SNDR - Earnings call transcript Q2 2019 | Schneider National, Inc.

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Operator

Good morning and welcome to the Schneider National Second Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. This webcast is being recorded and will be available for replay later in the day. This call is scheduled for one hour. After introductory remarks, there will be a question-and-answer period. others, yourself for two consideration of please to limit questions. Out Instructions] [Operator

now I Steve the call ahead, Bindas, to over turn of would Relations. sir. like Investor to go Please Director your host,

Steve Bindas

morning everyone. Thank you and good

website. and section Joining me today Officer. President Officer; is call press on Earlier Vice on of today, Steve Executive Investor Chief issued available Chief an release, Rourke, Bruffett, earnings are and and Executive Mark the our President Relations Financial the the company which

begin, to and the call actual included measures there like we the may related risks contain non-GAAP earnings results this Also, special in this Before you that to to to and I'd remind vary. Please of references forward-looking that may release. and uncertainties reconciliations non-GAAP refer notes statements measures. of statements, be may forward-looking

to Mark CEO, like to I'd Rourke. turn the over call our Now,

Mark Rourke

everyone, Good to comment summary financials you I few the joining a moving-forward on and morning, it offer quarter the and will more commentary. specific thank recent and Bruffett for turn for call. comments the for most Steve over

commentary start Let my me Truckload the in segment.

trailer spot in quadrant contract our was the second standard improve higher first, basket through overall freight market. the And task position. and secondly, large volumes cost for-hire to versus of primary our Our our quarter network tighten

to primary expected, mid-single-digit normalized the range. returned volume contract have As volumes miles have order increased spot in and

as for QX addition, per has levels. In contribution materially is order rate volume up the remaining $X.XX spot mile and over from improved

We our season for-hire for are truck contract XX% renewal now quadrant. the through

combination in oversupply from were QX, low and the capacity. experienced persistent a levels in of increases Average comps the single-digits quarter the higher renewal the changes in of mid-single-digit in

improved salaries, expense benefits primarily has other income the wages, position general and statement. the cost Our lines of and in

cost quarter our Truckload basis excluding First Mile improvement to in segment operating historical Mile in and the Final from QX First excluding led The sequential effects XX.X%. our of in margin versus XXX the points quality Final ratio of The performance a XXX points. was Truckload, operating to QX improvement improved of freight combination of to to average basis

of me the Final address shutdown the Mile morning's Let to offering. service this now First announcement of

for including to and thorough Following a longer over review Final difficult prospect offering of assessment a the service we several have the offering, of viable near- Mile term of decision shutdown a weeks. execute this First the alternatives, careful the next made structured to

on at allows the below While operation, our business expectation we not our focus and company is in core is timeline. and an and fully We course management capital the acceptable of interest Intermodal This Truckload, action disciplines. portfolio investments of consistent improving are or target, believe and made significant in on this meeting allocation businesses stakeholders. the with best results pace our our plan Logistics long-term performance, or operating to financial us of

to to the to past and gratitude invested my the all associates offering tremendous energy the I Schneider endeavor with want creativity have who three years. Final express Mile a of toward the and over amount involved First

redeploy Steve to it about to role, live business modeling effective the and associates in will for opportunities geography We all purposes. need. how think based of are implications looking at and decision financial upon this cover they

to QX revenues segment. X% what achieved per revenue excluding order domestic XX% was up growth in between and XXXX. X% the on to movements. Moving order estimate industry an year-over-year be in to Intermodal grew of the volume with X% of Intermodal we Intermodal over up fuel year-over-year quarter The reduction surcharge XX%

QX, range. contract average renewals the the in of book. the At quarter, through mid-single-digit to are the we contract renewal now end approximately XX% increased In

a large Intermodal volumes lane and levels, remains of options imperative the rail of community. over-the-road While supported an less as increase cross-section there for result shipper capacity have reduced a been a of strategic

Intermodal a rail a increased very asset from result and year achieved ratio as turns. of lower ago we and container an drug quarter, operating a dray solid end head effective driver counts reductions final with execution are clearing at the fleet ELD of expense as year. well-positioned points the highly and into and in basis We XXX implementations company house the fundamentals, XX.X increased the believe we alcohol

our surcharge revenues makes a our our and of our revenue of Brokerage same transloading digits volume though the order grew on order Logistics service double brokerage contracted import/export over contract now revenue. large Logistics Finally, period and up segment, brokerage insourcing per excluding year-over-year, combination in fuel XX.X% in lower offering. X% year-over-year

ratio flat was operating of Logistics The essentially XX% performance year-over-year.

automation We OrangeHub increase and of quarter sequentially X% Truck the our continue carriers My as processes to benefit in across platforms see assignments a our from carrier Load no-touch feature realized one. in the self-serve

I'll it to Now, over turn for further Steve commentary.

