SNDR - Earnings call transcript Q3 2017 | Schneider National, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to the Schneider National 2017 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Pat Costello, Senior Vice President of Investor Relations. begin. may you you, Thank

Pat Costello

Company’s Thank you, our have you joining for everyone. a results. Good this morning. morning, the release call earnings should of Thank quarter By XXXX copy for the operator. third now, received you

a not our one is If website. have available you copy, do at

Joining Lofgren, Officer. Lori Chief Lutey, Chief call Financial Executive Operating Officer; Chris the me Chief and are Mark Officer; on today our Rourke, our our

made to that Before today’s we comments. like would our with of guidance call, described on begin, uncertainties the comments financial to remind including filings those some These the you the statements risks I are including Company’s SEC. in forward-looking are and subject

results those materially from may call. described actual differ the Our during

the made does based attached Also, the I as of In any measures are revised Chris? circumstances GAAP discussed addition, today most Chris not forward-looking reconciled statements comparable to are this Company update upon any Lofgren. new like now to financial would measures expectations. our during to or call our and all non-GAAP to turn statements CEO, to undertake and call over directly the tables press the in release. forward-looking

Chris Lofgren

quickly, across in our rates. impact per seen premiums, third leading being revenue morning. in back was good truck revenue surge Integrating spot rates, said a last contract quarter and respond we’ve tale fall an of and seen the a August When order Quest price us and year, to an and factors, the you, the at the historical and spoke of including per the economy to in improving potentially to demand retain I increases, to storms, total capacity. in recruit allowed metrics. Pat Between you, telling month into change board Thank the demand driver movement for that year. full good be our platform would continuing the August pricing we in very pricing for and looking challenges the improving in out two

ability yield in over the The market the improving decisions end price in more the thoughtful capacity also to cost XXX up The for to quarter us momentum towards make the and to resulting pay on netting played increase, fourth accounting across last quarter. processes In to enterprise. grow to recruiting the the productivity done us addition work of this our positions adjustments our XXXX. out and drivers incurred quarter into carry more the capitalize well and through in

call, cost the in contracts of but on we our these quarter we earnings fourth dedicated both revenue last some quarter. third grew for in it As our highlighted more Truckload sub-segments costs our the with and bringing positioning startup favorably

and continuing with important That than said, be an customers in continue of this We been business, of first First to also in portfolio. and the growth mile cost has we network portion our structure getting dialed part for the slower to in see expected. middle to both promise Final our progress the this the for current emerging validate e-tailers Mile our business to

We investments measured be but network our quarters, this to continue timeframe months. will the in for position not the this will reengineering making necessary acquisition the of complete long-term for intent,

were the Intermodal of market segments in improvements resiliency the our our to Truckload but also returns The to and saw and above negative, especially on doubt had all respond hurricanes, without quarter changes to segment, our was We impact negative not the and but our Intermodal to third an Harvey, quarter. quarter both expectations, demonstrated in able lower Truckload the the businesses our services. saw quickly portfolio Logistics

increased improving for volatility saw translated earnings Our business. into Logistics segment which that

the items and the view out moved needed of the helped storm materials Harvey pricing other the water, drive give bottle into Mark business will recovery and detailed demand from segment. for in building Irma. every impacts in the increased quarter, we to As start

have moving rallied entire call. for Harvey we need, to our hurricanes to I Irma. Before personally and on, around communities office thank associates of in I you listening organization equipment a facilities, by know want associates how customers, your number generous driver, the and in and the our on and protecting the both shop response impacted

a You to will are And me it to I our Mark what for that, make with company. privilege Rourke. work in over it turn

Mark Rourke

start will moving the of view I market Chris. macro you, a most the into environment, with segment quarter specifics. my before Thank recent comments with

supply rate his environment highlighted tightened capacity freight throughout as as opening improved increasing as as spot and gains. quarter in asset well First, the in reflected demand Chris contract and utilization

