Schneider National, Inc. · NYSE:SNDR
Schneider National — Q3 2023 Earnings Presentation
32 slides from Schneider National's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Investor Presentation
THIRD QUARTER 2023 Investor Presentation INNOVATIVE – RESILIENT – DRIVEN
Slide 2: Agenda
► Business overview Agenda ► Strategy ► Capital allocation ► Technology and innovation ► People and values ► Secular trends ► Invest with SNDR ► Current results and outlook ► Appendix 2
Slide 3: Experienced Leadership, Focused on Growth and Delivering Shareholder Value
BUSINESS OVERVIEW Driven by our uncompromising values to deliver the goods that enhance the lives of people everywhere. Experienced Leadership, Focused on Growth and Delivering Shareholder Value At a glance: Mark Rourke • Chief Executive Officer and President since 2019, previously serving as Execut
Slide 4: Premier multimodal provider of transportation and logistics solutions
BUSINESS OVERVIEW Premier multimodal provider of transportation and logistics solutions. Truckload Segment Over the road freight transportation via dry van, bulk, temperature-controlled and flat- bed trailers across either network (irregular route) or dedicated (structured route) contracts. Includes
Slide 5: Truckload: Dedicated and Network
BUSINESS OVERVIEW Truckload consists primarily of Dedicated contract configurations, complemented by a trailer-centric one-way Network operation. Dedicated • Contracted and consistent capacity through cycles • Multi-year contracts with 90%+ renewal rates • Driver-preferred alignment • Organic and ac
Slide 6: Intermodal goal to double in size by 2030
BUSINESS OVERVIEW Intermodal’s goal is to double in size by 2030, leveraging our differentiated company-owned container, chassis and dray model. • 27,000+ company-owned containers and 23,000 company-owned chassis • Approximately 1,600 company dray tractors, executing the majority of dray movements •
Slide 7: Logistics growing share through brokerage and Power Only
BUSINESS OVERVIEW Logistics continues to grow share by connecting shippers and carriers of all sizes through our advanced brokerage solutions, including Power Only. • 54,000+ qualified carriers in our network • Enabled by proprietary Schneider FreightPower® technology which digitally aggregates frei
Slide 8: Positioned for value creation and growth
BUSINESS OVERVIEW Positioned for value creation and growth at the forefront of the transportation industry. Premier multimodal transportation platform Technology leader and innovator Strong cash flow and disciplined capital deployment Diversity of customers and end markets 8
Slide 9: Multimodal platform has delivered profitable growth
BUSINESS OVERVIEW Multimodal platform has delivered profitable growth and increasing returns to shareholders. Growth focus on Intermodal, Logistics and Dedicated. Adjusted Diluted Earnings per Share Operating Revenues Income Free Cash Flow from Operations $2.64 $6,604 $395 $600 $0.94 $4,384 $280 $10
Slide 10: Diversity of customers and end-markets served
BUSINESS OVERVIEW Diversity of customers and end-markets served Growing Customer Base: supports resiliency through business cycles. Change in Customer Concentration Diverse End-Market Footprint: 2022 Revenues (xFSC) All other 33% Retail 21% Food and Online-only beverage 15% retail 4% Consumer Auto 4
Slide 11: Comprehensive North American footprint
BUSINESS OVERVIEW Comprehensive North American footprint with industry-leading safety, culture and performance. 11
Slide 12: Our strategy: superior portfolio of services
STRATEGY Our strategy is to deliver a superior portfolio of services that enables our business to prosper and achieve sustainable growth in revenue and earnings performance and shareholder value. Strategic approach ► Deploy capital to targeted service offerings in support of our goal Always to enhan
Slide 13: Strategic growth areas: Intermodal, Logistics and Dedicated
STRATEGY Schneider’s strategic growth areas are Intermodal, Logistics and Dedicated. We have purposefully reshaped the portfolio since our April 2017 IPO to enable resiliency through cycles. Increased earnings 31% contribution from 47% 47% Intermodal and Logistics Based on sum of Truckload, Intermod
Slide 14: Use-of-cash strategy
CAPITAL ALLOCATION Schneider’s use-of-cash strategy creates a balance between growth, shareholder returns and resilient financial performance in all market conditions. MAINTAIN STRONG FUND OPERATING FUND ACQUISITIVE COMMITTED TO BALANCE SHEET AND GROWTH NEEDS GROWTH NEEDS SHAREHOLDER VALUE • Maintai
Slide 15: Committed to shareholder value
CAPITAL ALLOCATION Committed to shareholder value Share repurchase program Quarterly dividends YTD as of Sept 30, 2023 As of Sept 30, 2023 *Does not include the $2.00 special dividend paid in Nov 2020 • Announced our inaugural $150.0 million, three-year share • Committed to delivering consistent and
Slide 16: Technology investments as a catalyst for growth
TECHNOLOGY AND INNOVATION Tech investments are a catalyst for profitable growth as an Enterprise through our focus on automation, intelligence and aggregation. • Driving growth through our Schneider FreightPower® marketplace by investing in seamless digital connections and transactions with shippers
