Q2 2025 Schneider National Inc Earnings Call

Investor relations. You may begin.

Thank you, operator, and good morning everyone. Joining me on the call today are Mark Brooke, president and chief executive officer, Daryl Campbell Executive, Vice, President and Chief Financial Officer. And Jim filter, Executive Vice President and group president of transportation and Logistics.

Earlier today, the company issued an earnings press release this release, and an investor presentation are available on the investor relations section of our website. At schneider.com, our call will include remarks about future, expectations forecast, plans, and prospects for Schneider these constitute forward-looking statements for the purposes of the Safe Harbor. Provisions under applicable federal, security laws, or looking statements involve risks and uncertainties that could cause actual results to differ materially from current expectations. The company urges investors to review the risks and uncertainties discussed in our SEC filings including but not limited to our most recent annual reports on our Forum 10K, and those risks identified in today's earnings release.

All forward-looking statements are made as of the date of this call and Schneider's disclaims any duty to update such statements except as required by law.

In addition, pursuant to regulation g. A Reconciliation of any non-gaap Financial measures referenced during today's call can be found in our earnings release and investor presentation, which includes reconciliations to the most directly comparable. Gaap measures now, I'd like to turn the call over to our CEO Mark work.

Thank you, Christine and hello everyone. Thank you for joining the Schneider call today.

I want to welcome Christine to the Schneider team and look forward to her contributions as we go forward for our prepared remarks, I will start by providing an update on our commitment to drive ongoing structural improvements in our business.

First, we are restoring margins while positioning the business to maximize through cycle returns.

Second, we are leaning into our areas of differentiation to create our own growth opportunities.

In third, we are compounding organic growth with the creative m&a.

Within that context, I will share my perspective on the Freight Market as well as the positioning and performance across our multimodal platform.

Daryl will then provide a financial overview of the second quarter results and share our updated 2025 earnings per share and net capital expenditure guidance.

Then we'll take your questions.

I will begin our efforts to restore margins and maximize through cycle returns.

The second quarter benefited from the cumulative effects of our actions we have taken to lift our business through a challenging backdrop. Importantly, we demonstrated our ability to capitalize on the modest seasonality that did materialize through strong operating leverage.

We are approaching this, several ways through a disciplined and purposeful customer Freight allocation process by containing costs across the Enterprise. And by executing on initiatives, to improve the resiliency of our truckload earnings

Regarding customer allocations, we remain disciplined throughout the second quarter focused on serving our customers, effectively in doing so profitably.

We are now roughly 3-4 through the contractual renewal period both in truckload Network and Intermodal.

We remain on track to deliver low to mid single digit percentage increases in our truck full of Network pricing renewals, while inter motorul pricing is remained stable as expected.

Within Network, we continue to believe that maintaining rates and discipline is the right course of action.

Given that race do not adequately, reflect our costs and service levels.

As a result, our spot exposure remains elevated to historical norms.

that said, we believe second quarter results, underpin the importance of extracting contract rate increases

our team has successfully capitalized on pockets of Market strength as they have emerged leading to sequential and year-over-year low single digit Improvement in Revenue per truck per week,

Well, elevated spot exposure was a pricing mix headwind in the quarter. It positions us for greater operating leverage, when the market turns. Whether through Rising spot rates, or increased capacity to secure accretive contract rates.

In dedicated pricing improved for the third consecutive quarter as we remain disciplined on both renewals and new business wins.

In Intermodal pricing has been in line with our expectations. We are further encouraged by the positive Trends. We are seeing in customer allocations and win rates the latter of which are at a level not seen since 2022 and I will elaborate on that shortly.

These gains are driven by our focus on errors. We have real differentiation enabling us to deliver meaningful value to our customers. While remaining steadfast in our focus on sustainable, operating earnings growth,

Next we remain focused on containing costs across the Enterprise continuing to execute on our established cost reduction Target of over 40 million.

this includes synergies from Recently, required cow and systems with full run rate benefits, anticipated in 2026,

Of targeted savings has largely been driven by efficiency actions.

We believe these efforts will not only help sustain performance to the extent. This challenging environment persists.

But they also position us to accelerate earnings as conditions improve.

Finally, we're improving the earnings resilience of the truckload segment.

Dedicated. Now represents about 70% of our truckload Fleet our materially higher percentage than several years ago.

Driven by organic growth and supported by our 3 acres to date.

As noted on our first quarter call, we anticipated some churn in the second, and third quarters.

While a portion of this churn materialized earlier than expected, it was largely in line with our projections.

Importantly, the team offset, the vast majority of this churn with new business wins keeping Fleet count consistent with the first quarter.

Looking forward, we will continue to see the impact of this turn in the short term, but we expect gross wins to pick up supported by the strength of our pipeline.

Some of this growth will be offset by continued. Improvements in tractor productivity, resulting in highly efficient Revenue growth.

Overall though, we anticipate sequential growth in our Netflix account for the remainder of the year.

Meanwhile we saw an increase of 70 owner, operators compared to the first quarter, marking the first instance of net growth since the second quarter of 2023.

We were also able to net up over 200 company, drivers in network without increasing truck. Count demonstrating our ability to act opportunistically near the bottom of the cycle and reflecting the impact of our productivity initiatives around drivers per tractor.

Truck load earnings improved, nearly 60% sequentially and over 30% year-over-year underscoring. The strong operating leverage inherent in the business and the progress we've made in restoring margins.

The long-term strategy of Shifting, the business toward dedicated and variable cost capacity and network will help to improve the resilience of our earning stream through Cycles.

In the near term, we see ample opportunity to grow network operating earnings without having to grow truck count or deploy significant capital.

Our second area of structural Improvement is to lean into our areas of differentiation to drive. Growth ahead of what the market sends. Our way,

In fact, many of our forward indicators such as dedicated pipeline inter motorul, wind rates and new customer growth are all matching or exceeding levels that we have seen when the market was magnitude stronger.

