Schneider National, Inc. (SNDR)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 revenue grew 10% year over year to $1.452B, but margin compression and higher insurance claims drove diluted EPS to $0.11 and adjusted EPS to $0.12; revenue slightly beat consensus while EPS was a significant miss due to $16M claims-related costs (+$0.07 EPS headwind) .
• Management lowered full-year 2025 adjusted EPS guidance to approximately $0.70 and cut net CapEx to approximately $300M, citing sub-seasonal demand and capital discipline amid tariff uncertainty; they expect some earnings improvement in Q4 .
• Truckload revenue (ex-fuel) rose 17% on Cowan Systems and Dedicated growth, but operating ratio worsened to 96.8% on claims costs and startup friction; Intermodal volumes +10% with margin modestly improved (OR 94.0%), while Logistics OR increased to 98.1% on brokerage pressure .
• The call emphasized emerging supply-side catalysts (regulatory enforcement, carrier bankruptcies, Class 8 builds below replacement, tariff considerations) and accelerated AI-driven productivity, supporting medium-term margin restoration and optionality in pricing .
• Near-term stock reaction catalyst: large EPS miss and guidance cut offset by supply-rationalization narrative and continued Intermodal/Mexico strength; watch Q4 execution on claims normalization, Dedicated startup friction easing, and CapEx pause impacts .

What Went Well and What Went Wrong

• What Went Well

  • Intermodal volumes rose 10% YoY; OR improved to 94.0% and operating income increased 7% despite mix headwinds; Mexico volumes grew over 50% in region with service 1–3 days faster than competitors .
  • Dedicated wins accelerated, converting pipeline at ~3x 1H pace; Network achieved low-to-mid single-digit rate increases in bid season, supporting medium-term yield recovery .
  • AI-driven productivity gains: orders per day per broker up double digits vs 2023, with localized deployments showing 50–60% productivity improvements; management expanding agentic AI across support functions .

• What Went Wrong

  • EPS miss: diluted EPS $0.11 and adjusted $0.12 as claims costs were $16M higher than expected (+$0.07 EPS headwind), and enterprise operating ratio deteriorated to 97.6% .
  • Truckload margins compressed (OR 96.8%, +130 bps YoY) on increased salaries/wages from Cowan headcount, insurance costs (prior-year claims development), startup friction, and higher depreciation/equipment costs .
  • Logistics OR rose to 98.1% (+50 bps YoY) amid lower brokerage volume; Intermodal revenue per order fell 2% due to shorter length of haul and modest peak surcharges (mix headwinds) .

Financial Results

Q3 actuals vs consensus (S&P Global):

Values retrieved from S&P Global.*

Segment revenues

Segment operating income

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our third quarter results benefitted from our acquisition of Cowan Systems… though these were offset by claims costs that were $16.0 million, or $0.07 earnings per share, greater than our previous guidance.” — CEO Mark Rourke .
• “Several new dynamics… are definitive catalysts for the removal of excess capacity, including regulatory enforcement actions… [and] the industry is now approaching a year of Class 8 truck production below replacement levels.” — CEO Mark Rourke .
• “Our updated 2025 full year adjusted diluted earnings per share guidance is approximately $0.70… Our full year net capital expenditures are expected to be approximately $300 million.” — CFO Darrell Campbell .
• “We are… rolling out agentic AI to all of our other service offerings… productivity is several times better [in pilots].” — CEO Mark Rourke .
• “Intermodal… retention rates of incumbent business jumped 10 points QoQ… volume growth… several times the industry rate in Mexico.” — CEO Mark Rourke .

Q&A Highlights

• Dedicated growth and friction: Wins converting at ~3x 1H pace in specialty equipment; near-term startup friction depresses revenue per truck per week but expected to ease into 2026 .
• Intermodal mix/pricing: Flat renewals; revenue per order down on shorter hauls and East/Mexico mix; disciplined avoidance of low-rate Transcon; margins still improved .
• Network spot exposure: Elevated to ~double historical 5–6% to retain leverage for 2026 allocations and redeployment into higher-return business .
• Supply-side outlook: Management sees supply-side rationalization potentially exceeding the 3–4% 2017 ELD effect; developing over next two years, not a one-off event .
• CapEx and tariffs: Tractor order pause in Nov/Dec; focus on asset productivity and tariff total cost of ownership, driving higher FCF without aging fleet risk .

Estimates Context

• Q3 results vs consensus: Revenue beat by ~$21M (+1.5%); EPS missed by ~$0.084 (−41%). The EPS miss was primarily driven by $16M higher-than-anticipated claims costs (+$0.07 EPS headwind) and sub-seasonal demand late in the quarter .
• Trajectory: Q1 and Q2 delivered modest beats on EPS and slight revenue beats; Q3 reversed with a material EPS miss while revenue remained resilient*.
• Implication: Street models likely reduce FY25 EPS to ~guidance ($0.70), reflect lower Logistics brokerage volumes, Truckload margin restoration pushed out, and Intermodal volume strength with mix headwinds*.
  Values retrieved from S&P Global.*

Key Takeaways for Investors

• EPS miss and guidance cut overshadow solid revenue and Intermodal strength; watch for claims normalization in Q4 and Dedicated friction easing to support margin recovery .
• Supply-side catalysts (regulatory enforcement, bankruptcies, Class 8 below replacement, tariffs) could tighten capacity into 2026, enhancing pricing optionality—management is positioning with elevated spot exposure and disciplined allocations .
• Intermodal remains a bright spot: Mexico-led growth and service differentiation (1–3 days faster) support share gains; expect flat pricing near term but margin improvement as mix stabilizes .
• CapEx discipline (tractor order pause; ≈$300M for FY25) and AI-driven productivity (50–60% gains in pilots) should enhance FCF and operating leverage through the cycle .
• Truckload margin restoration hinges on reducing unbilled miles, improving equipment ratios, consolidating facilities, and executing Dedicated startups; Network rate recovery needed to match cost to serve .
• Dividend maintained at $0.095 and balance sheet remains strong ($194.1M cash; $522.8M debt/leases); optionality for accretive acquisitions and shareholder returns .
• Trading setup: Near-term pressure from EPS miss/guidance cut; potential medium-term re-rating if supply-tightening thesis materializes and internal productivity initiatives translate into OR improvement .

Additional relevant press releases:

• EXL partnership to streamline appointment scheduling with AI (50%+ cycle-time improvement; 24% cost reduction), reinforcing Schneider’s tech-enabled productivity narrative .
• Quarterly dividend declaration of $0.095 per share (record Dec 12; pay Jan 12) .
• Post-quarter launch of Fast Track premium expedited intermodal offering with 95%+ on-time and up to two days faster transit on key lanes, enhancing Intermodal value proposition .