SNDR - Earnings call transcript Q1 2018 | Schneider National, Inc.

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Operator

Greetings, and welcome to the Schneider National 2018 First 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 for Schneider National. Mr. you, Thank begin. may Costello, you

Pat Costello

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

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

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

made to that we today's begin, statements. like would our with of guidance call, described on Before 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

Christopher Lofgren

and all thank Good joining us. for Pat. you, Thank morning you

we our We're to business continue contribution out challenge on our to the tractor in execute the highly it the become with not with network per earnings continue needs prominent. in in that As the and have segments platform. maximizing capacity using of environment mentioned to able bringing for our of experienced a extent load capacity service we market. first more decade. much well performed created quarter constrained customer release, had operating played this like in All increase Demand well this balance full and environment offerings an Quest expected. pricing driver over This opportunities

network businesses, the part cycle have same effectiveness the who demonstrate will of I you our its of may the platform to believe first dynamic Mark that to out level the basis detail from has of execution down contribution exercising up of in quarter. on based of all all cycle importance XXXX. both on as this of XXXX contracted played of those and price the demonstrated through doubts of choice For will operating the in the and was XXXX from half

levels the our with can ordered continue Lori in intermodal business section. guidance incrementally We're capital making to Mark fixed to customers. the adjustment offering, this make Mile good the witnessing be their moderate service we this positioned Final plan. to to retailers ultimately our we our channel expenditure in the websites growth well are remarks. of business us we into our above are order for in tightness grow to capacity capital will continuously, choice of the XXXX, has goods plan the offer volumes combined more caused driver and First leverage progress tightness to a this for will positioning The our his We nature given intermodal to on invest open of driver in expenditure lower the to homes the to deliver in service their of terms business. provide color infrastructure their her highlight industry's revenue

this prospects While in businesses, we as economy, could help services premium are their on their meet bullish in broad portfolio but customers North that remained there needs marketplace. numerous American grow certain to growing transportation the a continue disrupt factors our our the on

upside but the the to into the into start good occur foundation first the set a more in the half second year. year. have We've will significant of good a quarter us will second in quarter, We carry

Mark that raise we in I his for this on With highlight comments will over comments. her to to will continue operations. the it guidance. Lori such, will As turn

Mark Rourke

you, Thank morning and good everyone. to Chris,

a First, storm spring. our especially recent in through of we can weather maintenance and attention finally a to Midwest upper the for to events turn persisting fleet in you the us, our series the driver now difficult mid-April with team behind professional quarter big thank and perhaps the

Impact units brokerage company and owner operator from gain is solutions. year-over-year sequentially as flat XXXX prominence Chris to As customers within challenging. improvement coverage on that supply be proved per transportation increasing price offered in productivity. renewables. our continue needs offset QX fuel contractual XXX with services in driver working and our segments. rate and broad truckload third X% some throughout X% truckload successful which provide relatively X% conversion XXXX address operated to of in the party environment addition, intermodal through inflationary It of compared to customers erosion the each I'll truckload to growth very quarter. over of to segment, a to count the the per indicated, overall updates where in get environment free to our quarter was QX Revenue and has as XXXX. demand the In from in intermodal road And segments of as And color and revenues down truck an excluding portfolio logistics leverage a QX outstrips of a increase our week tractor additional cost was surcharge the we closely combination our by units consistently serve assets increase was our

gain. to in excluding revenue Our the gains largest surcharge quadrant price renewals digits. per increased increase as in quadrant and X% that truck averaged standard compared contract truckload nearly double fuel year-over-year low attributed all week of of QX in XXXX per closed for-hire QX are price Customer was

was a negative an XX.X% impact large and greatest specially. mile revenue that's the by did quadrant specialty in X%, per for-hire productivity contracted per also in week in experienced resulting their delivery in mix year-over-year as resides price offset Our largest X.X% in first quadrant. year-over-year a improvement contract largely We below improvement quadrant X% at And week truck surcharge that quarter. dedicated one just per fuel of final slightly truck a excluding new a per truck revenue at have in that revenue impact

