sndr-20220331

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, 2022


☐			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

☐

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 22, 2022, the registrant had 83,029,500 shares of Class A common stock, no par value, outstanding and 94,892,655 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, 2022

TABLE OF CONTENTS

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

Note 8

Debt and Credit Facilities

Note 9

Income Taxes

Note 10

Common Equity

Note 11

Share-Based Compensation

Note 12

Commitments and Contingencies

Note 13

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
ChemDirect			Fortem Invenio, Inc.
CODM			Chief Operating Decision Maker
COVID-19			Coronavirus disease 2019, including its variants
FASB			Financial Accounting Standards Board
GAAP			United States Generally Accepted Accounting Principles
IPO			Initial Public Offering
KPI			Key Performance Indicator
LIBOR			London InterBank Offered Rate
MLS			Midwest Logistics Systems, Ltd. and affiliated entities holding assets comprising substantially all of its business.
MLSI			Mastery Logistics Systems, Inc.
NASDAQ			National Association of Securities Dealers Automated Quotations
PSI			Platform Science, Inc.
SEC			United States Securities and Exchange Commission
TuSimple			TuSimple Holdings, Inc. (formerly TuSimple (Cayman) Limited)
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 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 inflation and 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; volatility in the market valuation of our investments in strategic partners and technologies; our ability to manage and effectively implement 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 agreements, our ability to recover fuel costs through our fuel surcharge programs, and potential changes in customer preferences (e.g. truckload vs. intermodal services) driven by diesel fuel prices; 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; our ability to successfully transition from Burlington Northern Santa Fe Railway Company to Union Pacific Railroad Company as our primary intermodal rail service provider by January 2023; potential port congestion or interruptions that may result from contract negotiations between the International Longshore and Warehouse Union and west coast port owners; potential volatility in the value of our investments in strategic partners, especially as it relates to our investment in TuSimple; service instability and/or increased costs 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; 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 and firmware defects; 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 12, 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 at the “Investors” section of our website at www.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,
	2022		2021
Operating revenues	$	1,620.5	$	1,228.6
Operating expenses:
Purchased transportation	740.1		558.5
Salaries, wages, and benefits	337.5		267.1
Fuel and fuel taxes	110.2		63.8
Depreciation and amortization	83.8		73.1
Operating supplies and expenses—net	89.5		136.1
Insurance and related expenses	26.4		24.4
Other general expenses	97.9		29.4


Total operating expenses	1,485.4		1,152.4
Income from operations	135.1		76.2
Other expenses (income):
Interest income	(0.4)		(0.8)
Interest expense	2.8		3.4
Other expense—net	9.2		0.8
Total other expenses—net	11.6		3.4
Income before income taxes	123.5		72.8
Provision for income taxes	31.4		18.0
Net income	92.1		54.8
Other comprehensive income (loss):
Foreign currency translation adjustment—net	0.1		(0.1)
Net unrealized losses on marketable securities—net of tax	(1.6)		(0.6)
Total other comprehensive loss—net	(1.5)		(0.7)
Comprehensive income	$	90.6	$	54.1

Weighted average shares outstanding	177.7		177.4
Basic earnings per share	$	0.52	$	0.31

Weighted average diluted shares outstanding	178.5		177.8
Diluted earnings per share	$	0.52	$	0.31

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,
	2022		2021
Assets
Current Assets:
Cash and cash equivalents	$	272.6	$	244.8
Marketable securities	48.5		49.3
Trade accounts receivable—net of allowance of $6.6 million and $5.2 million, respectively	754.4		705.4
Other receivables	59.2		35.9
Current portion of lease receivables—net of allowance of $1.2 million and $1.1 million, respectively	111.9		110.6
Inventories	31.3		27.4
Prepaid expenses and other current assets	119.4		75.1
Total current assets	1,397.3		1,248.5
Noncurrent Assets:
Property and equipment:
Transportation equipment	3,119.0		3,056.2
Land, buildings, and improvements	208.1		215.7
Other property and equipment	176.9		175.1
Total property and equipment	3,504.0		3,447.0
Less accumulated depreciation	1,455.9		1,396.0
Net property and equipment	2,048.1		2,051.0
Lease receivables	161.0		160.1
Internal use software and other noncurrent assets	235.2		237.2
Goodwill	245.0		240.5
Total noncurrent assets	2,689.3		2,688.8
Total Assets	$	4,086.6	$	3,937.3
Liabilities and Shareholders’ Equity
Current Liabilities:
Trade accounts payable	$	400.2	$	331.7
Accrued salaries, wages, and benefits	67.4		104.5
Claims accruals—current	85.9		83.9
Current maturities of debt and finance lease obligations	1.8		61.4

Other current liabilities	170.6		108.7
Total current liabilities	725.9		690.2
Noncurrent Liabilities:
Long-term debt and finance lease obligations	209.9		208.9
Claims accruals—noncurrent	94.6		88.5
Deferred income taxes	480.2		451.0
Other noncurrent liabilities	71.1		74.9
Total noncurrent liabilities	855.8		823.3
Total Liabilities	1,581.7		1,513.5
Commitments and Contingencies (Note 12)
Shareholders’ Equity:
Preferred shares, no par value, 50,000,000 shares authorized, no shares issued or outstanding	—		—
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, 95,641,086 and 95,701,868 shares issued, and 94,890,562 and 94,626,740 shares outstanding, respectively	—		—
Additional paid-in capital	1,571.4		1,566.0
Retained earnings	935.0		857.8
Accumulated other comprehensive loss	(1.5)		—
Total Shareholders’ Equity	2,504.9		2,423.8
Total Liabilities and Shareholders’ Equity	$	4,086.6	$	3,937.3

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,
	2022		2021
Operating Activities:
Net income	$	92.1	$	54.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	83.8		73.1
Gains on sales of property and equipment—net	(60.9)		(1.9)
Proceeds from lease receipts	20.5		17.1
Deferred income taxes	29.7		7.7
Long-term incentive and share-based compensation expense	5.8		5.2

SEC Form 10-Q filed by Schneider National Inc.