sndr-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________________________________

FORM 10-Q

_____________________________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38054

_____________________________________________________________________________

Schneider National, Inc.

(Exact Name of Registrant as Specified in Its Charter)

_____________________________________________________________________________

Wisconsin

39-1258315

(State of Incorporation)

(IRS Employer Identification No.)

3101 South Packerland Drive

Green Bay

Wisconsin

54313

(Address of Registrant’s Principal Executive Offices and Zip Code)

(920) 592-2000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Class B common stock, no par value

SNDR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐ (Do not check if a smaller reporting company)

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of April 23, 2021, the registrant had 83,029,500 shares of Class A common stock, no par value, outstanding and 94,534,643 shares of Class B common stock, no par value, outstanding.

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SCHNEIDER NATIONAL, INC.

QUARTERLY REPORT ON FORM 10-Q

For the Quarter Ended March 31, 2021

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Page

Cautionary Note Regarding Forward-Looking Statements

PART I. FINANCIAL INFORMATION

ITEM 1.

Financial Statements

Consolidated Statements of Comprehensive Income (Unaudited)

Consolidated Balance Sheets (Unaudited)

Consolidated Statements of Cash Flows (Unaudited)

Consolidated Statements of Shareholders ’ Equity (Unaudited)

Notes to Consolidated Financial Statements (Unaudited)

Page

Note 1

Note 2

Note 3

Note 4

Note 5

Note 6

Note 7

Debt and Credit Facilities

Note 8

Income Taxes

Note 9

Common Equity

Note 10

Share-Based Compensation

Note 11

Commitments and Contingencies

Note 12

Segment Reporting

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

ITEM 4.

Controls and Procedures

PART II. OTHER INFORMATION

ITEM 1.

Legal Proceedings

ITEM 1A.

Risk Factors

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 3.

Defaults Upon Senior Securities

ITEM 4.

Mine Safety Disclosures

ITEM 5.

ITEM 6.

GLOSSARY OF TERMS


3PL			Provider of outsourced logistics services. In logistics and supply chain management, it means a company’s use of third-party businesses, the 3PL(s), to outsource elements of the company’s distribution, fulfillment, and supply chain management services.
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
CARES			Coronavirus Aid, Relief, and Economic Security
CODM			Chief Operating Decision Maker
COVID-19			Coronavirus disease 2019

FTFM			First to Final Mile operating segment
GAAP			United States Generally Accepted Accounting Principles
IRS			Internal Revenue Service
KPI			Key Performance Indicator
LIBOR			London InterBank Offered Rate
MLSI			Mastery Logistics Systems, Inc.
NASDAQ			National Association of Securities Dealers Automated Quotations
PSI			Platform Science, Inc.
SaaS			Software as a Service
SEC			United States Securities and Exchange Commission
U.S.			United States
WSL			Watkins and Shepard Trucking, Inc. and Lodeso, Inc. These businesses were acquired simultaneously in June 2016.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company’s current expectations, beliefs, plans, or forecasts with respect to, among other things, future events and financial performance and trends in the business and industry. The words “may,” “will,” “could,” “should,” “would,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “prospects,” “potential,” “budget,” “forecast,” “continue,” “predict,” “seek,” “objective,” “goal,” “guidance,” “outlook,” “effort,” “target,” and similar words, expressions, terms, and phrases among others, generally identify forward-looking statements, which speak only as of the date the statements were made. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks, and uncertainties. Readers are cautioned that a forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement.

The risks, uncertainties, and other factors that could cause or contribute to actual results differing materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following:

•Our ability to successfully manage the demand, supply, and operational challenges and disruptions (including the impact of reduced freight volumes) associated with the ongoing COVID-19 pandemic and the associated responses of federal, state, and local governments and businesses;

•Economic and business risks inherent in the truckload and transportation industry, including competitive pressures pertaining to pricing, capacity, and service;

•Our ability to effectively manage tight truck capacity brought about by driver shortages and successfully execute our yield management strategies;

•Our ability to maintain key customer and supply arrangements (including dedicated arrangements) and to manage disruption of our business due to factors outside of our control, such as natural disasters, acts of war or terrorism, disease outbreaks, or pandemics;

•Our ability to manage and implement effectively our growth and diversification strategies and cost saving initiatives;

•Our dependence on our reputation and the Schneider brand and the potential for adverse publicity, damage to our reputation, and the loss of brand equity;

•Risks related to demand for our service offerings;

•Risks associated with the loss of a significant customer or customers;

•Capital investments that fail to match customer demand or for which we cannot obtain adequate funding;

