Schneider National (NYSE: SNDR) reported strong earnings again in the fourth quarter, beating analysts’ earnings per share (EPS) estimates of $0.46. The transportation giant posted adjusted diluted EPS of $0.49, up from 2017’s fourth quarter result of $0.33.
The company posted diluted EPS of $0.48, down from Q4 2017’s $1.60. Full year 2019 diluted EPS guidance is $1.65 to $1.75.
Operating revenues came in at $1.3 billion, an increase of 11 percent over Q4 2017, and consistent with Schneider’s Q3 2018 operating revenue. Income from operations also climbed, coming in at $118.6 milion, a 27 percent increase over the same period last year.
Schneider CEO Chris Lofgren attributed much of the quarter’s strength to above average performance by each of the company’s reportable segments, including truckload, intermodal and logistics. The company’s ability to adjust to changing market dynamics also continued to play a role in its success.
“Exceptional performance by each segment of our portfolio of services delivered record fourth quarter and full-year operating earnings,” Lofgren said. “Our focus on sustainable contract pricing in our truckload segment, reallocation of capital expenditures to our intermodal segment, and leverage of new Quest revenue management capabilities in our logistics segment produced revenue growth and strong operating results. Our continued investment in, and rapid introduction of, new capabilities in our Quest technology platform have made the organization even more nimble to any changes in market dynamics.”
Fourth quarter revenues, excluding fuel surcharge, came in at $1.2 billion, a 10 percent improvement over the same quarter in 2017.
Adjusted income from operations for Q4 2018 was $120.6 million, up 21 percent. Schneider’s earnings report said the intermodal and logistics segments accounted for 48 percent of adjusted income from operations in the fourth quarter of 2018 compared to 36 percent in the fourth quarter of 2017 and 46 percent for full year 2018 compared to 31 percent in 2017.
Net income dropped to $84.8 million in Q4 2018, down 70 percent from the same quarter in 2017.
“The decrease in net income and diluted earnings per share compared to the fourth quarter of 2017 was due to a benefit from the tax reform act enacted in December 2017 that allowed for deferred taxes to be adjusted to the lowered federal income tax rate,” Schneider’s earnings report reads.
Schneider reported truckload revenue, excluding fuel surcharge, of $583 million, up 2 percent over Q4 2017. The truckload segment’s income from operations came in at $77.7 million, a 23 percent increase over Q4 2017.
Revenue per truck per week was $3,985, an increase of 5 percent, or $188, over Q4 2017. Dedicated standard revenue per truck per week climbed 9 percent. The company ended 2018 with 11,500 trucks.
“Truckload operating ratio was 86.7 percent for the fourth quarter of 2018, compared to 88.9 percent for the same quarter in 2017,” the report reads. “The first to final mile (FTFM) operating loss of $9.4 million negatively impacted truckload segment operating ratio by approximately 330 basis points in the fourth quarter of 2018.”
The FTFM business also posted a $9.5 million loss in Q3 2018. Schneider plans to adjust its FTFM execution model to improve financial performance.
Intermodal revenues, excluding fuel surcharge, came in at $272.5 million, an increase of 31 percent over Q4 2017. This claim can be attributed to a 16 percent growth in orders and revenue per order of $2,265, an increase of $257, or 13 percent.
Schneider increased its containers and trucks by 24 percent, and 15 percent, respectively, compared to the same quarter in 2017, to support the growth in intermodal orders.
Intermodal income from operations came in at $41.5 million, an 87 percent increase over Q4 2017.
“Intermodal operating ratio was 84.8% for the fourth quarter of 2018, an improvement of over 450 basis points compared to the same period in 2017, and a 90 basis point improvement sequentially from the third quarter of 2018,” the company’s earnings report reads. “Intermodal operating ratio has sequentially improved seven consecutive quarters.”
Logistics revenue, excluding fuel surcharge, came in at $285.5 million, a 14 percent jump over Q4 2017, mainly due to brokerage volume growth of 18%. Brokerage was 78 percent of logistics revenues,excluding fuel surcharge, for the fourth quarter of 2018. This is compared to 76 percent for the same quarter in 2017.
Logistics income from operations was $17 million, a 27 percent increase compared to Q4 2017.
This segment’s operating ratio was 94.1 percent, a 50 basis point improvement over the same period of 2018 and a 120 basis point improvement from Q4 2018.
Lofgren said he is encouraged by the opportunities he sees ahead in 2019.
“In 2019, we anticipate economic growth, a more balanced supply and demand market in the first half of the year, continued momentum in our intermodal and logistics segments and improved truckload operating ratio,” Schneider COO Mark Rourke said. “Consistent with our themes, we will continue to enhance all touchpoints of our drivers’ experiences, grow and position our portfolio to deliver the best returns, and advance our Quest platform.”
Schneider’s full year diluted earnings per share guidance is $1.65 to $1.75, and the company’s net capital expenditures guidance is approximately $340 million.
Schneider’s stock was down 2.5 percent as of 11 a.m. Thursday.