Schneider National, Inc. (NYSE:SNDR) Q1 2022 Results Earnings Conference Call April 28, 2022 10:30 AM ET Company Participants Steve Bindas - Director IR Mark Rourke - President & CEO Stephen Bruffett - EVP & CFO Conference Call Participants Jonathan Chappell - Evercore ISI Bert Subin - Stifel Kenneth Hoexter - BofA Securities Ravi Shanker - Morgan Stanley Jordan Alliger - Goldman Sachs Thomas Wadewitz - UBS Jack Atkins - Stephens Inc. Scott Group - Wolfe Research Christian Wetherbee - Citigroup Inc. Todd ...

Table of Contents (Exact Name of Registrant as Specified in Its Charter) _____________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________________________________________ FORM 10-Q _____________________________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended Ma ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________________________________________ FORM 10-K _____________________________________________________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents For the transition period from ...

Financial Data and Key Metrics Changes - The company reported record earnings performance in Q4 2021 of $178 million and for the full year of $534 million, reflecting a 77% increase in adjusted earnings compared to the prior year [12][34] - Revenues excluding fuel surcharge exceeded $5 billion for the first time, marking a 22% increase over 2020 [34] - Adjusted earnings per share (EPS) for 2021 was $2.29, with guidance for 2022 set between $2.35 and $2.55 per share [36][37] Business Line Data and Key Metrics Changes - Logistics became the largest segment by revenue in Q4 2021 at $548 million, surpassing truckload revenue of $524 million [28] - Dedicated segment grew organically by over 900 driver associates from January to December 2021, with a total of nearly 2,000 driver associates added due to the MLS acquisition [15][16] - Intermodal segment faced a 3% decrease in order count year-over-year, but revenue per order increased by 20% [20] Market Data and Key Metrics Changes - The company noted strong freight demand despite challenges in network fluidity and resource availability [8] - Intermodal margin performance for the full year 2021 finished at nearly 14% [20] - The company added 1,300 containers in Q4 2021, bringing total container growth for the year to 15% [20] Company Strategy and Development Direction - The company aims to double its Intermodal business by 2030, focusing on environmentally friendly capacity and exceptional customer value [22] - A strategic alignment change was announced regarding the partnership with Union Pacific for Intermodal services, expected to enhance growth potential [21][25] - The company plans to invest approximately $450 million in net capital expenditures for 2022, focusing on fleet improvements and technology advancements [40][41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about carrying positive momentum into 2022, with expectations of strong freight market conditions continuing [36][42] - The company anticipates addressing inflationary cost pressures through renewals across segments in 2022 [14] - Management highlighted the importance of technology investments to enhance operational efficiency and customer service [70][72] Other Important Information - The MLS acquisition closed on December 31, 2021, for $263 million, with results to be reported as part of dedicated operations starting Q1 2022 [35] - The company emphasized the need for a balanced growth strategy between East and West markets in the Intermodal segment [48][49] Q&A Session Summary Question: Can you help us think about the balance of your Intermodal business today between East and West? - Management indicated a strategic shift to unlock growth potential in the West, aiming for a more balanced growth profile [48][49] Question: Any concerns around potential service issues with the new partnership with Union Pacific? - Management expressed confidence in Union Pacific's capital plans and the ability to manage increased volume efficiently [50] Question: How prevalent are mini bids and shorter duration contracts in the one-way bid season? - Management noted that discussions are focused on ensuring capacity coverage and long-term arrangements rather than short-term contracts [55] Question: Can you characterize how conditions are evolving through the year? - Management indicated a constructive market environment with strong price momentum and supportive customer relationships [61] Question: What is the outlook for the Intermodal segment margins in 2022? - Management expects improvements in productivity and volume growth, which may contribute to earnings growth while maintaining margins [95][96] Question: How do you view the mix of the business over the next couple of years? - Management highlighted Dedicated, Intermodal, and Logistics as primary growth drivers, with no constraints on capital or capability [89]

Investor 0 p 目 6 70 presentation Fourth quarter 2021 SCHNEIDER Investor relations contact information Steve Bindas, Director 920-592-SNDR investor@schneider.com Disclaimer and forwardlooking statements Special Note Regarding Forward-Looking Statements This presentation, and certain information that management may discuss in connection with this presentation, contains forward-looking statements, within the meaning of the United States Private Securities Litigation Reform Act of 1995, which are intended to co ...