That is due in large part to our multimodal portfolio, which allows us to meet shipper demand and utilize our areas of strength to capture available volume even in a tepid environment.

For example, shippers continued preference for asset based offerings is supporting Network and power. Only demand offsetting the impact of our traditional brokerage volumes.

In fact, power only set an all-time high for second quarter volumes growing year-over-year for the sixth consecutive quarter.

In dedicated. Our pipeline is at a point that is historically translated into Fleet growth in subsequent quarters.

We continue to leverage the Strategic differentiators unique, across our 4, dedicated brands, with a focus on specialty equipment offerings where we see ample runway for growth and retention rates that are 3 to 400 basis points higher than standard equipment.

In Intermodal, we understand that the changing rail landscape will be of interest to all participants. We have strong rail relationships, and we look forward to the continued engagement and creating additional value for our customers.

Historically, we have demonstrated our ability to adapt to changing dynamics in the underlying intermodal landscape by leading into the unique elements of our service. Namely, our asset-based, drayage, chassis, and container offering.

For example, through our relationship with the cpkc Schneider is the Intermodal provider of choice in Mexico.

Offering a service that is 1 to 3 days faster than the competitors.

An advantage that is clearly resonating with shippers.

Mexico was a key driver of our second quarter volume growth.

Which rose 30% year-over-year.

We see strong momentum.

In Mexico. Specifically we are benefiting from being in our second allocation season with the cpkc

With a full year of service performance behind us to sell into.

The momentum is broad-based, and year-to-date win rates on our most accretive lanes are trending at nearly double last year's levels.

Pricing recovery remains a key lever to returning to our long-term targets.

However, our ability to create these Enterprise growth opportunities is helping our results today and the benefits of this approach will become more evident in a stronger Market environment.

We will be able to convert in many instances of historically, large Pipeline, and be increasingly at selected with the freight that we take on.

Contributed to income from operations growth this quarter.

We are pleased with our performance and we continue to evaluate how we best unlock additional value from these strong brands.

Starting in October Cal and Logistics will be integrated into Schneider Logistics. To leverage our Enterprise tools and eliminate redundancies and effort. We expect will drive improved margins in this segment.

Switching now to perspectives on the market.

we expect the economic uncertainty, that characterizes the second quarter to proceed into the back half of the year which trade policy, continuing to evolve

In addition, the timing and impact of regulatory enforcement such as requirements around English language, Proficiency in the use of B1 drivers along with the recent legislative developments remain unclear.

Even so we believe the most likely path forward is for the freight of environment. To continue its movement toward recovery with capacity, continuing to exit the market at a slow, but steady drum beat

And as we noted earlier, we are seeing the effects of this progress in driver recruiting which saw pockets of strength, during the quarter, likely reflecting a flight to Quality among drivers.

Declining capacity in conjunction with some seasonal, demand patterns continue to drive the market closer to equilibrium.

What customer reactions and strategies are varied. We have seen a growing number express, some concern about capacity and as a result, our funneling more freight, our way,

Altogether, We Believe strong execution on our efforts to drive structural improving our financial returns deliver above Market organic growth.

And a creative m&a will drive earnings, higher in 2025.

Let me now turn it over to Daryl for his Insight on the second quarter and our guidance Daryl.

Thank you, Mark and good morning everyone.

I'll review our Enterprise and segment Financial results for the second quarter and provide insights in our updated full year, 2025 EPs, and net capex guidance.

Summers of our financial results and guidance can be found on pages 24, to 30 of our investor presentation available on our investor relations section of the website.

Starting with the second quarter results. Enterprise revenue is excluding fuel surcharge where 1.3 billion dollars of 10% compared to a year ago.

Adjusted income from operations was $57 million.

And 9% increase year-over-year.

Is adjusted. Operating ratio was roughly in line with the second quarter of 2024.

Adjusted diluted earnings per share for the second quarter was 21 cents.

The discipline actions, we've taken on Revenue management Cost Containment and productivity enabled year-over-year improvement in our Enterprise income from operations, for the third consecutive quarter, including double-digit improvement, in our asset intensive businesses, despite what remains a challenging Market.

We're gaining traction on our previously. Announced structural cost savings targets with execution to date directly contributing to our second quarter performance.

However, the industry continues to see inflation in key areas such as accident claims and equipment related costs. And we remain focused on identifying additional savings opportunities to offset these pressures.

From a segment perspective, truckload revenue is excluding fuel surcharge with 623 million in the second quarter of 15% year-over-year.

Growth was primarily due to the common acquisition and modesty higher Revenue per truck per week partially offset by lower Network volumes and dedicated churn.

Truck load operating income Greece 4031 increase year-over-year reflecting the same Revenue drivers as well as costs and productivity efforts.

Operating ratio was 93.6% and Improvement of 70 basis points compared to last year and approximately 230 basis points better than the first quarter.

Network margins, improved sequentially by 150 basis points supported by improved Revenue per truck per week on ongoing actions to reduce variable input costs.

These efforts include reducing on Bill Miles.

Improving tractor to driver ratios and implementing targeted head tone actions.

Collectively.

These initiatives drove double digits, sequential earnings growth in truckload, despite Revenue increasing just 1% quarter of a quarter.

Intermodal revenues excluding fuel surcharge, where 265 million for the second quarter of 5% year-over-year, driven entirely by volume growth as yields remained roughly flat

This marks a fifth consecutive quarter of year-over-year volume growth in the segment.

Ing, solid operating leverage on volume growth. As we continue to see the benefits from our Network optimization and Dre productivity, including ongoing efforts to fill empty. Lanes, reduce friction costs at the ramp and improve Freight, mix?

Operating ratio is 93.9% and Improvement of 30 basis points compared to second quarter 2024.

Logistics Revenue, excluding fuel, surcharge total of 340 million in the second quarter.

Up 7% from the same period. A year ago, driven by the colon acquisition and continued growth in power only volumes.

