Schneider National Reports Q1 2019 Results

Operating revenues of $1.2 billion, an increase of 5% compared to first quarter 2018

Schneider National, Inc  announced results for the three months ended March 31, 2019.

 “Compared to first quarter 2018, our Truckload segment experienced declines in revenue and earnings, while our Intermodal segment grew revenue despite adverse weather and our Logistics segment delivered revenue growth and expanded margins,” noted Mark Rourke, Chief Executive Officer of Schneider.

“Our Truckload operations were impacted by a decline in contractual business which was compounded by weather conditions in our core Midwest and East markets,” Rourke continued. “This resulted in lower productivity and in costs which did not align with the demand environment. The issues that impacted the first quarter were either temporary or mostly in our control to address, which we are aggressively doing.”

“In our Truckload segment, we are encouraged by our business wins, which will address the volume issue, and by the effectiveness of our initiatives to adjust our cost position. In addition, our Intermodal and Logistics businesses are well positioned for continued year-over-year growth. As such, our outlook for the remainder of 2019 remains largely intact.”

Truckload

• Revenues (excluding fuel surcharge): $531.8 million, a decrease of 3% compared to first quarter 2018
• Income from operations: $23.2 million, a decrease of 50% compared to first quarter 2018

Truckload revenues (excluding fuel surcharge) decreased 3% in the first quarter of 2019 compared to the same quarter in 2018. Revenue per truck per week declined $74, or 2%, compared to the first quarter of 2018. Price was positive compared to the same quarter in 2018 due to carryover rate renewals and first quarter 2019 rate renewals; however, it was more than offset by lower volume and asset utilization. In addition, insufficient levels of primary lane contract volumes resulted in a higher proportion of spot volume compared to a year ago, which negatively impacted for-hire Truckload results.

Truckload income from operations decreased 50% in the first quarter 2019 compared to the same quarter in 2018 due to lower volume and productivity, and increased variable costs. Several hundred more drivers were brought on compared to the first quarter of 2018; however, Truckload was unable to productively utilize the capacity for reasons cited earlier. In addition, Truckload results were negatively impacted by First to Final Mile (FTFM). During the quarter, FTFM converted its middle mile execution model to better utilize the variable capacity of Truckload and Intermodal. The conversion costs contributed to the FTFM operating loss, which was approximately a 320 basis point drag on Truckload operating ratio in the first quarter of 2019.

Intermodal

• Revenues (excluding fuel surcharge): $237.6 million, growth of 18% compared to first quarter 2018
• Income from operations: $19.9 million, a decrease of 10% compared to first quarter 2018

Intermodal revenues (excluding fuel surcharge) grew 18% in the first quarter of 2019 compared to the same quarter in 2018 due to a $267, or 13%, improvement in revenue per order and a 3% growth in orders. Revenue per order improved due to carryover of 2018 rate renewals, first quarter 2019 rate renewals and increased length of haul.

Intermodal income from operations decreased 10% in the first quarter of 2019 compared to the same quarter in 2018. Earnings from increased price and volume were offset by lower dray productivity and higher rail and ramp storage costs, largely the result of adverse weather.

Logistics

• Revenues (excluding fuel surcharge): $243.9 million, growth of 10% compared to first quarter 2018
• Income from operations: $10.3 million, an increase of 32% compared to first quarter 2018

Logistics revenues (excluding fuel surcharge) grew 10% in the first quarter of 2019 compared to the same quarter in 2018. The decrease in industry spot rates resulted in higher Brokerage demand and lower revenue per order. Brokerage volume grew 20% in the first quarter of 2019 compared to the same quarter in 2018.

Logistics income from operations increased 32% and operating ratio improved 70 basis points in the first quarter of 2019 compared to the same quarter in 2018. The increase was primarily due to Brokerage volume growth, combined with effective net revenue management. In the quarter, Brokerage executed approximately 19,000 no-touch carrier assignments on our proprietary platform resulting in improved broker and carrier productivity.

Business Outlook

Rourke commented, “Based primarily on first quarter results, we are updating our full year 2019 adjusted diluted earnings per share guidance to $1.50-$1.60. First quarter new business awards across all three segments, and the corrective cost actions we have set in place are benefiting the second quarter. Regarding net capital expenditures, our full year guidance remains at approximately $340 million.”

Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures, including revenues (excluding fuel surcharge) and adjusted operating ratio. 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 2019 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 is a leading transportation and logistics services company providing a broad portfolio of premier truckload, intermodal and logistics solutions and operating one of the largest for-hire trucking fleets in North America. The Company believes it has developed a differentiated business model that is difficult to replicate due to its scale, breadth of complementary service offerings, and proprietary technology platform. Its highly flexible and balanced business combines asset-based truckload services with asset-light intermodal and non-asset logistics offerings, enabling the Company to serve customers’ diverse transportation needs. Since its founding in 1935, the Company believes it has become an iconic and trusted brand within the transportation industry by adhering to a culture of safety “first and always” and upholding its responsibility to associates, customers, and the communities the Company serves.

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