Financial Data and Key Metrics Changes - The company reported a record EPS of $0.62 for Q3 2021, surpassing the previous record of $0.60 set in the prior quarter [8] - Enterprise revenues, excluding fuel surcharge, reached $1.3 billion, a 25% increase year-over-year [9] - Adjusted operating income doubled year-over-year, with truckload earnings up 87%, intermodal up 99%, and logistics up 143% [10] Business Line Data and Key Metrics Changes - Truckload segment earnings increased by 87% [10] - Intermodal segment saw a 1% growth in order count and a 20% increase in revenue per order [15] - Logistics revenue reached $475 million, only $10 million less than truck segment revenues, with improved operating ratios [18] Market Data and Key Metrics Changes - The company expects revenue excluding fuel surcharge to exceed $5 billion for the full year [11] - The operating income is projected to top $500 million [11] - The company anticipates a lower equipment gain in Q4 compared to Q3 due to reduced equipment sales [68] Company Strategy and Development Direction - The company is focused on growing its multimodal portfolio and enhancing its asset-light offerings in intermodal and logistics, which now comprise 44% of segment earnings [10] - Strategic growth offerings include dedicated truck, intermodal, and brokerage, with a focus on increasing container counts and improving operational efficiency [14][20] - The company is investing in technology to enhance customer experience and streamline operations [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining pricing momentum into 2022, despite potential inflationary pressures [26] - The company is optimistic about growth prospects in dedicated and intermodal services, with expectations for continued strong performance [20][26] - Management highlighted the importance of addressing supply chain challenges and maintaining a healthy demand environment [43] Other Important Information - The company has lowered its CapEx guidance to about $300 million due to higher proceeds from equipment sales and delayed deliveries [12] - Management is actively preparing for potential vaccine mandates and is encouraging vaccination among its workforce [52] Q&A Session All Questions and Answers Question: How does the company view 2022 in terms of pricing dynamics and fleet count? - Management is optimistic about pricing momentum and expects to carry that into 2022, with a focus on dedicated growth and improved asset utilization [24][26] Question: What are the expectations for truckload and intermodal pricing into next year? - Management noted that contract renewals are trending positively, with expectations for continued price increases in both segments [34] Question: What is the outlook for intermodal volume growth in 2022? - Management anticipates gradual improvement in intermodal volumes as supply chain issues are addressed, with confidence in dray performance and container builds [90] Question: How is the company addressing labor challenges in the dedicated and dray markets? - Management indicated that dedicated and intermodal configurations are more attractive to drivers, leading to better retention and recruitment [59] Question: What is the company's strategy regarding the FreightPower platform? - The company is focused on expanding its FreightPower platform to enhance service offerings and reach more customers effectively [50] Question: How does the company plan to utilize cash generated in the upcoming quarters? - The company plans to focus on organic growth in strategic areas and explore inorganic opportunities that align with its portfolio [57] Question: What are the expectations for the brokerage business and the impact of power-only services? - Management highlighted that power-only services are gaining traction but still represent a smaller portion of overall brokerage growth [94]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________________________________________ FORM 10-Q _____________________________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Securities registered ...

Financial Data and Key Metrics Changes - The company raised its full-year adjusted EPS guidance to a range of $1.85 to $1.95, representing a 25% increase at the midpoint compared to previous guidance [26][28] - Income from operations reached $126 million, marking the most profitable quarter in the company's history [30] - The second quarter EPS of $0.60 included an $0.08 mark-to-market gain from the investment in TuSimple [31] Business Line Data and Key Metrics Changes - Truckload and Intermodal segments showed solid sequential margin improvement, both exceeding long-term margin target ranges [11] - Logistics revenues grew by $200 million year-over-year, reaching $430 million, an 87% increase [12][23] - Truckload Network revenue per tractor per week improved by 9% sequentially and 23% year-over-year, driven entirely by yield-related increases [16] Market Data and Key Metrics Changes - Intermodal orders improved by 5% sequentially and 16% year-over-year, despite challenges in labor and ramp congestion [20] - Average unload dwell time for customers increased by 70% compared to 2019, indicating significant operational challenges [19] Company Strategy and Development Direction - The company aims to leverage its multimodal platform to transition from asset-heavy to asset-light operations, enhancing its role as a freight aggregator [13] - The focus on dedicated contract configurations in Truckload is expected to drive growth, with a goal of reaching 5,500 tractors in the network [15] - The Logistics segment is anticipated to become increasingly important, with a strategy to blend asset-heavy and asset-light services [55][106] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the labor market and its impact on operations, noting ongoing challenges but also improvements in driver recruitment efforts [49][41] - The company expects continued strength in market demand and constrained driver capacity to persist throughout the year, setting a constructive outlook for 2022 [27][62] Other Important Information - The company is lowering its net CapEx guidance to $325 million to $350 million, down from $375 million to $425 million, primarily due to higher anticipated proceeds from equipment sales [29] - The company has received 50% of its full-year replacement tractor units by mid-year, enhancing capital efficiency [18] Q&A Session Summary Question: Can you touch on the updated guidance for the back half of the year? - Management indicated that they are through most of the book renewal activity and expect continued price appreciation in the for-hire segment [36] Question: What are the headwinds and tailwinds for the rest of the year? - Management highlighted labor challenges as a significant headwind, while improvements in Intermodal flow were noted as a tailwind [50] Question: What differentiates the Logistics business from competitors? - The company emphasized its asset-light strategy and the integration of logistics and intermodal services as key differentiators [55] Question: What are the expectations for 2022 pricing? - Management believes that demand-driven events will likely shape the market conditions, with expectations for a positive rate environment [62] Question: How is the company addressing driver recruitment? - The company has reopened CDL training academies to develop new drivers, which is expected to yield benefits in the coming quarters [41] Question: What is the status of Intermodal box deliveries? - Management expressed confidence in receiving additional boxes, although they acknowledged the challenges posed by the supply chain [82] Question: How is the company preparing for peak season? - Customers are reportedly cautious about their promotional activities due to supply chain reliability issues, leading to a focus on inventory management [128]