•Fluctuations in the price or availability of fuel, the volume and terms of diesel fuel purchase commitments, and our ability to recover fuel costs through our fuel surcharge programs;

•Our ability to attract and retain qualified drivers and owner-operators;

•Our reliance on owner-operators to provide a portion of our truck fleet;

•Our dependence on railroads in the operation of our intermodal business;

•Service instability from third-party capacity providers used by our business;

•Changes in the outsourcing practices of our third-party logistics customers;

•Difficulty in obtaining material, equipment, goods, and services from our vendors and suppliers;

•Variability in insurance and claims expenses and the risks of insuring claims through our captive insurance company;

•The impact of laws and regulations that apply to our business, including those that relate to the environment, taxes, associates, owner-operators, and our captive insurance company; changes to those laws and regulations; and the increased costs of compliance with existing or future federal, state, and local regulations;

•Political, economic, and other risks from cross-border operations and operations in multiple countries;

•Risks associated with financial, credit, and equity markets, including our ability to service indebtedness and fund capital expenditures and strategic initiatives;

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•Negative seasonal patterns generally experienced in the trucking industry during traditionally slower shipping periods and winter months;

•Risks associated with severe weather and similar events;

•Significant systems disruptions, including those caused by cybersecurity events;

•The potential that we will not successfully identify, negotiate, consummate, or integrate acquisitions;

•Exposure to claims and lawsuits in the ordinary course of business;

•Our ability to adapt to new technologies and new participants in the truckload and transportation industry; and

•Those risks and uncertainties discussed in (1) our most recently filed Annual Report on Form 10-K in (a) Part I, Item 1A. “Risk Factors,” (b) Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and (c) Part II, Item 8. “Financial Statements and Supplementary Data: Note 14, Commitments and Contingencies;” (2) this Quarterly Report on Form 10-Q in (a) Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and (b) Part I, Item 1. “Financial Statements: Note 11, Commitments and Contingencies;” and (3) other factors discussed in filings with the SEC by the Company.

The Company undertakes no obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Report.

WHERE TO FIND MORE INFORMATION

The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information that the Company files electronically with the SEC. These documents are also available to the public from commercial document retrieval services and our website at www.investors.schneider.com. Information disclosed or available on our website shall not be deemed incorporated into, or to be a part of, this Report.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SCHNEIDER NATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in millions, except per share data)



	Three Months Ended March 31,
	2021		2020
Operating revenues	$	1,228.6	$	1,119.1
Operating expenses:
Purchased transportation	558.5		479.6
Salaries, wages, and benefits	267.1		264.4
Fuel and fuel taxes	63.8		60.9
Depreciation and amortization	73.1		69.8
Operating supplies and expenses	136.1		132.0
Insurance and related expenses	24.4		29.2
Other general expenses	29.4		29.5

Restructuring—net	—		(1.2)
Total operating expenses	1,152.4		1,064.2
Income from operations	76.2		54.9
Other expenses (income):
Interest income	(0.8)		(1.8)
Interest expense	3.4		3.8
Other expense (income)—net	0.8		(5.4)
Total other expenses (income)	3.4		(3.4)
Income before income taxes	72.8		58.3
Provision for income taxes	18.0		14.5
Net income	54.8		43.8
Other comprehensive loss:
Foreign currency translation loss	(0.1)		(0.8)
Net unrealized loss on marketable securities—net of tax	(0.6)		(0.3)
Total other comprehensive loss	(0.7)		(1.1)
Comprehensive income	$	54.1	$	42.7

Weighted average common shares outstanding	177.4		177.1
Basic earnings per share	$	0.31	$	0.25

Weighted average diluted shares outstanding	177.8		177.4
Diluted earnings per share	$	0.31	$	0.25

See notes to consolidated financial statements (unaudited).

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SCHNEIDER NATIONAL, INC.

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in millions, except share data)



