Schneider National, Inc. Announces Second Quarter 2023 Results

Schneider National, Inc. (NYSE: SNDR, “Schneider” or the “Company”), a leading transportation and logistics services company, today announced results for the three and six months ended June 30, 2023.

“The second quarter was a continuation of the well-documented challenges in the freight market, and our efforts to prudently adjust costs and enhance productivity are ongoing,” said Mark Rourke, President and Chief Executive Officer of Schneider. “Our dedicated new business pipeline remains solid with several key accounts onboarding through the end of the year and into 2024. We are now fully aligned with our slate of differentiated and complementary rail partners in our Intermodal business, all of which are delivering favorable service and transit times. Our Logistics business continues to advance enterprise value through its scale, technology, and Power Only offering.”

“On August 1, 2023, we acquired 100% of the membership interest in M&M Transport Services, a leading dedicated carrier located primarily in the northeastern United States with nearly 500 tractors,” Rourke commented. “M&M Transport is a strong and accretive fit to our existing dedicated offering and represents another step forward in our strategic growth plans. This transaction builds upon our successful acquisition of Midwest Logistics Systems, and we look forward to the value that will be generated for our customers and shareholders.”

“We are navigating the current environment from a position of strength which enables us to remain focused on the strategic advancement of our multimodal portfolio and to capitalize on the eventual recovery,” Rourke stated.

Results of Operations (unaudited)

The following table summarizes the Company’s results of operations for the periods indicated.

Enterprise Results

Enterprise second quarter 2023 income from operations was $103.8 million, a decrease of $72.8 million, or 41% compared to the prior year. Adjusted income from operations was $106.7 million, a decrease of $68.1 million, or 39%, compared to the prior year. In addition, gains on the sale of equipment in the second quarter were $10.5 million, compared to $2.8 million the prior year.

At June 30, 2023, the Company had a total of $216.1 million outstanding on various debt instruments compared to $215.1 million as of December 31, 2022. The Company had cash and cash equivalents of $249.2 million and $385.7 million as of June 30, 2023 and December 31, 2022, respectively. The Company’s effective tax rate was 24.9% in the second quarter, compared to 24.8% in the same quarter of the prior year.

In February 2023, the Company announced the approval of a $150.0 million stock repurchase program. As of June 30, 2023, the Company has repurchased $36.1 million under the program year to date. In April 2023, the Company’s Board of Directors declared a $0.09 dividend payable to shareholders of record as of June 9, 2023. This dividend was paid on July 11, 2023. On July 17, 2023, the Company’s Board of Directors declared a $0.09 dividend payable to shareholders of record as of September 8, 2023, expected to be paid on October 10, 2023. As of June 30, 2023, the Company had returned $31.8 million in the form of dividends to shareholders year to date.

Results of Operations – Reportable Segments

Truckload

Truckload revenues (excluding fuel surcharge) for the second quarter of 2023 were $532.7 million, a decrease of $38.9 million, or 7%, compared to the same quarter in 2022 due primarily to lower network price driven by market conditions. Average truck count declined sequentially as growth in dedicated was offset by a modest decline in network. Truckload revenue per truck per week was $4,005, a decrease of 6% compared to the same quarter in 2022.

Truckload income from operations was$64.8 million in the second quarter of 2023, a decrease of $15.9 million, or 20%, compared to the same quarter in 2022 due to pricing pressures in network and higher driver and other inflationary costs, partially offset by higher gains on the sale of equipment. Truckload operating ratio was 87.8% in the second quarter of 2023, compared to 85.9% in the second quarter of 2022.

Intermodal

Intermodal revenues (excluding fuel surcharge) for the second quarter of 2023 were $261.0 million, a decrease of $74.1 million, or 22%, compared to the same quarter in 2022 due to lower volume and revenue per order. Orders decreased 14% and revenue per order decreased 8% compared to the second quarter of 2022.

Intermodal income from operations for the second quarter of 2023 was $23.7 million, a decrease of $18.6 million, or 44%, compared to the same quarter in 2022, due to the factors related to revenue cited above, partially offset by lower rail and dray-related costs due to a higher percentage of drays completed by company drivers. Intermodal operating ratio was 90.9% in the second quarter of 2023, compared to 87.4% in the second quarter of 2022.