Cautionary Note Regarding Forward-Looking Statements [Forward-Looking Statements Overview](index=5&type=section&id=Forward-Looking%20Statements%20Overview) This section outlines forward-looking statements, emphasizing inherent estimates, expectations, risks, and uncertainties that could cause actual results to differ - Forward-looking statements involve **estimates, expectations, projections, goals, forecasts, assumptions, risks, and uncertainties**, and are **not guarantees of future performance**[12](index=12&type=chunk) - Key risks include managing **COVID-19 challenges**, **economic and business risks** in the transportation industry, **competitive pressures**, **driver shortages**, maintaining **customer and supply arrangements**, **volatility in strategic investments**, and **regulatory changes**[13](index=13&type=chunk)[18](index=18&type=chunk) PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements, including comprehensive income, balance sheets, cash flows, and equity, along with detailed notes [Consolidated Statements of Comprehensive Income (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)) This statement presents the company's unaudited consolidated comprehensive income for the three and six months ended June 30, 2021 and 2020 | Metric | 3 Months Ended June 30, 2021 (Millions) | 3 Months Ended June 30, 2020 (Millions) | 6 Months Ended June 30, 2021 (Millions) | 6 Months Ended June 30, 2020 (Millions) | | :----------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | | Operating revenues | $1,360.8 | $1,032.8 | $2,589.4 | $2,151.9 | | Income from operations | $125.8 | $63.4 | $202.0 | $118.3 | | Net income | $106.5 | $46.5 | $161.3 | $90.3 | | Basic earnings per share | $0.60 | $0.26 | $0.91 | $0.51 | | Diluted earnings per share | $0.60 | $0.26 | $0.91 | $0.51 | [Consolidated Balance Sheets (Unaudited)](index=8&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)) This statement provides the company's unaudited consolidated balance sheets as of June 30, 2021, and December 31, 2020 | Metric | June 30, 2021 (Millions) | December 31, 2020 (Millions) | | :----------------------------- | :----------------------- | :--------------------------- | | Total Assets | $3,767.8 | $3,516.2 | | Total Current Assets | $1,398.3 | $1,220.7 | | Total Liabilities | $1,569.4 | $1,460.7 | | Total Current Liabilities | $719.5 | $534.6 | | Total Shareholders' Equity | $2,198.4 | $2,055.5 | [Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) This statement presents the company's unaudited consolidated cash flows for the six months ended June 30, 2021 and 2020 | Metric | 6 Months Ended June 30, 2021 (Millions) | 6 Months Ended June 30, 2020 (Millions) | | :-------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net cash provided by operating activities | $255.0 | $319.8 | | Net cash used in investing activities | $(134.9) | $(110.1) | | Net cash used in financing activities | $(25.1) | $(47.5) | | Net increase in cash and cash equivalents | $95.0 | $162.2 | | Cash and cash equivalents, end of period | $490.5 | $713.8 | [Consolidated Statements of Shareholders' Equity (Unaudited)](index=10&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity%20(Unaudited)) This statement details the company's unaudited consolidated shareholders' equity for the period from December 31, 2020, to June 30, 2021 | Metric | Balance - December 31, 2020 (Millions) | Balance - June 30, 2021 (Millions) | | :----------------------------- | :------------------------------------- | :--------------------------------- | | Additional Paid In Capital | $1,552.2 | $1,559.1 | | Retained Earnings | $502.5 | $638.7 | | Accumulated Other Comprehensive Income | $0.8 | $0.6 | | Total Shareholders' Equity | $2,055.5 | $2,198.4 | [Notes to Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes explaining the accounting policies and specific financial statement line items [Note 1 General](index=11&type=section&id=Note%201%20General) This note describes Schneider National, Inc.'s business as a transportation and logistics provider and outlines the basis of presentation for its unaudited interim financial statements - Schneider National, Inc. provides safe, reliable, and innovative **truckload, intermodal, and logistics services** across North America[26](index=26&type=chunk) - The company adopted **ASU 2019-12, Simplifying the Accounting for Income Taxes**, on January 1, 2021, with **no material impact** on its consolidated financial statements[29](index=29&type=chunk) [Note 2 Leases](index=11&type=section&id=Note%202%20Leases) This note details the company's lease arrangements as both a lessee and a lessor, including cash flows and investment balances | Metric (in millions) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Cash paid for operating leases | $15.3 | $17.3 | | Right-of-use assets obtained (Operating leases) | $19.5 | $21.6 | | Net investment in leases (as of period end) | $255.1 (June 30, 2021) | $228.1 (Dec 31, 2020) | | Revenue from sales-type leases (6 months) | $112.6 | $99.4 | | Operating profit from sales-type leases (6 months)| $15.5 | $9.7 | - As a lessor, the company finances transportation-related equipment under **sales-type leases**, generally for **one to three years**, with **fully guaranteed residual values**[32](index=32&type=chunk) [Note 3 Revenue Recognition](index=12&type=section&id=Note%203%20Revenue%20Recognition) This note disaggregates the company's revenues by service type and provides information on remaining performance obligations and contract balances | Disaggregated Revenues (in millions) | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Transportation | $1,255.5 | $951.1 | $2,374.1 | $1,979.4 | | Logistics Management | $46.8 | $29.8 | $93.3 | $60.9 | | Other | $58.5 | $51.9 | $122.0 | $111.6 | | Total operating revenues | $1,360.8 | $1,032.8 | $2,589.4 | $2,151.9 | - Remaining performance obligations for contracts with terms greater than one year totaled **$81.4 million** as of June 30, 2021, with **$26.4 million** expected within one year[39](index=39&type=chunk) [Note 4 Fair Value](index=13&type=section&id=Note%204%20Fair%20Value) This note describes the fair value measurement hierarchy and presents the fair value of the company's financial assets and debt | Financial Asset (in millions) | Fair Value Hierarchy Level | June 30, 2021 | December 31, 2020 | | :---------------------------- | :------------------------- | :------------ | :---------------- | | Equity investment in TuSimple | 1 | $25.2 | — | | Marketable securities | 2 | $49.1 | $47.1 | - The fair value of the company's debt was **$321.1 million** as of June 30, 2021, compared to a carrying value of **$305.0 million**, calculated using **Level 2 inputs**[47](index=47&type=chunk) [Note 5 Investments](index=14&type=section&id=Note%205%20Investments) This note details the company's marketable securities and equity investments in strategic partners, including gains recognized from the TuSimple IPO | Marketable Securities (in millions) | June 30, 2021 Fair Value | December 31, 2020 Fair Value | | :---------------------------------- | :----------------------- | :--------------------------- | | U.S. treasury and government agencies | $16.8 | $12.7 | | Corporate debt securities | $21.7 | $22.2 | | State and municipal bonds | $10.6 | $12.2 | | Total marketable securities | $49.1 | $47.1 | - The company recognized **pre-tax gains of $20.2 million** on its investment in TuSimple in the three and six months ended June 30, 2021, following its initial public offering in April 2021[55](index=55&type=chunk) - Equity investments in Platform Science, Inc. (PSI) and Mastery Logistics Systems, Inc. (MLSI) are accounted for using the **measurement alternative**, with **no indicated change in value** for the current periods[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 6 Goodwill](index=15&type=section&id=Note%206%20Goodwill) This note presents the company's goodwill balances by segment and reports accumulated impairment charges | Segment (in millions) | Balance at December 31, 2020 | Balance at June 30, 2021 | | :-------------------- | :--------------------------- | :----------------------- | | Truckload | $103.6 | $103.6 | | Logistics | $14.2 | $14.2 | | Other | $10.3 | $10.5 | | Total | $128.1 | $128.3 | - Accumulated goodwill impairment charges remained at **$42.6 million** as of June 30, 2021[58](index=58&type=chunk) [Note 7 Debt and Credit Facilities](index=15&type=section&id=Note%207%20Debt%20and%20Credit%20Facilities) This note outlines the company's debt structure, including unsecured senior notes and available credit facilities | Debt (in millions) | June 30, 2021 | December 31, 2020 | | :----------------- | :------------ | :---------------- | | Unsecured senior notes | $305.0 | $305.0 |\ | Current maturities | $(100.0) | $(40.0) |\ | Long-term debt | $204.9 | $264.8 | - The company has a **$250.0 million revolving credit facility** and a **$200.0 million Receivables Purchase Agreement**, with **no outstanding borrowings** under either facility as of June 30, 2021[59](index=59&type=chunk)[60](index=60&type=chunk) [Note 8 Income Taxes](index=17&type=section&id=Note%208%20Income%20Taxes) This note provides the company's effective income tax rates and details regarding deferred employer social security taxes | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Effective income tax rate | 25.4% | 25.8% | 25.2% | 25.4% | - The company deferred **$30.7 million** in employer social security taxes under the CARES Act, which are anticipated to be paid in 2021[62](index=62&type=chunk) [Note 9 Common Equity](index=17&type=section&id=Note%209%20Common%20Equity) This note details the computation of basic and diluted earnings per share and reports the declaration of quarterly cash dividends | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | | :----------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic earnings per common share | $0.60 | $0.26 | $0.91 | $0.51 | | Diluted earnings per common share | $0.60 | $0.26 | $0.91 | $0.51 | - In July 2021, the Board of Directors declared a quarterly cash dividend of **$0.07 per share** for Class A and Class B common stock, payable on October 8, 2021[67](index=67&type=chunk) [Note 10 Share-Based Compensation](index=18&type=section&id=Note%2010%20Share-Based%20Compensation) This note outlines the company's share-based compensation plans and reports the associated expense and unrecognized costs | Metric (in millions) | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Share-based compensation expense | $2.9 | $0.8 | $7.1 | $2.5 | - As of June 30, 2021, the company had **$25.2 million** of pre-tax unrecognized compensation cost related to outstanding share-based awards, expected to be recognized over a weighted average period of **2.4 years**[69](index=69&type=chunk) [Note 11 Commitments and Contingencies](index=18&type=section&id=Note%2011%20Commitments%20and%20Contingencies) This note describes the company's legal proceedings, firm commitments for equipment purchases, and potential impacts from pending lawsuits - Firm commitments to purchase transportation equipment totaled **$415.2 million** as of June 30, 2021[72](index=72&type=chunk) - A lawsuit claiming an additional **$40.0 million payment** related to the WSL acquisition could have a **material adverse effect** if a judgment is rendered against the company[73](index=73&type=chunk) - The company is appealing an adverse tax ruling with the IRS over excise taxes on refurbished tractors, which resulted in **$12.8 million expense** and **$13.7 million paid in 2020**[74](index=74&type=chunk) [Note 12 Segment Reporting](index=18&type=section&id=Note%2012%20Segment%20Reporting) This note provides a breakdown of the company's financial performance by its three reportable segments: Truckload, Intermodal, and Logistics | Metric (in millions) | Segment | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | | :------------------- | :-------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | Truckload | $475.2 | $451.1 | $926.9 | $920.5 | | | Intermodal| $274.0 | $219.0 | $529.8 | $457.0 | | | Logistics | $430.7 | $230.9 | $786.6 | $470.5 | | Income from Operations | Truckload | $73.6 | $40.5 | $111.9 | $77.1 | | | Intermodal| $34.9 | $11.0 | $54.9 | $27.3 | | | Logistics | $17.0 | $8.2 | $32.9 | $12.4 | | Depreciation & Amortization | Truckload | $52.4 | $52.5 | $105.0 | $103.5 | | | Intermodal| $11.6 | $11.7 | $23.1 | $22.5 | | | Logistics | $0.1 | — | $0.1 | — | - For segment reporting, fuel surcharge revenues are recorded as a **reduction of the segment's fuel expenses**[75](index=75&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive analysis