Steve Bruffett

This billion, an good key fuel in volumes the and results. XXXX. was which down reasons. Lower the quarter of and the the Mark component from experienced the segment a import/export everyone. decline. of year-over-year our Logistics quarter Thanks elements years financial we the of in overview of morning $X.X were Revenue segment excluding begin first I'll slightly with Truckload consolidated second primary numerous in of of the

of second and fourth this comps and expect was the operations the this of Adjusted profitable given continue decline we was revenue record while quarter year, from in from the most modest XX% QX our declines quarters Also, in a to XXXX. it of last income the million, second year was history. $XX tough third

the of line Most items recent followed are worth noting. improvement but quarter reflecting a couple from items that of the Also, there management a initiatives on sequential revenue XXXX, this in second of quarter, statement trends discussed and income cost XX% the reflects the consolidated first Mark earlier.

supplies more and increased quarter the at higher expenses our from second leasing sold The increased million $XX last that explained goods unit is operating the of cost first from about than year, difference. of activity

the quarter of the contained second a $X variance. second which of year's general $XX due expenses, The to explains item which remainder other was charge, Last down million million The about is cost decrease initiatives. litigation about half were year-over-year.

Looking year as was profit litigation covered a compared incentive were There of million for last so The the Logistics, the results. million Other to adjusted in Truckload, Mark of quarter segment. and our activity at compared compensation variance charge. the Intermodal, to second $X lower $X loss I'll segment this on and increased accruals drivers in the as for this year. leasing second last quarter comment

Mile I explain leave I going the for the income forward. how to Before Final work to statement, First accounting will want

a quarter as incur third will we operating normal today's losses until of First, announcement. portion for as business operated the the

XXXX, about $X operating with $XX you million This expect you of as first your think third compared total amount brings quarter approximately million. losses help of especially million models, To the to to to losses. $XX XXXX the about added XXXX we half

the will charges regarding earlier we charges in the are for and included quarter. the book to today. that the Second, third we non-cash are that amounts the issued shutdown cash shutdown Information estimated X-K related in

are adjust Beyond quarter, needed. we costs the third will incurred shutdown they and monitor as actual as

majority of to year. activity XXXX this expect occur calendar the within We the

provide will However, will on lease statement activity income of a a items we these period the for be years, transparency. to have monitored line separate over and

Moving cash now flows. to

financing operations $XXX million by activities. Our of was in year-to-date from investing offset cash essentially

the expect used So, generate We of our a November. repay at year be pace second debt CapEx cash the cash to million do cash flow same end. portion $XX free Also, is position of to the as expected the is maturity half the in tapers. virtually in to years of a

have a this adjusted Looking $X.XX. removed is we operating EPS guidance. primary half full At ahead, our Final second across the losses our and updated of midpoint, updated estimates assumptions incorporates fourth for to segments our from operating price First $X.XX to and the our for to guidance from the for year. volume from year Also, XX% the have guidance lower prior the quarter a adjustment Mile range the reduction been

and losses the and between offset quarter that prior assumed the in benefit. the than However, in quarters guidance actual difference more fourth were those the second operating third

to Regarding $XXX And level net from XX.X%. we expectations capital the $XXX we effective million tax rate lowering year full of be our expenditures, prior the approximately incrementally to expect million. year lastly, are full

up will for we that, your call with the And open questions.

Operator

[Operator Ladies and you. we will question-and-answer at gentlemen, time be session. Instructions] a Thank conducting this

your Stifel. with line question Ross Our first proceed comes David with of from the question. Please

David Ross

truck not per customers to just thing you be a Is Yes, to from yes, is seems the operations, the revving per revenue of market? namely the a on, year-over-year. focus week dedicated. because mix down or still that freight good is looking? gentlemen. first if that do weak How enough is issue? morning soft economy the trucks trucking have want Or the And I dedicated pipeline