This was partially offset by lower volumes and traditional brokerage as shippers. Continue to favor as it based solutions.

Logistics income from operations was 8 million dollars near first quarter levels, but down 29% from last year's high water mark.

Operating ratio was 97.7% and increase of 120 basis points compared to Prior year. Primarily due to softness in brokerage volumes partially offset by productivity initiatives.

The second quarter operating ratio was essentially flat sequentially.

Turning to Capital, allocation.

We paid Seventeen million dollars in dividends in the second quarter and 34 million year to date.

Net capex was 150 million compared to 182 Million last year due to reduced purchases of Transportation equipment.

Free cash flow increased approximately 10 million dollars compared to the same period in 2024.

We continue to expect net. Capex to be in the range of 325 million to 375 million for the full year.

We're monitoring economic and volume expertise, as well as the effects of our asset productivity initiatives. We have the ability to move to the low end of the range in a more subdued environment.

We also continue to monitor the impact of tariffs on the cost of equipment, and a range of scenarios is included in our guidance.

Our priorities remain organic growth in Dedicated and Intermodal, tractors, and investing in technology to drive business insights and Associate productivity.

In the second quarter, we began deploying free, cash flow to reduce leverage, including a $50 million repayment of our revolving credit facility.

As of June 30th 2025, we had 526 million in total, debt and Lease obligations and 161 million of cash and cash. Equivalents

Our net debt. Leverage was 0.6 times at the end of the quarter and improvement from 0.8 times at the end of the first quarter.

Moving to our updated full-year 2025 earnings guidance.

Our adjusted earnings per share. Guidance for the full year, 2025 is 75 cents to 95 cents which is assumed and effective tax rate of 23% to 24%.

As we review our revised full-year outlook, we continue to consider a range of outcomes tied to trade policy and broader economic uncertainty, while also incorporating the potential impacts of fiscal and regulatory policy changes since our last update.

We continue to believe that a steady march toward a more balanced market is supported by some elements of seasonality and capacity. Attrition is the most likely path forward and serves as the foundation of our guidance.

And trimming the high end of our previous guidance where incorporating a lack of resolution of trade policy uncertainty and the retreat in spot rates. Through July following the positive seasonal movement in May, neither of which are consistent with the highest end of our previous range.

Should a stronger Market materialize from consumer, resilience early benefits of fiscal stimulus, and greater impacts from regulatory enforcement and capacity. We're well positioned to capitalize on the Improvement.

We will do this through our network-based offerings, particularly in light of our elevated spot exposure.

Productivity enhancements and latent capacity, and intermodal.

That said we continue to operate in an uncertain environment, especially regarding the consumer Outlook.

At the same time, the industry continues to grapple with select areas of inflation, such as equipment-related costs and accident claims.

The former of which stands to face inflationary impacts from tariffs and the latter remains challenging to predict. But stubborn on net, given the difficult litigation environment.

Fighter, second half weigh down by elevating inflation with a line with a lower end of our guidance.

In terms of what this means, for the most likely scenario for our segments for a truckload Network business. We expect to remain on a trajectory of low to mid single digit price, renewals to the remainder of bit season.

To his spot rates, for me, in a modest headwind or become a tailwind will depend on how market conditions evolve from here.

We expect volume Trends to be supported by elements of positive seasonality would like to below a typical season of magnitude.

Dedicated earnings are expected to remain resilient with prices in line with prior guidance and a pickup in organic growth.

That said, the turn realized this quarter will continue to be evident in the second half of the year.

Given our focus on acid efficiency and opportunities, we see to add volume without increasing tractor counts. Net tractor growth, may be tempered, but this will be constructive to operating earnings growth.

For Intermodal segment, we continue to expect flat to slightly higher pricing for the remainder of the year.

Additionally, we expect the momentum in our allocations, and winds to drive above market growth. So, the degree of absolute volume Improvement will be Market dependent.

Our discipline focused on operating earnings dollar. Growth to customer. Allocations is expected to drive solid operating leverage even without much benefit of price.

our Logistics segment Outlook reflects lower volumes in traditional brokerage, given the ongoing shift toward more acid, based Solutions, such as power only,

We see strong potential for productivity initiatives to help support operating earnings though. We acknowledge there will be more evident as volume levels strengthen.

In closing our confidence in unlocking. The benefits of the actions within our control is bolstered. By the momentum, we've seen in our results in recent quarters

The extended down cycle has been challenging, but the actions we're taking are enhancing our earnings power and positioning the business to benefit from our operating leverage as market conditions improve.

with that, we'll open the call for your questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 in your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again,

Your first question comes from the line of Daniel imbro from Stevens. Your line is open.

Hey, guys, this is Joe enderlin on for Daniel. Thanks for taking the question.

Look into your long-term.

Uh, just look into your longterm truckload Target of 12% to 16%. Could you maybe break down the current dedicated verse Network? Run rates. And then how close do you think you can get to that long-term Target? Assuming we continue along this trend of subseasonal movements and spot rates through year end. Thanks.

Great. Thanks. Joe, you know as we've indicated we believe our dedicated business is and has been performing very resiliently, which is

Part and parcel to our strategy. And we've also indicated that.

It is performing at times, achieving the low end of our long-term guidance.

Where we have work to do, and where we're, most price sensitive and price recovery sensitive.

Centers around our network business. And so, while we don't publicly break down margin differentials.

um, we've been fairly clear that we continue to look for opportunities and where our operating leverage, really is to

Uh, change results in a, in a much faster cadence once we get some Market, uh, uh, lift relative to the pricing and we've been leaning into that for several quarters and we made maintain a great deal of discipline to get after that. So, um,

but we will need some rate recovery in in our Network business, particularly to, to get back to our long-term targets. So, um, and that's really the the place that we've been in for several quarters and, and it sits around our entire execution strategy right now. Yeah, and this is Daryl. So the only thing out of that is that, you know we're encouraged by what we've been seeing over the past several quarters. Uh, so Mark did mention that from a network perspective, price is the most important in terms of getting back to a longer term targets.

