Schneider Reports Large Rise in Q2 Earnings
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Schneider National on July 29 reported net income increased 129% year-over-year during the second quarter.
The Green Bay, Wis.-based truckload, intermodal and logistics services company posted net income of $106.5 million, or 60 cents a diluted share, for the three months ending June 30. That compared with $46.5 million, 26 cents, in 2020. Total operating revenue increased 32% to $1.4 billion from $1 billion.
“As you review the second quarter, several things should jump out,” CEO Mark Rourke said during a call with investors July 29. “First, the truckload and intermodal business segment delivered solid sequential margin improvement from the first quarter with both finishing above the top end of our current long-term margin target ranges. Secondly, our balanced portfolio demonstrated its value as logistics revenues grew $200 million over the second quarter from a year ago.”
Rourke
Rourke added that logistics revenue growth helped to offset some of the driver capacity challenges in the network business. Schneider, as a result, was able to provide capacity coverage for customers while keeping the freight and the corresponding revenues within the enterprise.
“The outcome is consistent with our strategy to leverage our multimodal platform from asset-heavy to asset-light,” Rourke said, “to serve as an aggregator of freight and capacity in supporting the supply chain needs of our shipper committee.”
Schneider said in the report that the Q2 net income includes a $20.2 million pretax gain related to its prior investment in self-driving technology company TuSimple, which completed its initial public offering in April.
The results surpassed expectations by Wall Street investment analysts, who had been looking for 42 cents per share and quarterly revenue of $1.21 billion, according to Zacks Consensus Estimate.
Truckload segment revenue for Q2 increased 5% to $475.2 million from $451.1 million during the same time last year. This was primarily due to yield management, including spot, contract and premium freight opportunities, and partially offset by reduced volume driven by lower network driver capacity. Truckload revenue per truck per week was $3,985.
Income from truckload operations increased 82% to $73.6 million from $40.5 million. This was the result of yield management actions and $13.7 million of equipment gains during the quarter that offset the earnings impact of lower network driver capacity and higher driver-related costs.
“In truckload, our growth focus is on multiyear dedicated contract configurations,” Rourke said. “Year-over-year our average tractor count growth was 265 units in the quarter on 400 units of sales growth. We have experienced less than 1% churn over our portfolio from the second quarter of a year ago. And we are working to get the new startups as well as existing business tractor units fully seated in what remains a highly constrained Class 8 and CDL driver market.”
Rourke added that in the network truckload business the company has invested in a series of compensation plans over the past year for professional drivers. Those have involved pay rates as well as delivering productivity gains across the solo driver fleet.
“We have also reopened several of our Schneider CDL training academies to develop our own new drivers,” Rourke said. “We will see the benefits of that work beginning in the mid-third quarter. The expense related to the startup of that process and priming the new CDL driver pump was borne in the second quarter.”
Intermodal segment revenue increased 25% during the quarter to $274 million from $219 million last year. This was due to yield management and volume growth primarily in the Eastern rail network. Orders grew 16% compared with the year-ago quarter despite container fluidity issues due to extended customer dwell times and rail network disruptions.
Income from intermodal operations surged 217% to $34.9 million from $11 million during the prior-year quarter. This was driven by the factors affecting revenue that partially were offset by higher rail and third-party dray costs.
Logistics segment revenue increased 87% to $430.7 million from $230.9 million last year. This was due to constructive market conditions and further leverage of Schneider FreightPower, an online marketplace that gives instant access to capacity and freight for carriers and shippers.
Income from logistics operations for the quarter increased 107% to $17 million from $8.2 million in 2020. This primarily was due to increased net revenue per order and volume growth.
Schneider ranks No. 7 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, and No. 15 on the TT list of the Top 50 logistics companies.
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