Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Schneider National Inc (SNDR, Financial) completed the acquisition of Cowan Systems, which is expected to be accretive to earnings per share and provide $20 million to $30 million in annual synergies.
- The company reported a year-over-year improvement in earnings across all reportable segments for the first time since the second quarter of 2022.
- Intermodal segment showed strong performance with year-over-year growth in orders, revenue per order, and improved productivity, resulting in a 380 basis point margin improvement.
- Schneider National Inc (SNDR) achieved significant reductions in DOT reportable accidents, reaching an all-time low accident frequency.
- The company has a strong new business pipeline in its Dedicated segment, with several hundred trucks of new business awards slated for start-up in the first half of 2025.
Negative Points
- The Truckload network business continues to be challenged, with efforts ongoing to restore profitability through internal cost control and productivity actions.
- The company faced $7 million in prior year accident reserves, impacting earnings by $0.03 per share, primarily affecting the Truckload segment.
- Logistics revenues were down 5% year-over-year due to lower brokerage revenue per order and volumes.
- Insurance expenses increased due to a surge in litigious activity, including nuclear verdicts and inflated settlements, impacting the cost and volatility of claim reserves.
- The freight market is still recovering, and while there are positive signs, the company is not yet satisfied with its results and continues to take actions to restore performance within long-term margin targets.
Q & A Highlights
Q: With the market tightening, when would you expect organic truck count to begin to grow again on both the network side and the dedicated side?
A: We expect to see growth in 2025, particularly in the second quarter. For the network side, growth will focus on variable cost capacities like owner-operators and power-only options. In Dedicated, we anticipate growth in truck count and revenue per truck per week due to tighter capital allocation and redeployment of underutilized equipment, especially from acquisitions like Cowan.
Q: Can you help quantify what you are seeing in rate renewals right now? Are you seeing mid-single digits or high singles in some pockets?
A: We are early in the renewal process, but discussions have been constructive and different from the past couple of years. Spot pricing has increased significantly since Thanksgiving, which, along with capacity adjustments, creates a more constructive pricing environment for 2025.
Q: What are you seeing in terms of capacity leaving the market, especially among small fleets?
A: We continue to see reductions in capacity, particularly among small fleets. While large carriers aren't exiting, they aren't expanding either. In terms of intermodal, about 10% of our boxes are stacked, and we have the capacity to move 30% more volume than in the fourth quarter.
Q: On the Cowan acquisition, is the lightweight fleet model something you could adopt elsewhere?
A: Cowan's lightweight model resonates with customers seeking payload advantages. We plan to unlock potential in other geographies and verticals using this model. Cowan's expertise will be applied across multiple geographies, enhancing our capabilities.
Q: What are you seeing in retail inventories and how are customers positioning themselves ahead of potential tariffs?
A: We haven't seen any significant trend in inventory increases. Some customers have pulled forward inventory due to potential port disruptions, but this is not widespread. Generally, customers feel their inventories are appropriate for expected demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