So for uh, several quarters in a row, we've seen year-over-year pricing Improvement. We've also seen pricing improvement in our dedicated space which uh, you know, we know is more resilient uh, from a from a inner modal standpoint uh volumes continue uh to increase year-over-year, we've seen 5 consecutive quarters. So we're trending in the direction of uh, beginning to the lower end of our longer term targets and then from a logistics standpoint, uh, obviously we're squarely within Striking Distance of that.

Got it. Thank you, guys. Just as a follow-up on the truckload side, there's been debate about what people look like this year. I think some of the rails mentioned a pull forward into June and July; others think a peak is ahead of us. Just how do you think peak is developing, and what's baked into your guidance from a demand standpoint?

There's really a wide range of behaviors as we look at at our customer base and, you know, there's, uh, some different factors that are taking some capacity out of the market as well. So, uh, depending on how customers played their hands as they went through allocations, they're in a little bit different different spot but uh, as it relates to our inner modal business, uh, we already have interval Peak search charges in place with most of our large customers, which is about 6, to 8 weeks ahead of where we normally are, uh, in truckload. We're starting to have those conversations, uh, and, you know, we do have a higher percentage of our our business as Mark talked about, in, in the the spot Market. The normal that's going to enable us to Pivot quickly, uh, but that, you know, that part of peak season, that happens a little bit later here in the in the year more and fourth quarter. Yeah, Joseph Mark. It's, you know, it's it's difficult to quantify. What is the pull forwards of what happened in the second quarter? What happened in the third quarter? We know there are, there's certainly

Evidence of certain customers doing that. But we also experienced that in the second quarter and we still had elements of seasonality uh, play out at certain junctures of the quarter and we would anticipate and we would expect that uh, despite

Certain strategies that made them pulled some of, uh, Freight forward that will have those same opportunities if not a little bit more elevated in a second half of the year.

That's helpful. Thank you guys.

You are. Next question. Comes from a line of Dan Moore from RW Barrett. Your line is open.

Hey guys. Uh Christine. Hey, Dan. Welcome on both. Yeah, welcome on board. Um,

Excited to work with you guys. Um,

a couple of questions back.

Yeah, it's good to be back. Um, just to kind of follow up.

You know, when I'm looking at the p&l here, there are a couple of line items that really stick out, um, Insurance. Obviously, um, other General expense, um, salaries and wages.

I know you guys are very focused on reducing costs. You have a n number of internal initiatives uh targeting cost reductions if we were to break down kind of the opportunity set to get uh returns back to where you want them back to, where investors expect you to be long term, I think of kind of a 3-legged stool rates, uh, costs and volume. Could you contextualize a little bit more around those 3 opportunity sets as you see them both in the near term and then the long term and kind of what you you know how much you feel like you need to get from each.

1 of those again rates costs and volume uh to secure, kind of a, you know, a um level of of return. That's that's more in line with historical uh historical levels and thank you for the time today.

So this is Daryl, so I'll start. Um,

So as as it relates to our segments you know there there's varying degrees of each 1 of those legs of the stool that's required. Uh so from a network perspective, uh most of the recovery towards a long-term margins will be driven by price.

And as I said earlier, we're encouraged by the direction of the pricing improvements. In terms of contractual rate renewals that. We we can control uh, for you know, 4 quarters in our in our role now, from a dedicated standpoint, uh, that business is more resilient.

Um, you know, we're less dependent on price, but though price is important, there is upside as it relates to price, especially on the backhaul.

Uh from an internal model standpoint uh volume uh clearly is is most important we've seen uh, even in, you know, the past several quarters, our ability to drive earnings growth uh with minimal uh growth in terms of price.

3 year and sequentially, uh, significant earnings growth, uh, despite uh, softer, um, you know, uh, softer spot Market back backdrop, uh, from an innermost standpoint. We're also very focused on productivity actions, uh, around Dre productivity.

Um, feeling empty lanes, and again we're seeing those those come through the results. So, you know, the actions that we're taking

Are structural in nature, um, and that's kind of the other leg of the stool. Um,

You know, Mark I'm not sure if there's anything that you want to add there. Yeah. Just as Dan as you kind of look at that income statement, just a reminder, we have Ken in our results to share, which we didn't have in last year. So just at the absolute category level.

You, you'll see. Um,

you know that that that flowing through, but we really been focused and we've done, I think a

A reasonable job of keeping our variable contribution.

Our direct contribution dollars um consistent and and and improving despite um the market that isn't quite yet given us the lift uh that we believe is in front of us on both volume and price. And so that we're we're managing that at the variable contribution line. I think fairly effectively and and that's why I think we can.

Really get some operating leverage. Once we do start to see some improvement in both price and volume and I think our incremental margins is based upon the work that we've done here, uh, position us favorably to do that now proof in the pudding and and we're focused on it and we have to demonstrate that to you and others but uh, that's that's our complete Focus. Yeah, this is Jim just 1, more thing to add that. I don't think we look at costs and volume as completely discreet items. Uh a lot of the actions that we've taken up prepared us to and our resulting in uh this Improvement and variable contribution really position as well for when there is volume up term, that we'll see more in the the cost Improvement as well.

Well, thanks again and good luck with the rest of your guys.

Thank you.

Your next question comes from the line of Robbie chancre from Morgan Stanley. Your line is open

Uh, great thanks. Hello Mark. Daryl and Christine, uh, a couple of questions here, uh, uh, the the I wasn't send it at all. Uh, how would you characterize the competitive environment in each of your segments? Uh, so 1 by TL intramodal dedicated Logistics. Um, is there even an unthinkable scenario? Where the rate of change on TL capacity is actually better than some of the other segments.

Rate of change similar in that just to make sure we capture what you're. Uh I was just wondering if if capacity is

Based.

