Summary of Schneider National (SNDR) 2025 Conference Call Company Overview - **Company**: Schneider National (SNDR) - **Date**: June 10, 2025 - **Speakers**: Mark Rourke (President and CEO), Daryl Campbell (EVP and CFO), Christine McGarvey (VP of Investor Relations) Current Market Conditions - **Market Sentiment**: There was significant uncertainty at the macro level, but the worst-case scenarios have not materialized, indicating a resilient consumer demand [6][7][8] - **Volume Trends**: A downturn in West Coast volumes was noted, but strength was observed in other regions, particularly in Mexico and the Midwest [9][10] - **Customer Expectations**: Mixed signals from customers regarding future demand, with some expecting a surge while others anticipate steady activity [10] Business Segments Performance - **Intermodal**: Less reliance on imports compared to truckload, with steady domestic demand. Productivity enhancements are being pursued [12][13] - **Capacity and Pricing**: The market is approaching equilibrium with modest price increases observed despite ongoing challenges [18][20] - **Used Truck Market**: Prices for used trucks, especially sleepers, have been healthy, indicating stress in the market for small carriers [22][24] Pricing Dynamics - **Contract Rates**: Contractual improvements are being maintained, with a focus on not signing unfavorable agreements [29][30] - **Spot vs. Contract Rates**: A significant disparity exists between spot and contract rates, with contract rates showing flat to positive trends [31][32] Cost Management and Productivity - **Cost Control**: The company has focused on cost management and productivity improvements, resulting in year-over-year margin improvements [38][40] - **Acquisition Synergies**: The recent Cowen acquisition is expected to yield synergistic opportunities, particularly in cost management [42][64] Regulatory Environment - **English Language Provision**: New enforcement guidelines for the English language requirement could disrupt the market, particularly for smaller carriers [46][50] - **B1 Mexican Program**: Increased enforcement may tighten capacity around the border, impacting operations [50][52] Intermodal Growth - **Market Position**: Schneider National is optimistic about intermodal growth, particularly in the Mexico market, with strong service performance noted [54][56] - **Pricing Trends**: Intermodal pricing remains flat to slightly up, with expectations for continued stability [63] Capital Allocation Strategy - **Growth Focus**: The company prioritizes organic growth but remains open to strategic acquisitions, particularly in dedicated and intermodal segments [64][66] - **Leverage Profile**: The company is comfortable with a leverage ratio of up to 2.5 times for the right acquisitions [70][72] Guidance and Outlook - **Earnings Guidance**: EPS guidance is set between $0.75 and $1.00, reflecting a more optimistic outlook than previously anticipated [80][82] - **Market Sentiment**: The negative forward sentiment has moderated, leading to a more favorable industry outlook [92] Key Takeaways - **Resilience in Demand**: The company is experiencing steady demand despite macroeconomic uncertainties - **Focus on Cost Management**: Continuous efforts in cost control and productivity enhancements are yielding positive results - **Strategic Growth Opportunities**: Schneider National is well-positioned for growth in intermodal and dedicated segments, with a balanced approach to capital allocation and acquisitions.