Slide 17: Living out our core values
PEOPLE AND VALUES How we do it is as important: Living out our core values in support of our vision. SAFETY FIRST AND ALWAYS RESPECT FOR ALL INTEGRITY IN EVERY ACTION EXCELLENCE IN WHAT WE DO Schneider trucks are spec’d with the Schneider has provided $10 million Schneider earns PepsiCo Asset Dedica
Slide 18: Commitment to sustainability
PEOPLE AND VALUES Our commitment to sustainability across our business and leadership allows us to authentically address a changing landscape to build a fleet and workforce for the future. 7.5% by 2025 Reduced CO2 We are committed to: emissions per mile 60% by 2035 Utilizing diverse modes of transpo
Slide 19: Advising customers on emissions reduction goals
PEOPLE AND VALUES As experts in the shipping industry, we advise our customers on how our operations fit into their overarching emissions reduction goals. Fleet decarbonization is critical to PepsiCo’s goal to achieve net zero emissions by 2040. Collaboration is necessary to understand, measure and
Slide 20: Secular trends that drive our strategy
SECULAR TRENDS Secular trends that drive our strategy and our future growth. TRUCKLOAD INTERMODAL LOGISTICS Customers value committed contract Increased focus on ESG/sustainability Challenging capacity conditions are freight in order to build reliability and goals with customers, consumers and expec
Slide 21: Invest with SNDR
INVEST W ITH SNDR Positioned for value creation and Premier multimodal growth at the forefront of the transportation platform transportation industry. • Most diverse logistics and Technology leader and innovator transportation platform in North America. • Portfolio of services enables Strong cash fl
Slide 22: Current results and outlook
CURRENT RESULTS AND OUTLOOK We are preparing our business for the inevitable market recovery and advancing our strategic objectives for We experienced year over year Dedicated, Intermodal, and Logistics declines in revenue and 3Q23 3Q22 earnings in the third quarter, Operating Revenues $1,352 $1,675
Slide 23: Acquisition of M&M Transport Services, LLC
Acquisition of M&M Transport Services, LLC Enhancing shareholder value • Leading provider of dedicated transportation with a 30+ year successful history of growth • Demonstrated reputation for customer service with long tenured relationships Advancing our strategic objectives • Complementary culture
Slide 24: 3Q23 Enterprise Results
CURRENT RESULTS AND OUTLOOK 3Q23 Enterprise Results Operating revenues Revenues excluding fuel surcharge • Third quarter results were impacted by a variety of transitory and macro-related headwinds, the largest component being unfavorable pricing in our network businesses. • Intermodal and Logistics
Slide 25: 3Q23 Truckload Results
CURRENT RESULTS AND OUTLOOK 3Q23 Truckload Results Revenues excluding Income from fuel surcharge operations • Lower revenues and earnings YoY driven by unfavorable pricing primarily in Network. • Dedicated onboarded nearly 700 trucks of new business in the quarter, 2/3 from the M&M Transport acquisi
Slide 26: 3Q23 Intermodal Results
CURRENT RESULTS AND OUTLOOK 3Q23 Intermodal Results Revenues excluding Income from fuel surcharge operations • Volumes decreased 9% and revenue per order 16% lower YoY. • The negative earnings impact of pricing and volume was partially offset by lower rail and dray-related costs. • Complementary rai
Slide 27: 3Q23 Logistics Results
CURRENT RESULTS AND OUTLOOK 3Q23 Logistics Results Revenues excluding Income from fuel surcharge operations • Decreased revenue per order impacted by lower market prices and an 11% decrease in brokerage volume YoY. • Earnings declined due to lower volumes and net revenue per order, as well as reduce
Slide 28: Updated FY23 guidance
CURRENT RESULTS AND OUTLOOK We expect a continuation of current market conditions through 4Q23, therefore we have updated our FY23 guidance. We are intently focused on positioning our Enterprise for improving market conditions, $1.40 - $1.45 which we expect to materialize Full year adjusted diluted
Slide 29: Disclaimer and Forward-Looking Statements
Special Note Regarding Forward-Looking Statements This presentation contains and, any commentary or discussion by management of the content of this presentation may include “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995 (the “Act”), which Disclaimer
Slide 30: Appendix
Appendix
Slide 31: Non-GAAP Reconciliations: Revenues, Net Income, Income from Operations
APPENDIX Non-GAAP Reconciliation—Revenues Excluding Fuel Surcharge1 Non-GAAP Reconciliation—Adjusted Income from Operations1 ($M) FY2017 FY2022 3Q23 3Q22 ($M) FY2017 FY2022 3Q23 3Q22 Income from operations $280 $600 $47 $145 Operating revenues $4,384 $6,604 $1,352 $1,675 Litigation and audit assessm
Slide 32: Non-GAAP Reconciliations: Adjusted EBITDA and Free Cash Flow
APPENDIX Non-GAAP Reconciliation—Adjusted EBITDA1 Non-GAAP Reconciliation—Free Cash Flow1 ($M) FY2017 FY2022 3Q23 3Q22 ($M) FY2017 FY2022 3Q23 3Q22 Net income $390 $458 $36 $126 Net cash provided by $461 $856 $183 $225 operating activities Provision for (benefit from) (127) 146 11 42 Purchases of tr