transit implementation as we First on mid-XXXX. in There namely, schedules drag release, market the The the software, e-commerce first the Finally, reductions mile services than optimal service less approximately delivered operating address on influences reducing truckload improvement Final LTL transit to began to margin a pilot the the business are and is of a to in in effort are all pilot requirements, present stem levels XXX in as new the runtime QX new portions several of serviced meaningful in to the mile The integration network. optimization or year. segment with terminal Mile middle of to our fill locations at serve. the resulting quarter. retooled the software and QX have the terminal basis in by rate cost intention technology higher final earnings finish our this volumes, to terminal point noted up reduction of compared XX% on schedules At that

network serve population on mile Both break as expected brought are we final element of Finally, the in cost top two miles lower and final to facilities large first they mature. markets middle for to bulk facilities quarter. the and in

book network performance the almost year-over-year. intermodal. growth We order onto in QX of the pre-date leading single another timing renewed way quarter experience over not solid very per to digits. our in experience approximately our Order to and traditional compared contract adjustments the our road growth improved the XX% of order QX in QX was and to with intermodal revenue Moving XX% high the segment, adjustments did X% as X% of transparent Furthermore, XXXX price averaging from with lag intermodal at XXXX. the the price portion

compared community business our with to percent improved to company Company of this and dray party execution orders especially in offer market QX our to XXXX. serves QX both of Dray XXX professional of customer basis Our advantage fleet as our service to alternatives dray in company Orange and as continues condition. in XXXX cost points [ph] third advantages the covered as

XXX container containers Our from count XXXX. grew of QX sequentially

current in and guidance you January. in X,XXX we to be advance chassis which plan peak, the service our more for provided all to of Our an with in calls CapEx fall of is consistent additional containers that or

costs as throughout Lori of experienced We costing contract in the our have XX% be margins revenue The Finally, acquisition the quarter. same rising environment a over it will of revenues period net segment. is XX% The the the points numbers. that And arenas segment makes to brokerage more expanded up our now both XXXX. turn spot covered logistics customer specific I to pricing with capacity in on XXXX. higher offering QX carrier business logistic by well in over grew the adjustments in XX basis adapting and

Lori Lutey

Thank you, Mark.

primarily strong growth billion, this broad year-over-year billion. was increased The due quarter solutions the company's first of quarter the the supply fuel offer revenue demand environment. revenue while to the surcharge alternative in portfolio market. complementary excluding XX% tight and to Enterprise enabled services on revenue deliver results $X.X first $X to increased it of The in price to Now for capacity and XXXX. operating to XX%

Net from increased first addition the $X.XX estimated reduction an earnings an between This of the IPO a we rate of of of the of ago. of In at point of rate per count impact adjusted compared The in million tax by Enterprise operating slightly share share first items impact the per be to EPS share. improved share Operating to level anticipate share in is at of first more is million rate were effective at increase primarily unchanged result compared quarter diluted as on rate from The than and compared first increased operations in in driven tax This XXXX of state offset manners. $XX.X quarter effective We growth quarter improved was in XXXX. year will to the slightly basis the was to $X.XX quarter and to tax our had the revenue than a previous company's is improved XXX $XX.X were quarter. XX% ago. diluted per first adjusted a basis tax XX.X%. our This first at anticipated. in points some higher basis, the affect the have an XXXX negative XX.X%. and income and both ratio a adjusted is generated and $X.XX $XX.X per leasing year-over-year quarter as XX.X% to $X.XX million, EPS operations. the which in for basis in the by by income is XX.X% or tax XX.X% tax continued $X.XX estimate price. $X.XX was and XXX year effective XXXX to rates. On increases continue Discrete positive record estimated

segment a XX.X%. represented X%. perspective. our from Now an truckload operating a results rate resulting the look growth In turning $XX to of million, revenue quarter was of income ratio million segment, $XXX at our first in of Operating

As has drag to the operating of negative our mile First ratio. Final for our explained, service already point offering in the quarter basis impact was XXX truckload Mark a

