Schneider Posts Higher Revenue, Lower Profits in First Quarter
Schneider reported solid growth but lower overall profits in the first quarter of 2017 compared with the same period a year ago in its first quarterly financial report since becoming a public-traded company in April.
CEO Christopher Lofgren said he was pleased with the company’s performance in which revenue grew 8.4% to $1 billion in the three months ended March 31, from $928 million in 2016. That result was attributable in part to the acquisition of Watkins & Shepard and Lodeso Inc. in June 2016 and double-digit growth in freight brokerage and higher fuel surcharges. Net income fell 19.8% to $22.6 million, or 15 cents a share, in 2017 from $28.1 million, or 18 cents a share, in 2016.
“We believe that the advantages provided by our Quest technology platform and our cultural transformation focused on managing to operating contribution margin has allowed us to navigate the soft market thus far in 2017,” Lofgren said in a statement released May 11. “Nowhere was this more evident than within our intermodal segment, which despite the difficult operating conditions, reported strong volume growth and relatively stable earnings compared to the first quarter of last year.”
Schneider ranks No. 7 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada. The Green Bay, Wis.-based company received $280 million from the sale of 28.9 million shares of Class B common stock in April and $60 million on May 5 from the exercise of an overallotment of 3.3 million shares by stock underwriters. The company also paid its first quarterly dividend as a public company of 5 cents a share.
In terms of segment results, Schneider said its truckload business saw revenue excluding fuel surcharge increase 6.4% to $522.1 million in the first quarter. Operating income fell 8.7% to $38.5 million.
Intermodal segment revenue declined 2% to $181.1 million, and income from operations fell 6.4% to $6.6 million.
Logistics revenue grew 10.3% to $183.9 million, and income rose slightly to $5.2 million, an increase of 0.1% compared with the first quarter of 2016.
Lofgren said he anticipates market pressures of the first quarter to carry into the second quarter with conditions improving in the second half of the year due to increasing demand and concern by shippers about freight hauling capacity as a federal mandate on using electronic logs for monitoring driver hours of service takes effect in December. The new regulation is expected to result in a reduction in the number of drivers available to haul freight.
Schneider expects to spend between $325 million and $350 million on capital expenditures in 2017, which includes $100 million to replace leased chassis with company-owned units for its intermodal business.
The company cut back on purchases of new trucks and trailers in the first quarter, in part, because of a weak market for used equipment. Schneider officials said they will remain cautious about expanding capacity until margins improve.
For the year, the carrier said it anticipates earnings of between 92 cents and $1.02 per share.
“Our breadth of service offerings positions us well to succeed as the market tightens,” Lofgren stated.