Investment Rating - The report does not explicitly state an investment rating for the transportation and logistics industry Core Insights - The report highlights a positive trend in U.S. imports, with a 6.1% week-over-week increase as of May 18, outperforming seasonal expectations by 980 basis points and showing a 2.8% year-over-year increase [2] - Spot rates for truckload transportation have surged, with dry van rates increasing by 6.1% week-over-week, outperforming historical averages [3] - There are concerns regarding potential freight demand impacts due to tariffs, with expectations of a flat outlook for dry van spot rates in 2026 [6] Summary by Sections Import & Congestion Monitor - Container bookings from China to the U.S. are at five-year lows, down 27% compared to 2023, indicating subdued future demand [2] - The report notes a recovery in container imports at the Port of LA/LB, which increased by 24% week-over-week [2] Truckload and Rail Data - Spot rates for dry van, reefers, and flatbed have all increased week-over-week, with dry van rates now 4% higher year-over-year [3] - The dry van load-to-truck ratio increased by 57% week-over-week, indicating a tightening market [6] - Rail management teams express skepticism about the feasibility of transcontinental mergers due to regulatory barriers [7] Airfreight & Surface Transportation - Airfreight rates have been monitored closely due to tariff implications, with significant declines observed in key freight lanes, particularly the China-U.S. lane, which fell by 6% week-over-week [10] - The overall airfreight market is experiencing broad-based weakness, with all major lanes underperforming seasonal expectations year-to-date [10] Rail Performance - The report card for railroads indicates varying performance levels, with some railroads rated as excellent while others are fair or poor [9] - Regulatory challenges are highlighted as a significant barrier to potential mergers in the rail industry, with environmental impact studies being particularly burdensome [7]

Core Insights - Schneider National, Inc. reported first-quarter 2025 earnings per share (EPS) of 16 cents, exceeding the Zacks Consensus Estimate of 14 cents and reflecting a 45% year-over-year improvement [1] - Operating revenues reached $1.40 billion, slightly below the Zacks Consensus Estimate of $1.44 billion, but showed a 6.2% year-over-year increase [1] - The company experienced a decline in consumer sentiment and market expectations due to increasing economic uncertainty [2] Financial Performance - Income from operations (adjusted) grew 47% year-over-year to $44.2 million [2] - Truckload revenues (excluding fuel surcharge) were $613.7 million, up 14% year-over-year, driven by the acquisition of Cowan Systems and improved revenue per truck per week [3] - Intermodal revenues (excluding fuel surcharge) increased 5% year-over-year to $260.4 million, supported by a 4% volume growth [5] - Logistics revenues (excluding fuel surcharge) reached $332.0 million, a 2% year-over-year increase [7] Segment Highlights - Truckload income from operations was $25.1 million, up 68% year-over-year, with an operating ratio improvement to 95.9% from 97.2% [4] - Intermodal income from operations surged 97% year-over-year to $13.8 million, with an operating ratio of 94.7% [6] - Logistics income from operations grew 50% year-over-year to $8.1 million, with an operating ratio of 97.6% [7] Liquidity and Cash Flow - Cash and cash equivalents at the end of the first quarter were $106.2 million, down from $117.6 million in the previous quarter [8] - Long-term debt increased to $565.8 million from $420.8 million [8] - The company generated $91.7 million in cash from operations during the quarter [8] Shareholder Returns and Guidance - Schneider announced a $150.0 million stock repurchase program, having repurchased 4.1 million Class B shares for $103.9 million as of March 31, 2025 [9] - A dividend of $0.095 per share was declared, payable on July 10, 2025 [9] - The company updated its 2025 adjusted EPS guidance to a range of 75 cents to $1.00, down from the previous range of 90 cents to $1.20 [10][11]

[PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial information for Schneider National, Inc., including financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [Financial Statements](index=6&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Schneider National, Inc. for the quarter ended March 31, 2025, including comprehensive income, balance sheets, cash flows, and detailed notes [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) For the first quarter of 2025, the company reported operating revenues of $1,401.8 million, an increase from $1,319.0 million in the prior year period, with net income rising to $26.1 million, or $0.15 per diluted share Consolidated Statements of Comprehensive Income (Q1 2025 vs Q1 2024) | Metric (in millions, except per share data) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating revenues | $1,401.8 | $1,319.0 | | Income from operations | $42.1 | $28.7 | | Net income | $26.1 | $18.5 | | Diluted earnings per share | $0.15 | $0.10 | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) As of March 31, 2025, total assets were $4,978.5 million, a slight increase from year-end 2024, with total liabilities increasing to $1,990.3 million primarily due to a rise in long-term debt Consolidated Balance Sheet Highlights (as of March 31, 2025) | Metric (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,165.0 | $1,115.3 | | Net property and equipment | $2,875.5 | $2,869.4 | | Goodwill | $339.6 | $377.9 | | **Total Assets** | **$4,978.5** | **$4,933.7** | | Total current liabilities | $614.2 | $704.5 | | Long-term debt and finance lease obligations | $565.8 | $420.8 | | **Total Liabilities** | **$1,990.3** | **$1,946.8** | | **Total Shareholders' Equity** | **$2,988.2** | **$2,986.9** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Net cash provided by operating activities was $91.7 million for the first quarter of 2025, a decrease from the prior year, while net cash used in investing activities increased to $126.7 million Cash Flow Summary (Q1 2025 vs Q1 2024) | Activity (in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $91.7 | $97.6 | | Net cash used in investing activities | $(126.7) | $(102.1) | | Net cash provided by (used in) financing activities | $23.6 | $(30.6) | | **Net decrease in cash and cash equivalents** | **$(11.4)** | **$(35.1)** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail key accounting policies and events during the quarter, including the acquisition of Cowan, the company's debt structure, and segment performance breakdowns - On December 2, 2024, the company acquired Cowan for approximately **$398.6 million**, financed through cash and borrowings under a **$400.0 million** delayed-draw term loan facility[29](index=29&type=chunk) - Goodwill decreased from **$377.9 million** to **$339.6 million** in Q1 2025 due to a **$38.3 million** adjustment related to the Cowan acquisition[62](index=62&type=chunk) Debt and Credit Facilities (as of March 31, 2025) | Facility (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Unsecured senior notes | $50.0 | $145.0 | | Revolving credit agreement | $50.0 | $— | | Receivables purchase agreement | $70.0 | $70.0 | | Delayed-draw term loan facility | $400.0 | $300.0 | | **Total debt and credit facilities** | **$570.0** | **$515.0** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for Q1 2025, highlighting a 6% increase in operating revenues and a 47% increase in income from operations, largely driven by the Cowan acquisition and improved Intermodal performance - Enterprise net income increased by **$7.6 million** (41%) in Q1 2025 compared to Q1 2024, driven by a **$13.4 million** increase in income from operations[122](index=122&type=chunk) - Operating revenues increased by **$82.8 million** (6%) in Q1 2025, primarily due to a **$75.6 million** increase in Truckload revenues (driven by the Cowan acquisition) and a **$13.2 million** increase in Intermodal revenues[124](index=124&type=chunk)[129](index=129&type=chunk) - Key operating expense increases in Q1 2025 vs Q1 2024 include a **$44.9 million** (13%) rise in salaries, wages, and benefits and a **$10.8 million** (11%) increase in depreciation, both primarily due to the Cowan acquisition[130](index=130&type=chunk) Income from Operations by Segment (Q1 2025 vs Q1 2024) | Segment (in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Truckload | $25.1 | $14.9 | | Intermodal | $13.8 | $7.0 | | Logistics | $8.1 | $5.4 | | Other | $(4.9) | $1.4 | | **Total Income from operations** | **$42.1** | **$28.7** | [Truckload Segment Analysis](index=28&type=section&id=Truckload%20Segment) The Truckload segment's income from operations increased by 68% to $10.2 million in Q1 2025, driven by a 14% increase in revenues (excluding fuel surcharge) primarily from increased Dedicated volumes following the Cowan acquisition Truckload Segment KPIs (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues (ex-fuel, $M) | $613.7 | $538.1 | | Average trucks | 12,279 | 10,884 | | Revenue per truck per week | $3,953 | $3,853 | | Operating ratio | 95.9% | 97.2% | - Truckload income from operations increased by **$10.2 million** (68%) year-over-year, driven by revenue growth from the Cowan acquisition, partially offset by higher insurance premiums[140](index=140&type=chunk) [Intermodal Segment Analysis](index=29&type=section&id=Intermodal%20Segment) The Intermodal segment's income from operations nearly doubled, increasing 97% to $6.8 million in Q1 2025, due to a 5% increase in revenues (excluding fuel surcharge) driven by volume and revenue per order