In revenue to an quarter, first million Turning to XX and we've and fourth operating XXXX. compared of to improvement income segment. at basis the points of XXX the intermodal of reported quarter quarter $XX an million compared operating XX.X%, $XXX points with the ratio first XXXX, our of of basis an

have current has end We're with intermodal conversion executing to the a model completed pleased environment. an As at the the the been reminder, in very chassis team at owned effective we how XXXX. of fully

that the in that revenue logistics the As XX.X%. was and $XXX an quarter, of with of segment, of market. million spot $X XX% to million Brokerage of operating our income we've half was and excess ratio in revenue an logistics first operating of over of reported the into just revenue

compared anticipated. tend related million in this costs strong segment $XXX increase Costs in increase include the be XXXX. of company, do compared revenue loss cash to of the lumpy. EBITDA was The other the December, March XXXX, Company's of segment to somewhat increase These cash had net costs we $XXX the primarily XX% to end due of $XX larger recognition Included that not compensation million the to million than quarter cash public at allocate becoming impact $XXX.X and was the accounting. are a cash XXXX. of segment moderate The for first quarter operations. an the slightly million, we impact and in On equivalents to incentive in in XX, additional totaled Adjusted earnings. our and was to the equivalents of cash change

Company of This As the dividend the of to to March total payable declared XXXX. dividend shareholders XX, declared of Also Schneider XXXX. July paid a on March as to XXXX. outstanding XXXX, debt million of as XXXX. end a as on X, is December, $X.XX had XXXX. $X.XXb of XX, of XXXX, $XXX expected X, April The a shareholders million Company of instruments $XXX various record record of compared on on April paid be June dividend was XX, This payable XX, to dividend

quarter guidance in to to which Lastly, earnings full reminder, XXXX will of first the $X.XX of typically represents the second way our the our actions we XXXX base, previous a half the year. updating our to based customer from of services of of be and second our even adjusted anticipate for dynamic pronounced as increase in now midpoint be in XXXX. $X.XX, a portfolio year. of the have are This diluted X% to accrue a we a impact will per pricing By more full earnings at share second of in on year of the range the $X.XX our We quarter diverse a more $X.XX. range half

We to maintaining $XXX net million. for XXXX million $XXX CapEx are of our guidance

I a been my you, back is be honor turn It Thank and great for miss call this operator on final Chris I such the retiring. team and Schneider I'll close call the greatly. an friend. will being mentor With has to to team my to for the before would questions. that I Now and add the Chris that like remarks, before

Operator

you. Thank

Our with question-and-answer line from We will session. now UBS. comes the Wadewitz Instructions] question Tom being of [Operator our first

Thank also limit could please have one yourself please to if question re-queue. you follow-up and questions you you If

Tom Wadewitz

morning. Good

intermodal kind that Let's see, I and quarter, like would you might drivers you it performance in about that guess questions, you you how strength trend? of of the new think know there fourth is you well. our the very conviction intermodal? adding, also you guess the favorable looks key in capacity and lot I How as are in good think know for of know that containers the good of very strength know trend new try one that of to and that a that intermodal maybe had I of I sustainability kind quarter results, the margin performance sustain highlights you're affect

Christopher Lofgren

this morning, Good is Tom, Chris.

me Let bit you an of give overview. just a

in the that with about talked with we've are that think on business the road And were has we the I the side. clearly sixth was what that were driven inning was a decision our platform revenue and just management lot by this the of of one science happened seen we show. that that when the businesses putting improvements Quest being starting to in use on we

think part talked the is a and made But in without we think how is we in rolling I improvement America the the made I the has adjusted in And me about containers, that North can't owned terms that's played the so our productivity execution impact more that perform. on we're have clearly little is has we transportation terms tight doubt across just it. that key all And business year. of And that last capacity just investment fact certainly had to a But in that surface about of thinking chassis then let color Mark for that. and that. and helping into provide overestimate the the extra

Mark Rourke

certainly time. a and Orange increase able continue dray service least productivity to assets our at offer cost then to And Yeah. a think you. a coverage marketplace standpoint, differentiation and on customer our I the our Thank serve experience in performance from from to being both

upon train another based in just could rail we orders the overall been have that In the estimate consumed additional based demand based fluidity would the quality has opportunities market have quarter. upon on upon boxes addition, missed easily we just within X,XXX

that as are are a now And as are on And in more additional almost boxes basis of box quality here quarter we to that on give the the so cover. our to we and will opportunity constrained us demand will right second front see, the the as are customers constrained to start us front. coming capture we prominent asking truck middle an