Schneider X.X% standard higher increased within X.X% continue the second cycle for average week internal the the for largest strength its second the markets week quadrant, year-over-year. in in with September. internal out Truckload, the business, the Intermodal beginning contract into XXXX of averaged both indices QX. improving Truckload and standard quarter. renewals August. quarter levels, spot price surpassed price our rates higher strength of in Our trends levels Contract XXXX the Those surpassed indices Truckload in on for XX% renewals Intermodal of

drivers. Mile for-hire QX, Chris results Final and drivers dray professional new dedicated over adding from sequentially, offerings. the Intermodal We in in to mentioned, driver enjoyed improved base As grew by QX our XXX by retention

and as we inspections the build Intermodal change the cost the change business offset negatively impact our in especially price The of orders it QX that offering, lost in and a volumes, necessary the the to not in affected yield to repairs in earnings price” expense price the completed. There minus the first of beyond. were however, cost the while were year-over-year in which recruiting freight and a of opportunities. operation impacts is brokerage and is positive year did premium where segments calendar revenue note inflation that storms was segments revenue the experienced were to in to in missed expenses driver-related truck month It on positive negatives proved performance. be position segment, cost in we from headwind were September freight all wage and Truckload was flood-related distressed equipment that of important “net the suspended, days Truckload However, markets expect

Truckload rail $X negatives, the a estimate lost enterprise to XXXX. specifics, comment, final orders certainly steady, disposal due we of depressed close One while few gains billed negative but summary million experience impact as market QX. when in with lost the same a Specifically, in we did and used remains before revenue erosion a from impacts. XXXX estimate to $X a miles, positive the secondary Intermodal million Therefore segment storm we equipment $X period million in we the net be

operations, gains. QX So XXXX. largest let’s platform quarter, liquid primarily spot contracted price tractor in while Truckload as specialty largest experienced units of and surcharge tractor the The asset standard, our increased to surcharge X%. truck X% per by productivity a of initiative was again the choice specialty due revenue revenue was The transition of compared improved count fuel week for-hire improvement haul by per gain into the the truck Quest segments and line asset tractor XXXX. The from at The revenue QX starting network fuel X% and as week combination per excluding QX. while year-over-year productivity contracts, grew LTL tank for-hire XX%, First with over excluding improved our gains, sequentially Truckload. in XX average revenue of freight X%, tightening Truckload, in per truck to segment selection grew an year-over-year per enabled week, Mile average the again per count

inflationary the do capacity points capacity the margins benefit expect and adequately to We associated greater growth the Within the QX. XXX utilization XXX basis a the extract quarter, did cover of than price as result, expense Truckload not with and year-over-year. increased in gains net contracted

mix-related of QX’s hurricanes Logistics of primarily revenues spot a As we reflect disruptive moved of Intermodal did discuss our on lanes more XXXX. success addition, X,XXX greater Lori International increased The And to over deal with margin order into our of in year, from than impacts network the Furthermore, X% contracted is of consider throughout now year-over-year. finally, a of quarter, more our as portions contracts of million the rates margin results. within cost containers, due and duplicate you $X.X in versus than impacts. X% largely purchased a rental implementation the X% QX’s QX and great on segment containers QX transportation, fewer the of the chassis Harvey out Eastern customer order which our productivity and Mexico per the it I’ll we orders mix offset network. is to Eastern of achieved despite growth all X% prior adjusting complete, if of X%. due realities the experienced count to turn XX% contract over adjusted the XX% Lutey compared Transcon X.X% Intermodal on our change quarter the grew our year-over-year. to of now primarily part partial to Revenue serving over reductions Intermodal throughout chassis slightly enabled aforementioned of CFO, the With that market the the down versus grew the as QX’s we on in about to XXXX. the transition networks, consistent increasing grew in performance segment, quarter, we financial the to own the We of had an of fleet focus

Lori Lutey

you, Thank Mark.

operations while surcharge $X X%, the income million, For revenue the hurricanes. from revenue excluding increased of major $XX.X of negative compared the operating to third enterprise quarter in X% $X.X year-over-year third to primarily increased billion, two of impact billion. the quarter, driver increased adjusted Enterprise was quarter X% a XXXX enterprise due and cost to third XXXX, decrease to the net of fuel

the quarter $X.XX or $XX.X adjusted in the which XXXX already used had we negative the Other offering. than quarter Net the basis, XXXX. be a XXXX, quarter to million. service estimated percentage that as a continuing for compared the to a XXXX to approximately of diluted enterprise was per includes Adjusted an compared Mark compared and $X structure refine to for increased for was the million, to a EPS an First on was the a quarter year-over-year share. ago. second ratio revenue year-over-year year adjusted contributing share of ratio impact our in quarter higher was and third compared third quarter cost from was indicated, third quarter operating EBITDA the EBITDA XX.X% XX impact and decrease to XX.X% to $X.XX surcharge XX estimated million basis of included, of XXXX. decline per factors $XX.X Final Adjusted $X.XX X%, third basis third to quarter On basis to equipment of has of IPO Adjusted share, year-over-year points adjusted net have $X.XX, the quarter. our fuel count, XX third points recent in basis Mile weaker income the was storms the $XXX.X of to As Operating to sequentially up points excluding as increased XX.X% for XX.X%. of million