growth Intermodal Segment KPIs (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Orders | 104,440 | 100,494 | | Revenue per order | $2,467 | $2,442 | | Operating ratio | 94.7% | 97.2% | - Intermodal income from operations increased by **$6.8 million** (97%) year-over-year, attributed to volume growth, higher revenue per order, and a decrease in rail-related costs[146](index=146&type=chunk) [Logistics Segment Analysis](index=29&type=section&id=Logistics%20Segment) The Logistics segment's income from operations grew by 50% to $2.7 million in Q1 2025, primarily due to a higher net revenue per order, which offset lower brokerage volumes - Logistics revenues (excluding fuel surcharge) increased by **$7.1 million** (2%) in Q1 2025, driven by the Cowan acquisition, but offset by lower revenue per order and volume in the brokerage business[149](index=149&type=chunk) - Logistics income from operations increased by **$2.7 million** (50%) year-over-year, mainly due to an increase in net revenue per order[150](index=150&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company's primary liquidity source is cash from operations, supplemented by credit facilities, with Q1 2025 seeing a slight decrease in operating cash flow and increased debt to fund the Cowan acquisition - As of March 31, 2025, the company had combined available capacity of **$234.5 million** under its revolving credit and receivables purchase agreements[154](index=154&type=chunk) - Net cash provided by operating activities decreased by **$5.9 million** in Q1 2025 compared to Q1 2024, while net cash used in investing activities increased by **$24.6 million**[161](index=161&type=chunk)[162](index=162&type=chunk) - Financing activities provided **$54.2 million** in cash, a reversal from the prior year, due to proceeds from the delayed-draw term loan and revolving credit agreements, partially offset by a large payment on unsecured senior notes[165](index=165&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company states that its market risks have not changed significantly from those disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There have been no significant changes to market risks since the last annual report[172](index=172&type=chunk) [Controls and Procedures](index=32&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Based on an evaluation by management, including the CEO and CFO, the company's disclosure controls and procedures were deemed effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[173](index=173&type=chunk) - No changes occurred during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[174](index=174&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, and details on unregistered sales of equity securities and use of proceeds [Legal Proceedings](index=33&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in various lawsuits in the ordinary course of business, which are not expected to have a material impact on its operations or financial statements - The Company is party to various lawsuits in the ordinary course of its business, which are not expected to have a material impact[176](index=176&type=chunk)[89](index=89&type=chunk) [Risk Factors](index=33&type=section&id=ITEM%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred to the risk factors disclosed in the 2024 Annual Report on Form 10-K[177](index=177&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the first quarter of 2025, the company repurchased 337,352 shares under its publicly announced program, with $46.1 million remaining available for future repurchases Share Repurchase Activity (Q1 2025) | Period | Total Shares Purchased | Avg. Price Paid | Shares Purchased as Part of Program | | :--- | :--- | :--- | :--- | | Jan 2025 | — | $— | — | | Feb 2025 | 210,776 | $27.29 | 53,352 | | Mar 2025 | 305,763 | $24.34 | 284,000 | | **Total** | **516,539** | | **337,352** | - As of March 31, 2025, the company had **$46.1 million** remaining under its **$150.0 million** share repurchase authorization[180](index=180&type=chunk)

Core Insights - Schneider National reported $1.4 billion in revenue for Q1 2025, a year-over-year increase of 6.3%, with an EPS of $0.16 compared to $0.11 a year ago, indicating positive growth in earnings [1] - The revenue fell short of the Zacks Consensus Estimate of $1.44 billion, resulting in a surprise of -2.87%, while the EPS exceeded expectations by 14.29% [1] Financial Performance Metrics - The operating ratio for consolidated operations was reported at 97%, slightly better than the average estimate of 97.2% from five analysts [4] - The intermodal operating ratio matched the average estimate of 94.7% from four analysts [4] - The truckload operating ratio was reported at 95.9%, compared to the estimated 96.4% [4] - The logistics operating ratio was 97.6%, slightly better than the estimated 98.1% [4] Revenue