Schneider National, Inc. Announces First Quarter 2022 Results

“During the first quarter, revenue management and new dedicated business helped mitigate inflationary cost pressures and ongoing capacity headwinds in our network truckload business”

• Operating Revenues $1.6 billion; $1.2 billion in 2021
• Income from Operations $135 million; Adjusted Income from Operations $148 million
• Diluted Earnings Per Share $0.52; Adjusted Diluted Earnings Per Share $0.57
• Increased full year Adjusted Diluted Earnings per Share guidance to $2.55 – $2.70

Schneider National, Inc. announced results for the three months ended March 31, 2022.

“During our five years as a public company, we have achieved meaningful progress toward our strategic objectives,” said Mark Rourke, Chief Executive Officer and President of Schneider. “We set out to build a leading multimodal transportation platform that operates at scale and is resilient through business cycles. The progress we have made, as further evidenced by our first quarter results, provides momentum and excitement for the future.”

“During the first quarter, revenue management and new dedicated business helped mitigate inflationary cost pressures and ongoing capacity headwinds in our network truckload business. Our recent acquisition, Midwest Logistics Systems, is performing well, and we have begun to realize anticipated synergies,” Rourke continued. “Revenue per order grew 16% in our Intermodal segment, supported by container additions and effective revenue management, while our Logistics segment, augmented by expansion of our Power Only offering and Schneider FreightPower®, grew both revenue and earnings over the prior year and delivered a record operating ratio of 92.3%.”

Enterprise Results

Enterprise income from operations for the first quarter of 2022 was $135.1 million, an increase of $58.9 million, or 77%, compared to the same quarter in 2021. Gains on the sales of equipment were immaterial in both comparative periods. First quarter 2022 income from operations included a $50.9 million net gain related to a property sale which closed in the quarter. In addition, first quarter results included two items that negatively impacted income from operations. The first item was an adverse court ruling on April 25, 2022 in a previously-disclosed litigation with the former owners of Watkins and Shepard Trucking (WSL). The Company reserved $59.0 million for this matter, which includes compensatory damages, interest, and attorneys’ fees, and is currently evaluating all options regarding this judgment. The second item involves an adverse state tax audit assessment for prior reporting years amounting to $5.2 million that the Company plans to appeal. Considering these items, adjusted income from operations for the first quarter of 2022 was $148.4 million, an increase of $72.2 million, or 95%, compared to the prior year.

At March 31, 2022, the Company had a total of $211.7 million outstanding on various debt instruments compared to $270.3 million as of December 31, 2021. The Company had cash and cash equivalents of $272.6 million and $244.8 million as of March 31, 2022, and December 31, 2021, respectively.

In January 2022, the Company’s Board of Directors declared an $0.08 dividend payable to shareholders of record as of March 11, 2022. This dividend was paid on April 8, 2022. On April 25, 2022, the Company’s Board of Directors declared an $0.08 dividend payable to shareholders of record as of June 10, 2022, expected to be paid on July 11, 2022.

Results of Operations – Reportable Segments

Truckload

Truckload revenues (excluding fuel surcharge) for the first quarter of 2022 were $548.4 million, an increase of $96.7 million, or 21%, compared to the same quarter in 2021, primarily due to dedicated new business growth, the inclusion of MLS, and favorable revenue and network management, partially offset by a lower Truckload network fleet count and lower productivity mainly related to early first quarter COVID-impacts. Truckload revenue per truck per week was $4,186, an increase of 13% compared to the same quarter in 2021.

Truckload income from operations was $119.4 million in the first quarter of 2022, an increase of $81.1 million, or 212%, compared to the same quarter in 2021, primarily due to the earnings impact of the gain on a property sale as referenced above and effective revenue and network management, partially offset by higher driver and related costs. Truckload segment operating ratio was 78.2% in the first quarter of 2022, compared to 91.5% in the first quarter of 2021. Operating ratio in the first quarter was impacted 930 basis points by the gain on property sale.

Intermodal

Intermodal revenues (excluding fuel surcharge) for the first quarter of 2022 were $302.1 million, an increase of $46.3 million, or 18%, compared to the same quarter in 2021 primarily due to a 16% improvement in revenue per order compared to the first quarter of 2021, as well as volume growth, despite fluidity challenges. Intermodal grew its container count by over 2,200 units in the quarter which represents year-over-year fleet growth of 26%.

Intermodal income from operations for the first quarter of 2022 was $38.9 million, an increase of $18.9 million, or 95%, compared to the same quarter in 2021, primarily driven by constructive revenue management partially offset by higher rail and dray driver costs. Intermodal operating ratio was 87.1% in the first quarter of 2022, compared to 92.2% in the first quarter of 2021.

Logistics

Logistics revenues (excluding fuel surcharge) for the first quarter of 2022 were $545.7 million, an increase of $189.8 million, or 53%, compared to the same quarter in 2021 due to increased revenue per order and 24% brokerage volume growth over the prior year.

Logistics income from operations for the first quarter of 2022 was $41.9 million, an increase of $26.0 million, or 164%, compared to the same quarter in 2021, primarily due to increased net revenue per order and volume as cited above, enabled by increased contribution from the Company’s Power Only offering and digital capabilities of Schneider FreightPower®. Logistics operating ratio was 92.3% in the first quarter of 2022, compared to 95.5% in the first quarter of 2021.

Business Outlook

“We anticipate steady improvements to network and supply chain fluidity throughout 2022,” Rourke commented. “Based on our first quarter results and company-specific market positioning, our updated full year adjusted diluted earnings per share guidance is $2.55 – $2.70, an increase from our prior guidance of $2.35 – $2.55. Our full year guidance for net capital expenditures is updated to $500 million, up from approximately $450 million.”

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 2022 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.

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