Now income segment, revenue revenue and was In million of of turning a was income excluding to fuel million. $XX.X $XXX.X our Logistics operating revenue was In results surcharge $XX.X $XXX.X perspective. with million segment, the segment, income Truckload Intermodal our from million. In operating operating million with million. $X.X segment $XXX.X was the

December Schneider September of compared XXXX. to As the had outstanding XX, of million as of XXXX, debt on instruments, million a $XXX.X various end total $XXX.X of

decided could million Given without end equivalents our that the and penalties. December proceeds at cash $XXX.X the to compared XXXX, September flow, million At $XXX.X repay of we to XX, prepayment cash totaled the utilize cash positive XXXX. incurring we debt to of free all our IPO

Our first year-to-date $XX.X compared flow free cash to million, of the months XXXX. increased nine

share from year to share. be diluted view of are adjusting the per expectations our recent increased includes were quarter count which to $X.XX range IPO of internal for the our The the the lower adjusted estimated of which per guidance range updated $X.XX Lastly, earnings based our fourth than year quarter. into third we results, full our share on XXXX is $X.XX in full impact and the

the year maintaining in I lower would questions. sit million CapEx chassis net our to where to $XXX that, open being full XXXX with call on be for We of range. which end range this at Based for we million, includes conversion. anticipate like Operator, we of are today, the the the million approximately $XXX to $XXX

Operator

is question Stanley. first line Thank you. the Please Morgan Instructions] Ravi [Operator with of Our with coming proceed question. your from Shankar

Ravi Shankar

or were Thanks. you end just the Good Lori, morning CapEx EPS you range, I follow-up about what referring everyone. last the can range? on range the to the of said lower

Lori Lutey

The CapEx range, Ravi.

Ravi Shankar

drivers into you you still Okay, the that’s count by Thanks XXXX? Do be just driver up your of on right peers year? feel now? going some the next for are into think got you clarification. like are who stocked that XXX. you you you question, up And your it. be do bottleneck main positioned bumped Or better to going seem Do to a than feel struggling like with going

Chris Lofgren

Good then, choice very made with to And get a keep we the make Chris. so, go a our as we market beginning see morning, retention. engine going mandate looked appropriate the today it’s ELD better made we we adjustments also right, little try that Ravi. seeing are is I pleased to that and in am of than a enforcement and recruiting pay even bit We still plan. we the dialed into confident progress going that is and the were our year to a This create there. behind conscious We really made that sure decision at this which to to

so, of into we quarter. impact is be the dynamics as good going the move market And the environment and fourth demand. big driver the very from we happens going sit I the what into our XXXX to about think question And where standpoint, we just the of to and what’s feel

you don’t I know, want if follow-up Mark, on that. So, to

Mark Rourke

size think we XXX strength I scale results, in several Yes, which have at meaningful the I Ravi, of did a retention impact. reflect how a growth, guess, improved an having our on result is organization, would certainly the our I as of quarter it’s and

little recruiting you our look our value in certainly across organization we market we to folks gets allows the in conversion. success have bunch including a you talked effective out that proposition the – dedicated very portfolio, qualified fleet effective then at of about a that message relatively private that very And at a Secondarily, our and access replacements the to that get because segments, to growth a then, when bigger fashion. which are time

model particularly our grow our environment access well IC choice also plays in is certainly We very safety company culture in Intermodal then, driver our and and rate quality the very our space. dray, a freight rising attractive,

is So, when delivered you put number. we XXX how that play, whole portfolio on at really the

Ravi Shankar

Very helpful. Thank you.

Operator

you. Thank

proceed next Our your is with with the of UBS. from line question. coming question Please Tom Wadewitz

Tom Wadewitz

side you, ask approach service. you Yes, more rail a have good morning. and one think, how I then little Wanted on bit to I on the driver

may in next So, I the that service? you have how you how you [ph] think to rate in perhaps do follow-up how think might contracts equation the then, do [rates So that need? again much you XXXX? about rail And and considering about a to port that right on need year? retention be] price need the you getting And

