Schneider National(SNDR) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues, excluding fuel surcharge, were $1.2 billion, essentially flat year-over-year [27] - Adjusted income from operations for Q3 was$44 million compared to $48 million a year ago [27] - Adjusted diluted earnings per share for Q3 was$0.18, down from $0.20 a year ago [27] - Increased auto liability insurance costs year-over-year represented a$0.04 headwind to earnings per share [28] - Net debt leverage stood at 0.15 times at the end of the quarter [36] Business Line Data and Key Metrics Changes Truckload - Truckload revenue, excluding fuel surcharge, was $532 million, 1$24 million, down 3% year-over-year [29] - Truckload operating ratio was flat compared to the same period last year [29] Intermodal - Intermodal revenues, excluding fuel surcharge, were $265 million, 1$16 million, a $5 million increase compared to the same period last year [30] - Intermodal operating ratio improved by 170 basis points year-over-year [31] Logistics - Logistics revenue, excluding fuel surcharge, was$314 million, down 4% year-over-year [32] - Logistics operating income was $8 million compared to$9 million a year ago [32] - Logistics operating ratio was essentially flat compared to the same period last year [32] Market Data and Key Metrics Changes - The market showed signs of recovery, but the improved seasonality trend did not sustain from mid-August through quarter end [9] - There was double-digit percentage order growth year-over-year in the West and Mexico for Intermodal [19] - The East experienced offsets in growth due to a competitive truckload Intermodal market [19] Company Strategy and Development Direction - The company is focusing on structural improvements, customer experience, capital allocation optimization, and cost management [8] - The Dedicated segment is expected to continue high-level retention and growth opportunities [15][17] - The company aims to leverage its differentiated asset model in Intermodal to capitalize on market recovery [20] Management's Comments on Operating Environment and Future Outlook - Management noted that the freight market is recovering, with expectations for year-over-year earnings improvements in Q4 [36] - The company anticipates stabilization across most businesses and improved seasonality, particularly within truckload network and logistics [38] - Management expressed confidence in the opportunities ahead, particularly in the Dedicated segment [17] Other Important Information - Net CapEx in September was $154 million, below the prior year, due to enhanced asset productivity [33] - The company returned$50 million in dividends to shareholders, a 5% increase from the same period last year [36] - Full year 2024 updated net CapEx guidance is approximately $330 million [35] Q&A Session Summary Question: Full year guidance and market assumptions - Management expects improvement from Q3 to Q4 based on typical seasonality and secured project work [40][41] Question: Trucking segment operating income decline - The decline was attributed to lower network volumes, increased insurance costs, and moderating order tenders [42][43] Question: Dedicated and Network segments pricing trends - Pricing is leading volumes, with disciplined pricing strategies in place [46] Question: Operating supplies and insurance costs - Insurance costs are impacted by increased litigation and nuclear verdicts, while operating supplies are affected by revenue normalization [48][50] Question: Path to profitability for one-way operating - The company is focusing on minimizing volatility and improving rate restoration activities [56][57] Question: Customer discussions on potential pull forward ahead of tariffs - There have not been many discussions about additional pull forward related to tariffs at this time [60] Question: Margin expansion opportunities - Management believes capacity is exiting the marketplace, which could lead to improved margins [63] Question: Intermodal pricing expectations - It is too early to provide guidance on 2025 pricing, but there is a focus on remaining disciplined [67] Question: Competitive landscape and pricing dynamics - The company is observing a slow erosion of supply and is focused on rate restoration to be compensable for costs [86]