of the company's financial condition and results of operations, including an overview, recent developments, and liquidity [INTRODUCTION](index=20&type=section&id=INTRODUCTION) This introduction provides an overview of Schneider National, Inc.'s diversified transportation and logistics services, its capital allocation strategy, and ongoing COVID-19 mitigation efforts - Schneider offers a diversified portfolio of **truckload (dedicated and network), intermodal (rail and dray), and logistics (brokerage, supply chain, warehousing) services** across North America[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - The business is **seasonal**, with revenues typically **lowest in the first quarter** and **highest in the fourth quarter**, and operating expenses higher in winter months[87](index=87&type=chunk) - The company continues to implement measures to mitigate **COVID-19 risks**, including work-from-home policies and travel limitations, while transitioning associates back to a primarily on-premise work environment[89](index=89&type=chunk) [RESULTS OF OPERATIONS](index=22&type=section&id=RESULTS%20OF%20OPERATIONS) This section details the company's financial performance, including non-GAAP measures, enterprise summaries, and comparative analysis of results by period and segment [Non-GAAP Financial Measures](index=22&type=section&id=Non-GAAP%20Financial%20Measures) This section explains the company's use of non-GAAP financial measures to provide a clearer understanding of core operating performance by adjusting for non-recurring items and fuel price fluctuations - Non-GAAP measures are used to assist investors in understanding **core operating performance** by removing the impact of items that do not reflect core operations and isolating the effects of fluctuating fuel prices[92](index=92&type=chunk)[93](index=93&type=chunk) - Management relies primarily on **GAAP results** in addition to non-GAAP measures, acknowledging their limitations as analytical tools[94](index=94&type=chunk) [Enterprise Summary](index=22&type=section&id=Enterprise%20Summary) This summary provides key GAAP and non-GAAP financial measures for the consolidated enterprise, showing significant improvements in operating revenues, income, and operating ratios | Metric (in millions, except ratios) | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | | :---------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating revenues | $1,360.8 | $1,032.8 | $2,589.4 | $2,151.9 | | Revenues (excluding fuel surcharge) | $1,250.6 | $964.1 | $2,389.0 | $1,980.2 | | Income from operations | $125.8 | $63.4 | $202.0 | $118.3 | | Adjusted income from operations | $125.8 | $63.6 | $202.0 | $117.3 | | Operating ratio | 90.8 % | 93.9 % | 92.2 % | 94.5 % | | Adjusted operating ratio | 89.9 % | 93.4 % | 91.5 % | 94.1 % | | Net income | $106.5 | $46.5 | $161.3 | $90.3 | | Adjusted net income | $106.5 | $46.7 | $161.3 | $89.6 | [Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020](index=24&type=section&id=Three%20Months%20Ended%20June%2030%2C%202021%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202020) This section analyzes the company's financial performance for the second quarter of 2021 compared to the same period in 2020, highlighting revenue and income drivers [Enterprise Results Summary](index=24&type=section&id=Enterprise%20Results%20Summary_Q2) This summary highlights the significant increase in enterprise net income and income from operations for Q2 2021, partly driven by investment gains - Enterprise net income increased by **$60.0 million (129%)** to **$106.5 million** in Q2 2021, primarily due to a **$62.4 million increase in income from operations**[103](index=103&type=chunk) - A **$20.2 million pre-tax gain** on the TuSimple investment contributed to the Q2 2021 increase, compared to a **$2.7 million gain on PSI** in Q2 2020[103](index=103&type=chunk) [Components of Enterprise Net Income](index=24&type=section&id=Components%20of%20Enterprise%20Net%20Income_Q2) This section details the changes in enterprise operating revenues and income from operations, attributing growth to strong segment performance and improved operating ratios - Enterprise operating revenues increased by **$328.0 million (32%)** to **$1,360.8 million** in Q2 2021[105](index=105&type=chunk) - Revenues (excluding fuel surcharge) increased by **$286.5 million (30%)**, driven by **Logistics (+$199.8 million)**, **Intermodal (+$55.0 million)**, and **Truckload (+$24.1 million)**[106](index=106&type=chunk)[110](index=110&type=chunk) - Income from operations increased by **$62.4 million (98%)** to **$125.8 million**, due to improved net revenue per order/truck, favorable equipment dispositions, and lower insurance costs, partially offset by higher driver costs and reduced Truckload freight volumes[107](index=107&type=chunk) - Enterprise operating ratio improved to **90.8% (GAAP)** and **89.9% (adjusted)** in Q2 2021[96](index=96&type=chunk)[108](index=108&type=chunk) [Enterprise Operating Expenses](index=24&type=section&id=Enterprise%20Operating%20Expenses_Q2) This section analyzes the changes in enterprise operating expenses, highlighting increases in purchased transportation, salaries, and fuel, alongside a decrease in insurance costs - Purchased transportation increased by **$212.5 million (49%)** due to higher third-party carrier costs in Logistics and increased rail costs in Intermodal[111](index=111&type=chunk) - Salaries, wages, and benefits increased by **$27.8 million (11%)** due to higher Logistics salaries, driver pay, and performance-based incentive compensation[111](index=111&type=chunk) - Fuel and fuel taxes for company trucks increased by **$27.9 million (66%)** due to higher cost per gallon[116](index=116&type=chunk) - Insurance and related expenses decreased by **$11.3 million (40%)** due to favorability in auto liability resulting from decreased claims severity and frequency[116](index=116&type=chunk) [Total Other Expenses (Income)](index=26&type=section&id=Total%20Other%20Expenses%20(Income)_Q2) This section explains the increase in total other income for Q2 2021, primarily driven by a significant pre-tax gain on the TuSimple investment - Total other income increased by **$17.7 million** in Q2 2021, mainly due to a **$20.2 million pre-tax gain** on the TuSimple investment[113](index=113&type=chunk) [Income Tax Expense](index=26&type=section&id=Income%20Tax%20Expense_Q2) This section details the increase in income tax expense for Q2 2021, reflecting higher taxable income and a slightly lower effective tax rate - Provision for income taxes increased by **$20.1 million (124%)** in Q2 2021 due to higher taxable income[114](index=114&type=chunk) - The effective income tax rate was **25.4%** for Q2 2021, compared to **25.8%** for Q2 2020[114](index=114&type=chunk) [Revenues and Income from Operations by