Breakdown - Fuel surcharge revenue was $143.50 million, below the average estimate of $150.91 million, representing a year-over-year decline of 8% [4] - Intermodal revenue was $260.40 million, slightly below the average estimate of $263.43 million, but showed a year-over-year increase of 5.3% [4] - Logistics revenue reached $332 million, exceeding the average estimate of $328.31 million, with a year-over-year growth of 2.2% [4] - Other revenues were reported at $88.70 million, below the average estimate of $106.53 million, reflecting a year-over-year decline of 5.9% [4] - Inter-segment eliminations revenue was -$36.50 million, worse than the average estimate of -$30.67 million, with a year-over-year change of -11.8% [4] - Excluding fuel surcharge, total revenues were $1.26 billion, slightly below the estimated $1.29 billion, but represented an 8.2% increase year-over-year [4] - Truckload revenue was $613.70 million, below the average estimate of $630.60 million, but showed a year-over-year increase of 14.1% [4] - Network revenue, excluding fuel surcharge, was $177.90 million, below the average estimate of $203.39 million, with a year-over-year decline of 9.3% [4] Stock Performance - Schneider National's shares have returned -8.8% over the past month, underperforming the Zacks S&P 500 composite, which changed by -0.7% [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance in the near term [3]

Financial Data and Key Metrics Changes - Enterprise revenues excluding fuel surcharge were $1.26 billion, an 8% increase year over year [20] - Adjusted income from operations was $44 million, a 47% increase year over year [20] - Adjusted diluted earnings per share for the first quarter was $0.16 compared to $0.11 last year [21] - Enterprise adjusted operating ratio improved by 90 basis points compared to the first quarter of 2024 [21] Business Line Data and Key Metrics Changes - Truckload revenues excluding fuel surcharge were $614 million, a 14% increase year over year, primarily due to the acquisition of Cowen and higher dedicated and network revenue per truck per week [21] - Intermodal revenues excluding fuel surcharge were $260 million, a 5% increase year over year due to volume growth and increased revenue per order [22] - Logistics revenues excluding fuel surcharge were $332 million, a 2% increase year over year due to the acquisition of Cowen, partially offset by lower revenue per order [23] Market Data and Key Metrics Changes - The market remains highly competitive with truck network achieving low to mid single-digit percentage increases [11] - Intermodal rates remained largely flat year over year, with increased volume allocations in favorable geographies [12] Company Strategy and Development Direction - The company is focused on optimizing capital allocation across strategic growth drivers of dedicated truck, intermodal, and logistics [8] - A commitment to cost containment across all expense categories is critical to enhance competitive position and margins [14] - The company aims to transition to a more variable cost model by expanding owner-operator relationships [16] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is resilience in macroeconomic numbers, forward sentiment for customer freight demand is less clear due to tariff-driven uncertainty [13] - The company expects continued year-over-year improvement in results through 2025, despite moderating expectations for earnings improvement [27][28] Other Important Information - The company has established targets of more than $40 million in additional cost reductions across the enterprise [14] - The updated full-year 2025 guidance for adjusted earnings per share is $0.75 to $1, reflecting current trade policy and economic uncertainty [27] Q&A Session Summary Question: What are you seeing regarding the expected deceleration of imports? - Management indicated that intermodal is approximately 15% to 25% tied to imports and expects a drop-off in volume, but new business wins are anticipated to offset this decline [36] Question: Can you characterize the new business wins within intermodal? - New business wins are expected to ramp up in the second quarter, particularly in Mexico, which is seeing strong growth [44][45] Question: What is the outlook for dedicated growth? - Management believes there is still a long runway for dedicated growth, with many customers pivoting from private fleets to common carriers [109] Question: How much of the targeted $40 million cost reductions has been realized? - The company has been managing variable costs tightly and believes the $40 million target is achievable, though it will not be linear throughout the year [111]

