Schneider National Q2 2025 Earnings Call Transcript

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Provided by Quartr
July 31, 2025

Key Takeaways

  • Positive Sentiment: Strong Q2 results: enterprise revenue excluding fuel surcharge was $1.3 billion, up 10% YoY, adjusted operating income rose 9%, and adjusted EPS was $0.21.
  • Positive Sentiment: Truckload segment operating income increased 31% YoY to $40 million, with network margins improving 150 bps sequentially to a 93.6% operating ratio, despite elevated spot exposure.
  • Positive Sentiment: Intermodal achieved its fifth consecutive quarter of volume growth, with a 5% YoY increase—led by Mexico which grew 30%—and improved operating ratio by 30 bps to 93.9% on stable pricing.
  • Negative Sentiment: Logistics revenue rose 7% YoY to $340 million driven by the Cowen acquisition and power-only growth, but operating income fell 29% YoY to $8 million due to soft brokerage volumes.
  • Neutral Sentiment: Full-year 2025 adjusted EPS guidance is $0.75–$0.95, with the high end trimmed amid ongoing trade policy uncertainty and a retreat in spot rates after seasonality.
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Earnings Conference Call
Schneider National Q2 2025
00:00 / 00:00

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Operator

Thank you for standing by, and welcome to the Schneider's Second Quarter twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. I'd now like to turn the call over to Christine McCarthy, Vice President of Investor Relations. You may begin.

Christyne McGarvey
Christyne McGarvey
VP - IR & Corporate Finance at Schneider National

Thank you, operator, and good morning, everyone. Joining me on the call today are Mark Bork, 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.

Christyne McGarvey
Christyne McGarvey
VP - IR & Corporate Finance at Schneider National

These constitute forward looking statements for the purposes of the Safe Harbor provisions under applicable federal securities laws. Forward 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 report on our Form 10 ks and those risks identified in today's earnings release. All forward looking statements are made as of the date of this call, and Schneider 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.

Christyne McGarvey
Christyne McGarvey
VP - IR & Corporate Finance at Schneider National

Now I'd like to turn the call over to our CEO, Mark Bork.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Thank you, Christine, and hello, everyone. Thank you for joining the Schneider call today. I wanna 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 on our business. First, we are restoring margins while positioning the business to maximize through cycle returns.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Second, we are leaning into our areas of differentiation to create our own growth opportunities. And third, we are compounding organic growth with accretive m and 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.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

I will begin our efforts to restore margins and maximize through cycle returns. Second quarter benefited from the cumulative effects of our actions we have taken to lift our business through a challenging backdrop and importantly, demonstrate 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 and doing so profitably. We are now roughly three fourths through the contractual renewal period, both in truckload network and intermodal.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

We remain on track to deliver low to mid single digit percentage increases in our truckload network pricing renewals, while intermodal pricing has remained stable as expected. Within network, we continue to believe maintaining rate discipline is the right course of action given that rates 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.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

While 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 areas we have real differentiation, enabling us to deliver meaningful value to our customers while remaining steadfast in our focus on sustainable operating earnings growth.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Next, we remain focused on containing costs across the enterprise, continuing to execute on our established cost reduction target of over 40,000,000. This includes synergies from recently acquired Cowen Systems with full run rate benefits anticipated in 2026. The remainder of targeted savings is largely 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.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Dedicated now represents about 70% of our truckload fleet, a materially higher percentage than several years ago, driven by organic growth and supported by our three acquisitions 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, 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 churn in the short term, but we expect gross wins to pick up supported by the strength of our pipeline.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

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 net fleet count 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 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. Truckload 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.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

The long term strategy of shifting the business toward dedicated and variable cost capacity in network will help to improve the resilience of our earnings 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, intermodal win 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.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

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 has historically translated to fleet growth in subsequent quarters. We continue to leverage the strategic differentiators unique across our four dedicated brands with a focus on specialty equipment offerings where we see ample runway for growth and retention rates that are three to 400 basis points higher than standard equipment. In intermodal, we understand that the changing rail landscape will be of interest to all participants.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

We have strong rail relationships, and we look forward to the continued engagement in creating additional value for our customers. Historically, we have demonstrated our ability to adapt to changing dynamics in the underlying intermodal landscape by leaning into the unique elements of our service, namely our asset based dray, chassis, and container offering. For example, through our relationship with the CPKC, Schneider is the intermodal provider of choice in Mexico, offering service that is one to three 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. Looking forward, we see strong momentum.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

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 become more evident in a stronger market environment. We will be able to convert, in many instances, a historically large pipeline and be increasingly selective with the freight that we take on.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Third and finally, in addition to our organic growth, our recent acquisitions, including our largest Cowen Systems, contributed to income from operations growth this quarter. We are pleased with their performance, and we continue to evaluate how we best unlock additional value from these strong brands. Starting in October, Cowen Logistics will be integrated into Schneider Logistics to leverage our enterprise tools and eliminate redundancies, an effort we expect will drive improved margins in this segment. Switching now to perspectives on the market. We expect the economic uncertainty that characterized the second quarter to persist into the back half of the year with trade policy continuing to evolve.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

