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Schneider (SNDR) Q3 Earnings Miss Estimates, Decrease Y/Y

Zacks Equity Research

Schneider National’s SNDR third-quarter 2019 earnings (excluding 21 cents from non-recurring items) of 32 cents per share missed the Zacks Consensus Estimate by 3 cents. The bottom line also declined 20% year over year. Also, operating revenues dipped 7.52% to $1183.9 million, lagging the Zacks Consensus Estimate of $1,224.7 million. Moreover, revenues (excluding fuel surcharge) decreased 7% to $1,069.7 million. Results were hampered by lower volumes and unfavorable pricing.

Moreover, income from operations (on a reported basis) plunged 70% to $29 million in the third quarter, mainly due to the $50.4-million charges regarding the first-to-final mile shutdown (FTFM) within the truckload unit. Also, adjusted operating ratio (operating expenses as a percentage of revenues) deteriorated 110 basis points to 92.6%.

Segmental Highlights

Truckload revenues (excluding fuel surcharge) declined 9% to $515.6 million. Average trucks (company trucks and owner-operated trucks) in the segment also fell 4.2% to 10,919. Further, revenue per truck per week for the segment dropped 6%. This downside was due to lower volumes and unfavorable pricing. 

Loss from operations at the segment was $12.5 million versus income from operations of $54.4 million a year ago due to FTFM shutdown, tractor impairment charges and lower price as well as volume. Moreover, operating ratio deteriorated to 102.4% from 90.4% in the year-earlier period. Lower the value of the ratio the better.

Intermodal revenues (excluding fuel surcharge) dipped 2% to $249.2 million with orders declining 4%, mainly due to unfavorable volumes in the domestic intermodal freight market. Segmental income from operations decreased 30% as a result of contracted volumes and higher purchased third-party costs. Additionally, intermodal operating ratio deteriorated to 89.9% in the reported quarter from 85.8% in the prior-year.

Logistics revenues (excluding fuel surcharge) dropped 13% to $236.1 million, primarily due to a customer in-sourcing activity in the segment’s import/export operations. Brokerage accounted for 86.9% of logistics revenues (excluding fuel surcharge) in the quarter compared with 79.1% in the prior year with brokerage volume expanding 11% year over year.

However, brokerage net revenue compression primarily induced a 24% decline in segmental income from operations. Further, operating ratio at the segment deteriorated to 95.8% from 95.2% in the third quarter of 2018.

Schneider National, Inc. Price, Consensus and EPS Surprise


Schneider National, Inc. Price, Consensus and EPS Surprise

Schneider National, Inc. price-consensus-eps-surprise-chart | Schneider National, Inc. Quote

2019 EPS View Trimmed

This Zacks Rank #3 (Hold) company expects full-year adjusted earnings per share between $1.24 and $1.30, lower than the previous projection of $1.30-$1.38. The Zacks Consensus Estimate for 2019 earnings stands at $1.32. The slashed guidance is mainly due to the tractor impairment charge of $11.5 million recognized in the September quarter. Meanwhile, the forecast for net capital expenditures was cut from $325 million to $310 million, mainly owing to the anticipation of higher proceeds from sale of tractors.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Transportation sector are awaiting third-quarter earnings reports from key players like Expeditors International of Washington EXPD, Air Lease Corporation AL and Copa Holdings CPA. While Expeditors and Air Lease will release third-quarter results on Nov 5 and Nov 7, respectively, Copa Holdings will announce the same on Nov 13.

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