Investor Presentation. August 2017

Transcription

1 Investor Presentation August 2017

2 Disclaimer and Forward-Looking Statements Special Note Regarding Forward-Looking Statements This presentation, and certain information that management may discuss in connection with this presentation, contains forwardlooking statements, within the meaning of the United States Private Securities Litigation Reform Act of 1995, which are intended to come within the safe harbor protection provided by such Act. These forward-looking statements reflect our current expectations, beliefs, plans, or forecasts with respect to, among other things, future events and financial performance and trends in our business and industry. Forward-looking statements are often characterized by words or phrases such as may, will, could, should, would, anticipate, estimate, expect, project, intend, plan, believe, target, prospects, potential and forecast, and other words, terms, and phrases of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks, and uncertainties. We caution that a forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. Risks and uncertainties that could cause our actual results to differ materially from those contained in the forward-looking statements include, among others, those discussed under the heading Risk Factors in our Prospectus dated April 5, 2017 filed with the Securities and Exchange Commission (SEC) pursuant to Rule 424(b) of the Securities Act of 1933, as amended, which is deemed to be part of our Registration Statement on Form S-1 (File No ), as well as our other filings with the SEC. Non-GAAP Financial Measures Reconciliation This presentation, and certain information that management may discuss in connection with this presentation, references certain non-gaap financial measures, including adjusted enterprise revenue (excluding fuel surcharge), adjusted income from operations, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share. Reconciliations of the non-gaap financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are in an appendix to this presentation. Management believes the use of these non-gaap measures assists investors in understanding our business as further described below. The non-gaap information provided is used by our management and may not be comparable to similar measures disclosed by other companies. The non-gaap measures used herein have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. 2

3 Leading North American Transportation Services Company Iconic Orange Brand Broad Portfolio of Market-Leading Businesses Founded in 1935 in Green Bay, Wis Adjusted Enterprise Revenue (xfsc) Adjusted Income from Operations 1 Brand reputation of operational excellence built on service, trust, and reliability Industry-leading safety culture and performance Comprehensive presence throughout North America Portfolio of businesses with different asset intensities Only known industry peer of size to have completed a comprehensive ERP transformation Strong balance sheet with access to capital provides flexibility to pursue organic and acquisitive growth initiatives Logistics $0.7bn Intermodal $0.8bn 20% 20% Other 2 $0.2bn 4% 56% Truckload $2.1bn Intermodal $46mm Logistics $31mm 16% 10% $3.8bn $293mm 3 Truckload: Second Largest in North America Truckload $221mm Intermodal: One of the Largest in North America Logistics: Fastest-Growing Segment 74% Notes: 1 See appendix for reconciliations; adjusted for fuel surcharge 2 Other is net of intersegment eliminations 3 Includes loss of $5mm from other revenue 3

4 A Superior Business Built for Sustainable Growth 1 Iconic Large-Scale Transportation Services Provider 2 Diversified Revenue Mix Supporting Resilient Growth Through Cycles 3 Transformative Technology Driving Profitability Across Segments 4 Leadership in First-to-Final Mile 5 A Leading Intermodal Business with Built-In Margin Growth 6 Fast-Growing Non-Asset Logistics Business 7 Well Positioned for Sustainable Growth 4

5 Iconic Large-Scale Diversified Transportation Services Provider Our formula for resiliency: a balanced business mix 2016 Revenue (xfsc) ($mm) Scale in all segments Ability to move freight between modes $6,007 Provides more options to drivers, increasing retention 779 Provides more options to shippers who want access to capacity and logistics solutions $3,752 $3,723 $3,573 Aligned and incentivized salesforce 3, , $1,830 3, $1,028 1,757 2,091 2,191 1, $ Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Truckload Intermodal Logistics Other Sources: SEC filings, public investor presentations and SNDR management estimates Notes: 1 Intersegment eliminations allocated across segments pro rata for revenue contribution 2 Fuel surcharge allocated across segments pro rata for revenue contribution and excluded to calculate revenue (excluding fuel surcharge) 3 Other revenue is net of intersegment eliminations 4 Includes fuel surcharge revenue. Peer 3 does not disclose fuel surcharge revenue 5

