Schneider National – Low Volumes To Blame For Earnings Miss; Lowers 2019 Guidance - Schneider National (NYSE:SNDR)

Schneider National, Inc. SNDR, a transportation and logistics services company, announced first quarter 2019 earnings of $.21 per share, $0.06 per share lower than last year and $0.10 worse than the consensus estimate.

"Our Truckload [TL] operations were impacted by a decline in contractual business, which was compounded by weather conditions in our core Midwest and East markets. This resulted in lower productivity and in costs which did not align with the demand environment. The issues that impacted the first quarter were either temporary or mostly in our control to address, which we are aggressively doing," said Schneider's Chief Executive Officer Mark Rourke.

Schneider National reported total revenue of $1.194 billion, up 5 percent year-over-year. Revenue excluding fuel surcharge increased 6 percent to $1.082 billion. Operating income excluding fuel declined 24 percent to $51.5 million with an adjusted operating ratio (OR) of 95.2 percent, 180 basis points (bps) worse year-over-year.

Truckload (TL) revenue excluding fuel surcharges declined 3 percent year-over-year to $531.8 million as revenue per truck per week declined 2 percent to $3,606. Management said that price was positive in the quarter, but lower volumes, which resulted in lower truck utilization, drove the declines. Volumes were lower in some of the company's primary lanes, which forced it to take on more spot shipments. Average trucks declined by 186 units to 11,573. OR for the division was 95.6 percent, 410 bps worse year-over-year.

Further, TL was negatively impacted by its First to Final Mile (FTFM) conversion. The company continues to try to minimize the variability in the first- and middle-mile operations by converting more freight to intermodal, for-hire truck and third-party capacity. Management said that the conversion costs to do this negatively impacted the division's OR by 320 bps in the quarter.

SNDR KEY PERFORMANCE INDICATORS

Intermodal revenue excluding fuel surcharge increased 18 percent to $237.6 million as orders were up 3 percent and revenue per order increased 13 percent. However, operating income declined 10 percent in the period as drayage productivity declined due to weather-related railroad service headwinds.

Logistics revenue excluding fuel surcharge increased 10 percent to $243.9 million as brokerage volumes increased 20 percent. Management said that lower spot rates drove the increase in brokerage demand. Operating ratio improved 70 bps to 95.8 percent.

"Based primarily on first quarter results, we are updating our full year 2019 adjusted diluted earnings per share guidance to $1.50-$1.60. First quarter new business awards across all three segments, and the corrective cost actions we have set in place are benefitting the second quarter," said Rourke.

The new guide sits well below the company's prior 2019 guidance which called for full-year earnings of $1.65 to $1.75. The current NASDAQ consensus estimate is $1.69.