Mark Rourke

midst, the of David, very and here the is robust pleased XXXX Good we been now closures robust, a not have on with our fairly business of third but new very so quarter, in remains are the in pipeline only implementations. we're series the this and Certainly, in dedicated, morning far second Mark. really,

to bit a more historical that point doing additional that we're specialty supporting operations, our where Although average, mega different B. much area is are away they're retail, in fleets services service little which A our the of has things products the smaller over from years into of point big versus which simply generally at our heart are from value-added strategy to doing predominant adding but moving been a very

being has those bit so structured we time But deployed. those performance approach. of different from to our have in operations to to little superior up they're overall slip the operations way activity because are approach little less seating profitability capital And a the as such, that of start so prior a and

about get at, through inefficiency three-month couple do I obviously very, we good So, start-up to the very some process. getting have that. that and process did will within feel a we're We through through

So, and a feel will it focus. very that, continued about be good

or operations. any would the that's those center for tractor around the increase year would capacity in we fact, where dedicated count In levels remainder of see

David Ross

or would capital And have length old operations Are contract the specialty And mega size? ones? they fleet consider they term better those because on deals than it's return any terms? deals you are dedicated different smaller to a longer

Mark Rourke

that the that's, Yes. world a I of durable David. category businesses stable all standpoint, because they and on on could deeper the that's commoditized and question, renewal much are becoming in They're you than of relationship argue, services the Generally, from stable there providing. network more longer and a very at you're stable revenue, more earnings generally offer contracts. more that put would and above term

David Ross

you need quickly to Mile for own And either there to repurposed the be Final plan them? XX Do leased? then, are just facilities, exited? going those down. Those how be they are a on to you Is shut First or

Steve Bruffett

facilities. Yes facilities parameters the we're that still those those obligated is range those to so Steve. from lease at in be there David, it's lease we in are to, a and near terms attempting multiyear, leased, and variety term All longer this the to the market sublease will

David Ross

you. Thank Excellent.

Operator

next with you. Group is proceed your with Thank question from Research. The question. Scott Please Wolfe

Scott Group

thanks. morning guys. Good Hey

So, a you're per on of for-hire, the of And per mile? so that's the in in utilization thinking what us rev far and seeing year. how rest July of share in breakdown of truck rate those then maybe you're much give you help about the metrics can sort and how

Mark Rourke

Sure Scott.

is for-hire; As -- relates in it was question? this -- that the it the was and

Scott Group

for-hire, X% the Yes, in yes. down the

Mark Rourke

is front pricing is utility the more and that we of project-orientated or contract positive Yes, so than seeing exception with very very, in is do we're well. the less promotional just one things XXX%

of the Overall, in marketplace. less there's stress I just and because think duress

all And to of finds we're of the -- year on productivity-related. think constructed finishing deal in generally and well. great be that we're first through So to replacement the tractors, currently way the quarter But price there virtually almost the as rate did replacement line a on take of half as our we going the in that I deliveries of front. as is the quarter, XX% its

in So, a that of space. a in bit of there everything productivity little noise out we is sales standpoint. of the not getting But because all from have erosion

Scott Group

you rate contract I get but -- you in stays second mile? assuming positive comment, per total Are rate the per assuming mile pricing the are half,

Mark Rourke

is going relative the to typical certainly seasonality year the those holiday be contract to it's second on in project Scott. believe things, it's we to the we positive of of the question a have The half that season, going work, think all standpoint. be -- I

price space. the in turn If in those things negative, pattern, versus could don't typical but short-term space that's hold to seasonal the total contract project more a

Scott Group

you did July? about say And Okay. Mark, anything

Mark Rourke

a did We not it We as It's isn't, very July. playing being would generally it's typical. period, robust not. and July consider is

Scott Group

second Do secondly, you in quarter? Any just half Does there's about in yields share then just Can positive? Intermodal shifts about yields, good the really margin Okay. Do there. about How And concerns players. talk of sort guidance? expectations margins? stay in volume that the between volumes thoughts embedded second continue?

Mark Rourke

Obviously, growth we've with there. having in Yes, in shrinking a I'm would market volume Intermodal. that how a been we're effectively suggest X% pleased competing performing really really,

year-over-year had Scott, you If from because the of a going ago on of some our tariff to think is going of standpoint deliver trade forward, the half a whole little kind the in and the murky lift a what about activity basis this year second we pull-forwards. the year. certainly discord It's

and rest Intermodal our is than Asian the by imports international influenced more business. of

would So, it, equal, less pull-forward expect activity. that we things to of all being probably

So, some comparisons. that year-over-year pressure could put on overall

contractual solid we're in and would as there the between and renewals expect But be and hanging end revenue rate of nicely per mid-single-digit order here the through range, year. XX% the still of book to very the the in we

Scott Group

about market that's volume, about comment and your Mark, understand, I so more comps. Just the

about weakness? talking anything contract or you're not explain And losses that volume would so

Mark Rourke

weakness And what you are volume referencing?