Uh, when you you potentially have more competitive actions in dedicated and intramodal, uh, kind of maybe the rate of change on capacity exists in DL could could even be better than intramodal. Dedicated Etc.

Yeah, yeah. Robbie, uh, thanks for the question. This is Jim, you know, I think you you might be right. We are seeing some um, you know, mid-size, uh, Capac competitors, exiting the market. The other thing that we're seeing right now with uh, English language proficiency enforcement, uh, we appreciate that. Uh, we're now enforcing the existing regulations and, and when we look at, it's a slow bleed out, but on Trend that has the opportunity to be a meaningful amount of capacity. That's exiting the market. I think the other thing that you know, it's not completely evident that, you know, as we've, you know, talked to our our underlying carriers and our Logistics business, we're seeing carriers self-regulate uh both by removing drivers that don't speak English. But also implementing language proficiency tests for new driver candidates similar to what Schneider does. And so if you you know you put those 2 things together, we're talking about a a really a meaningful amount of capacity and and you know, that doesn't

Directly uh address B1 drivers as well. Uh which we would still say that there's an opportunity there and uh if there were any changes that would be perhaps necessary not necessarily A slowly but something that would be more meaningful change.

Of brands on the specialty equipment side. Um, that doesn't mean that it's irrational. Competition and dedicated. It just means that there's a different solution being uh, pursued by certain element of the customer base and

And that's where we've seen our churn. And, and we also believe that that's largely behind us and that our new business wins and our implementation, which has a little bit of drag in the short term. And we also see that because we don't know we have dislocated equipment that you have to get from the old to the new and that plays out in your Revenue per truck per week metrics. But we believe, as we come out of the second quarter, we got a little bit of Hangover on that in the third. Uh, but we'll largely then start. We expect to start to see traction there and the dedicated numbers, uh,

as we kind of get farther into the year,

As it relates to Intermodal. We think it obviously, it's a much different competitive Dynamic based upon concentration and capability there with with the players that can bring real scale to the market.

And uh as always our, our biggest competition there is over the road truck. And so uh, we we also feel that we're seeing a great traction and

Really the volume first. And and generally pricing comes second uh as this typically plays between Trucking Intermodal.

Uh, and the network side, highly competitive. All right? And uh, and so what we've decided to lean into our value and in the short term, if that means putting more uh, capacity into the spot Market also gives us operating leverage and there's no place in our portfolio. That has more operating leverage right now. Uh, as, uh, we continue to focus on the things we're doing on the self-help but also, uh, when the market gives us, uh,

Some lift both price and volume that we can quickly and most quickly turn that into improved results. So still probably in front of us a little bit but we're going to see how we perform and how the market plays out in the second half of the year. I think will be more constructive as we get into 2026.

Got it. That is incredibly helpful maybe as a quick follow-up. Uh, can you just remind us again? Just how Nimble you can be, uh, pivoting between, uh, spot and contract and also dedicated as a cycle. Uh, picks up, not asking you to share your secret sauce but just kind of broad Strokes.

Yeah. Robbie I I would give us uh very capable and high marks in our ability to Pivot our tools. Our Technologies allows us to give real good and real direct pricing guidance.

And acceptance guidance. And I also don't discount the value that hasn't dedicated because just about every 1 of our conditions, we find some level to bring value back to the customer.

Through back call and and eliminating empty miles. And we have more Choice there at a better price points, that is a creative, not only to our solution to the customer but it's a creative to our bottom line and dedicated. And so, uh, we will move with, uh,

Extreme prejudice to go fast and pivot uh to where our capacity is being valued in the network.

Understood, uh, thanks. Uh, Jensen ladies for time.

Thank you.

You. Our next question comes from Alina Brian. Awesome back from JP Morgan. Your line is open.

Hey, good morning. Thanks for taking the question.

So, just wanted to ask Mark.

Hey, good morning. Um, want to ask I guess. Mark, Mark Jimmy been around uh for a few Freight cycles and just your view on, you know, your initial speed on transcon. Well I'm I'm catching up pretty quick. Um, I think these

the big question, you know, with the Trans Khan on the, on the board now, um,

What are your, what's your sort of initial take in terms of what that means from a growth. In a partnership perspective, long term in a model growth, I would assume has to be a selling point here so that would be, uh, on the plus side. Um, but maybe for the long term are there any things? You're a little more cautious, or taking a, a harder. Look at, obviously, there's a service disruption recently that affected your network is, is that on your mind. So, uh, some perspectives is, is we all start to digest? What might be the, the end game here.

Yeah, right. I think I'm I'm tracking with your question there and obviously, with all the news, um, and the up being 1 of our key, underlying partners, and feel really good about where we stand with them. But as you know, there's a process to everything. And uh, this has a very detailed process that we believe is likely to evolve

As it moves through its, uh, you know, all all the, uh, assessments that need to take place from here. And as we think about

our strategy and the Intermodal Network details really matter. All right. Uh, and it's a detailed dependent as how we think about these things. And so, as we think about our Intermodal strategy,

Everything that we do has to be the best interest of Schneider, has to be the best interest of our shareholders and our customers.

And, uh, from our view to achieve that, we're always assessing New Opportunities new, uh, ways of doing business that bring value to the customer. And so, and I think we've demonstrated over the Long Haul here that we can adapt, and we can,

Um, bring new services and and and source, so new and just a week into this, we really probably don't have a lot to share a lot to say at this point. Uh, but uh, you know, this is places that we're comfortable. We have a very solid team, Jim's background and experience here.

Uh, throughout his career is going to be Paramount as we look at the playing field and look at the opportunities. And, and position this Intermodal product to thrive in the future.

Understood. I will experience will definitely help um maybe Jim just a quick follow up and you talk about peak season.