Segment](index=26&type=section&id=Revenues%20and%20Income%20from%20Operations%20by%20Segment_Q2) This section provides a detailed breakdown of revenues and income from operations for each reportable segment during Q2 2021 [Truckload](index=27&type=section&id=Truckload_Q2) Truckload revenues (excluding fuel surcharge) increased by 5% in Q2 2021 due to higher rates, despite lower volumes, leading to an 82% increase in income from operations | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | Change (%) | | :----------------------------- | :--------------------------- | :--------------------------- | :--------- | | Revenues (excluding fuel surcharge) | $475.2 million | $451.1 million | 5% | | Average trucks | 9,287 | 10,241 | -9.3% | | Revenue per truck per week | $3,985 | $3,434 | 16% | | Operating ratio | 84.5% | 91.0% | -6.5 pp | | Income from operations | $73.6 million | $40.5 million | 81.7% | - Revenue per truck per week increased by **16%** due to a **16% increase in rate per loaded mile**, driven by higher spot and contracted rates[119](index=119&type=chunk) [Intermodal](index=28&type=section&id=Intermodal_Q2) Intermodal revenues (excluding fuel surcharge) increased by 25% in Q2 2021 due to improved revenue per order and higher order volumes, resulting in a 217% increase in income from operations | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | Change (%) | | :----------------------------- | :--------------------------- | :--------------------------- | :--------- | | Revenues (excluding fuel surcharge) | $274.0 million | $219.0 million | 25% | | Orders | 113,894 | 98,362 | 16% | | Revenue per order | $2,399 | $2,145 | 12% | | Operating ratio | 87.3% | 95.0% | -7.7 pp | | Income from operations | $34.9 million | $11.0 million | 217.3% | [Logistics](index=28&type=section&id=Logistics_Q2) Logistics revenues (excluding fuel surcharge) surged by 87% in Q2 2021, driven by increased revenue per order and volume growth, leading to a 107% increase in income from operations | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | Change (%) | | :----------------------------- | :--------------------------- | :--------------------------- | :--------- | | Revenues (excluding fuel surcharge) | $430.7 million | $230.9 million | 87% | | Operating ratio | 96.1% | 96.4% | -0.3 pp | | Income from operations | $17.0 million | $8.2 million | 107.3% | - Volume growth of **23%** within the brokerage business contributed to the increase in Logistics revenues[128](index=128&type=chunk) [Other](index=28&type=section&id=Other_Q2) Other income from operations decreased by 92% in Q2 2021, primarily due to higher performance-based incentive compensation, partially offset by increased leasing income - Other income from operations decreased by **$3.4 million (92%)** to **$0.3 million** in Q2 2021, mainly due to an increase in performance-based incentive compensation[130](index=130&type=chunk) [Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020](index=29&type=section&id=Six%20Months%20Ended%20June%2030%2C%202021%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202020) This section analyzes the company's financial performance for the first six months of 2021 compared to the same period in 2020, detailing revenue and income drivers [Enterprise Results Summary](index=29&type=section&id=Enterprise%20Results%20Summary_H1) This summary highlights the significant increase in enterprise net income and income from operations for H1 2021, partly driven by investment gains - Enterprise net income increased by **$71.0 million (79%)** to **$161.3 million** in H1 2021, primarily due to an **$83.7 million increase in income from operations**[131](index=131&type=chunk) - A **$20.2 million pre-tax gain** on the TuSimple investment contributed to the H1 2021 increase, compared to an **$8.8 million gain on PSI** in H1 2020[131](index=131&type=chunk) [Components of Enterprise Net Income](index=29&type=section&id=Components%20of%20Enterprise%20Net%20Income_H1) This section details the changes in enterprise operating revenues and income from operations, attributing growth to strong segment performance and improved operating ratios - Enterprise operating revenues increased by **$437.5 million (20%)** to **$2,589.4 million** in H1 2021[133](index=133&type=chunk) - Revenues (excluding fuel surcharge) increased by **$408.8 million (21%)**, driven by **Logistics (+$316.1 million)**, **Intermodal (+$72.8 million)**, and **Truckload (+$6.4 million)**[134](index=134&type=chunk)[137](index=137&type=chunk) - Income from operations increased by **$83.7 million (71%)** to **$202.0 million**, due to improved net revenue per order/truck, favorable equipment dispositions, and lower insurance costs, partially offset by higher driver costs and reduced Truckload freight volumes[135](index=135&type=chunk) - Enterprise operating ratio improved to **92.2% (GAAP)** and **91.5% (adjusted)** in H1 2021[96](index=96&type=chunk)[136](index=136&type=chunk) [Enterprise Operating Expenses](index=29&type=section&id=Enterprise%20Operating%20Expenses_H1) This section analyzes the changes in enterprise operating expenses, highlighting increases in purchased transportation, salaries, and fuel, alongside a decrease in insurance costs - Purchased transportation costs increased by **$291.4 million (32%)** due to increased third-party carrier costs in Logistics and higher rail costs in Intermodal[137](index=137&type=chunk) - Salaries, wages, and benefits increased by **$30.5 million (6%)** due to higher Logistics salaries, performance-based incentive compensation, and driver pay[142](index=142&type=chunk) - Fuel and fuel taxes for company trucks increased by **$30.8 million (30%)** due to higher cost per gallon[142](index=142&type=chunk) - Insurance and related expenses decreased by **$16.1 million (28%)** due to favorability in auto liability resulting from decreased claims severity and frequency[142](index=142&type=chunk) [Total Other Expenses (Income)](index=30&type=section&id=Total%20Other%20Expenses%20(Income)_H1) This section explains the increase in total other income for H1 2021, primarily driven by a significant pre-tax gain on the TuSimple investment - Total other income increased by **$10.9 million** in H1 2021, primarily from a **$20.2 million pre-tax gain** on the TuSimple investment[139](index=139&type=chunk) [Income Tax Expense](index=30&type=section&id=Income%20Tax%20Expense_H1) This section details the increase in income tax expense for H1 2021, reflecting higher taxable income and a slightly lower effective tax rate - Provision for income taxes increased by **$23.6 million (77%)** in H1 2021 due to higher taxable income[140](index=140&type=chunk) - The effective income tax rate was **25.2%** for H1 2021, compared to **25.4%** for H1 2020[140](index=140&type=chunk) [Revenues and Income from Operations by