In addition, the timing and impact of regulatory enforcement, such as requirements around English language proficiency and the use of b one drivers, along with the recent legislative developments remain unclear. Even so, we believe the most likely path forward is for the freight environment to continue its movement toward recovery, with capacity continuing to exit the market at a slow but steady drumbeat. 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. While customer reactions and strategies have varied, we have seen a growing number express some concern about capacity and as a result are funneling more freight our way.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Altogether, we believe strong execution on our efforts to drive structural improvement in our financial returns, deliver above market organic growth and accretive M and 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?

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

Thank you, Mark, and good morning, everyone. I'll review our enterprise and segment financial results for the second quarter and provide insights on 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 revenues excluding fuel surcharge were $1,300,000,000, up 10% compared to a year ago. Adjusted income from operations was $57,000,000, a 9% increase year over year.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

Enterprise adjusted operating ratio was roughly in line with the 2024. Adjusted diluted earnings per share for the second quarter was 21¢. The disciplined 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.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

From a segment perspective, truckload revenue is excluding fuel surcharge was $622,000,000 in the second quarter, up 15% year over year. This growth was primarily due to the common acquisition and modestly higher revenue per truck per week, partially offset by lower network volumes and dedicated churn. Truckload operating income reached $40,000,000 a 31% increase year over year, reflecting the same revenue drivers as well as cost and productivity efforts. Operating ratio was 93.6%, an 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 and ongoing actions to reduce variable input costs.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

These efforts include reducing unbilled miles, improving tractor to driver ratios, and implementing targeted headcount actions. Collectively, these initiatives drove double digit sequential earnings growth in truckload despite revenue increasing just 1% quarter over quarter. Intermodal revenues, excluding fuel surcharge, were $265,000,000 for the second quarter, up 5% year over year, driven entirely by volume growth as yields remained roughly flat. This marks the fifth consecutive quarter of year over year volume growth in the segment. Intermodal operating income was $16,000,000 a 10% increase compared to the same period last year, reflecting solid operating leverage on volume growth as we continue to see the benefits from our network optimization and dray productivity, including ongoing efforts to fill empty lanes, reduce friction costs at the ramp, and improve freight mix.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

Operating ratio was 93.9%, an improvement of 30 basis points compared to second quarter twenty twenty four. Logistics revenue, excluding fuel surcharge, totaled $340,000,000 in the second quarter, up 7% from the same period a year ago, driven by the Cowen acquisition and continued growth in power only volumes. This was partially offset by lower volumes in traditional brokerage as shippers continue to favor asset based solutions. Logistics income from operations was $8,000,000 near first quarter levels, but down 29% from last year's high watermark. Operating ratio was 97.7%, an increase of 120 basis points compared to prior year, primarily due to softness in brokerage volumes, partially offset by productivity initiatives.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

Second quarter operating ratio was essentially flat sequentially. Turning to capital allocation. We paid $17,000,000 in dividends in the second quarter and $34,000,000 year to date. Net CapEx was $150,000,000 compared to $182,000,000 last year due to reduced purchases of transportation equipment. Free cash flow increased approximately $10,000,000 compared to the same period in 2024.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

We continue to expect net CapEx to be in the range of $325,000,000 to $375,000,000 for the full year. We're monitoring economic and volume expectations as well as the effects of our asset productivity initiatives, and 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 our 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 $50,000,000 repayment of our revolving credit facility.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

As of 06/30/2025, we had $526,000,000 in total debt and lease obligations and $161,000,000 of cash and cash equivalents. Our net debt leverage was 0.6 times at the end of the quarter, an 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 $0.75 to $0.95 which assumes an 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.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

We continue to believe that a steady march toward a more balanced market supported by some elements of seasonality and capacity attrition is the most likely path forward and what serves as a foundation of our guidance. In trimming the high end of our previous guidance, we're 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 improvements. We will do this through our network based offerings, particularly in light of our elevated spot exposure, productivity enhancements, and latent capacity in intermodal. That said, we continue to operate in an uncertain environment, especially regarding the consumer outlook.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

At the same time, the industry continues to grapple with select areas in 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. A flatter second half, weighed down by elevated inflation, would align with the lower end of our guidance. In terms of what this means for the most likely scenario for our segments, our truckload network business, we expect to remain on a trajectory of low to mid single digit price renewals through the remainder of bid season. The degree to which spot rates remain a modest headwind or become a tailwind will depend on how market conditions evolve from here.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

We expect volume trends to be supported by elements of positive seasonality that are likely below typical seasonal magnitude. Dedicated earnings are expected to remain resilient with prices in line with prior guidance and a pickup in organic growth. That said, the churn realized this quarter will continue to be evident in the second half of the year. Given our focus on asset efficiency and opportunities we see to add volume without increasing tractor count, 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.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

Additionally, we expect the momentum in our allocations and wins to drive above market growth, though the degree of absolute volume improvement will be market dependent. Our disciplined focus on operating earnings dollar growth through 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 asset 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 evidence 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.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

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.

