Business Overview and History Schneider National, Inc. (SNDR) is a premier multimodal transportation and logistics provider, offering a diverse portfolio of truckload, intermodal, and logistics solutions. With a history spanning over 80 years, the company has established itself as a resilient and adaptable player in the highly competitive transportation industry.
Schneider National was founded in 1935 by Al Schneider, who started the company with a single truck. Over the decades, the company has grown exponentially, expanding its service offerings and geographical reach. In 1956, Schneider expanded beyond truckload services by adding intermodal offerings, marking a significant milestone in its diversification strategy. Throughout the 1970s and 1980s, the company continued to grow, both organically and through strategic acquisitions, solidifying its position as one of the largest truckload carriers in North America.
A major turning point came in 1991 when Schneider entered the logistics business, providing freight brokerage, warehousing, and other value-added services. This diversification into logistics complemented the company's truckload and intermodal offerings, allowing Schneider to provide customers with a comprehensive suite of transportation and supply chain solutions.
Over the years, Schneider faced numerous challenges, including industry deregulation in the 1980s, volatile fuel prices, and increased competition. In response, the company invested heavily in technology, fleet modernization, and operational efficiency initiatives to maintain its market-leading position. Despite these headwinds, Schneider remained focused on providing high-quality service to its customers and fostering a strong company culture.
In 2017, Schneider took a major step forward by conducting an initial public offering, which provided additional capital to support the company's growth strategies. Since going public, Schneider has continued to expand its service offerings, enhance its multimodal capabilities, and pursue strategic acquisitions to better serve its diverse customer base across North America.
Today, Schneider National operates a diversified fleet of trucks, trailers, and intermodal containers, serving a wide range of customers across North America. The company's transportation and logistics services are divided into three reportable segments: Truckload, Intermodal, and Logistics. The Truckload segment provides over-the-road freight transportation, including dry van, bulk, temperature-controlled, and flatbed services. The Intermodal segment offers door-to-door container on flat car (COFC) service, combining rail and drayage transportation. The Logistics segment provides asset-light freight brokerage, supply chain management, and importexport services.
Financial Performance and Ratios Schneider National has demonstrated a solid financial performance over the years. As of the latest reported quarter (Q3 2024), the company's revenue, excluding fuel surcharge, was $1.2 billion, essentially flat year-over-year. The company's adjusted income from operations was $44 million, compared to $48 million in the same period the previous year.
The company's financial ratios paint a picture of its financial health and efficiency. Schneider National's current ratio, a measure of liquidity, stood at 1.65 as of Q3 2024, indicating a strong ability to meet short-term obligations. The company's debt-to-equity ratio, a measure of solvency, was 0.09, suggesting a conservative capital structure with a low level of leverage.
Schneider National's return on assets (ROA) and return on equity (ROE) for the latest reported year (2023) were 5.2% and 8.0%, respectively, reflecting the company's ability to generate profitability from its asset base and equity.
Financials
Quarterly Financial Highlights In the third quarter of 2024, Schneider National's truckload segment revenue, excluding fuel surcharge, decreased by 1% year-over-year, primarily due to a decline in network volume, which was partially offset by growth in the dedicated business. The truckload segment's operating income decreased by 3% compared to the same period in the previous year, impacted by increased insurance costs and lower gains on equipment sales.
The company's intermodal segment revenue, excluding fuel surcharge, increased by 1% year-over-year, driven by volume growth. Intermodal operating income improved by 41% compared to the third quarter of 2023, benefiting from volume growth, internal cost actions, network optimization, and enhanced trade performance.
Schneider National's logistics segment revenue, excluding fuel surcharge, decreased by 4% year-over-year, mainly due to a decrease in revenue per order and a slight reduction in brokerage volume. Logistics operating income declined by 11% compared to the same period in the previous year, primarily due to the decrease in net revenue per order.
For the most recent fiscal year (2023), Schneider National reported revenue of $5.50 billion, net income of $238.50 million, operating cash flow of $680.00 million, and free cash flow of -$127.60 million. In the most recent quarter (Q3 2024), the company reported revenue of $1.32 billion, net income of $30.60 million, operating cash flow of $206.40 million, and free cash flow of $113.40 million. Year-over-year, revenue decreased by 3.0% and net income decreased by 14.0% compared to Q3 2023, primarily due to lower net revenue per order in the Logistics segment and volume declines within the truckload network business, partially offset by growth in the Dedicated truckload and Intermodal segments.