Core Viewpoint - Schneider National reported quarterly earnings of $0.16 per share, exceeding the Zacks Consensus Estimate of $0.14 per share, and showing an increase from $0.11 per share a year ago, representing an earnings surprise of 14.29% [1][2] Financial Performance - The company posted revenues of $1.4 billion for the quarter ended March 2025, which was 2.87% below the Zacks Consensus Estimate, and an increase from $1.32 billion year-over-year [2] - Over the last four quarters, Schneider National has surpassed consensus EPS estimates two times but has not beaten consensus revenue estimates [2] Stock Performance - Schneider National shares have declined approximately 26.6% since the beginning of the year, compared to a decline of 5.3% for the S&P 500 [3] - The current Zacks Rank for Schneider National is 5 (Strong Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $1.47 billion, and for the current fiscal year, it is $0.95 on revenues of $5.95 billion [7] - The trend for estimate revisions ahead of the earnings release was unfavorable, which may impact future stock performance [6] Industry Context - The Transportation - Services industry, to which Schneider National belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting potential challenges for stocks in this sector [8]

Financial Data and Key Metrics Changes - The company reported enterprise revenues excluding fuel surcharge of $1.26 billion, an 8% increase year over year [18] - Adjusted income from operations was $44 million, a 47% increase year over year [18] - Adjusted diluted earnings per share for the first quarter was $0.16 compared to $0.11 last year [19] - The enterprise adjusted operating ratio improved by 90 basis points compared to the first quarter of 2024 [19] Business Line Data and Key Metrics Changes - Truckload revenues excluding fuel surcharge were $614 million, a 14% increase year over year, driven by the acquisition of Cowen and higher revenue per truck per week [19] - Truckload operating income was $25 million, up nearly 70% year over year [20] - Intermodal revenues excluding fuel surcharge were $260 million, a 5% increase year over year, with operating income increasing by 97% [20][21] - Logistics revenues, excluding fuel surcharge, were $332 million, a 2% increase year over year, with operating income up 50% [21] Market Data and Key Metrics Changes - The market remains highly competitive, with truck network achieving low to mid single-digit percentage increases [10] - Intermodal rates remained largely flat year over year, with increased volume allocations in certain geographies [11][12] - The company noted a potential drop in intermodal volume due to tariff uncertainty, but new business wins are expected to offset this impact [32] Company Strategy and Development Direction - The company is focused on optimizing capital allocation across dedicated truck, intermodal, and logistics [6] - A commitment to cost containment across all expense categories is critical to enhance competitive positioning and margins [13] - The company aims to transition to a more variable cost model by expanding owner-operator relationships [15] - The strategic focus includes enhancing asset efficiency and exploring inorganic growth opportunities [28] Management's Comments on Operating Environment and Future Outlook - Management expressed that the freight market remains resilient, but forward sentiment for customer freight demand is less clear due to tariff-driven uncertainty [12] - The company expects continued year-over-year improvement in results through 2025, despite moderating pricing improvements [25] - Management acknowledged the challenges posed by a competitive landscape and the need for disciplined pricing strategies [10][25] Other Important Information - The company has established targets of more than $40 million in additional cost reductions across the enterprise [13] - The updated full-year 2025 guidance for adjusted earnings per share is $0.75 to $1, reflecting current trade policy and economic uncertainty [24] Q&A Session Summary Question: What are you seeing regarding the expected deceleration of imports? - Management noted that intermodal is approximately 15% to 25% tied to imports and expects some drop-off in volume, but new business wins are anticipated to offset this [32] Question: Can you characterize the new business wins within intermodal? - New business wins are expected to start implementing in the second quarter, with strengths noted in Mexico and other areas [38] Question: How do you expect to achieve EPS growth year over year? - Management expects year-over-year growth in price and margin but does not provide quarterly guidance [45] Question: What is the outlook for dedicated growth? - Management believes there is still meaningful room for expansion in the dedicated segment, despite current competitiveness [95] Question: How is the company managing pricing conversations in the current environment? - Management emphasized the importance of stating assumptions with customers and remaining flexible in negotiations [63]