Operator

Thank you. We will now begin the question and answer session. Your first question comes from the line of Daniel Imbro from Stephens. Your line is open.

Joe Enderlin
Senior Research Associate at Stephens Inc

Hey guys, this is Joe Enderlin on for Daniel. Thanks for taking the question. Looking to your long term, just looking to your long term truckload target of 12% to 16%, could you maybe break down the current dedicated versus 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 sub seasonal movements and spot rates through year end? Thanks.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

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 and at times achieving the low end of our, long term guidance. Where we've have work to do and where we're most price sensitive and price recovery sensitive centers around our network business.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

And so while we don't publicly break down margin differentials, we've been fairly clear that we continue to look for opportunities and where our operating leverage really is to change results in a in a much faster cadence once we get some market lift relative to the pricing. And we've been leaning into that for several quarters, and we may maintain a great deal of discipline to get after that. So but we will need some rate recovery in in our network business, particularly, to to get back to our long term target. So 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.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

And this is Daryl. So the only thing I'll add is that, you know, we're encouraged by what we've been seeing over the past several quarters. So Mark did mention that from a network perspective, price is the most important in terms of getting back to our longer term targets. So for, several quarters in a row, we've seen year over year pricing improvement. We've also seen pricing improvement in our dedicated space, which, you know, we know is more resilient.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

From an from a intermodal standpoint, volumes continue, to increase year over year. We've seen five consecutive quarters who were trending in the direction of, beginning to the lower end of our longer term targets. And then from a logistics standpoint, obviously, we're squarely within striking distance of that.

Joe Enderlin
Senior Research Associate at Stephens Inc

Got it. Thank you, guys. Just as a follow-up on the truckload side, there's been debate about what peak will look like this year. I think some of the rails mentioned a pull forward into June, July. Others others think peak is ahead of us.

Joe Enderlin
Senior Research Associate at Stephens Inc

Just how do you think peak is developing and what's baked into your guidance from a demand standpoint?

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

Yeah. Thanks. This is, Jim. So, there's really a wide range of behaviors as we look at our customer base, and, you know, there's, some different factors that are taking some capacity out of the market as well. So, depending on how customers played their hands as they went through allocations, They're in a little bit different different spot.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

But as it relates to our intermodal business, we already have intermodal peak surcharges in place with most of our large customers, which is about six to eight weeks ahead of where we normally are. In truckload, we're starting to have those conversations, and, you know, we do have a higher percentage of our our business, as Mark talked about, in in the the spot market than normal that's gonna enable us to pivot quickly. But that, you know, that part of peak season, that happens a little bit later here in the in the year more in fourth quarter.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Yeah, Joe. It's Mark. It's, you know, it's it's difficult to quantify what is the pull forwards, 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, play out at certain junctures of the quarter. And we would anticipate and we would expect that, despite certain strategies that may have pulled some freight forward that we'll have those same opportunities, if not a little bit more elevated in the second half of the year.

Joe Enderlin
Senior Research Associate at Stephens Inc

That's helpful. Thank you, guys.

Operator

Your next question comes from the line of Dan Moore from R. W. Baird. Your line is open.

Dan Moore
MD & Senior Transportation Analyst at Baird

Hey, guys. Christine. Hi, Dan. Welcome on Yeah. Welcome on board. Excited to work with you guys. Couple of questions.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Have you back.

Dan Moore
MD & Senior Transportation Analyst at Baird

Yeah. It's good to be back. Just to kinda follow-up, you know, when I'm looking at the p and l here, there are couple of, line items that really stick out. Insurance, obviously, other general expense, salaries and wages. I know you guys are very focused on reducing costs.

Dan Moore
MD & Senior Transportation Analyst at Baird

You have a number of internal initiatives targeting cost reductions. If we were to break down kind of the opportunity set to get returns back to where you want them, back to where investors expect you to be long term, I think of kind of a three legged stool rates, costs and volume. Could you contextualize a little bit more around those three 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 one of those, again, rates, costs, volume, to secure kind of a, you know, level of of return that's that's more in line with historical, historical levels. And thank you for the time today.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

Sure.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

So this is Daryl. So I'll I'll start. So as as it relates to our segments, you know, there there's varying degrees, of each one of those legible stool that's required. So from a network perspective, most of the recovery towards our 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 for, you know, four quarters in a in a row now.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

From a dedicated standpoint, that business is more resilient, you know, less dependent on price, though price is important, and there is upside as it relates to price especially on the backhaul. From an intermodal standpoint, volume, clearly is is most important. We've seen even in, you know, the past several quarters, our ability to drive earnings growth, with minimal, growth in terms of price. And then from a logistic standpoint, again, volume and market conditions similar to network are where, most of that benefit, resides. Now, we've been very thoughtful in terms of actions that we've taken and, you know, the actions that we've taken to restore margin have been multipronged, controlling what we can in the freight allocation season as it relates to price.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

But as you mentioned, there are lot of cost initiatives that we've taken on. From our perspective, those cost initiatives are structural and sustained sustainable, but very thoughtful. So we're making sure that things that we're doing are positioning us for, increased leverage on the upside. So from a, truckload perspective, we're very focused on productivity and and asset efficiency goals. Right?