Chris Lofgren

driver do net price all right. up, don’t is that Pay recurring, driver And about we some definition I’ll the think inside be – start good in Mark the Tom, Mark expenses. good I Chris. is the job going we cost This and but link to acquisition and morning. essentially What’s a net price, of talk things. on of this fee, of gave if that are is, what and have recruiting here have as sitting kinds it sign-on next raises where then follow-up. those year the we bonuses, are certainly retention, interesting we not building

to have favor. of going in first culture a or lot people feel starting we in around to things availability And as pressure not are probably a drivers time a the it’s from clear it, the move those going what’s construction to have But exit going in there. able company, that just the my be are that certainly what’s to to drivers. exit have that going we’ll and market. pressure we XXXX so, we is, have is to aspect And We dialed net rules of know are we watching to to happen I didn’t But things in into going when think, demand be other the Mark of decade into strict when with get the going right had perspective, and on play certainly to get trying safety be seen and to keep choose and hurricane this and good going two safe, where where and that the terms has play happen are we more understand April a the in is move to going a got the If they the operate homebuilding sitting be are industry could to those much place. our we that that that price, they to is going industry enforcement the in on, what’s at company. some

those to to we of to are going how pay. Mark? we have the here to price. we’ve what place are And talk But we it about need to to so, turn look to over terms think understand about detail. I lens am trying in going that this machine through a Mark and more are What to little going at in got we

Mark Rourke

onboarding comments, price where relative net was September to and net Yes, outstripped et cost that wage our month Tom, that driver the where price increases turned our in my ability first from standpoint positive cetera. recruiting a expense,

trucking. beyond the to build I had keep to Now, seated the and we have we going in would labor that sure other going to are invest bear to is upon others fleet the that options expect that the we recognize that and continue the forward that be necessary, the and market to cost market am in exist

we that we would just going other the seeing pressures to on are and a expect as all market in Chris it into October XXXX outlined. that pretty we and forward see are with it So, head basis, bullish the we

Tom Wadewitz

Okay, I that. of wanted And CSX some appreciate the ask Intermodal to on great. I you changes.

of Thank number market that market of the of could affect in But that just rid getting ability in Chicago. rather will changes peak dray of the it whether I think than the cost service, are the grow on the season. is seem reality canceling and offer your they does Intermodal it’s look how does [Indiscernible] in if worse thoughts service some and perhaps business? wondered your the to and service terms and some it that structure you. I tight lanes our, maybe change poor the on timing affect you

Chris Lofgren

let I I’ll very close been Tom, that. am some he think can data it going He to think very, perspective. put I Mark gives right the answer and has that around just I that, is is, were partner. we that if things that going probably the say a would there on are simply we running we great too. that do railroad think that CSX And things to that

So, it? Mark, don’t why take you

Mark Rourke

question. your I opportunities rail Tom, our us understand this Yes, of certainly. degree it interrupted, the case, of elimination a I any time in Obviously, to and think lanes service context impacts are customers negatively

the low of are look that of serve. pairs X% currently However, and volume origin But railroad, total at of and they represent when by the they dozens lanes elimination lanes you of destination certain our reason are and count. these and that order less productive dozens we

that intact on that X%. with for even value proposition to believe, XX% viable X% that’s have we keep over it So, the on customer the keep we the alternatives of and train that routing impacted,

the on think ultimately lanes of volume resources again, railroad. So, railroading it’s high of I improves precision what entire and performance focusing the the an outcome

it has impact, can So, we mitigate dramatically. it while we think an

Tom Wadewitz

very time. helpful. that Yes, number framework Thank is great. Okay, and the for you that

Chris Lofgren

Tom. Thanks,

Operator

coming Citi. line next question with your Weatherby with from Chris Please Thank proceed you. the The is question. of

Chris Weatherby

morning. net good to that up on Wanted price comment. Hey, pick thanks,

Truckload on the does improvement some of September maybe for how month quarters. mentioned should then, a you year-over-year that of segment we couple October was the of we And the be in triggered in then, the Can rate a terms you to seen degradation side? and think us sense think give sort of positive. as some maybe some that was on shorter net We’ve that driver intermediate done well, thinking of maybe the about some you you’ve of looks looks? the about as in price but basis, this And next improvement how I first OR move when preloading kind forward? the

Chris Lofgren

Good to to morning, going it am just Chris. turn I over Mark.

data of got on has I and lots of the airtime lot that net concept is, price gets think and perspective he that of company. here a in

Mark Rourke

going and expect well, we our the position expenses drivers have the incurred net Yes, another to out Intermodal Truckload, first, in favorably segments for front. pursuing and that all is that really, of don’t ourselves to we offerings. we And business, quarter the brokerage fourth of are capacity so XXX catch-up on be that’s our

have those So, both cycle, of that successful tell initiatives, that are I and being we and you out always while in-cycle to you of with some increasingly. would level resistance

we have commercial our it’s So, that relative organization the number costs. to initiative those recover as to

So, price that to spread we would the to September going we that continue will see net started expect in expand. forward

Chris Weatherby

relative how to of correlated metrics about that we sort think think And, should sort those we are? should Truckload OR, how well of Okay.

