cents in 1999. Boyd blamed the drop on increased fuel prices, which fluctuated considerably during 1999.

Outside of driver salaries and owner/operator costs, fuel had always been the Boyd Bros.'s greatest expense; thus, like all businesses heavily dependent on the petroleum industry, Boyd was to a large degree at the mercy of that industry's extremely volatile market. That dependency means that it was difficult to make reliable predictions. In 1998, with the newly purchased Wellborn factored into its calculations, one of the company's stated goals was to increase its total revenues to $200 million by 2001, an increase of $123 million over its revenues for 1997. It was an ambitious goal, one that proved too ambitious. In fact, although the company's revenues reached a record high in 1999, in 2000 they fell slightly, down to $126.7 million, and Boyd Bros. incurred a net loss of $1 million. An increased fuel cost was one of the major reasons for the company's slippage.

Boyd Bros. faced not only increased fuel costs but a weakening freight market in 2000, notably a decline in requests for steel shipments. This soft market condition, in addition to fuel costs, reduced the profits for Boyd's owner/operations, some of whom left the company and thereby reduced its fleet of available trucks, particularly at its Welborn division. In the fall of 1999, at its peak, Boyd Bros.' owner/operator programs had around 550 drivers, 270 of whom operated equipment leased from the company. By the end of the fourth quarter of 2000, the number had dropped to 130, a steep decline. The situation began to stabilize near the end of the year, however. Although encouraged by that, Boyd's CEO and president, Gail B. Cooper, cautioned that "challenging revenue and cost conditions will continue to pressure our earnings at least through the early part of 2001." In 2000, hoping to regain profitability over the long haul, the company implemented fuel surcharges and fuel efficiency programs designed to offset rising diesel fuel costs. Boyd Bros. also put in place a program to lower costs in non-driver related sectors. It remained to be seen whether these measures would prove effective in the first few years of the new century.

Principal Subsidiaries: Welborn Transport Co.

Principal Competitors: Heartland Express, Inc.; J.B. Hunt Transport Services, Inc.; Patriot Transportation Holding, Inc.; Schneider National, Inc.; Swift Transportation Co., Inc.; Transtar, Inc.

Chronology

• Key Dates:

• 1956: Company is founded by Dempsey Boyd and his brothers.
• 1989: W. Miller Welborn founds Welborn Transport.
• 1990: Boyd Bros. completes installation of OmniTracs system on all its trucks.
• 1994: Company goes public, trading on NASDAQ as BOYD.
• 1997: Boyd Bros. initiates owner-operated program and acquires Welborn Transport.
• 1998: W. Miller Welborn is named CEO.
• 2000: Company begins trading common stock on NASDAQ SmallCap Market; Gail B. Cooper becomes company president and CEO when Welborn becomes Boyd's vice-chairman.