Scott Group

half to want share a tariffs comps volumes be have saying or just you're to that comment about that Well, contracts? could related comp a second comment on I understand, is market tough is and volumes, some losses market that so the lower. you

Mark Rourke

I've through the we're As mentioned, XX% renewal.

comments we losses, ago. equation. have on sides that lifting was the predominantly My around we intermodal volumes what both were have year prior wins, have a We of

Scott Group

Okay, Appreciate makes the sense. time. All right guys.

Operator

next with question. with proceed from Shanker Ravi Morgan Please Thank you. Stanley. your The question is

Ravi Shanker

morning Good Thanks. everyone.

of So, think ORs clean lot little can I the like Final for Mile looking mass it and of understand into like the look so just First due will looks XXXX Final Can out mean, to help what much in Final sense Mile? us. TL strip you ex-First the I'm on on and the you think makes XQ us heading I you a TL as margins guidance to bit XQ not what Mile? -- as a once decision I for just much noise,

Steve Bruffett

This is Steve, Ravi.

Final our in second the about example, the million was First degradation we've was quarter, $XX First a Just indicated Final for Mile. comments margin earnings at to excluding the looking to quarter. segment in what Mile earlier second Truckload in year-over-year There

So, the segment made was on comparison of being XX% it down difference adjusted when rather to the XX%. that's prior in than you more adjust that, down Truckload a year quite XX%, the for an like basis,

just so And First your Mile assumptions to depends it on about Final going forward.

with in waters But obviously, what still will costs clear quarter get going that drag to we look would the If that third forward Truckload the then be they to segment. be were some as but there'll clean like. -- pretty associated fourth by in the the we quarter think pretty the time

Ravi Shanker

there assets business that once you of Kind of of different mean really kind ways Understood. effects effect in time any That's people, kind Final you had mean, this? again, the you core Mile this? are the all up you to I in freed I that And the the it. have TL the from like of the First were, Are and helpful. knock-on ran impact. I clearly, business of guys on there isolates think knock-on

Mark Rourke

captured if the don't I question accurately. know I've Ravi,

Ravi Shanker

TL you you the business to be people and business? of be will kind truck Is the may impact or the technology going Mile and and trucks on And business to there of any redeploying the in are like Meaning, the used the kind count like this? core rest be Final the -- First that trucking of in assets from

Steve Bruffett

we're thorough is operations, Truckload will understand First we in repurpose the Final can to assess okay. keep a Steve. go currently in fair unique amount of better. to operations. our Yes, that's This to through deployed equipment and process which a equipment They're best actually where I we is in the Mile a -- position the

pool It's of more tractors that, the and but optimize business predominantly the there of of XXX the roughly as at the with day, configurations that of end and as X,XXX be of or fleet across age will, looking assets. appropriate our out slightly that the tractors, trailers result will come a

be will exact people we we go as amount determined need the out the coming of in organization broad on naturally, business total. will And unfortunately, the people there through forward. side, sort The will be be that as

Ravi Shanker

facilities? Okay. given Kind Understood. on color around you business, a full the some are just you But just that? where don't the And customer surprise by just three of necessarily Was the year. what and decision headlines this or in the I of can think two that's decision, insourcing lastly, logistics a insourcing? put customer that context it it drove kind was

one-off to trend do kind of as large of a Or see this logistics? And a insource do just think will look you you of kind bigger picture, it's bigger the increasingly where customers like development? start

Mark Rourke

That Mark. customer, we're single the year, is kind of periods here. the comparison change. in now facility a happened this was into Ravi, the decision just it overlap Yes, earlier so single And

process, core So, retailers be customer the outsourced. thought with very some -- and consistent what the will to relative of large but a particularly is what

So, but I general, a would consider certainly, on it, trend. one-time in

Ravi Shanker

Great. Thank you.