Segment](index=30&type=section&id=Revenues%20and%20Income%20from%20Operations%20by%20Segment_H1) This section provides a detailed breakdown of revenues and income from operations for each reportable segment during H1 2021 [Truckload](index=31&type=section&id=Truckload_H1) Truckload revenues (excluding fuel surcharge) increased by 1% in H1 2021 due to higher rates, despite lower volumes, leading to a 45% increase in income from operations | Metric | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | Change (%) | | :----------------------------- | :--------------------------- | :--------------------------- | :--------- | | Revenues (excluding fuel surcharge) | $926.9 million | $920.5 million | 1% | | Average trucks | 9,412 | 10,223 | -7.9% | | Revenue per truck per week | $3,845 | $3,497 | 10% | | Operating ratio | 87.9% | 91.6% | -3.7 pp | | Income from operations | $111.9 million | $77.1 million | 45.1% | - Revenue per truck per week increased by **10%** due to a **13% improvement in rate per loaded mile**, partially offset by reduced productivity from Q1 weather[147](index=147&type=chunk) [Intermodal](index=32&type=section&id=Intermodal_H1) Intermodal revenues (excluding fuel surcharge) increased by 16% in H1 2021 due to improved revenue per order and higher order volumes, resulting in a 101% increase in income from operations | Metric | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | Change (%) | | :----------------------------- | :--------------------------- | :--------------------------- | :--------- | | Revenues (excluding fuel surcharge) | $529.8 million | $457.0 million | 16% | | Orders | 222,679 | 204,949 | 9% | | Revenue per order | $2,351 | $2,160 | 9% | | Operating ratio | 89.6% | 94.0% | -4.4 pp | | Income from operations | $54.9 million | $27.3 million | 101.1% | [Logistics](index=32&type=section&id=Logistics_H1) Logistics revenues (excluding fuel surcharge) increased by 67% in H1 2021, driven by increased revenue per order and volume growth, leading to a 165% increase in income from operations | Metric | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | Change (%) | | :----------------------------- | :--------------------------- | :--------------------------- | :--------- | | Revenues (excluding fuel surcharge) | $786.6 million | $470.5 million | 67% | | Operating ratio | 95.8% | 97.4% | -1.6 pp | | Income from operations | $32.9 million | $12.4 million | 165.3% | - Volume growth of **17%** within the brokerage business contributed to the increase in Logistics revenues[155](index=155&type=chunk) [Other](index=33&type=section&id=Other_H1) Other income from operations increased by 53% in H1 2021, primarily due to increased income from the leasing business, partially offset by higher performance-based incentive compensation - Other income from operations increased by **$0.8 million (53%)** to **$2.3 million** in H1 2021, mainly due to increased income from the leasing business[157](index=157&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=33&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses the company's cash uses, sources of liquidity, debt structure, cash flow activities, and overall liquidity position [Debt](index=33&type=section&id=Debt_Liquidity) This section outlines the company's debt structure, primarily consisting of senior notes and finance leases, and confirms compliance with financial covenants | Debt (in millions) | June 30, 2021 | December 31, 2020 | | :----------------- | :------------ | :---------------- | | Senior notes | $305.0 | $305.0 | | Finance leases | $2.9 | $2.0 | | Total debt | $307.9 | $307.0 | - As of June 30, 2021, the company was in **compliance with all financial covenants** under its credit agreements and senior notes[163](index=163&type=chunk) [Cash Flows](index=33&type=section&id=Cash%20Flows_Liquidity) This section analyzes the company's cash flow activities from operations, investing, and financing for the six months ended June 30, 2021 and 2020 | Cash Flow Activity (in millions) | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | Change (%) | | :------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Operating activities | $255.0 | $319.8 | -20.2% | | Investing activities | $(134.9) | $(110.1) | 22.5% | | Financing activities | $(25.1) | $(47.5) | -47.2% | - Cash provided by operating activities decreased by **$64.8 million (20%)** in H1 2021, primarily due to an increase in cash used for working capital, particularly trade accounts receivable[166](index=166&type=chunk) - Cash used in financing activities decreased by **$22.4 million (47%)** in H1 2021, mainly due to a **$25.0 million repayment of private placement notes** in March 2020[170](index=170&type=chunk) [Capital Expenditures](index=34&type=section&id=Capital%20Expenditures_CashFlows) This section details the company's capital expenditures, highlighting increased investment in transportation equipment for fleet replacement and age reduction | Capital Expenditures (in millions) | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | Change | | :------------------------------- | :--------------------------- | :--------------------------- | :----- | | Transportation equipment | $153.6 | $83.3 | $70.3 | | Proceeds from sale of property and equipment | $(76.6) | $(29.6) | $(47.0)| | Net capital expenditures | $99.5 | $78.7 | $20.8 | - Net capital expenditures increased by **$20.8 million** in H1 2021, driven by a **$70.3 million increase** in transportation equipment purchases for fleet replacement and age reduction, partially offset by a **$47.0 million increase** in proceeds from equipment sales[169](index=169&type=chunk) [Other Considerations that Could Affect Our Results, Liquidity, or Capital Resources](index=34&type=section&id=Other%20Considerations%20that%20Could%20Affect%20Our%20Results%2C%20Liquidity%2C%20or%20Capital%20Resources) This section discusses potential impacts on the company's financial condition from market volatility of strategic investments and highlights its strong liquidity position - The **$25.2 million equity investment in TuSimple** is susceptible to **market price volatility**, which could materially affect the company's financial condition and results of operations[171](index=171&type=chunk)[180](index=180&type=chunk) - The company maintains a **strong liquidity position** with **$539.6 million** in cash, cash equivalents, and marketable securities, and **$375.8 million** of unused credit capacity as of June 30, 2021[172](index=172&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=36&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's market risks, noting the addition of equity price risk related to its investment in TuSimple - The equity investment in TuSimple, valued at **$25.2 million** as of June 30, 2021, is subject to **market price risk**; a hypothetical **10% decrease** in its share price would reduce the investment's value by approximately **$2.5 million**[180](index=180&type=chunk) [ITEM 4. Controls and Procedures](index=36&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting - The company's disclosure controls and procedures were evaluated and deemed **effective** as of June 30, 2021[181](index=181&type=chunk) - There were **no material changes** in internal control over financial reporting during the fiscal quarter[182](index=182&type=chunk) PART II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=37&type=section&id=ITEM%201.