Sir charges is a little bit earlier than normal. I guess was the comment. I don't know what normal is anymore, but if you could put a little more context around that and is that just

earlier than normal just to kind of cover the uncertainty, or is there something uh, more demand driven that we should read into their

Thanks, yeah, yeah, yeah, thanks, Brian, yes. Uh, it's, it's driven by demand when, uh, customers are starting to, uh, to Surge up and we're seeing, uh, you know, some of that surge right now. And, and our intent there is, uh, really to be able to manage our our operation. So that we're putting cost, where incremental cost is, uh, is being incurred and, and to make sure that, you know, a, a 1 or a small number of customers, don't completely disrupt our Network. And so it's really a matter to ensure that we're maintaining efficiency in our business. And and we are starting to to uh, see that right now and so that's why we want to make sure we have those in in place.

Okay, thank you. Appreciate the time this morning.

Thanks Brian.

Your next question comes from the line of Tom wits from UBS. Your line is open,

Uh yeah, good morning. So I I had 2 kind of numbers questions just quick ones and then I had a more strategic 1 but uh Daryl what. What was the impact again sale in truck?

Okay. Well, what was the impact of gain on sale in truckload in 2q? And then I think on the other operating line, the, the loss was a bit higher, um, and just wondering how to forecast that maybe for 3 to 4 queue. And then I've got the more strategic 1 for Mark and Jim. Thanks sure. It seems like, I'm also

Yeah, I guess.

Yeah, this is, this is Daryl. So as a reminder, in the first quarter, we did mention that we saw some improvement, um, different proceeds on, on the sale of equipment. Uh, so in the first half of the year, uh there's probably 3 million dollars or so year-over-year uh Improvement.

Uh so for the second half of the year, we also expect some level of improvement consistent with what we, uh, previously forecasted, uh, no change in in that guidance. But year-over-year very modest, probably the modest impact on results.

As it relates to other.

So, you know, all the segments can be uneven in certain quarters and we certainly did see that. Uh, as a reminder, what's in all the segments, you know, small carrier leasing business. Uh, which we've mentioned before, captive Insurance, uh, company results is also in there and then select unallocated corporate expenses as it relates to looking forward. We'd expect that for the third and fourth quarters, uh, you know, the results will be consistent with the second quarter. So for your modeling, you can assume

Pretty much the same as 2q.

Like, how much is the volume is such as 2 railroad? I don't know if there was a way you can frame it, so we can think about that.

Yeah, this is Jim I'll take a crack at that 1 because and Mark said that well, that you know, the details are what really matters as you go through this. And you know, you guys have seen some of the bigger changes we've made and and you talked about what we've done with Mexico and how that's benefited us. I I I'd also say that, you know, there's a lot of small tweaks that go on with the network and of course, you don't see all the the decisions that we don't make. Uh, and and the way we get there is it's a very deliberate process that we use to evaluate any new rail Service. Uh, that's really played out very well for us, both commercially and operationally, for, for Schneider, and for our customers. And so, uh, as you know, this this plays out will be applying that, uh, same recipe to how we think about this going forward.

which is also the way that we don't really break down East versus West and some of those, uh,

Different components. So but thanks for the questions Tom.

Okay, thank you.

Your next question comes from the line of Chris Weatherbee from Wells Fargo. Your line is open.

Great. Thanks. Good morning. Um, you know, I guess I wanted to talk a little bit about the guidance and and try to understand a couple of things.

So, the downside I think, when we talked in the second quarter during the second quarter, I think there was a sense that maybe the downside of the guidance assume some an environment that was pretty bad outcome. Maybe that didn't materialize, although that's still there as we think about the back half of the year. So maybe just a little bit of perspective of what you think is kind of change what's evolved, where the risks sort of Lies here and I guess maybe as a follow-up to that, you know, when you think about the shape of the back half is 4q, still probably a a bigger quarter than 3 Q, from an earnings perspective, or maybe there's a little bit of a pull forward of peak. So it's really 3. Q is better. And maybe the risk lies in 4 q. Just a little thought on. That would be helpful.

Yeah sure. So this is this is Daryl. I'll start. Uh so as you mentioned the the worst case that was kind of being floated around, did not materialize, but just to to clarify that the low end of our guidance was not tied to the worst case.

Uh, so there is some still, some risk as it relates to, you know, cost, uh, and, and select areas that, that I mentioned before. And also, you know, just the overhang of trade policy uncertainty. We're certainly not, not immune to that, um, you know, from from a high-end perspective, you know, in in my prepared remarks, I did mention that we trimmed, uh, the, the high-end, uh, of of the guidance, by by 5 cents, uh, that is tied to, you know, some of the trade policy overhang that, uh, you know, continues to impact, uh, you know, just a general economy, uh, also from a spot Market spot rate Market, uh, perspective, we did see some seasonality, uh, throughout the quarter.

Uh but in order to, to have gotten to the higher end of our previous, uh, range of of a dollar, uh, you know, that inflection would have had to be, you know, higher and more sustained.

Um, so, you know, they're varying degrees um, of conditions that that could happen and that's built into the scenarios that we've, uh, built. Uh, in coming up with, you know, the high and the low end. Uh, there are many things that factor in the, you know, the level of seasonality and the persistence, uh, you know, the degree of spot price movement, uh, you know, the implementation of new business wins, uh, both both in dedicated. Uh, and inner mode of the timing of that uh, new business wins, uh, as as well as, you know, inflationary impacts, uh, on cost. So, depending on how some of those Market forces evolved, uh, you know, you

You'll get to kind of varying degrees of uh, you know, outcomes within the range. So those are some of the things that we thought about. We also thought about regulatory

And fiscal policy. Uh, you know, those things are obviously still evolving. The, you know, the big beautiful Bill. Uh, also some of the things that Jim talked about in terms of regulatory enforcement, uh, could have, uh, you know, a direct impact. You know, that that's on the net positive. Uh, but the timing of that also, uh, is uncertain and and yet yet to be played out.

Yeah, Chris so I I think as it relates to the second quarter I think it played out fairly close to what our expectations were and just to reiterate the all at the time of, I guess this last call, we were right in the heart of this.