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

So we're we talked about reducing unbilled miles. We talked about a lot of the headcount actions that were taken. So those actions have come through in our results that you can see year over year and sequentially, significant earnings growth, despite softer, you know, softer spot market back backdrop. From an intermodal standpoint, we're also very focused on productivity actions, around very productivity, filling out empty lanes. And, again, we're seeing those those come through the results.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

So, you know, the actions that we're taking are structural in nature, and that's kind of the other leg of the stool. You know, Mark, I'm not sure if there's anything that you wanna add there.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Yeah. Just and, Dan, as you kinda look at that income statement, just a reminder, have Cowen in our results this year, which we didn't have in last year. So just at the absolute category level, you'll you'll see, you know, that that that flowing through. But we've really been focused, and we've got a, I think, a reasonable job of keeping our variable contribution, our direct contribution dollars, consistent and and and improving despite, the market that isn't quite yet given us the lift 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.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

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 on the work that we've done here, position us favorably to do that. Now proof's in the pudding, and and we're focused on it, and we have to demonstrate that to you and others, but that's that's our complete focus.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

Yeah. This is Jim. Just one more thing to add that I I don't think we look at cost and volume as completely discrete items. A lot of the actions that we've taken have prepared us to and are resulting in this improvement and variable contribution really position us well for when there is volume upturn that we'll see more in the cost improvement as well.

Dan Moore
MD & Senior Transportation Analyst at Baird

Thanks again and good luck with the rest of the year guys.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Thank you.

Operator

Your next question comes from the line of Ravi Shanker from Morgan Stanley. Your line is open.

Ravi Shankar
Ravi Shankar
Executive Director - Institutional Equity Sales at Morgan Stanley

Great. Thanks. Hello, Mark, Daryl and Christine. Couple of questions here. I wasn't saying I missed it at all.

Ravi Shankar
Ravi Shankar
Executive Director - Institutional Equity Sales at Morgan Stanley

Would you characterize the competitive environment in each of your segments? So one way TL, intermodal, dedicated logistics, is there even an unthinkable scenario where the rate of change on TL capacity is actually better than some of the other segments?

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Rate of change, say more on that, just to make sure we capture what you're

Ravi Shankar
Ravi Shankar
Executive Director - Institutional Equity Sales at Morgan Stanley

I'm just wondering if capacity is exiting the TL space when you potentially have more competitive actions in dedicated and intermodal, kind of maybe the rate of change on capacity exits in TL could could even be better than intermodal, dedicated, etcetera?

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

Yeah. Yeah, Ravi. Thanks for the question. This is Jim. You know, I think you you might be right.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

We are seeing some, know, mid sized competitors exiting the market. The other thing that we're seeing right now with English language proficiency enforcement, we appreciate that. We're now enforcing the existing regulations. And and when you 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, talk to our our underlying carriers, our logistics business, we're seeing carriers self regulate, both by removing drivers that don't speak English, but also implementing language proficiency test for new driver candidates similar to what Schneider does.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

And so if you, you know, you put those two things together, we're talking about a a really a meaningful amount of capacity, and and, you know, that doesn't directly, address b one drivers as well, which we would still say that there's an opportunity there. And if there were any changes, that would be perhaps not necessarily a slow bleed, but something that would be a more meaningful change.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

So, Ravi, as maybe as it relates to the competitive nature, you know, we've we've noted some churn in dedicated, and we've we've looked at that and studied what we're really seeing there is in our standard equipment business. And I think anytime you get into a a market that has this much drag and and duration on a down cycle, those parts of the portfolio are more vulnerable to other type solutions that customers may be looking for opportunity, to ratchet cost down at the expense perhaps of a service equation. And so that is not so much that the competitive landscape, at the dedicated true dedicated level. That's why we're so focused across our four dedicated brands on the specialty equipment side. That doesn't mean that it's irrational competition in dedicated.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

It just means that there's a different solution being pursued by certain element of the customer base. And 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. 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, but we'll largely then start we expect to start to see traction there in the dedicated numbers as we kinda get farther into the year.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

As it relates to intermodal, we think it obviously, it's a much different competitive dynamic based upon concentration and capability there with the with the players that can bring real scale to the market. And as always, our our biggest competition there is over the road truck. And so we we also feel that we're seeing a great traction in really the volume first and and generally pricing comes second, as this typically plays between truck and intermodal. And the network side, highly competitive. Right?

