Schneider National(SNDR)2024-05-02 20:34Financial Data and Key Metrics - In Q1 2024, the company experienced positive contract price renewal closures in the low single digits for the truckload network for the first time in six quarters [8] - Dedicated revenue per truck per week was flat year-over-year and down 4% sequentially from Q4 2023, primarily due to severe weather in January [9] - Average Dedicated truck count grew year-over-year by 773 units and 80 units sequentially from Q4 2023 [9] - Truckload network revenue per truck per week contracted 10% year-over-year in Q1 2024, with most of the change due to depressed rates [16] - Intermodal segment volumes were flat year-over-year, with revenue per order down 7% compared to Q1 2023 [17] - Intermodal margins improved 40 basis points sequentially from Q4 2023 [17] - Logistics segment revenues declined 15% year-over-year in Q1 2024, primarily due to decreased revenue per order and overall volume declines [22] - Adjusted income from operations for Q1 2024 was down 0.11 compared to 131 million, in line with Q4 2023 [47] Business Segment Performance - In the Asset-Based truckload segment, revenues excluding fuel surcharge were flat year-over-year in Q1 2024 [21] - Truckload earnings for Q1 2024 were lower year-over-year, primarily due to network price and volume pressures [21] - Intermodal segment revenues, excluding fuel surcharge, were down 7% year-over-year in Q1 2024 [22] - Intermodal earnings were down year-over-year, primarily due to lower revenue per order and higher MT repositioning costs [22] - Non-asset logistics segment revenues declined 15% year-over-year in Q1 2024 [22] - Logistics operating margins eroded over 300 basis points compared to Q1 2023, but only 10 basis points sequentially from Q4 2023 [46] Market Performance - The East region in the Intermodal segment is the most competitive region with the truck alternative [17] - Growth in the West, Transcon, and Mexico offset declines in the East [17][27] - The company is seeing signs of inventory destocking concluding, although shippers remain cautious about restocking [23] Company Strategy and Industry Competition - The company is focused on cost reduction actions, asset efficiency improvements, and returning operating segments to long-term margin targets [15] - Dedicated now represents 62% of truckload tractors, with a strong pipeline and new business awards for Q2 and Q3 2024 [44] - The company is leveraging its multimodal platform to quickly pivot when the market improves [43] - The company is encouraged by the Union Pacific's announcement to reduce transit time by two days on the largest freight lane from LA to Chicago [45][54] Management Commentary on Operating Environment and Future Outlook - The company is assessing signs that market conditions are beginning to moderate, but has not seen enough to consider the market at an inflection point [8] - The company expects improving yields in network businesses, volume growth in intermodal and logistics, and continued truck growth in dedicated [24] - The company updated its adjusted diluted earnings per share guidance range for 2024 to 1, assuming a full-year effective tax rate of 25% [52] - Net CapEx expectations for 2024 are adjusted to be in the range of 400 million [52] Other Important Information - The company recognized five Schneider Hall of Fame Driver associates who surpassed 4 million safe driving miles [19] - The company paid nearly 98 million during Q1 2024, with net debt leverage at 0.4 times [49] Q&A Session Summary Question: Intermodal allocation season and Western market dynamics [26] - The company is about 40% through the allocation season and remains disciplined in selling into areas with network differentiation [26] - Growth in the West, Transcon, and Mexico has helped overcome difficulties in the East [27][28] Question: Guidance and market recovery confidence [29] - The company sees positive signs in demand and pricing, but expects moderate capacity reductions and demand improvement [30][31] - Potential disruptions in competing rail services in the East could impact the market [32] Question: Contract renewal trends and asset-based solutions [33][35] - Low single-digit contract renewals were referenced for the truck network [33] - Customers are increasingly favoring asset-based solutions, which benefits the company's brokerage and power-only offerings [35] Question: Intermodal growth and competitive dynamics [37][72] - The company sees differentiation in intermodal due to service reliability and sustainability [37] - The company expects intermodal to grow faster than over-the-road transportation [64] Question: Equipment sales and guidance [66] - The company assumes flat or zero gain on equipment sales, with a 100 million in Q1 2024, with CapEx adjustments reflecting efficiency improvements [131]