Paranoia around the tariffs and all the things that that could do from a negative standpoint. Our our guidance never took the worst worst case scenario there to to Daryl's point. We thought a reasonably

Uncertainty, as it relates to the third versus the fourth quarter. You know, there could be different impacts by our segments.

Uh the question is what is the import volumes that will materialize in the fourth quarter? And Inter model might be a little bit more uncertain at this point and the truck could be a bit stronger. Just based upon us being in the last mile versus the first mile that are in are in a modal positions in. So we try to be thoughtful to our best.

Um,

assessment of that. Uh, and and that's not only by quarter, but also by segments. So, um, that's how we would position the range. Yeah, know, only only thing like this is Daryl again. Uh, so, despite all the uncertainty, you know, the continues to to linger, uh, we have demonstrated the ability to grow earnings, uh, you know, through that uncertainty and we've seen that several quarters in a row. Uh, just based on the structural actions that we've taken for things within our control.

Okay. Okay, I appreciate the, uh, the color around that and and maybe just as a quick follow-up, the dedicated pipeline. So can you just expand a little bit on sort of what you're seeing there and and maybe how we think about that and sort of what hits in 3 to 2. Maybe what hits in 4 q.

Sure, I'll give you, I'll let Jim, uh, maybe fill in some additional color here. But as we talked about, uh, I think our first quarter call, we were adding some additional resources to get after what we felt, uh, was a growing Pipeline. And, and we feel really solid, and as I did in my opening comments, um, our pipeline is at a position Now, by size. And by configuration that if we use any level of historical assessment, that pretends that we're

In a position of future growth. And so we feel that the additional resources are focused around specialty.

uh, and the targets that we've laid out, in addition, not only to our Legacy but also

Our 3 other brands that we've acquired has, put us in a pretty darn good position to towards the future. And and so the the we always use the word robust but I would say certainly uh based on any historical context, we feel really good about where we are in the pipeline.

Yeah, so, we got to close. We got to implement all the things that need to occur, but we need to have where we are in the pipeline and we have several large late stages. Uh, that we should be hearing about soon. Yeah. And we're, we're late stage and then at at the same time, very well, prepared to implement efficiently. And so some of those will be able to add in without actually adding trucks as well. So, we feel really good about that our position.

Great. Thanks very much, appreciate it.

Thank you, Chris.

Your next question comes from a line of Jonathan Chappelle from evercore. Your line is open.

Thank you. Good morning. Um, Mark, on the logistics front, it sounds like, uh, power only is doing pretty well. Traditional brokerage is struggling, um, as has to be expected. I thought we, uh, I mean, I felt that the long-term logistics guidance range, uh,

Margin guidance range, increase uh some years back was driven uh by the thought, the power only can retain uh, a stronger margin so can you just help us understand? You know the margin continues to be around this low 2%, seems like power only is moving up the the chain lower margin business moving down. Um, you know what, kind of drives that closer to the range? Is it just truly a cycle or is is power? Only maybe not as, um, through cycle resilient as, as we may have thought.

Yeah, Johnson, thank you for the question. Yeah, we do have a bit of a mix uh going on there and our most under stress

Part of our traditional brokerage centers around the truckload mode, and LTL, and some of the other modes are taking a higher percent of our overall mix, which also comes with a different.

Uh, contribution per order play in configuration.

So really, our focus is getting as efficient as we can get uh with the new tools. Some AI work feel really good, how The Brokerage team is adopting and getting in front of some emerging Technologies, they're thinking drive real value, not only there but in other elements and starting to play in other elements of our business across the portfolio.

Um, clearly we're really positive about our performance on power only and that not only counts, Top Line, but bottom line performance as well. And we do expect and and do require higher returns in that because we're putting

Initiatives and growth in our traditional brokerage and still profitable. I mean there's others that aren't profitable but we're we're not satisfied where we are there and we think we have Improvement opportunities.

This is Jim, I'll just add on. I I I do feel like we've done a good job in terms of the capability that we're building into the business, and that's why we're we're integrating, uh, the Colin resources onto this platform. Uh, the other thing just shares that we are seeing customers prefer asset based Solutions right now. And so, when that does return as there's Market tightness, we're really going to be able to Leverage The, our investments there.

Okay. Thanks Jim. Um, just a quick follow-up here. I don't want to read too much into this, but to Tom's question that other

Loss at at 9.1 million uh, in the second quarter, I think you were unofficially or officially looking for like 4 million. That's 5 million higher. We're looking you just said 3 Cube and 4 Cube at a similar level. So if we add that all up, that's like maybe 15 million higher. And yet you did keep the guidance range effectively, which is the top end coming down. So, were you already anticipating kind of that level of other loss or is? Maybe the Core Business holding up a bit better in this?

Stub so to speak is is kind of dragging you down back to the original thought range.

Yep, so the the 3 to 4 million um, that you said officially unofficially, uh, that was not embedded within our guidance. So, um, you know what we've seen you know was within, you know, the range of what we expected. Uh, so, you know, going forward, we expect a similar run rate um,

You know, just giving the composition of what of what's it all there.

Yeah, that won't be, you know, obviously give a long term guidance there, but um, as it relates to the year, um, that's that's what we would inform you. But we're working on those businesses and uh uh to to get that back to what we believe is, is what we would Target as our sustainable level there.

Okay, that makes sense. Thanks Mark, their likely to make a big change in the remaining 2 quarters of the year.

Right. Thank you.

Thank you.

You are. Our next question. Comes from a line of Ari. Rosa from Citigroup, your line is open.

Hi. Good morning. Uh, so I I hear you on the points about capacity tightening and I think that's encouraging but I'm curious how you interpret some of the weakness that we've seen, uh, in July, uh, related to the spot rates and kind of that post July 4th, uh, period. I understand. Obviously, some of that is seasonality, but talk to me about kind of how you see that capacity tightening playing out because it seems like the overall tone from from some of your

Appears has been maybe a little bit more incrementally cautious, I would say on on the demand Outlook and and the pace of tightening. So I'm just curious to see kind of how you see back half playing out in into 2026. Thanks.