Logistics

Logistics revenues (excluding fuel surcharge) for the second quarter of 2023 were $343.4 million, a decrease of $177.9 million, or 34%, compared to the same quarter in 2022 primarily due to decreased revenue per order impacted by lower spot prices, and a 10% decrease in brokerage volume.

Logistics income from operations for the second quarter of 2023 was $12.8 million, a decrease of $34.5 million, or 73%, compared to the same quarter in 2022 due to lower volumes, decreased net revenue per order, and reduced earnings from port dray activity. Logistics operating ratio was 96.3% in the second quarter of 2023, compared to 90.9% in the second quarter of 2022.

Business Outlook

“Though the second quarter was weaker than anticipated due to increased pricing pressure and muted volumes, we are managing through the difficult environment with our sights set on the path ahead,” said Stephen Bruffett, Executive Vice President and Chief Financial Officer of Schneider. “We expect challenging conditions to continue through the third quarter followed by a degree of improvement in the fourth quarter due to modest seasonality. Based on second quarter results and the outlook for freight conditions, our updated guidance for full year 2023 adjusted diluted EPS is $1.75 - $1.90. Our net capital expenditures guidance for full year 2023 remains at a range of $525 - $575 million, with a full year effective tax rate estimated at 24.5%.”

Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures, including revenues (excluding fuel surcharge), adjusted income from operations, adjusted operating ratio, adjusted net income, and adjusted diluted earnings per share. Management believes the use of non-GAAP measures assists investors in understanding the business, as further described below. The non-GAAP information provided is used by Company management and may not be comparable to similar measures disclosed by other companies. The non-GAAP measures used herein have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of results as reported under GAAP.

A reconciliation of net income per share to adjusted diluted earnings per share as projected for 2023 is not provided. Schneider does not forecast net income per share as the Company cannot, without unreasonable effort, estimate or predict with certainty various components of net income. The components of net income that cannot be predicted include expenses for items that do not relate to core operating performance, such as costs related to potential future acquisitions, as well as the related tax impact of these items. Further, in the future, other items with similar characteristics to those currently included in adjusted net income, that have a similar impact on the comparability of periods, and which are not known at this time may exist and impact adjusted net income.

About Schneider National, Inc.

Schneider National, Inc. and its subsidiaries (together “Schneider,” the “Company,” “we,” “us,” or “our”) are among the largest providers of surface transportation and logistics solutions in North America. We offer a multimodal portfolio of services and an array of capabilities and resources that leverage artificial intelligence, data science, and analytics to provide innovative solutions that coordinate the timely, safe, and effective movement of customer products. The Company offers truckload, intermodal, and logistics services to a diverse customer base throughout the continental United States, Canada, and Mexico. We were founded in 1935 and have been a publicly held holding company since our IPO in 2017. Our stock is publicly traded on the NYSE under the ticker symbol SNDR.

Our diversified portfolio of complementary service offerings enables us to serve the varied needs of our customers and to allocate capital that maximizes returns across all market cycles and economic conditions. Our service offerings include transportation of full-truckload freight, which we directly transport utilizing either our company-owned transportation equipment and company drivers, owner-operators, or third-party carriers under contract with us. We have arrangements with most of the major North American rail carriers to transport freight in containers. We also provide customized freight movement, transportation equipment, labor, systems, and delivery services tailored to meet individual customer requirements, which typically involve long-term contracts. These arrangements are generally referred to as dedicated services and may include multiple pickups and drops, local deliveries, freight handling, specialized equipment, and freight network design. In addition, we provide comprehensive logistics services with a network of thousands of qualified third-party carriers. We also lease equipment to third parties through our wholly owned subsidiary Schneider Finance, Inc., which is primarily engaged in leasing trucks to owner-operators, including, but not limited to, owner-operators with whom we contract, and we provide insurance for both company drivers and owner-operators through our wholly owned insurance subsidiary.

Conference Call and Webcast Information

The Company will host an earnings conference call today at 10:30 a.m. Eastern Time. The conference call can be accessed by dialing 844-826-3033 (U.S.) or 412-317-5185 (international). A replay will be available approximately three hours after the call through August 10th by dialing 844-512-2921 (U.S.) or 412-317-6671 (international). The passcode for the replay is 10180138. A live webcast of the conference call can also be accessed on the Investor Relations section of the Company’s website, Schneider.com, along with the current quarterly investor presentation.

Source: Schneider SNDR