Mark Rourke

Good up and as certainly the the been to price this the that to to want this the company, predominance to to go necessary organization some that’s you to share a point, get driver out to I keep of think, you that a question. when point, community. bottom-line of

more for and a we as certainly we spread positive that again, in expect have that the margin to get business. there, implications will fashion occur, So, a

Chris Lofgren

price net the net is essentially company. nothing really performance there in and it Chris, like drives that is price OR the

And correlation. can so, tighter There as than a imagine price. is correlation with just net there tight there price is with a you very, is very

discussions. on So, and in we now it’s report but metric, center front our don’t that

Chris Weatherby

I the for Thanks helpful. time. appreciate That’s it. Okay.

Operator

coming The with is of Merrill line proceed with Please the Ken question. next Lynch. question you. Hoexter from Thank your

Ken Hoexter

Was it less that Final or seeing even that a here? was decline that about you third changed side the Mark, bit or it lower outlook, First a talking causing Chris than quarter that’s it more to Lori, was talk there Lori, morning. lower cost guess, gone Good to your about in given maybe such the Maybe Great. Was $X.XX $X.XX? it there could targeted? or I Mile? fleet the on what or little what’s running the the specialty Truckload adjustments to

Lori Lutey

I really our primary that us the was missed really Hey expectations Ken, The for comments. said reasons my this internal we in lowering Lori. opening third for was is It what quarter.

and the that’s that that reason hiring net I then then created up post First that that there, made really at when So the making the we Final look netting primary of investment at we and look sense drivers Chris we hurricane the there the together the what of those quarter, - did to a number the Mile all makes we when $X.XX. and investments about cost of the in and comments we are up $X.XX range in things to the think third really

Ken Hoexter

at forward – I that, orders just had on to I of versus So, much am you XXXX? say looking and that the fourth margin decreased it of you the third that how cost guess, mile kind and out go was was into was the quarter to increased third trying are you what trying the quarter go quarter are mentioned over clarify – in that, final effect and this everything in Truckload. the for past forward to figure

Chris Lofgren

can land this tighten year mean, bottom. second up the we started the we and back at thing the hey, The the a Chris. lowering, we we’ve we we this $X.XX through moving We get that on clarity just didn’t quarter. reasons downwards just is in – the talked came about deliver think little I this third it quarter to try said, and at Ken, and more for we where

infrastructure the $X.XX is will or centered there $X.XX we Mile Final third portion fixed dialed more and need right also handle down a that is to of a sure So to was from and the times work also tell hard have that e-tailers the you, cost of that how take that time, back looking first these of this around it, is I is really a the some lowering Mile what that stuff. and it’s with the it’s – lot the at the to middle get because are not Final and way, to in quarter. lot for of do same that it in transit of of really kind $X.XX we but making to

need It a So, what takes a to we fourth have couple do, it. impact we but offsets are carry is see very some quarter. are some certainly to we We quarters cost And that going time. forward as know that we favorable on it very, it what will here. for now

Ken Hoexter

thought. that Appreciate

Chris Lofgren

Mark, to… know if want I you don’t

Ken Hoexter

ahead. Go

Chris Lofgren

have he didn’t Mark, anything just, to add.

Ken Hoexter

time. the Appreciate guys. Thanks Great.

Chris Lofgren

Thank you, Ken.

Operator

Thank you.

question line Group your is Our next coming the with Research. from Please question. proceed of Scott with Wolfe

Scott Group

morning thanks. Hey, guys. Good

Intermodal Intermodal us can quarter renewals kind of what’s or versus think Truckload metrics? fourth quarter just, us And tracking contractual of mid-threes those Any pricing Mark, trends on in breakdown you what’s and And So, price some realistic were give your is Truckload tell can the of the that a utilization increase number you for XXXX? of mid-ones. was sort and maybe how in view Truckloads the in quarter? direction that then, I you said

