Schneider National, Inc.

In 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'd now like to turn the call over to Christine McGarvey, Vice President of Investor Relations. You may begin.

Thank you, operator, and good morning, everyone. Joining me on the call today are Mark Rourke, 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, forecast plans, and prospects for Schneider. These constitute forward-looking statements for the purposes of the safe harbor provisions under applicable federal security 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 10K 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, Christine, and hello, everyone. Thank you for joining the Schneider call today. I want to 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 in our business. First, we are restoring margins while positioning the business to maximize through-cycle returns. Second, we are leaning into our areas of differentiation to create our own growth opportunities. And third, we are compounding organic growth with the creative M&A. Within that context, I will share my perspective on the freight market as well as the positioning and performance across our multimodal platform. Darryl will then provide a financial overview of the second quarter results and share our updated 20-25 earnings per share and net capital expenditure guidance. Then we'll take your questions. 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 be capitalized 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 remained 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. We remain on track to deliver low to -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 -over-year low single-digit improvement in revenue per truck per week. 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. Next, we remain focused on containing costs across the enterprise, continuing to execute on our established cost reduction target of over $40 million. This includes synergies from recently acquired Cowen Systems with full run rate benefits anticipated in 2026. The remainder of target 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 are improving the earnings resilience of the truckload segment. 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, the team offset the vast majority of this churn with new business wins, keeping 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. 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 second quarter of 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. Truck load 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. The long-term strategy of shifting the business toward dedicated and variable cost capacity of 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. 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 into 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 300 to 400 basis points higher than standard equipment. In intermodal, we understand that the changing rail landscape will be of interest to all participants. We have strong rail relationships, and we look forward to the continued engagement and creating additional value for our customers. Historically, we have demonstrated our ability to adapt to changing dynamics in the underlying intermodal landscape by leading into the unique elements of our service, namely our asset-based tray, 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 and 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. 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 -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 to 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. 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. In addition, the timing and impact of regulatory enforcement, such as requirements around English language proficiency and the use of B1 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. Altogether we believe strong execution on our efforts to drive structural improvement in our financial returns, deliver above market organic growth, and a creative M&A will drive earnings higher in 2025. Let me now turn it over to Darrell for his insight on the second quarter and our guidance. Darrell?