Operator

you. Thank

next comes proceed with UBS. your Wadewitz Please Our from question. question Tom with

Tom Wadewitz

a morning. comment Scott a the I more a that just to ask Wanted it. Intermodal good Yes, side. you little sure but bit wanted make to bit you -- on I touched understand know on

So, the is to on you you like that view down? comment. understand -- half case, It Intermodal that of is to second I make that but just likely -- that wasn't kind sure think Or be it might were be clear. is sounded your

Steve Bruffett

Yes, this is Steve.

a today, given not half sitting the I think we as likelihood there for principally possibility comment. But here negative. reason of the or in that half significantly negative year comps the have think second of last year, is past that we that, volume the

a done great our environment rate job stable relatively there. in has been space has The Intermodal the and team

calendar through that business and of And for so year we're well. this book as -- largely

to a with see rate have But it have we'll on side. out negative. Volume, there and so is seasonality it that think be plays story how constructive a possibility I on. we'll could slightly the So,

Mark Rourke

well-positioned of the then we up market. not. If imports. volume maybe the sluggish growth. really to But some stays feel count the that on, kind path Yes, is really around flows, take on that of feel robust, the that box set seasonal felt it's been -- and the advantage feel think to If we particularly we're we're we'll well going I on Tom, then

Tom Wadewitz

in But this that to peak view that. good. generally think your up market? What's about we the of and like broader on appreciate also I think pick I season. peak maybe of some be freight I terms it optimism look a heard we've seems and a in downside a perspectives. XXXX? been how be freight guess, Okay, seasonal compared seems variety and XXXX, to it's season on might to There your freight, the rapid more downturn there'll

year. And wonder that sense XXXX you peak of positive two-year rates improvement a if in But it next you terms a we quickly play how more then is V-shaped also, might and just like XXXX? out And in downturn downturn? be of this kind might might maybe saw kind Or that and this have improve season view. of get of

Steve Bruffett

and personal lot information on My unpack community on so there, for this in and going the decisions. There's to folks chain today view is a both information the prevalent Tom. make the more in of is on sources carrier to the that what's for supply much just availability shipper

additional the cycle, this and midsized happen and bring that, around those ago I margins spot small capacity with more here the of the rapidly to cycle for there think look carriers, the And to spot both think sitting at because so particularly of were, way a conditions year the these and on downside incentives a result rates. I certainly lot up they the carriers, was changes as I as a of

much different. And are those today same influences

has the can those as came here world. that program think, our certainly carrier quickly data capacity same owner-operator just community so to as marginal that you of availability spiked The And inquiring in, same that depart. incoming take volume We're owner-operator if about last the subset small considerably. seeing a several some capacity, weeks, I points

the smaller So, another case, example carrier much this looking this same were position. duress spot that and world I who I way very certainly, the owner-operator into they statement occurring. think is that in the in of the came for a just could was rate think that's be In

play and this dynamic and for we alcohol X% So, have we and could again, I We the think think on doesn't year. I don't and and things XX% the swings. we into some and -- take with swings issue need XX% that X% ELD is the occurring the next drug -- need be early to cost an that final external certainly, implementation clearinghouse coming change

wouldn't a a we'll we some stretch and if seasonal as slog surprise in And what go if XX-month is be might that quicker operating than back be me historically. tightening XX to see which maybe tighter we it than is get would down some in recovery the So, you cycles kick, look we we generally a that. typical,

Tom Wadewitz

you. thank great. Okay,

Operator

you. Thank

the comes next Our Jack line question of proceed with Stephens. from Please question. your Atkins with

Jack Atkins

so negative their with Robinson own bit for of with pricing Hey the about taking a their guys. in of call an a volume to conference business. Mark, C.H. regard effort action of in is heard Thanks aggressive that that to growth the market. broader question terms and the get We kind for questions. to you. my maybe support need heard their talk drive more to perhaps my as I I on Good interpreted in market much yesterday morning. first guess, truckload

as where we curious it to the I'm market the contract relates your into of remainder sort bigger within as picture look next early just to of sort year some here thoughts headed pricing thoughts we're from of year. this pricing, and on truckload out

Mark Rourke

be book the we're not in for be the contract comps contractual to the me in slightly that, maybe to year Yes. would and to negative the it relative prices based to to we if year condition, talking And later upon renewed what category. as flat more mentioned, we're a I current -- have for go surprise XX% the -- ago those

the would those tensions of more upon brokerage And in by depending some squeeze of mix. spot our business we spot normally June the month expect the to relates a versus felt, particularly than it your net revenue a business, company pull I in of order. world, the in June, bit certainly, is contract think As certainly

more we're than But of slightly other back contract-orientated month the of rebounded there. to have July think "normal nicely Again, things some less condition". here and I big the because in that's a players