Chris Lofgren

a Good relative question be guidance Well, this Truckload to the on we juncture, quarter X% are not on of the that I would space, your initial call Scott, yet, this certainly morning. productivity giving XXXX would X% on in – the and characterize at than X% price. the on is are and certainly utilization where relative of certainly we we expect to a in will sit performance improving. a price those would fourth net of impact, impact basis more see based quarter X% that X.X% numbers upon I today that the but

Scott Group

saying So is… what you are

Chris Lofgren

have the to out mid-cycle, of of back is lot cycle of cost and recover that some to be of all Not invested. that that go we

Scott Group

so so Intermodal that Okay, number the so X% is, quarter, now what far in now the fourth is quarter? and in X% Truckload are increase bigger you the a bigger in fourth saying that

Chris Lofgren

would out. we that the how plays expect to quarter And be

Scott Group

think And they we issues to any today? cost Okay. you any out maybe to XXXX, from then, stand overall in back impact was to if a as then, service just from to the just about just rail going do have talk And the standpoint service you and you quarter there look question, CSX increases? where Intermodal negative can visibility

Chris Lofgren

reliability was we of just As a have rail slower get service, boxes well, of not performing from it need impacted I being and Scott, upon the to railroad. we to the a to relates kind standpoint they question, the be by how it where the consumed fluidity that based would first consider more and to on just think service to all as we railroads

with though that So, we could rail eroding, there even the we’ve box box relative more, and on pleased to am some It’s very had the be our overall bit based network. impacts not just I our performance, fluidity productivity but we doing But the upon are a it’s better same turns that also particularly railroading keeping precision that predicament will that on as would get the in and in matures box the train. fact, that relative the railroads expect of better. to with slower certainly the CSX and fluidity improvements Western are the

flywheel believe that Those guidance capacity you things business the we the are will to provide don’t next a it pricing for world our there. tightening over the be on as for to to really any condition road. exist would will I expect truck Intermodal well. As correlated yet be and relates we Intermodal Obviously, that have favorable year, highly catalyst to effect

Scott Group

Okay. guys. Thank you,

Chris Lofgren

you. Thank

Operator

you. Thank

Morgan. Ossenbeck question with next your with the Please question. J.P. coming is line of from proceed Our Brian

Brian Ossenbeck

taking Thanks morning. Hey, question. good my for

Chris Lofgren

morning. Good

Mark Rourke

morning. Good

Brian Ossenbeck

a back those I needs for. a maybe think, e-tailers add go the to Mile the you just transit just as more that what to for we if context looking to to to meet be done and little times First second Final were Chris,

just with bit knew more the in on so, side was you looking little it seems Mile to last needed because do, think I a what their need, you I year mentioned acquisitions you built like the you Final out clarity, specifically or footprint.

So, and quarters, together to you if going what be? might said I with be of in just detail tie can terms in a to needs little what you timing know, be not in the it’s it more months. done measured

Chris Lofgren

the very, to that and those home, is comes making cost, – get that we work make that now of transit the sure utilization, Mark very a really site, the And real from and is to but kinds designed times comments things like friend of what more to standards me, company Final that. company to Sure, before transit I’ll the the made balances and into set utilization. that. of first to the it’s on a essentially, then start and have to we the we that’s And Volume But, essentially Mark, of a our are has the Mile some is equipment a acquisition. is lot then A he’d network getting into the predictable what putting crosstalk, that, system. good were that that the telling that’s where drivers business done. is, pick-up doing be doing very a that we to freight with operating too, essentially

there is will done. being of So there. also have terms of execution where Mark, in work that real and is things we clearly, growth do want help the refining the But you that’s network some to? to

Mark Rourke

covers. that the that start-up activity we a going and on rate fourth LTL I a Chris we cube the as and optimizing the that transit we number mentioned leveraged. between for here as cube Obviously, network, e-retailers have expect transit large of to – with tailwind quarter and are constant business, volume break national bulk or fill tension have think standpoint that that coming national the the routing gets No, in in sure between we the and tension excuse a possible that But a it’s making most for efficient headwind me, that our the terminals footprint through nice be nice business.

Brian Ossenbeck

Okay, positive it a bit, is income of bounced just quick little positive, point know was, there little that if think financial side kind on anything this I segment or out I actually you Lori. follow-up around it. quarter. a us? then, number a could more I in other didn’t And know particular that the but for the that to that in was got is

Lori Lutey

and an we that leasing number our had uptick Yes, in in that our where is I would is, go of leases. business captured with

also created IPO category, year, That’s that biggest and income had that captured there. so some in probably And Last driver. we cost acquisition some the cost.

a bit. what So year a that year-over-year from last was drove down perspective,

Brian Ossenbeck

was know or said the business up. Okay. on way rates you the go expected when a I leases? Any to were that good quantify rates increase to

Lori Lutey

ends. do break on We capture their don’t that. on are us comment really through owner/operators. don’t versus we we leasing leasing Yes, But which out

Brian Ossenbeck

Okay. Thanks time morning. this for your

Lori Lutey

Okay, thank you.

