Schneider National, Inc. Q4 FY2025 earnings call

• Fourth quarter results fell short of expectations with softer market conditions in November and most of December, but there was momentum at year-end due to supply attrition in the industry. Regulatory actions are driving capacity exit and limiting new entrants.
• The company made strides in lowering network cost to serve, increased dedicated offerings to nearly 70% of the fleet, created differentiation in intermodal and scaled flexible asset-light tech-enabled solutions, and supplemented with accretive acquisitions.
• 2026 adjusted earnings per share guidance is $0.70 to $1, with net CapEx expected to be in the range of $400 million to $450 million in 2026, focusing on asset efficiency gains.
• In 2026, the company will continue strategic growth initiatives: in truckload, lean into dedicated earnings growth, especially in certain verticals; in intermodal, drive share gains through differentiated lanes and the launch of Fast Track; optimize volumes between network and logistics offerings.
• Achieved $400 million in cost savings in 2025 and expects an additional $40 million in cost savings in 2026 through initiatives like reducing non-driver headcount and tightening equipment ratios.
• Announced leadership changes with Mark Rourke to be Executive Chairman and Jim Filter to be President and Chief Executive Officer effective July 1.

Truckload

• Revenue excluding fuel surcharge in the fourth quarter was $610 million, up 9% year over year.
• Truckload operating income was $23 million, a 16% increase year over year.
• Operating ratio was 96.2%, an improvement of 30 basis points compared to last year.

Dedicated

• Operating income grew year over year, benefiting from an additional two months of Cowen compared to 2024. However, volumes were affected by unplanned auto production shutdowns with select customers. Startups picked up with new business wins remaining elevated, and the fleet count was roughly flat quarter over quarter.

Intermodal

• Revenue excluding fuel surcharge was $268 million for the fourth quarter, a 3% decline year over year, but volume growth of 3% was seen. Mexico grew over 50% year over year. Intermodal operating income was $18 million, a 5% increase compared to the same period last year, with operating ratio at 93.3% (a 50 basis points improvement versus last year).

Logistics

• Revenue excluding fuel surcharge totaled $329 million in the fourth quarter, up 2% from the same period a year ago. Logistics income from operations was $3 million, down from $9 million last year, while operating ratio was 99.2%, an increase of 180 basis points.

• Adjusted earnings per share guidance for the full year 2026 is $0.70 to $1, assuming an effective tax rate of approximately 24%.
• Net CapEx for 2026 is expected to be in the range of $400 million to $450 million, primarily for replacement CapEx to protect the Asia fleet.
• Anticipates a stronger second half of 2026 due to supply-driven market improvement and incremental cost savings, but remains in an environment with inflationary cost pressure and demand uncertainty. The midpoint of guidance assumes demand consistent with 2025, while the low end assumes modest softening and the high end reflects a slight overall pickup in economic activity.

• Market conditions are uncertain with both inflationary cost pressure and demand uncertainty.
• Industry regulatory actions to drive capacity exit will take time to have full impact and may continue for several quarters.
• Factors like customer inventory fluctuations and weather conditions can affect business performance.

Q: Ravi Shanker asked about what bid season is priced in the midpoint and high end of the 2026 guide and the supply side assumptions underpinning the guide.

A: Mark Rourke said contract renewals in network business got mid to low single-digit renewals, and intermodal is growing volumes with different mixes but needs time for price to catch up. Darrell Campbell said the guide reflects uncertainty in the market with supply expected to continue exiting and demand having different scenarios from low end to high end.

Q: Jonathan Chappell asked about dedicated revenue per truck per week and why it lagged in 4Q.

A: Mark Rourke said it was affected by unplanned automotive shutdowns due to component issues and start-up costs with sourcing difficulties. Darrell Campbell added healthcare costs were heightened in truckload which is part of dedicated revenue.

Q: Brian Ossenbeck asked about CapEx for 2026.

A: Darrell Campbell said 2026 CapEx is mostly replacement-based to protect the Asia fleet. Mark Rourke added there was less CapEx in 2025 due to tariff clarity and timing, and it's now stepping up for replacement.

Q: Jordan Alliger asked about customer inventory levels and freight restock event.

A: Jim Filter said end-market consumer demand remained stable but there was restocking activity in late December, and Mark Rourke said the logistics manager index showed inventory drop in late 2025 which could lead to replenishment cycle.

Q: Tom Wadewitz asked about rate from supply side and where improvement is most optimistic in 2026.

A: Jim Filter said capacity exit will continue and there's potential for rate upside, and improvement is expected first in network business, then intermodal and logistics. Mark Rourke added dedicated has opportunities with backhaul efficiencies.

Q: Chris Wetherbee asked about network profitability and intermodal pricing.

A: Mark Rourke said network profitability needs productivity and price recovery. Jim Filter said they increased spot exposure to take advantage of price increases. For intermodal, pricing in 4Q was mix-related and they'll lean into differentiated areas for growth in 2026.

Q: Ariel Rosa asked about normalized mid-cycle earnings potential.

A: Mark Rourke said they think they can make meaningful progress towards long-term targets in 2026 with more favorability on supply side and demand catalysts, and will provide updates on progress throughout the year.