Schneider National, Inc.

Greetings and welcome to Schneider's fourth quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Bindis, Director of Investor Relations. Thank you. You may begin.

Thank you, Operator, and good morning, everyone. Joining me on the call today are Mark Roark, President and Chief Executive Officer, Steve Bruffet, Executive Vice President and Chief Financial Officer, and Jim Filter, Senior Vice President and GM of Intermodal and Chief Commercial 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, and hello, everyone, and thank you for joining the Schneider call this morning. I will open our dialogue today with commentary on the performance of our segments in the fourth quarter and the solid momentum that we are taking into the new year in each of them. And it has been a busy start to the new year. The market in general remains challenged in terms of network fluidity and insufficient resource availability, including professional driver, warehouse, and maintenance technicians. At the same time, freight demand remains strong. Additionally, and specifically to Schneider, we have added a dedicated focus trucking acquisition with Midwest Logistics Systems, or MLS as we call them, and announced a 2023 strategic alignment change regarding our Western Rail partner and our intermodal offering. On that point, Jim Filter has joined us this morning in his role of general manager of our intermodal offering. Jim will offer additional strategic insight on that opportunity and what we expect in terms of growth for the business, and in support of our valued customer community. We will then turn to Steve Ruffet for commentary on financial performance in the quarter and provide insight into 2022 full-year earnings per share guidance and an update on our recently completed review of our long-term margin performance targets across our segments. Finally, Steve will provide insight into our 2022 net capital expenditure guidance. So as a result, you can expect our opening comments to consume more time than we normally do before getting on to your questions. Our enterprise delivered record earnings performance in the fourth quarter and the full year of $178 million and $534 million respectively. These results reflect our strategy to create a premier multimodal transportation platform that enables us to aggregate demand and capacity in a way that provides all stakeholders with access, visibility, and insights to meet their supply chain needs. I am grateful to our talented and committed associate base who adapted to the broader market conditions throughout the year and leaned into the work necessary to achieve top tier results in it. I'm also appreciative of our valued customer base. The integrated multimodal approach increasingly enabled by our Schneider Freight Power Platform is resonating with the needs of our diversified customer community. In addition, customers have been highly supportive of addressing inflationary costs being introduced in the business in support of higher wages, equipment, and other variable cost categories. While we don't intend to guide on 2022 price performance, we do expect to continue to address inflationary costs through our 2022 renewals across our segments. Importantly, our strategic growth drivers of dedicated intermodal brokerage take a great deal of momentum into 2022. Dedicated grew organically from January to December last year by over 900 driver associates. the result of delivering great value to our existing customers, and our new business development team bringing in dozens of new business wins. Combining our organic growth with our MLS acquisition, Dedicated is nearly 2,000 driver associates larger than a year ago. The new business pipeline in Dedicated remains robust, and we have several hundred units of new business ahead of us in the new year, and we're off to a strong start in the first quarter. Growth in dedicated is partially in recognition of the preferences of the professional driver community and the type of work and the customer alignment that they find most satisfying. The allocation of our people and our rolling assets have increasingly shifted from network to dedicated configurations. That said, we are working diligently on stabilizing the tractor count in our network configuration as it offers great value to our customers and to our business. as indicated by revenue per truck per week and network increasing 23% year-over-year in the fourth quarter. In intermodal, the team overcame rail fluidity challenges and container turn delays at customer locations by effectively managing network yields, minimizing the use of higher cost third-party dray resources by leveraging our highly productive company driver dray fleet, and disciplined allocation of containers to where they could be turned most efficiently. Order count was down 3% year over year, and revenue per order increased 20% over the same period. And as we discussed last quarter, we expected to overcome the supply chain issues from Asia to take delivery of additional containers by year end. In fact, we netted up 1,300 containers in the quarter, bringing our full year container growth to 15%, or a net of 3,300 containers for the year. Intermodal margin performance for full year 2021 finished at nearly 14%. Now I'll bring in Jim to talk more about strategic positioning of intermodal for growth in our recent announcement. Jim?