Chris Lofgren

Brian. Thanks,

Operator

Thank you.

with your question from Fowler is with of proceed Our next Todd question. coming line the KeyBanc. Please

Todd Fowler

thanks good morning for and Thanks Great. taking question. the

real Just think escalators is the talking timing increases, maybe of the on the pay contracts, driver you there back I if renewals got on a of some give the about more could ability of go your address dedicated or the – us there really that and in color you’ve would some and some to ability season the or some around price to contract contract to some brought time rate now? get pressure some cost the the businesses some of and capture the for XXXX the go some out the of But do increases the back the of cost right can marjority to bit to stem offset pay of to of this way period the inflation. renewals driver you of

Chris Lofgren

stuff process just do you then the the this years, is, same talk you, get and contracts. to Todd, about customers if certainly you’ll for their things give the year have those XX The more around way in-cycle more we and to the is generally, they months opportunity contract structure the open. re-bid let a for-hire Mark they or Dedicated the essentially as the and those a what frankly, is whereas And that have happens if essentially two work where take contracts market this it or will but thing. changes. and rate recognize is freight, contracts Well, it cycle, might industry, is. have But I’ll the

of cost we And we’ve these some take have so, in until that wait going to that the to and we market had serve. not fleet address sure issues are XXXX make to order essentially to positioned to the

Mark? So,

Mark Rourke

Yes, the period, we I to communities’ interests aligned envisioned make also here but in robust think both that come carrier a highly what’s there capacity and to is are the which short-term, are the in sure customer adequate community in XXXX.

our of bid great be with outside So, discussions are I to customer constructive would our event or events finding and a issue. the to responsiveness procurement community we a characterize highly

have position talk that. continue to have have and about and out customer strength to courage And that. are receptive providing of to highly think to are I what the the those we a you are and and interests aligned what’s have you to response necessary you again, to So, go a finding

Todd Fowler

Good.

chassis that’s thoughts have I will my do point? fleet on Okay, makes at capital this be and far about XXXX Thanks. And investment coming early we other can you down, that but follow-up the and that next maybe that but as as parameters any it’s year? question, helpful any the too have ask know we initial think CapEx into spending just to do sense.

Lori Lutey

Okay. This is Lori.

be any conversion we providing are with essentially not we chassis Obviously, We complete our will are guidance. and completed now.

a that repeating we next But So to are expenditure. will in not provide capital our be call. quarterly guidance going

Todd Fowler

Okay, understood. Thanks time. the for

Chris Lofgren

Thank you.

Operator

you. Thank

line proceed next is from Research Matth Buckingham Our question of question. with coming Brooklier with the Group. Please your

Matth Brooklier

thanks your as market? that Hey, side What maybe your terms the in contribution business? then, over you us you in you the in twelve of spot Truckload, update mix. next terms talk to an of for-hire Can being of expectations its months morning. give business percentage classify and the in good And can of would your

some total business, side how on opportunities you market things? potentially the tight expecting if and are mix of is change trying to just transactional given For currently the the potentially to incremental that leverage maybe

Mark Rourke

we to think incredibly in choice. spot I There about contract important asking is me, and the the just is business this whether a the Intermodal. business specialty have the also ways you think think – here, question capacity, have capacity you but are you on ability or exercise as really a of let three reside network Yes, or standpoint, van for-hire they so

of more in every where have at available serve. capability particularly and offers the we basket market we have materially to with freight it coming then that looking the so, day, And the

we help so, upsell, ability issues have overall to basket. selection cover charges And shift premium, offering the the premiums to with of and or customers

the those And to exercising put fits we we the and have on for-hire our overly year obviously Intermodal of be all are choice so, segments be of the certainly you that exercising needs much the of opportunistic, today. all that choice when but to around and together, and networks mindset locations with in not better margins business in a thoughtful that our for-hire that specialty and those to or

Chris Lofgren

we might from of ability and and come pick Chris, like spot going a have think kinds have the go pick we in with those that this I that’s be we we to are things, around, taking Matt, – our contracts market we just back and this don’t that more to where we is where but of traditionally freight. that’s to just, say to the are essentially With well. platform, relationships Quest able basket and from

just right, necessarily now And exactly so, contract the turn business the all more is to that’s how things, spot more than the these take how going and don’t business go are not of of kinds and and we our kind upside-down the we to say freight, favorable. opportunities because back freight spot run becoming choice to others is market opportunity But, we recontract, and rate do.