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

And, and so we've decided to lean into our value. And in the short term, if that means putting more 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 as we continue to focus on things we're doing on the self help, but also when the market gives us 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 gonna see how we perform and how the market plays out in the second half of the year. I think we'll be more constructive as we get into 2026.

Ravi Shankar
Ravi Shankar
Executive Director - Institutional Equity Sales at Morgan Stanley

Got it. That is incredibly helpful. Maybe as a quick follow-up. Can you just remind us again just how nimble you can be pivoting between spot and contract and also dedicated as the cycle picks up? Not asking you to share your secret sauce, but just kind of broad strokes.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Yes, Ravi. I would give us very capable 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'd also don't discount the value that it has in dedicated because just about every one of our conditions, we find some level to bring value back to the customer through backhaul and and eliminating empty miles. And we have more choice there at better price points that is accretive not only to our solution to the customer, but it's accretive to our bottom line and dedicated.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

And so we will move with extreme prejudice to go fast and and pivot to where our capacity is being valued in the network.

Ravi Shankar
Ravi Shankar
Executive Director - Institutional Equity Sales at Morgan Stanley

Understood. Thanks, gents and ladies for your time.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Thank you.

Operator

Your next question comes from the line of Brian Ossenbeck from JPMorgan. Your line is open.

Brian Ossenbeck
Brian Ossenbeck
MD & Senior Analyst - Transportation at J.P. Morgan

Hey. Good morning. Thanks for taking the question. Just wanted Hey. To ask Mark Good morning.

Brian Ossenbeck
Brian Ossenbeck
MD & Senior Analyst - Transportation at J.P. Morgan

Want to ask if Mark and Jimmy have been around, for a few freight cycles and just your view you know, your

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

initial Nice way to say roll.

Brian Ossenbeck
Brian Ossenbeck
MD & Senior Analyst - Transportation at J.P. Morgan

On TransCon. Well, I'm I'm catching up pretty quick. I think these the the big question, you know, with the TransCon on the on the board now, what what are your what's your sort of initial take in terms of what that means from a growth and a partnership perspective long term intermodal growth? I would assume has to be a selling point here, that would be, on the plus side, but maybe for the long term. Are there any things you're little more cautious or taking a a harder look at?

Brian Ossenbeck
Brian Ossenbeck
MD & Senior Analyst - Transportation at J.P. Morgan

Obviously, there's a service disruption recently that affected your network. Is is that on your mind? So, some perspectives as as we all start to digest what might be the the end game here.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Yeah. Right. I think I'm I'm tracking with your question there. And, obviously, with all the news, and the UP being one 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, this has a very detailed process that we believe is likely to evolve as it moves through its, you know, all all the, assessments to be to take place from here.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

As we think about our strategy and the intermodal network, details really matter. Right? And it's a detail dependent as how we think about these things. And so as we think about our intermodal strategy, you know, we're very cognizant that everything that we do has to be in the best interest of Schneider, has to be the best interest of our shareholders and our customers. And from our view, to achieve that, we're always assessing new opportunities, new ways of doing business that bring value to the customer.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

And so and I think we've demonstrated over the long haul here that we can adapt, that we can bring new services. And and and so we're so new at just a week into this. We really probably don't have a lot to share, a lot to say at this point. But, you know, this is places that we're comfortable. We have a very solid team.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Jim's background and experience here throughout his career is gonna be paramount as we look at the playing field, look at the opportunities, and and position this intermodal product to thrive in the future.

Brian Ossenbeck
Brian Ossenbeck
MD & Senior Analyst - Transportation at J.P. Morgan

Understood. Well, experience will definitely help. Maybe, Jim, just a quick follow-up.

Brian Ossenbeck
Brian Ossenbeck
MD & Senior Analyst - Transportation at J.P. Morgan

When you talk about peak season surcharges a little bit earlier than normal, I guess, with 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 more demand driven that we should read into there? Thanks.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

Yeah. Yeah. Yeah. Thanks, Brian. Yes.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

It's it's driven by demand when customers are starting to to surge up, and we're seeing, you know, some of that surge right now. And and our intent there is really to be able to manage our our operations so that we're putting costs where incremental cost is is being incurred and and to make sure that, you know, a a one 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, see that right now, and so that's why we wanna make sure we have those in in place.

Brian Ossenbeck
Brian Ossenbeck
MD & Senior Analyst - Transportation at J.P. Morgan

Okay. Thank you. Appreciate the time this morning.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

Thanks, Brian.

Operator

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

Tom Wadewitz
Tom Wadewitz
Senior Equity Research Analyst at UBS Group

Yes. Good morning. So I had two kind of numbers questions, just quick ones, and then I had a more strategic one. But Darryl, what what was the impact of gain on sale in truck? Okay.

