Schneider National, Inc.

Thank you for standing by. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Schneider second quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I will now hand the call over to Steve Bendis, Director of Finance, Investor Relations. You may begin your conference.

Thank you, operator, and good morning, everyone. Joining me on the call today are Mark Lark, President and Chief Executive Officer, Darrell 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, forecasts, plans, and prospects for Schneider. 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 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 and investor presentation, which includes reconciliations to the most directly comparable GAAP measures. Now I'd like to turn the call over to our CEO, Mark Rourke.

Thank you, Steve, and hello, everyone. Thank you for joining the Schneider call this morning. I will start by offering my perspective on our second quarter results in the context with the current business and freight cycle trends and how we are positioning the strengths of our multimodal platform on the path towards growing revenue and financial returns for our shareholders. I will then turn it over to Dale for his commentary on the second quarter results and free cash generation and the setup for the second half of the year regarding capital allocation and earnings per share guidance. First, I want to thank all the Schneider associates, especially our professional drivers, for their contributions to the progress we made in the quarter. In the second quarter, we delivered solid sequential improvement in earnings and margins across our three primary segments of truckload, intermodal, and logistics by remaining diligently focused on four areas we have the most control. First, delivering an effortless customer experience, which we know resonated based upon the number of customer recognition awards that we recently received. Second, navigating the 2024 shipper freight allocation season with purpose and discipline. Third, optimizing capital allocation opportunities across our tractor rolling stock, chiefly in dedicated intermodal, by increasing the ratio of drivers to trucks. And fourth, containing costs across all expense categories. These actions will continue to drive enterprise value, allowing us to seize the opportunities ahead, enhance returns as the freight market recovers. Our commercial philosophy is be mode agnostic across our multimodal platforms. and offer customers the best combination of service, cost, emission reduction, and transit performance that meets their needs. While our offerings are constructed to compete and function independently based upon the unique value propositions, there is considerable enterprise commercial leverage, which is evident in 46 of our top 50 customers purchasing services in all three segments. It is clear that our value is resonating with customers. In the quarter, we received five recognition awards, including Carrier of the Year and Partnership in Sustainability. We are continuously collaborating with our customers, both during and outside allocation events, to ensure that we have a full understanding across their diverse supply chain needs, and we are aligned with what they see ahead. We've been hearing more frequently from customers that they are seeking to secure asset-based capacity and balance their brokerage mix. We are now approximately three quarters through the 2024 shipper freight allocation season. So let me offer second quarter highlights that I believe are instructive for the forward positioning of our multimodal platform, starting with truckload. In our truckload network, we achieved another quarter of modest contractual price gains. And for the first time in two years, spot price in June exceeded contract price. Importantly, spot remained above contract for the full month of July as well. However, we are behind the tempo that we expected in our prior guidance, therefore shifting out the timing of the pricing recovery. In dedicated, truck counts are up 12% year-over-year through a combination of organic and acquisitive growth. Dedicated represents 63% of the total tractors we deploy in truck load. Sequentially, dedicated truck count was down 1% as new business implementations and existing account growth were offset with targeted asset efficiency actions, as well as moderate account churn. Overall, truckload segment margins improved 290 basis points sequentially from the first quarter. We expect further margin improvement for the second half of the year. Moving to our fully asset-based intermodal segment, quarter counts were slightly up year-over-year and up 3% sequentially. Growth in TransCon Mexico and the West was offset by shrink in the East against the highly competitive truck alternatives. While domestic intermodal has not experienced the full benefit of the higher year-over-year West Coast import levels, we have started to see increased port transload activity. Specific to our REES momentum in Mexico cross-border, we recognize double-digit volume growth with the CPKC delivering freight between Mexico and the Midwest at truck-like transit times. We continue to see significant cross-border Mexico growth opportunities as we move forward. driven by ongoing manufacturing investment, automotive production, and shippers continuing to build nearshoring into their supply chains. We recently moved into a new location in Mexico City, reinforcing our commitment to build and grow on our longstanding presence, more than three decades' worth, and the expertise that we have in that market. Overall, intermodal margins improved 300 basis points from the first quarter results as we continue to heal the network which reduced friction cost, enabling dray productivity gains and fewer empty repositioning shipments. We moved more orders year over year with 10% fewer dray trucks, while maintaining our high ratio of drays executed by our company driver fleet. We expect further improvement margin performance in the back half of the year. Finally, logistics margins improved 180 basis points from the first quarter's performance, as we competed effectively in the quarter, especially considering the highly competitive brokerage market. Brokerage order volumes contracted 4% year-over-year, while growing 2% sequentially from the first quarter, as asset-based brokers are increasingly favored by shippers at this stage of the freight cycle. Power Only continued its double-digit percentage growth rate, both year-over-year and sequentially, as mid-to-large shippers prefer the value and flexibility of trailer pools. Power only serves to augment the truck load network needs of our trailer pool shippers. And again, we expect year-over-year volume growth in the back half of the year. We continue to be encouraged by our performance in the brokerage market through these very challenging conditions, driven by our execution and differentiated strategy of our freight power platform, standalone freight generation capabilities, and power-only offering. In summary, the quarter saw positive indicators, including seasonal demand, tightening supply during the annual road check event, increased spot pricing, and modest contract price gains in our truckload network. While we are not calling a market inflection just yet, and the sustainability of these trends is not yet proven, there are signs of market improvement, which we anticipate will present opportunities as we move forward. So let me turn it over to Daryl for his summary comments on the quarter and a look ahead before we get to your questions. Daryl?