And management, revenue sustainable, so management, resource believe the boxes execution for really and both of is is some platform very operating dray additional remainder year. the have network this we a position that's a and we effort, now good against our well think why putting from in market the we'll the

Tom Wadewitz

good boxes, boxes, I that the it conviction selling sustainable visibility is have to and summarize mean performance that? this, So sounds the like fair is a way to using you at

Christopher Lofgren

Yes is, it yeah.

Tom Wadewitz

results. you strong and the Great. on Thank Okay. congratulations

Christopher Lofgren

Thank you, Tom.

Lori Lutey

you. Thank

Operator

Please with Our proceed the Hartford question. with Robert Baird. of next question Ben W. from comes line your

Ben Hartford

intermodal, Lori, then year's Mark, touched strong retirement. you their but in maybe and spending there in it talked this amount just, big And a but their market you. taking about disproportionate shippers and the but I have best is in big been growth box putting are they're and side, a what the the work approach constraints to Thank shippers what very service end in luck these you're of on show bid, to know brokerage, the numbers and that back. congrats you looking at performance spot

thinking increased level or years years? to couple from some over supply about were there next because managing of a large of well year's So durability high issues are rates is your just of into and well intermodal from the XXXX rising and migration the the spot during Are as appetite use this of and bid the a retail few perhaps the how What or it? intermodal because and this to any you peak to portfolio perspective, seeing truckload visibility assess capacity that. next the in you then toward the away is over you year freight chains avoiding situated customers service committed seeing

Mark Rourke

in think away there's Certainly you Ben. desire the do and or as those commentary us has so intermodal what more customer done train. from of any at but is well into been there's you even be if perhaps I price driving it's higher you, volume going with it's market acceptance that challenges which spot service be much - they're the real a on very can And points the load because Thank problematic. bit to the Great. vein contractually less much believe then not they mentioned

strong road the real vertical of segments the had just we continue over all intermodal for and virtually customer have geographies and conversion, So and all a see to appetite space. really to

bullish again of to that. - and So another reason, we're some adding on containers

added We several haven't we the upon it's based years our are, perform we absolutely at of last to over do a great think deal the right time containers where that. ability and to

and And so than just discussion been capable it's the desire have demand at of because so. we're overall difficult upon more obviously our and on that of services customers us take assets fright times of a based the

you that collaborative do long everything our really bring best out we of allows into of customer As throwing into play. that are we we to and the so be than know portfolio are mentioned, to more in and arena regard the that's we that play a trying simply and us brokerage contract spot very market think the term

Ben Hartford

a to volume comparisons single-digit the perhaps to to upper type growth is are side, seen but a side the could that mid as And visible obviously of result all sustainable of difficult give low follow-up double-digit that? we've in of going enough the you brokerage brokerage year point on the have suggest to more you

Christopher Lofgren

we would of largest Yeah, all being But I And forms and yeah, the intermodal on believe we multi-modal, positioned trend. obviously that. truckload and play feel stay well so. of we're again and LTL,

Ben Hartford

Thank you.

Operator

with of the Our with proceed question. next Hoexter from line Lynch. question your Merrill Ken comes Please

Ken Hoexter

given of to your a little I you maybe that little impact as going on know Lori, and Great. for Good - best into drag you are that are you're mile through little guess margins, point that on about the tractors. a last the up obviously to you just Can Mark, bit expanding? about on more Can talk new and the now you trucks the congrats next or you getting XXX this the what us still phase. maybe is home walk or you ramp in talk Chris about standard talked morning the basis the or last go and bit the a mile business scale you bit rollout, on talk