So, tightening relative rate my in this may the is to personal stand and this bottom view being certainly we of we whole of closer the bottom the bode capacity be think contract to capacity where a would for here condition. getting the bit supply of on mix second half I well

Jack Atkins

Okay. And peak? a Thank half assuming on second color color. Just any in follow-up normal does weaker peak, in of What guidance sort XXXX normal FY Steve, then you that a for year the season? of assume the peak you just a terms question Are helpful. guidance. would that of the than be the around

Mile XXXX, on of Final And about operating FY we quick think apples-to-apples expectation to When number? Thanks to First again. a that that'll loss any what's FY sort have your the that. with to leases can the an be related then, we follow-up in just ongoing business, for XXXX associated just just current

Steve Bruffett

Sure. Okay.

there's is have is And that of average. a type my what guidance. The of we bit seasonality our I that assumed assumed is year XXXX in albeit guess full below first that seasonality EPS a part response

of we effect. for but strongest our expect year, that but as typical, would the would quarter to we experienced last degree to example, bit fourth not moments a So, and is more third seasonality, some muted be have the

more that the year, it environment. past How we'll change. We things, year aren't but given later a a could date out, the see, we've traveled month could completely if to plays in overall be this different you assumed muted about

your of part is the confines The in third rest the maybe full second question, it's about XXXX, quarter. this way we and that year account believe, of will for regarding I the the To year leases. of

onetime entry to of estimates that make facilities. regarding exposure the have First the Mile Final that We the will net a lease we shutdown

But adjust the predominantly actual entry results hopefully, one time, and lease be third be quarter. over adjustments But booked needed. we'll will our And should those then charge to in as profile. relatively monitor that they small as the

Jack Atkins

great. Okay,

Final expect that? the First just barring assumptions charge, your about to So, expecting about Mile losses you're this any wouldn't right XXXX? Is you're in any not to -- that Mile way in First to to to take that be to any Final you clear, think changes

Steve Bruffett

correct, yes. That's Correct.

Mark Rourke

believe in fourth will quarter. be Really the minimal

Jack Atkins

again Thanks for great. the time. that's Okay,

Mark Rourke

thank Yes, you.

Operator

you. Thank

Our from Please proceed next question. Citi. question Wetherbee with your is Chris with

Chris Wetherbee

Yes, thanks. on Good that I to want pick up point guys. morning sure just Maybe the just belabor we're I make to but clear. don't here to --

what the fourth First Final Is right to $XX terms then million booked in the losses terms million a In think million in in range that? to million of and you've of quarter. $XX quarter $XX then third in assuming in it I -- the million goes million the should already thinking that to probably to $XX $XX $XX on XQ and minimal be way Mile, There's it's in about XQ. we and something the in XQ in the about

Steve Bruffett

for specific Yes, you let me be even more there.

the First virtually million, was in if estimate, third second that nothing, any, fourth quarter with in and $X quarter, estimating quarter. million million, $XX.X small, we're the it And quarter. very $XX was

Chris Wetherbee

Okay.

the the perspective? -- number that's EPS so year embedded those are numbers And the guidance what's in from for full an

Steve Bruffett

Yes.

Chris Wetherbee

And XXXX in then your is current virtually nothing expectations?

Steve Bruffett

correct. That's

Chris Wetherbee

Okay.

the has bit guess sort through move to the year weaker as just the of get half context Very the productivity the I sense of me back how helpful. that's we what details, guys think in a of about through to fleet been a on trucks. and environment a that in appreciate and the that. then wanted terms walking you for-hire go you of clear. Okay, I just

we sort give year. a thinking the it of for sense of that what fleet on expect rest stays assume the here? forward we Just Should gradual the for-hire increase on flat? going you're Do

Mark Rourke

Chris. Thanks

put what of this the of the at more trucks -- versus dedicated the get in our think and juncture, to would our I be we half as for-hire. they year configurations strategy second the

by in driven the actually most lower of replacement think capital you here number having and delivered us space year. months slightly see in I six first that of the for-hire the So, of our some

of all And so slack of that to through rapidly all get very kind that have far we work we'll so out July in of system. the and the month here, of

And so for-hire the in slightly smaller number a I would anticipate space.

Chris Wetherbee

Okay.

up? XQ that's then in And showed Okay. that

Mark Rourke

Correct.