Tom Wadewitz
Tom Wadewitz
Senior Equity Research Analyst at UBS Group

What 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. And just wondering how to forecast that maybe for three q, April, and then I've got the more strategic one for Mark and Jim. Thanks.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

Sure.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

It seems like a multiple multiple quarters down.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

So, again, just yeah, this is this is Daryl. So as a reminder, in the first quarter, we did mention, that we saw some improvement, different proceeds on on sale of equipment. So in the first half of the year, there's probably $3,000,000 or so year over year improvement. So for the second half of the year, we also expect some level of improvement consistent with what we, previously forecasted. No change in in that guidance. But year over year, it's probably our probably our

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

It's a modest impact on results.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

As it relates to other so, you know, other segment can be uneven in certain quarters, and we we certainly did see that. As a reminder, what's in other segment, you know, small carrier leasing business, which we've mentioned before, captive insurance, 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, you know, the results to be consistent with the second quarter. So for your modeling, you can assume pretty much the same as two q.

Tom Wadewitz
Tom Wadewitz
Senior Equity Research Analyst at UBS Group

Okay. Yeah. Thanks for that. And on, you know, Jim and Mark, you you know, you got a question on the intermodal, I guess, the intermodal related to the, you know, potential rail consolidation. I, you know, it seems to me that you've been very careful and strategic in crafting your service and your partners in intermodal such that, you know, you're not just going toe to toe in all the business, and, you know, lowest price always, but but getting some differentiation what you can offer.

Tom Wadewitz
Tom Wadewitz
Senior Equity Research Analyst at UBS Group

Right? And I guess the Mexico is a good, you know, good example of that. You know, maybe how much of your business do you think is, you know, East West would run on both railroads and something that, you know, if the the kind of consolidation doesn't you're not on both sides of it, you might get hurt a little, or have some disadvantage. And how much do you think there's you know, it's either low local traffic or there's kind of some way that that it's more differentiated. I don't know.

Tom Wadewitz
Tom Wadewitz
Senior Equity Research Analyst at UBS Group

What maybe just, like, how much of the volume is such as two railroads. I don't know if there was a way you can frame it so we can think about that.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

Yeah. This is Jim. I'll take a crack at that one 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'd I'd also say that, you know, there's a lot of small tweaks that go on with the network.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

And, of course, you don't see all the the decisions that we don't make. And and the way we get there, it's it's a very deliberate process that we use to evaluate any new rail service. That's really played out very well for us, both commercially and operationally for for Schneider and for our customers. And so, as, you know, this this plays out, we'll be applying that, same recipe to how we think about this going forward.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Which is also a way that we don't really break down east versus west in some of those different components. So but thanks for the questions, Tom.

Tom Wadewitz
Tom Wadewitz
Senior Equity Research Analyst at UBS Group

Okay. Thank you.

Operator

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

Chris Wetherbee
Chris Wetherbee
Senior Analyst at Wells Fargo

Great. Thanks. Good morning. I guess I wanted to talk a little bit about the guidance 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 assumes some an environment that was a 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 changed, what's evolved, where the risk sort of lies here? And I guess maybe as a follow-up to that, when you think about the shape of the back half, is 4Q still probably a bigger quarter than 3Q from an earnings perspective? Or maybe there's a little bit of a pull forward of peak, it's really 3Q is better and maybe the risk lies in 4Q? Just a little thought on that would be helpful.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

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

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

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

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

But in order to to have gotten to the higher end of our previous, range of of a dollar, you know, that inflection would have had to be, you know, higher and more sustained. So, you know, there are varying degrees of conditions that that could happen, and that's built into the scenarios that we've built in coming up with, you know, the high and the low end. There are many things that factor in the, you know, the level of seasonality and the persistence, you know, the degree of spot price movement, you know, the implementation of new business wins, both both in dedicated, and intermodal, the timing of that, new business wins, as as well as, you know, inflationary impacts, on cost. So depending on how some of those market forces evolve, you you'll get to kind of varying degrees of, the outcomes within the range. Those are some of the things that we thought about.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

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

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Yeah, Chris. So I I think as it relates to second quarter, I 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 position range on both the downside and the upside, although wider than is typical for us just, because of that uncertainty.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

As it relates to the third versus the fourth quarter, you know, there could be different impacts by our segments. The question is, what is the import volumes that will materialize in the fourth quarter? And intermodal might be a little bit more uncertain at this point, and truck could be a bit stronger just based upon us being in the last mile versus the first mile that our our intermodal positions in. So we try to be thoughtful to our best assessment of that, and and that's not only by quarter, but also by segment. So, that's how we would position the range.

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

Yeah. No. Only only thing I this is Daryl again. So despite all uncertainty, you know, that continues to to linger, we have demonstrated the ability to grow earnings, you know, through that uncertainty. And we've seen that several quarters in a row, just based on the structural actions that we've taken for things within our control.