Christopher Lofgren

to the What segment not growth the and we the to Mile standpoint Good that important ultimately opportunity of where both Sure, in the the into the to we units serving And what and of we biggest in the for we that's tractors e-commerce e-commerce for replenishing multiple market field segments be the do - throughout from the But that. morning, on Mile, BXB increasingly, mousetrap that where that going the Ken. categories happy I'd home a network dimensional the be Final market. the and investment of serve A space addressing have best Final amount to the fronts. over store market to in see is Class product have continue be use base. capital those consumer

going we're or progress page of lot need leverage the those as is and to to just feel volume anything, productivity, full and of to is hours rate With And per what to have that that across But clearly on it's that mean will a as away competitive, billing. shock lack can portions importance and can so have employed mile cannot freight we're it's has logging, the so in that to happen a the the at capacity as their fixed very, that economy we of trend the on needs cost the so that of so load of geographic calculations, a company volumes, And because electronic with and you and surcharge market overtime, our structure of a tightening kind that our we're a e-commerce our the contribution the and have have in productivity income. chains. competitive now thing. have in infrastructure extent a be that many those of very that really standpoint inside into transit the I to transit that of however And need certainly think much of accretive and have well really our network about as coverage, really driver absorber we a discussions a because I transitioning drive frankly the e-commerce know and that's happen a industry service from be how driver present - dynamic systems and execution we of and that more we it's thing day customer home And drive. we things a we fill we accessorial other full move opportunity timeframe, bring back necessary that is optimal kinds it's much typical And employment hours to not that [Technical network all inside supply more also many drivers rates work network in to fuel from I serve the Difficulty] either the embedded very this throughout they both driver transits can only of against inefficiencies, of we has made in day they phase for or than think much hours having the that the the play. our takes

pressures the construction the when that And the the address things. the it's work this think that that marketplace And today war compared potentially seeing of desirability we're to ability core in in I so forefront. hope those changes that some is all of my kinds against bring cases personal to all

Mark of our driver, we I'll the quality fleet. about view on Mark professional be going are drivers going to and that he of our that professional lower of I but about sees on want and year ballistic center me things we're the and in we have come think front not put and standard our in let talk way maybe kind So to it the and to in finish, my would the start fleet and

So mark?

Mark Rourke

Chris. Thanks

pay XXXX to certainly folks pay our equation to a of Just comments. stance, need and match alternately every then have the do around that really cultures other safety options choice you our want really part believe equation. point to so. who other have pay we adjusting know desires and want leverage and we will to couple that's the And and safety since the part But certainly We to have, to your continue of more, and drivers we of have the that. more deliver drivers ultimately been upon other the are be committed people their of and to the lifestyle income, strength part we company, portfolio based our

require of One and ability up back to know the the you grow bring don't but very mile that of attractions is CDO the have stable to that the a have final we first local in market than our proposition on. productive grown you ones mention, home different a on it. intermodal and time that's business a a traditionally those for highly drivers know value business at our and Has we've in great basis and way jobs from

that an process, be driver thinking so understand experience. from And everything make about mobilized doing we driver to on to we doing certainly comp, and the in we're that possible about the across those really you you're our takes their then well your to to be the respect that our business. and ultimately, are technology and lens sure putting a things successful But in to experience. how multiple And selection into the this our mentioned interfaces, And condition everything commitment full freight and as things We have we'll those and in effort organization fronts we're think have committed personal do think doing the driver with best driver it the thing. Chris we well. as we're

Ken Hoexter

know an answer run a as Thank be you smoothly, to appreciate congratulations I is handle we Lori, IPO missed. the walk home kind and off of to thoughtful you. able so

Lori Lutey

Thank much you very

Operator

next from the question comes Chris Wetherbee Our line your Please with of proceed question. from Citi.