Chris Wetherbee

Okay, great. the Appreciate time. very for you it. Thank much

Operator

Thank you.

from Ossenbeck is question. Brian JPMorgan. question Please next your with with proceed Our

Brian Ossenbeck

wanted Thanks like you the morning. for fleet expectations taking sounds questions. offering to for especially good improving context the container size my I Intermodal of rail service the in just it Hey about and service. ask

coming added of yesterday a And like service specifically, you California. out you look

maybe more on well. or need Why it that So, is the you through lanes you comment And now? year as think next do you can add to so? What offering?

Mark Rourke

As we'll part of around box the it take count. first -- centering maybe that, the

finish great would be calendar expect I we in second today's where to As we quarter. from finished Not the down slightly deal, a us year, slightly the but down.

is leverage there. the little we additional that there of have some would or disposables bit allow a execute And market have the flexibility point could we do if could that really, that some we volume

about to of mix on we're our transcon the elements bit the play quarter we believe the about are mindful making going more we the at believe box need is several even how for we in of so very to count or we're doing front. future decisions. foreseeable boxes, that that a on we and we're be we those consuming But we're mixed next But out be some expect where to

volume overall just that of those they railroad, a more the running some in on can train. but be with to finding looking that railroads they're the additional secured dialogue to for where think after that the may marketplace, we're As options able areas effective it their relative objectives on certainly be to achieve I bit going also ways the relates an seeing

And be so think some last may there's saw perhaps approach. bit other the for a that of similar you the parts opportunities other country little of in I some in

partners the look So, opportunities, and the we for in discussion continue of and with constant do those second we're a for communication year. that our will to to half

Brian Ossenbeck

Okay.

process thought case, just adding some So, to amenable a maybe of new venture? the are offerings a or is and or more in like that joint little more some it rails different capacity sounded

Mark Rourke

want that we our bring don't railroads. I the is to use can commercial add of insight marketplace certainly, generally dialogue very for think collaborative those where be. things -- and speak opportunities Yes, it's that one ones in our to our partners in approach relationships the the that of we're opportunities help the value a to about. about to constant and And But kind may

Brian Ossenbeck

the Okay. on First and way. for you've -- And management strategic on to made you while and been it What Mile. for had a shifts Obviously, changes some one level high working just a second along a few acquisitions. question, Final

kind over changed that couple triggered it the there Or decision? end implementing and combination of the challenge the really years? the Was factors was markets this of cost last that just something of more and opportunity this in of the

Mark Rourke

from both the acquisitions Well, things some objective over-dimensional consumer e-commerce into the right, doing how prior some national even the we And scope together with growing of itself this goods, went trend was to in that was really we into we to addressing and that needed certainly help our which bring purchasing what play. and were you're beyond extending focus.

there to a and this for with a here to and that on the that organization, felt were from any not reasonable and accomplish resonating to decision we horizon in we a from a volume But trying endeavor three-year what a standpoint cost we we the made we made. were glide to that standpoint path be density obviously, after accretive serve

to last way in service going play portfolio. it a different it's we've e-commerce focused of ways in across We're We'll on So, kind confluence three factors. not the play the years. of this our in been just

Brian Ossenbeck

thoughts. for Okay. Mark Thanks the

Operator

Thank you.

with comes Please Hoexter question question. next Bank Lynch. from Our Merrill your America proceed of with Ken

Ken Hoexter

Steve morning Steve. and Mark, Hi, good

of to Steve, in -- some a outlook the the up in things before of high want outlook, perspective? volume said declines. bid just your revisit you talk some you And in and Truckload you positive terms sounding from are can end noted seeing of about You be the rates sounded that kind may I bit low your and takeaways. the Maybe

Steve Bruffett

our and in that that shows uncertainty the what Yes, and rate I across particular. volume think Intermodal, seasonality Truckload around extent and more are have to high up; we just largely anticipate built activity the in low aspect around baked

where seasonality far more that's I are that about have of into So, given contractual the it the it's how our insight is year of we this decent and our in that's renewal we volume from space think come and view slide. predominance volumes

Ken Hoexter

and volumes of about that given in rate where that about So, less locked side on fluctuation got you've more just trend?