Yeah, I think. Thank you, are. I think what we were? We were laying out. What is the case for, uh, tightening of capacity. We've been and try and been careful not to predict because I don't think any of us have done a good job of predicting uh when there's an inflection there, but there are elements that are different and new that as we've

Surveyed a broad set of carriers, and that we're not just doing that border carriers, we're doing that across certain pockets in the Upper Midwest.

The southeast.

Where there are other uh, opportunities for English language proficiency to have an impact. And so, as we've done our survey work there, um, there's a, there's a a cohort that's doing nothing. There's a cohort that's taking more aggressive action.

and what we believe and particularly we've seen a little bit with the B1 and others is that the mere

Threat of enforcement has a deterrent effect or has changes to how people operate. And as Jim mentioned, we're seeing

Small carriers.

mid-size carriers Implement testing on the front end, we're seeing people take action to mitigate their risk because with this

Remedy of an out of service. It means that you're out recovering. Cargo you're out recovering equipment. You're not just fixing a tire or fixing a break.

Um, and so there's more implications to having an out of service call here. Um, and so, we're trying to again that all has to play out and prove, but we're seeing evidence by the people that we know, and trust, and, and what they're doing, uh, to adapt their business to the new reality. So,

Again, we're not trying to predict. We're just trying to set the case for what, uh,

Could occur. So and then from a demand standpoint

I don't know if we're being overly.

Optimistic, we're just talking about.

um,

Most likely scenario in the in the evidence that we have in front of us. So,

I wouldn't characterize us as being overly optimistic there.

Prude me. Okay. Fair enough. I made characterize ourselves. Yeah.

Well, well, I I, I'd say we're hopefully optimistic, so, you know, I would love to see some some better conditions here in second half. Um, I, you know, Switching gears a little bit. Just I wanted to return back to this, uh, subject of the, the transcon rail merger. Uh, proposal. Uh, it it sounds like you're broadly optimistic in terms of the the upside to grow inner Moto volume, if that were to go forward. But obviously I recognize, there are a lot of complex allegiances that you guys have given your relationship with CP and also giving your relationship with with the Union Pacific. I'm curious just how you're thinking about kind of the net opportunity to grow inner Moto volume, if that, were to move forward. And then, uh, if there are like, you know, essentially how you would position yourself in terms of speaking, any concessions or commitments, uh, or or kind of how how you're thinking about your role in this uh going forward, thanks?

Great. Thank you are. Let me just again, take an opportunity to clarify. We have not taken a position of optimism or we're taking the position of obviously. We

I have relationships that we value across 3,

Uh partners and and but what we also said Details Matter and details dependent for us to have any position on anything and we just at this juncture a weekend, we are not in a position to make comment we're not in a position uh, to take, you know, any pro or negative side? Do we like ultimately Solutions? Ultimately that improve Transit, that improve the customer experience. That allow us to compete. We're pro competition, and we're Pro customer, and to the degree that any of this helps us achieve those, then that's kind of where we'll come down. But we don't have any in enough information at this time to take an official position. So if we came across overly, uh, optimistic on that, then that was not our intent.

Or negative, we're not negative either. We're just in the learning mode.

Totally fair and understood. Thanks for the time.

Your final question comes from a line of Ken Hexter from Bank of America. Your line is open.

Great, good morning. Uh, Mark darling, Christine, um, good morning, Ken Christine. Hopefully, 1 day. We can we, can, we can jump over Robbie. Uh, we'll have to work with you on that. Um, 22 to 32 margins. Um, maybe you can talk about what, what's normal at at truckload if we should see, uh, you know, a 100 basis points, uh, deterioration. Like

Like normal, is there anything that would drive out? I know you don't do quarterly outlooks, but if there's anything normal, or abnormal As you move on, just given the generations in in volumes, uh, from tariffs and the like and then dedicated Revenue per truck decelerated, it was, it was flat year-over-year. Just wanted to any thoughts on on pricing. Why why we would see that and then thoughts on the fleet size of network. So 3, but 3 numeros, hopefully, it's pretty soon.

Stacking them up on overtime. Um,

Yeah, we don't generally give guidance obviously uh, directly on on on quarter to quarter and I think you've actually kind of assess their uh as you look at historic performance between second and third quarter, there are years that it's better. There's years that it's slightly worse and so it I think it actually in our experience that's about half and half depending upon the circumstances of the year.

you know, as we uh,

Came in through the July 4th holiday. We obviously seen some of that seasonality that we would typically see and to your comment um, particularly in the spot pricing Arena that did not sustain itself but we would also say that July hasn't necessarily been disappointing from how it's played out in the back half of the month.

Uh, both of some of our wins and some of the things that we're seeing across both truck and Intermodal. So

um but it's obviously way too early to to discuss what the full quarter is going to look like or be but um

Feeling, uh, you know, reasonably good where, uh, the second half of the month at least from a volume and a health standpoint.

Played.

Ility and including to our our own brokerage Freight that they now have the opportunity to, uh, weave into our our Network business. And then also with with company drivers, we're being a little bit opportunistic here. Um, we're kind of in the part of the cycle, we're able to do that very economically uh and it gives us some leverage against all of those other uh costs initiatives that we talked about. And you know I believe as you have company drivers, when the market does uh inflect upwards, it's an opportunity then to also grow our owner operators as well. They'll have more opportunities there.

Yeah, we're looking to drive efficiency first, which centers around, what's our ratio of drivers to trucks, and that should manifest itself in the revenue per truck per week as much as it does in actual truck count.

Wonderful. I appreciate the time, guys. Thanks again. Thanks for squeezing me in. Yeah.

Hey and that concludes our uh question and answer period. And also concludes today's conference call, we thank you for your participation and you may now disconnect