Chris Wetherbee

but I and good the fleet thanks, you to want if you guess is wanted congrats Lori. back got guidance. question before, I to assumption underlying the trajectory, ask reassure about the understood to morning, fleet on everybody. again sure I come underpinning just a there, Hey, what make it And know truckload the I about

could a you sense, back think it? XXs to just another of think about the number into way kind there do you us is give sort If of or you move can that

Mark Rourke

truckload relative a late condition then the trucks side elements into here. it is because holiday road, know you our downturn units typically which have third the the we some relative fleet, in On fourth seasonal experienced the segment have truck we exactly is production other total of the the what we front, peak the quarter a typically on on of to and

know I freight the customer mix. relative do to to looking believe a we're You portfolio and way still upgrade mix

But to could that to we into intermodal absolutely we as opportunities container And the our be middle improve have will CapEx you out great us our tractor, both juncture good look additional specifically we capital to offering would into that relative the our as that we we always so we're have growth doesn't of and growth at and could not capital, But units, deal, planned said business. we year, flat and continually that have growth necessarily of full obviously our your all of are range. to a at so a side for change looking do in find truck tractor how business do and the the of question, translate know intrigue guidance with to more the business. this look of fairly putting chassis because deal some Chris we'll the mix

there plenty and And do so of so. you make some to to have we excited still powder adjustments know we're

Chris Wetherbee

first Okay, that you're sort of clarify that's just level? of off quarter one to topping helpful. And flat

Mark Rourke

am. I

Chris Wetherbee

that's point, between was as said know just contract the the market how a sort reasonable year about profile Okay, that to helpful. and go and of And to ups, just you cost cost cost how between of you get think your when any pay you as a the I of the back have it to is to there get step into but if we of know you the Just then increases prices? what there's the to any, coming rail it frankly regular timing is think sort progresses, that want know really do intermodal there prices repricing matching you you helpful or particular sort service, differentials rail book? you're well, into and in sort when back sense ability think about is real relative

Christopher Lofgren

I you would encourage follow-up Chris. Hey, in maybe calls. the

get that to We of all opportunity that. won't have them the make do couple probably I to we another want and to sure have and calls

talk on follow-up call I back on if later around ask just when would come kind you So of you a and could today. check that that

Chris Wetherbee

Sure, thank you.

Christopher Lofgren

appreciate would you. Thank I that.

Operator

next your Ossenbeck comes Please question line JPMorgan. with from Brian the of Our question. proceed with

Brian Ossenbeck

good Hey, the me morning, for on call thanks here. getting

in Christopher whole logistic process. about a mentioned Just the one commentary just briefly reversed additional, you returns

if be So commentary the could more some give that, have build Thank from that might I of which of you fleet that could on into have you. you that the factor you well? wonder demands it your back, you that business, the sort how that's coming are wonder you you and of expecting if far that equipment as implementing if so just on away are and part if out, strategy purchase into the damaged, how because

Mark Rourke

an a reversal had upon cetera, having the service important equation the of Thank retailer. and been element important extending value have very Brian. e-commerce really our you part is the some Certainly to be the partner to that is the journey by liberal there of ability et on make of that world, have that of the platform policies, logistics we the from have all to But return cetera, all - charity, and really the by et it technology we necessary that's standpoint you, acquired connect satisfy disposal a acquisitions certainly whole added to to equation. to important whether or actually capture, the resolve the mechanism with retailer back call really donation, increasingly lend excuse me, way the incredibly a rules consumer to service the whether accommodate the that vendor that's a various making and the return that's or from portion that based

revenue comes as additional that stream see with we and So additional that service. an stream providing earnings that

Brian Ossenbeck

it. additional thanks appreciate I for Okay, color.

Operator

queue. the closing back further to Lofgren I'd are for There over Chris call no like comments. questions to hand in

Christopher Lofgren

everybody. you again thank Well,

phase one was she's is I the she commitment not And out She me. for been here next the We the appreciate are limit, for and everything this exit looks time here helping unbelievable us while done kind beat make have company, frankly, of thanking to Lori everything this for she transition. of never would the has life want I and her contributions. that but she right her done to more the missed pushing up to just without a call

phase. grateful the on move I'm So next standing you the I'm as sidelines and into

Steve As with the rekindling you he that time you on for looking And and have the will with me day. thank week wish following Lori's starting know next role your I great past many here relationships him. you call know you let of that all be and is forward a

Operator

teleconference. this and your gentlemen, you does Thank Ladies for conclude today's participation.

your at day. and time wonderful have a disconnect lines You may this

Schneider National (SNDR) 26 Apr 182018 Q1 Earnings call transcript