Steve Bruffett

Yes and the associated productivity with volumes. that goes

Ken Hoexter

that On think, were the e-commerce you talking you I that Mark, follow-up, changing beginning. about fundamentally audience? you dedicated. a that target Okay. noted shift? a in Is change Is in customers your market in

Mark Rourke

Ken, right. that's exactly Yes,

the and to to doing, on And so other delivering whole services, what whether of around go-to-market could be on typical store-type specialty-type example, ag the just beyond be configuration where doing be D.C. places we where services could space, operations to supporting strategy. chemicals in we're other fields, things retail a on various series customers' offloading more that we're the value-add it ATVs, doing a for

XXX not those for they less they're support. need much have in general, truck they And just but operations, fourth smaller things have are operations, quarter for searching, less need

focus like like the XX in of portfolio, profile, mix it's we shift part we're customer that's overall to XX last return months not the forward. profile And We're our directly really, retail, going of anti-big pushing approach but we particular, been our more that last the starting so more and is stickiness just forward the those, in direction. over the over to always the and months,

Ken Hoexter

how bunch customers of insourced is a large anything due business, they're that their due Is how customers, those changing sourcing a needs? larger Walmart's to that in to

Mark Rourke

of It's come more in serving. those are of there's kind I what's certainly more ability others about obviously, markets sustain things that the to insourcing, into It's folks who based just play. upon serve, cost space. of end say although contract, market, it's all acquisition, wouldn't more capacity we're aggressive But particularly. Not the some returns that than length the to the

Ken Hoexter

a Are you you was historicals I on in for providing normalize specialty. just else web -- just specialty, know for kind for-hire some I some can historical quarters we Steve, providing changed growth or dedicated that? minor. anything then Are think the it stuff. numbers And the of you've question, of next couple

Steve Bruffett

quarter, have it's by you we those last schedule about things. of statistics we recognition -- types can by have have thing We and on And quarter, cited a adjusted how if reported. we our offline they're for work that revenue with any you segment questions operating the

Ken Hoexter

for Thanks time the guys.

Operator

question Todd next question. comes your The Please you. proceed Fowler from with Thank with KeyBanc Capital Markets.

Todd Fowler

morning. prepared of phrased couple side. your or forget as on pretty exactly it. a you the about Good wages, a how Thanks. other cost you percent you the through cost went some quarter And talking you in salaries expense but Steve, Mark, were Great. the some improvement of I comments, look your in in comments, leverage side and revenue. positive

kind we were that I a there'll wages the some variability other a line that from that salaries quarter should the here and But rate is number clean miles be side? parts with going driven. the any run forward? And there know on expect that And in moving of item? were is Or what in

Steve Bruffett

Yes. one broader lands also It productivity them. line above are the There year. of that targets X%, like for below item. last and targets organization in quarter-over-quarter. year, our we were that there's The is part is our this we're I something incentive But the think, there. of down, in And some compensation factors

line. of within but between lesser of order that we owner-operator dynamic, and is than our magnitude, company had last those There's of there's second dynamic year. have two a the quarter this as shift slightly we house owner-operator year also driver So, a between that in more the -- in mix mix this the

plays well. into as that line that So,

Todd Fowler

sense. idea Okay, just incentive that from on we a And perspective? is can modeling directionally Steve, comment the how have comp you maybe basis a so an year-over-year makes much

Steve Bruffett

one level that but would We haven't gotten that's into that where of detail, show up.

Todd Fowler

Okay.

updated? would have standpoint can of renewals remind your last Just Intermodal at cost might then XXXX. move those partners a to relationships and as on the us sense just the partners, with trying what a Okay, rail of timing you get inflation looking contract was be into that's what's been the you when rail Thanks. we fair. your with And from your time

Steve Bruffett

to are. that we're into focused sides, structures multiyear on around Todd. durability you're But disclose We But rail of generally don't that. the kind what right, can't midst our so not unfortunately, -- we Yes, items long-term for the on we're share disclose we're have specifics and both enter permitted and market, try to in we contracts. the the and of

Todd Fowler

that talk you about I either? understand Mark, maybe contracts you part you magnitude. Can renew? when the can't So, talk on actually about comment Or can't

Mark Rourke

part comment on either. can't I Yes, that

Sorry.

Todd Fowler

enough. Okay, it's fair

the this Okay, just time thought morning. I Thanks for would try.

Mark Rourke

Thanks Todd.

Operator

you. Thank

today's and your the this participation thank you reached teleconference. And end have question-and-answer for our We conclude time. lines disconnect and ladies this your does you of may We session. gentlemen, at

Schneider National (SNDR) 4 Aug 192019 Q2 Earnings call transcript