Schneider National(SNDR) - 2021 Q1 - Earnings Call Transcript

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]