	March 31,		December 31,
	2021		2020
Assets
Current Assets:
Cash and cash equivalents	$	472.2	$	395.5
Marketable securities	49.4		47.1
Trade accounts receivable—net of allowance of $3.6 million and $3.7 million, respectively	560.0		537.7
Other receivables	23.6		20.8
Current portion of lease receivables—net of allowance of $0.8 million and $0.8 million, respectively	95.7		96.8
Inventories	25.6		44.9
Prepaid expenses and other current assets	108.6		77.9
Total current assets	1,335.1		1,220.7
Noncurrent Assets:
Property and equipment:
Transportation equipment	2,858.8		2,880.2
Land, buildings, and improvements	201.0		202.3
Other property and equipment	165.8		166.8
Total property and equipment	3,225.6		3,249.3
Less accumulated depreciation	1,435.0		1,417.4
Net property and equipment	1,790.6		1,831.9
Lease receivables	146.2		131.3
Capitalized software and other noncurrent assets	213.3		204.2
Goodwill	128.1		128.1
Total noncurrent assets	2,278.2		2,295.5
Total Assets	$	3,613.3	$	3,516.2
Liabilities and Shareholders’ Equity
Current Liabilities:
Trade accounts payable	$	295.8	$	245.7
Accrued salaries, wages, and benefits	95.7		110.7
Claims accruals—current	57.8		36.4
Current maturities of debt and finance lease obligations	100.7		40.4

Other current liabilities	117.1		101.4
Total current liabilities	667.1		534.6
Noncurrent Liabilities:
Long-term debt and finance lease obligations	207.2		266.4
Claims accruals—noncurrent	102.8		129.9
Deferred income taxes	457.9		450.4
Other noncurrent liabilities	78.4		79.4
Total noncurrent liabilities	846.3		926.1
Total Liabilities	1,513.4		1,460.7
Commitments and Contingencies (Note 11)
Shareholders’ Equity:
Class A common shares, no par value, 250,000,000 shares authorized, 83,029,500 shares issued and outstanding	—		—
Class B common shares, no par value, 750,000,000 shares authorized, 95,607,931 and 95,159,635 shares issued, and 94,532,803 and 94,311,653 shares outstanding, respectively	—		—
Additional paid-in capital	1,555.1		1,552.2
Retained earnings	544.7		502.5
Accumulated other comprehensive income	0.1		0.8
Total Shareholders’ Equity	2,099.9		2,055.5
Total Liabilities and Shareholders’ Equity	$	3,613.3	$	3,516.2

See notes to consolidated financial statements (unaudited).

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SCHNEIDER NATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in millions)



	Three Months Ended March 31,
	2021		2020
Operating Activities:
Net income	$	54.8	$	43.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	73.1		69.8
(Gains) losses on sales of property and equipment—net	(1.9)		2.8
Proceeds from lease receipts	17.1		18.0
Deferred income taxes	7.7		4.5
Long-term incentive and share-based compensation expense	5.2		2.4
Noncash restructuring—net	—		(1.1)
Other noncash items	1.4		(2.9)
Changes in operating assets and liabilities:
Receivables	(22.8)		(7.2)
Other assets	(51.8)		(29.9)
Payables	28.7		18.6
Claims reserves and other receivables—net	—		11.6
Other liabilities	(10.4)		(5.9)
Net cash provided by operating activities	101.1		124.5
Investing Activities:
Purchases of transportation equipment	(19.0)		(22.2)
Purchases of other property and equipment	(9.8)		(12.6)
Proceeds from sale of property and equipment	32.2		19.4
Proceeds from sale of off-lease inventory	4.4		4.0
Purchases of lease equipment	(11.3)		(26.6)
Proceeds from marketable securities	6.1		6.2
Purchases of marketable securities	(9.5)		(7.9)
Investment in equity securities	(5.0)		—
Net cash used in investing activities	(11.9)		(39.7)
Financing Activities:
Payments of debt and finance lease obligations	(0.2)		(25.1)
Dividends paid	(12.3)		(10.7)
Net cash used in financing activities	(12.5)		(35.8)
Net increase in cash and cash equivalents	76.7		49.0
Cash and Cash Equivalents:
Beginning of period	395.5		551.6
End of period	$	472.2	$	600.6
Additional Cash Flow Information:
Noncash investing and financing activity:
Equipment and inventory purchases in accounts payable	$	22.0	$	31.1
Dividends declared but not yet paid	13.8		11.8
Cash paid during the period for:
Interest	4.2		4.8
Income taxes—net of refunds	1.1		0.2

See notes to consolidated financial statements (unaudited).

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SCHNEIDER NATIONAL, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

(in millions, except per share data)



	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income		Total
Balance—December 31, 2019	$	—	$	1,542.7	$	693.6	$	0.1	$	2,236.4
Net income	—		—		43.8		—		43.8
Other comprehensive loss	—		—		—		(1.1)		(1.1)
Share-based compensation expense	—		1.9		—		—		1.9
Dividends declared at $0.065 per share of Class A and Class B common shares	—		—		(11.7)		—		(11.7)
Share issuances	—		0.1		—		—		0.1
Shares withheld for employee taxes	—		(0.9)

SEC Form 10-Q filed by Schneider National, Inc.