%20Legal%20Proceedings) This section states that the company is involved in various lawsuits in the ordinary course of business, with further details provided in Note 11 - The company is party to various lawsuits in the ordinary course of business, with details referenced in **Note 11, Commitments and Contingencies**[184](index=184&type=chunk) [ITEM 1A. Risk Factors](index=37&type=section&id=ITEM%201A.%20Risk%20Factors) This section notes no material changes to risk factors from the Annual Report on Form 10-K, except for the added risk related to the volatility of strategic investments - The market valuation of strategic investments, especially the publicly traded TuSimple, is subject to **substantial price volatility**, which could materially and adversely affect the company's financial condition and results of operations[186](index=186&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms that the company did not repurchase any equity securities and outlines dividend payment limitations under its credit facility - The company did not repurchase any equity securities during the three months ended June 30, 2021, and does not have a **share repurchase program**[187](index=187&type=chunk) - The 2018 Credit Facility includes covenants limiting the company's ability to pay dividends if a **default exists or would be caused** by such dividend[188](index=188&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=37&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section reports that no defaults upon senior securities occurred during the period - No defaults upon senior securities were reported[189](index=189&type=chunk) [ITEM 4. Mine Safety Disclosures](index=37&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine Safety Disclosures are **not applicable** to the company[190](index=190&type=chunk) [ITEM 5. Other Information](index=37&type=section&id=ITEM%205.%20Other%20Information) This section indicates that no other information was reported for the period - No other information was reported[191](index=191&type=chunk) [ITEM 6. Exhibits](index=38&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL-related documents - Exhibits include certifications pursuant to **Rule 13a-14(a) or 15d-14(a) (Section 302)** and **18 U.S.C. Section 1350 (Section 906)** of the Sarbanes-Oxley Act of 2002[193](index=193&type=chunk) - **XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Labels Linkbase, and Presentation Linkbase Documents** are filed[193](index=193&type=chunk) [Signature](index=39&type=section&id=Signature) This section confirms the official signing of the report on behalf of Schneider National, Inc. by its Executive Vice President and Chief Financial Officer - The report was signed by **Stephen L. Bruffett, Executive Vice President and Chief Financial Officer** of Schneider National, Inc., on **July 29, 2021**[199](index=199&type=chunk)

Financial Data and Key Metrics Changes - The company updated its adjusted EPS guidance from $1.45 - $1.60 to $1.60 - $1.70, reflecting an 8% increase in the midpoint and over $30 million in pretax earnings [25][26] - Revenue for Q1 2021, excluding fuel surcharge, increased by 12% year-over-year, with adjusted income from operations reaching $76 million, a 42% increase compared to Q1 2020 [29][30] Business Line Data and Key Metrics Changes - The Logistics segment achieved a record 49% year-over-year revenue growth and a 279% earnings improvement, marking the best performance for Q1 [15] - Truckload pricing is in the low to mid-double-digit percentage range for contract renewals, while Intermodal is experiencing high single-digit percentage increases [12][25] Market Data and Key Metrics Changes - The freight market is characterized by constrained capacity and excess demand, expected to persist throughout 2021 [7][26] - Intermodal volumes in the eastern part of the network have grown in the mid-double-digit percentage range for four of the last five quarters [22] Company Strategy and Development Direction - The company’s growth strategy focuses on scaled offerings and a mix of transportation modes across Truckload, Intermodal, and Logistics segments [10] - The company aims to capture and aggregate freight and capacity efficiently, responding to the needs of various shipper and carrier communities [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current upcycle in the freight market, driven by supply chain bottlenecks and healthy consumer spending [8][9] - The company anticipates that the constrained capacity and robust demand will continue to support strong performance throughout 2021 [26][27] Other Important Information - The company plans to add several thousand intermodal containers in 2021 and is focused on increasing its driver count despite challenges in the labor market [23][28] - The company is experiencing delays in equipment deliveries, approximately six weeks behind schedule, but expects improvements in the second quarter [85] Q&A Session Summary Question: What are the normalized mid-cycle margins and EPS expectations? - Management refrained from providing a specific normalized EPS number but indicated comfort with target margin ranges for Truckload, Intermodal, and Logistics segments [38][40] Question: How are customer conversations evolving in the tight truck market? - Management noted that customers are open to creative solutions, including switching between truck and intermodal services to meet capacity needs [44][46] Question: What is the outlook for Intermodal service levels? - Management reported that rail service levels in the East have returned to pre-pandemic reliability, while the West is improving but still facing challenges [55] Question: How is the company addressing driver shortages? - The company is stabilizing its driver count and has initiated CDL training programs to attract new drivers [108][109] Question: What is the outlook for gains on sale for the rest of the year? - Management expects modest gains on the sale of equipment for the remainder of the year, compared to losses in the previous year [84] Question: How does the company view the overall market and supply-demand dynamics? - Management does not foresee significant relief in capacity constraints for the remainder of the year, maintaining a bullish outlook on market conditions [122][123]