Financial Data and Key Metrics Changes - Enterprise revenues excluding fuel surcharge were $1.26 billion, an 8% increase year over year [19] - Adjusted income from operations was $44 million, a 47% increase year over year [19] - Adjusted diluted earnings per share for the first quarter was $0.16 compared to $0.11 last year [20] - Enterprise adjusted operating ratio improved by 90 basis points compared to the first quarter of 2024 [20] Business Line Data and Key Metrics Changes - Truckload revenues excluding fuel surcharge were $614 million, a 14% increase year over year, primarily due to the acquisition of Cowen and higher dedicated and network revenue per truck per week [20] - Truckload operating income was $25 million, up nearly 70% year over year [21] - Intermodal revenues excluding fuel surcharge were $260 million, a 5% increase year over year, with operating income increasing by 97% to $14 million [22] - Logistics revenues excluding fuel surcharge were $332 million, a 2% increase year over year, with operating income up 50% to $8 million [23] Market Data and Key Metrics Changes - The market remains highly competitive, with truck network achieving low to mid single-digit percentage increases [10] - Intermodal rates remained largely flat year over year, with increased volume allocations in certain geographies [11] - The dedicated retention rate remains in the low nineties, with expectations of elevated churn in the second and third quarters [9] Company Strategy and Development Direction - The company is focused on optimizing capital allocation across strategic growth drivers, including dedicated truck, intermodal, and logistics [7] - A commitment to cost containment across all expense categories aims to enable reinvestment in growth initiatives [13] - The company aims to transition to a more variable cost model by expanding owner-operator relationships [15] - The strategic differentiators include unique dedicated brands and strong rail relationships, enhancing reliability for intermodal shippers [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter results were in line with expectations despite weather impacts and economic uncertainty [14] - There is a recognition of potential volume drop in intermodal due to tariff uncertainty, but new business wins are expected to offset this [35] - The company anticipates continued year-over-year improvement in results through 2025, despite moderating expectations for earnings improvement [26] Other Important Information - The company has established targets of more than $40 million in additional cost reductions across the enterprise [13] - The updated full-year 2025 guidance for adjusted earnings per share is $0.75 to $1, reflecting current trade policy and economic uncertainty [26] Q&A Session Summary Question: What are you seeing regarding the expected deceleration of imports? - Management indicated that while intermodal is tied to imports, new business wins are expected to offset anticipated declines in volume [35] Question: Can you characterize the new business wins within intermodal? - New business wins are expected to ramp up in the second quarter, with strengths noted in Mexico and other areas [42][44] Question: What is the outlook for dedicated growth? - Management believes there is still a long runway for dedicated growth, with many customers pivoting from private fleets to common carriers [106] Question: How much of the targeted $40 million cost reductions has been realized? - The company is looking at various cost categories, with the full-year annualized impact expected to be achievable [110] Question: How do you view the pricing environment? - Management expects pricing to moderate in the near term, with continued year-over-year improvements anticipated [62]

Financial Performance - Q1 2025 - Operating revenues increased to $1402 million from $1319 million in 1Q24[71] - Revenues excluding fuel surcharge were $1258 million, compared to $1163 million in 1Q24[71] - Adjusted income from operations improved nearly 50% year-over-year[76], rising from $30 million to $44 million[71, 98] - Adjusted diluted earnings per share increased from $011 to $016[71, 100] - Adjusted EBITDA increased to $155 million from $131 million in 1Q24[71, 99] Segment Results - Q1 2025 - Truckload revenues increased 14% year-over-year due to the acquisition of Cowan Systems[81] - Intermodal revenues increased 5% year-over-year primarily due to volume growth of 4%[85] - Logistics revenues increased 2% year-over-year due to the acquisition of Cowan Systems[89] Capital Allocation and Shareholder Returns - $170 million in dividends paid out year to date as of March 31, 2025[58] - $83 million of shares repurchased in the quarter[76] - Approximately $461 million remaining authorization for share repurchase program as of March 31, 2025[58]