Schneider’s tough Q3 unlikely remembered if TL capacity resets

Core Viewpoint - Schneider National's shares fell 8% following a disappointing earnings report, driven by weak demand and increased insurance costs, leading to a significant reduction in the company's full-year outlook [1][2]. Financial Performance - The company reported third-quarter adjusted earnings per share (EPS) of 12 cents, which was 8 cents below consensus estimates and 6 cents lower year-over-year. This figure included a 7-cent impact from higher insurance claims costs [2]. - Consolidated revenue reached $1.45 billion, marking a 10% year-over-year increase and slightly exceeding the consensus estimate of $1.43 billion, primarily due to the acquisition of Cowan Systems [4]. Guidance and Outlook - Schneider lowered its full-year 2025 adjusted EPS guidance to approximately 70 cents, down from a previous range of 75 to 95 cents. Without the insurance impact, the guidance would have been closer to 77 cents, aligning more with the 80-cent consensus estimate [2][3]. Market Conditions - Freight demand remains below seasonal averages in October, although it has improved compared to September. The company noted that July's demand was boosted by a pull forward ahead of tariffs, while August and September were weaker than normal [3]. - Management indicated that shippers are becoming more selective in choosing carriers as regulatory enforcement increases, which has led to a rise in Schneider's spot market exposure from 5% to 6% [6]. Operational Insights - The truckload (TL) unit generated revenue of $625 million, reflecting a 17% year-over-year increase, while the dedicated fleet saw a 26% revenue increase due to a 28% rise in truck count from the Cowan acquisition [8]. - The Outbound Tender Reject Index, a measure of truck capacity, indicates that current tender rejections are higher than the previous year but do not signal a recovery in the market [7].