Chris Wetherbee
Chris Wetherbee
Senior Analyst at Wells Fargo

Okay. Okay. I appreciate the, the the color around that. And and maybe just as a quick follow-up. It's dedicated pipeline.

Chris Wetherbee
Chris Wetherbee
Senior Analyst at Wells Fargo

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 three q, maybe what hits in four q?

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Sure. I'll give you I'll let Jim, maybe fill in, some additional color here. But as we talked about, I think, in our first quarter call, we were adding some additional resources to get after what we felt, was a growing pipeline, and and we feel really solid. And as I did in my opening comments, 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 additional resources are focused around specialty, and the targets that we've laid out, in addition not only to our legacy, but also our three other brands that we've acquired has put us in a pretty darn good position towards the future.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

And and so the the we always use the word robust, but I would say, certainly, based on any historical context, we feel really good about where we are in the pipeline. Yeah. So we gotta close. We gotta 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 that we should be hearing about soon.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

Yeah. We're we're late stage and then at at the same time very well prepared to implement efficiently. And so some of those we'll be able to add in without actually adding trucks as well. So we feel really good about our position.

Chris Wetherbee
Chris Wetherbee
Senior Analyst at Wells Fargo

Great. Thanks very much. Appreciate it.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Thank you, Chris.

Operator

Your next question comes from the line of Jonathan Chappell from Evercore. Your line is open.

Jonathan Chappell
Senior MD at Evercore ISI

Thank you. Good morning. On the logistics front, it sounds like morning. Sounds like Power Only is doing pretty well. Traditional brokerage is struggling, as to be expected.

Jonathan Chappell
Senior MD at Evercore ISI

I thought we I mean, I felt that the long term logistics guidance range margin guidance range increase some years back was driven by the thought that Power Only can retain a stronger margin. So can you just help us understand margin continues to be around this low 2%? Seems like Power Only is moving up the chain, lower margin business moving down. What kind of drives that closer to the range? Is it just truly a cycle or is is power only maybe not as, through cycle resilient as as we may have thought?

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Yeah. Jonathan, thank you for the question. Yeah. We do have a bit of a mix, going on there, and our most under stress part of our traditional brokers centers around the truckload mode and LTL and some of the other modes are are taking a higher percent of our overall mix, which also comes with a different contribution per order play and configuration. So, really, our focus is getting as efficient as we can get, with the new tools, some AI work.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Feel really good how the brokerage team is adopting and getting in front of some emerging technologies that I think can drive real value, not only there, but in other elements and starting to play in other elements of our business across the portfolio. 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 a trailing asset and capital against that power only. And so it's achieving not only the volume expectations and the customer value that we anticipated through cycles, whether it's up or down, it's also performing financially. And so where we're leaning into is our productivity initiatives and growth in our traditional brokerage and still profitable.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

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 opportunity.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

And I'll 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 of the business, and that's why we're we're integrating, the Cowen resources onto this platform. The other than just share is 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 gonna be able to leverage our investments there.

Jonathan Chappell
Senior MD at Evercore ISI

Okay. Thanks, Jim. Just quick follow-up here. I don't wanna read too much into this. But to Tom's question, that other loss at at 9,100,000.0, in the second quarter, I think you were unofficially or officially looking for, like, 4,000,000.

Jonathan Chappell
Senior MD at Evercore ISI

So that's 5,000,000 higher. We're looking you just said 3Q and 4Q at a similar level. So if we add that all up, that's, maybe 15,000,000 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 kind of dragging you down back to the original thought range?

Darrell Campbell
Darrell Campbell
EVP & CFO at Schneider National

Yep. So the the $3.03 to 4,000,000, that you said officially, unofficially, that was not embedded within our guidance. So, you know, what we've seen, you know, was within, you know, the range of what we expected. So, you know, going forward, we expect a similar run rate, you know, just given the composition of what of what's in all there.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

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

Jonathan Chappell
Senior MD at Evercore ISI

That makes sense. Mark.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Sounds unlikely to make a big change in remaining two quarters of the year.

Jonathan Chappell
Senior MD at Evercore ISI

Right. Thank you.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Thank you.

Operator

Your next question comes from the line of Ari Rosa from Citigroup. Your line is open.