Segment Performance Schneider National's Truckload segment, which includes Dedicated and Network operations, saw a decrease in revenues excluding fuel surcharge of $3.1 million in Q3 2024 compared to Q3 2023. This was driven by a decrease in Network volume, partially offset by increases in Dedicated volumes due to organic growth and higher rates. Income from operations for the Truckload segment decreased by $0.8 million, or 3%, due to revenue impacts, increases in salaries and wages, insurance expenses, and lower gains on equipment sales, partially offset by decreased purchased transportation costs.
The Intermodal segment reported an increase in revenues excluding fuel surcharge of $1.7 million, or 1%, in Q3 2024 compared to Q3 2023, due to higher volume and revenue per order. Income from operations for the Intermodal segment increased by $4.6 million, or 41%, driven by revenue growth and decreased rail and dray execution costs.
The Logistics segment experienced a decrease in revenues excluding fuel surcharge of $12.3 million, or 4%, in Q3 2024 compared to Q3 2023, due to a decrease in brokerage revenue per order and a slight reduction in brokerage volume. Income from operations for the Logistics segment decreased by $0.9 million, or 11%, primarily from the decrease in net revenue per order.
Geographic Markets Schneider National operates primarily in the United States, Canada, and Mexico. The company does not provide detailed financial reporting by geographic region.
Guidance and Outlook For the full year 2024, Schneider National has updated its adjusted diluted earnings per share (EPS) guidance to the range of $0.66 to $0.72, assuming a full-year effective tax rate of 24%. The company has also maintained its net capital expenditure guidance of approximately $330 million for the year.
Schneider National's management has highlighted the company's focus on positioning the business for structural resiliency and being advantaged in the freight market correction. The company remains disciplined on commercial actions, cost management, and resource optimization across its enterprise, aiming to enhance long-term value creation.
The updated full year 2024 EPS guidance implies a slight sequential improvement in earnings from Q3 to Q4. Schneider National expects continued stabilization across most of its businesses as well as improved seasonality, particularly within the truckload network and logistics segments, during the fourth quarter.
Liquidity Schneider National maintains a strong liquidity position, as evidenced by its current ratio of 1.65 as of Q3 2024. This indicates that the company has ample resources to meet its short-term obligations. Additionally, the company's low debt-to-equity ratio of 0.09 suggests a conservative approach to leverage, providing financial flexibility and stability.
As of September 30, 2024, Schneider National reported cash holdings of $179.00 million. The company has access to significant credit facilities, including a $250 million revolving credit facility maturing in November 2027, with $45 million drawn as of September 30, 2024, and a $200 million receivables purchase agreement maturing in May 2027, with $70 million drawn as of the same date. The combined available capacity from these credit facilities stood at $305.70 million as of September 30, 2024.
The company's quick ratio, which measures its ability to meet short-term obligations with its most liquid assets, stood at 1.528 as of September 30, 2024, further demonstrating Schneider National's strong liquidity position.
Challenges and Risks Schneider National, like many transportation companies, has faced various challenges in recent years. The COVID-19 pandemic and its impact on global supply chains have tested the company's adaptability and resilience. Additionally, the industry has grappled with rising insurance costs, labor shortages, and fluctuations in fuel prices, all of which have affected Schneider National's operations and financial performance.
The company's network truckload business has been particularly impacted by the ongoing market conditions, with more than 100% of the earnings in the truckload segment currently generated by the dedicated sector. Schneider National has been proactive in addressing these challenges, focusing on rate restoration, growing its owner-operator capacity, and optimizing its capital allocation across its strategic growth drivers.
The transportation and logistics industry has seen moderate growth, with a compound annual growth rate (CAGR) of approximately 5% over the past 5 years. However, the industry has faced challenges from supply chain disruptions, labor shortages, and inflationary pressures, which have impacted financial performance across the sector.
Conclusion Schneider National's long history, diversified service offerings, and strategic focus have positioned the company as a resilient player in the transportation and logistics industry. Despite facing various challenges, the company has demonstrated its ability to adapt and maintain a strong financial profile. As the freight market continues to evolve, Schneider National's commitment to operational excellence, disciplined capital allocation, and customer-centric approach positions it well to navigate the road ahead and create long-term value for its shareholders.