Schneider National, Inc.

and welcome to the Schneider earnings call. At this time, all participants are in listening mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Steve Bendis, Director of IR.

Steve Bendis Thank you, operator, and good morning, everyone. Joining me on the call today are Mark Roark, President and Chief Executive Officer, and Steve Bruffet, Executive Vice President and Chief Financial Officer. Earlier today, the company issued an earnings press release, which is available on the investor relations section of our website at Schneider.com. Our call will include remarks about future expectations, forecasts, plans, and prospects for Schneider, which 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 Form 10-K 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, which includes reconciliations to the most directly comparable GAAP measures. Now I'd like to turn the call over to our CEO, Mark Roark. Mark? Thank you, Steve.

Hello, everyone, and thank you for joining the Schneider call today. I will open up our dialogue with Schneider Contacts and Commentary on our three operating segment results for the second quarter, as well as what we expect for the second half of 2021 and into next year. Before we get to your questions, Steve Bruffett will provide some additional insight into our updated full-year earnings per share guidance, affirm CapEx range expectations, and close out on some brief overall enterprise results commentary. As you review the second quarter, several things should jump out. First, the truckload of intermodal business segments delivered solid sequential margin improvement from the first quarter, with both finishing above the top end of our current long-term margin target ranges. Secondly, our balanced portfolio demonstrated its value as logistics revenues grew $200 million over the second quarter of a year ago, serving as an offset for some of the driver capacity challenges in our network businesses. This allowed us to provide capacity coverage for our customers while keeping the freight and the corresponding revenues within the enterprise. The outcome is consistent with our strategy to leverage our multimodal platform from asset heavy to asset light to serve as an aggregator of freight and capacity in supporting the supply chain needs of our shipper community. So let me spend a couple of minutes on each of those and how it serves as a powerful setup for the remainder of 2021 and into 2022, again, consistent with our strategy. In truckload, our growth focuses on multi-year dedicated contract configurations. Year over year, our average tractor count growth was 265 units in the quarter on 400 units of sales growth. We have experienced less than 1% churn over our portfolio from the second quarter of a year ago. and we are working to get the new startups as well as existing business tractor units fully seated in what remains a highly constrained Class A CDL driver market. In the network truckload business, we have invested in a series of compensation plan increases over the last year for our professional drivers in terms of pay rates, as well as delivering productivity gains across our solo driver fleets. We have also reopened several of our Schneider CDL training academies to develop our own new drivers, and we will see the benefits of that work beginning in the mid-third quarter. The expense related to the startup of that process and priming the new CDL driver pump was born in the second quarter. We are still pushing towards our goal of 5,500 tractors in the network, as we highlighted in our last quarter update. We have stayed in front of those investments with rate support from our valued shipper base. Truckload network revenue per tractor per week improved 9% sequentially from the first quarter and 23% over the second quarter of 2020. All the revenue per tractor increase was yield-related as productivity in the network was flat as company solo utilization increases were offset by a lower mix of team and owner-operator levels. In the quarter, network contract rate improvement in the mid-teen double-digit percentage was realized with the remaining 25% of the book scheduled to be renewed in the third quarter. Our capital efficiency was very solid considering the uneven cadence of receiving our new tractor deliveries while preparing a high number of units for disposal into a strengthening used equipment market. Despite the OEM supply challenges, we have received 50% of our full-year replacement from tractor units at the halfway point of the year. We have reduced our driver-to-tractor ratios and have limited held-for-sale inventory, boosting our capital efficiency rates, which we intend to continue going forward. Next, our intermodal segment is grappling with excess demand beyond what we can successfully move. The intermodal ecosystem, like many areas of the economy, are suffering from extended labor challenges. We can see this in our customer data, as our customers' average unload dwell time has increased 70% from the 2019 comparable period. Additionally, labor shortcomings and freight volumes continue to impact intermodal ramp congestion in certain critical parts of the network, at times resulting in volume-limiting rail allocations. Finally, we're not fully seated in company tractor dray fleet at some of our high-volume hubs. Despite those meaningful challenges, intermodal orders improved 5% sequentially from the first quarter and 16% over second quarter of a year ago. Intermodal, as expected, has achieved low double-digit revenue per order increases as nearly 80% of the book has been renewed, although not all completely implemented within the second quarter. We intend to bend our network to give priority to those shippers and consignees who most efficiently and effectively turn our equipment into So we would expect to increase our container terms in the second half of the year. Our container count grew 5% or 1,000 containers from a year ago. Our goal is to net up after disposals another 1,500 to 3,000 containers by year end, which is dependent on overcoming our equipment manufacturer supply chain delivery challenges, which we are trying to help with. Finally, our logistics segment is thriving and growing across its portfolio of services, including contract logistics, port services, with the largest contributor being brokerage. The segment's revenues climbed to $430 million from $230 million a year ago, or 87% growth. The earnings contribution of the logistics segment kept pace by doubling over the second quarter of last year. A combination of market conditions and our continued investments in our people, processes, and technology platform of freight power for shippers and carriers are driving the volume and earnings growth performance. Let me stop there, and I'll turn it over to Steve before we get to your questions.