Ari Rosa
Ari Rosa
Senior Analyst at Citigroup

Hi, good morning. So 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 in July related to spot rates in kind of that post July 4 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 some of your peers has been maybe a little bit more incrementally cautious, would say, on the demand outlook and the pace of tightening. So I'm just curious to see kind of how you see back half playing out into 2026. Thanks.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Yeah. I think thank you, Ari. I think what we were really laying out, what is the case for 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 when there's an inflection there. But there are elements that are different and new that as we have surveyed a broad set of carriers and that we're not just doing that border carriers, we're doing that across the certain pockets in the Upper Midwest, the Southeast, where there are other, opportunities for English language proficiency to have an impact.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

And so as we've done our survey work there, 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 b one 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, midsize 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 that you're out recovering cargo.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

You're out recovering equipment. You're not just fixing a tire or fixing a brake. And so there's more implications to having an out of service call here. 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 and what they're doing, to adapt their business to the new reality. So, again, we're not trying to predict.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

We're just trying to set the case for what could occur. So and then from a demand standpoint, I don't know if we're being overly optimistic. We're just talking about, in the individual segments, what we believe is the 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. Prudently, I may characterize those. Well,

Ari Rosa
Ari Rosa
Senior Analyst at Citigroup

I'd say we're hopefully optimistic. I would love to see some better conditions here in second half. Switching gears a little bit, just I wanted to return back to this subject of the TransConrail merger proposal. It sounds like you're broadly optimistic in terms of the upside to grow intermodal 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 given your relationship with the Union Pacific.

Ari Rosa
Ari Rosa
Senior Analyst at Citigroup

I'm curious just how you're thinking about kind of the net opportunity to grow intermodal volume if that were to move forward. And then if there are like essentially how you would position yourself in terms of seeking any concessions or commitments or or kind of how how you're thinking about your role in this going forward? Thanks.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Great. Thank you, Ari. 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 have relationships that we value across three 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.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

We're not in a position, 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 kinda where we'll come down. But we don't have any enough information at this time to take an official position.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

So if we came across overly, optimistic on that, then that was not our intent. Or negative. We're not negative either. We're just in the learning mode.

Ari Rosa
Ari Rosa
Senior Analyst at Citigroup

Totally fair and understood. Thanks for the time.

Operator

Your final question comes from the line of Ken Hoexter from Bank of America. Your line is open.

Ken Hoexter
Ken Hoexter
Managing Director at Bank of America

Great. Good morning, Mark, Darling, Christine.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Morning, Ken.

Ken Hoexter
Ken Hoexter
Managing Director at Bank of America

Christine, hopefully one day we can jump over, Robbie. We'll have to work with you on that. 2Q to 3Q margins, maybe you can talk about what's normal at Truckload, if we should see 100 basis points deterioration like normal? Is there anything that would drive outside I know you don't do quarterly outlooks, but if there's anything normal or abnormal as you move on just given the gyrations in volumes from tariffs and the like? And then Dedicated revenue per truck decelerated.

Ken Hoexter
Ken Hoexter
Managing Director at Bank of America

It was flat year over year. Just wanted to any thoughts on pricing, why we would see that? And then thoughts on the fleet size of network? So three, but three numerical questions. Hopefully, it's pretty soon.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Stacking them up on overtime. Yeah. Can we don't generally give guidance, obviously, directly on on quarter to quarter? And I think you've happily kind of assessed there. As you look at historic performance between second, third quarter, there are years that it's better.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

There's years that it's slightly worse. And so I think it actually, in our experience, that's about half and half depending upon the circumstances of the year. You know, as we came in through the July 4 holiday, we obviously seen some of that seasonality that we would typically see. And and to your comment, 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, both to some of our wins and some of the things that we're seeing across both truck and intermodal.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

So but it's obviously way too early to to discuss what the full quarter is gonna look like or be, but feeling, you know, reasonably good where the second half of the month at least from a volume and a health standpoint played.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

Yeah. And then I'll this is Jim. I'll take your question on on network capacity. So, you know, we did see some growth of owner operators, which and we'd say is a little bit, counter to what we're seeing in the overall market there, and and that's really driven by we have some traction with our our freight power for owner operator applications, which we implemented in in q one. And that's giving our owner operators just more visibility, including to our our own brokerage freight that they now have the opportunity to weave into our our network business.

Jim Filter
Jim Filter
Executive VP & Group President of Transportation & Logistics at Schneider National

And then also with with company drivers, we're being a little bit opportunistic here. We're kinda in the part of the cycle we're able to do that very economically, and it gives us some leverage against all of those other cost initiatives that we talked about. And, you know, I believe as you have company drivers, when the market does inflect upwards, it's an opportunity then to also grow our owner operators as well. They'll have more opportunities there.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

And 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.

Ken Hoexter
Ken Hoexter
Managing Director at Bank of America

Wonderful. Appreciate the time, guys.

Mark Rourke
Mark Rourke
CEO, President & Director at Schneider National

Thanks, Ken.

Ken Hoexter
Ken Hoexter
Managing Director at Bank of America

Thanks for squeezing me in.

Operator

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

Executives
    • Christyne McGarvey
      Christyne McGarvey
      VP - IR & Corporate Finance
    • Mark Rourke
      Mark Rourke
      CEO, President & Director
    • Darrell Campbell
      Darrell Campbell
      EVP & CFO
    • Jim Filter
      Jim Filter
      Executive VP & Group President of Transportation & Logistics
Analysts
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