Matth Brooklier

Okay.

- tremendous some make terms platform of more in - ability Quest the you a your not guess, anticipated go of, basis is mix also I terms like forward of a of sounds amount guess, up it opportunity let So take the to in change decisions and those the what and on incremental... of business I

Chris Lofgren

there that the with customers. the think have will we don’t point dynamic be of that network from think how in relationships hauling. of We a about the change change we kind we big contribution for It’s are our just running the we shift design to freight

Matth Brooklier

the helpful. Appreciate Okay, time. that’s

Chris Lofgren

You bet. Thank you.

Operator

Credit the from Suisse. your with Allison you. question. of question Landry with Please Thank next The coming proceed line is

Allison Landry

Good morning.

of but to this? and about gives guide don’t in XX% in range. in mid XQ So, two of sequential at for QX average you lot that the implied we quarter? last is close the Thank increase somewhere from looking the is in of the double how I XXXX a sequential guidance, in terms the fourth history, And the you. change think the have realize confidence the what years, QX magnitude to But should EPS you

Mark Rourke

quarter recruiting increased the on to at juncture, third again, to a mind. and effort here expense call to that is more what scenario. the expect At Mark. price, quarter things to we Certainly, his intend we’ve least the hurricanes. relative driver net wage between couple we XXX the of at be spread over don’t relative this the to Couple in fourth extraordinary increase talked the Allison, and don’t have net

network we I extends anticipate season. way our we And think historically and and really which growingly occurred of early of don’t the well as plays out and improving that of into drop-off price we the productivity the couple even that and December. of experience into all the now, of how in December portfolio. well e-retail out January of And season e-commerce has the January, choice the the as market are last and so through strong of in the level that it’s phenomena influence the and weeks the same of part see because that more that growing middle

the scenarios achieve price the fourth. in of of then, third business expect to the reference combination those took unique in adventures the some change So, and we that place and that quarter mix the

Allison Landry

sort just on up following and of Okay, that.

of the and December to a e-commerce, and in I on the the there from trends size helpful? of contribute sequentially may here sort give but sequential that to know sort are us of going quarter, how relative is QX to of sense contribution business into more you you the QX, be magnitude for that historical the In that trends to way that, of could any mentioned much extending terms of sort the January, if increase that fourth will e-commerce

Mark Rourke

make if to year I are know I do question, to at of contribution our allow that for we teams seasons and peak portion a all for contribution exact that number – premium that us way differently we take those Allison. in the putting of But a understand available seize at we advantage extract levels to the We opportunities. of that. groups the the environment, together vacation in those operationally things driver potential to a Yes, can don’t do an I sure include being have bit that period superior as reward have of solos volunteer community our to capacity availability to manage

into elements because, But that that we is superior they for to returns options and there number offer So, the business. drivers go planning a of superior that. our do

Chris Lofgren

I to most think, happens particularly, that to think end business. of the as get in Allison, fourth quarter, going show back in December about is when you the of what up Trucking you our

distressed our drop-off you’ll through But freight to business in And see of organization. move any You’ll our Intermodal and it business. work see that. see people way as that that’s early to have brokerage our some e-commerce how to can for mid-December start on some of are push the holiday almost we the looking season,

Allison Landry

thank Okay, you.

Chris Lofgren

you. Thank

Operator

Thank you. It questions appears this there at no further time. are

the So, I’d back over Lofgren like floor pass to Mr. to any for comments. concluding additional

Chris Lofgren

quarter the hurricanes an interesting the I behind It was appreciate line. everybody third being Well, us. on having

the it’s put the XXXX. talked it’s get drivers quarter things place to a feel are quarter we as Mark seeing. pretty as way thing. a and Again, efforts we in quite into that we bullish the the We going move on and feel to we are the into positive fourth about, like think in As interesting really we fourth now good

of end getting Have look and with great back holidays you early quarter, great the day. forward we’ll a timeframe. have So, to great you. Thank in a February

Operator

time. this We your this gentlemen, now disconnect thank teleconference. at conclude participation does today’s for and your you Ladies you may and lines

Schneider National (SNDR) 7 Nov 172017 Q3 Earnings call transcript