6 Diversity of Customers and End-Markets Served Supports Stable Growth Through Business Cycles Diverse End-Market Footprint With a Broadening Customer Base 2016 Revenue (xfsc) 1 Furniture & Floor Covering 5% Construction 4% Consumer Products Goods 11% Change in Customer Concentration 1 Food & Beverage 11% 59% General Merchandise 34% Transportation 3% Plastics 3% Chemicals 3% Auto 7% Electronics & Appliance 6% Freight Management 9% Paper 4% 51% 11% 12% 38% 30% #1 #10 #11 #20 All Others that Includes More than 200 of the Fortune 500 Sources: SEC filings, public investor presentations and SNDR management estimates Note: 1 Based on adjusted enterprise revenue (excluding fuel surcharge). See appendix for reconciliation 6

7 Transformation: Digitizing Our Value Chain $250mm technology investment differentiates us and enables optimized decisions that drive enhanced contribution STATIC CONTRIBUTION DYNAMIC CONTRIBUTION SUSPECT LEAD PROSPECT QUALIFY QUOTE ORDER EXECUTION BILLING CASH INTERNAL & EXTERNAL DATA SOURCES PREDICTIVE, PREVENTIVE, AND PRESCRIPTIVE ANALYTICS Transformation of culture and business process Feedback loops to enhance performance over time Significant driver of margin expansion Turns order takers to profit makers Driven by One Version of the Truth 7

8 Significant Scale in Each Core Business Operating Revenue (xfsc) ($mm) 1 $6, Operating Revenue (xfsc) 1 # of Trucks Truckload Revenue (xfsc) 1 17,548 11,722 9,529 7,100 4,706 na na Revenue (xfsc) ($mm) 1 $3,026 $3,752 $3,723 $3,573 $1,830 $1,028 $555 $2,091 $1,757 $1,356 $810 $555 $0 Peer 1 3 Peer Peer 6 Peer 4 Peer 5 Peer 6 Peer 2 Peer 1 Peer 4 Peer 5 Peer 6 Peer Intermodal Revenue (xfsc) Logistics Revenue (xfsc) 1 # of 84,594 Containers 2 29,300 17,653 9,131 na na na Revenue (xfsc) ($mm) 1 $3,472 Revenue (xfsc) ($mm) 1 $1,382 $2,191 $779 $738 $758 $319 $0 $0 $0 $417 $378 $218 $0 4 5 Peer 1 Peer 3 6 Peer 2 4 Peer Peer 5 Peer 6 Peer 3 Peer 1 Peer 4 Peer 2 Peer 5 Peer Sources: SEC filings, public investor presentations and SNDR management estimates Notes: 1 Revenue excludes fuel surcharge 2 Represents FY 2016 year end equipment count, Peer 5 and SNDR represent average FY 2016 equipment count 3 Represents adjusted enterprise revenue (excluding fuel surcharge) and net of intersegment eliminations. See appendix for reconciliation 4 Intersegment eliminations allocated across segments pro rata for revenue contribution 5 Fuel surcharge allocated across segments pro rata for revenue contribution and excluded to calculate revenue (excluding fuel surcharge) 6 Includes fuel surcharge. Peer 3 does not disclose fuel surcharge revenue 7 Represents truck brokerage and logistics operations 8 Represents non-reportable segment, which includes the Company's logistics and freight brokerage services, as well as support services 8

9 SPECIALTY STANDARD With Broadest Portfolio of Service Offerings in North America COMPREHENSIVE PORTFOLIO OF SERVICE OFFERINGS TRUCKLOAD INTERMODAL LOGISTICS Long-Haul Regional / Short-Haul Long-Haul Regional / Short-Haul DRY VAN BULK Chemical Energy Expedited OTHER SPECIALTY Specialty Van Flatbed Expedited FOR HIRE TEMPERATURE CONTROL Reefer White Glove Expedited Freeze Protection FINAL MILE+ / E-COMMERCE Threshold Multi-Stop Cross-Dock DEDICATED DOOR-TO-DOOR CONTAINER ON FLAT CAR (COFC) LONG-HAUL REGIONAL NORTH AMERICAN CROSS-BORDER Full Truckload LTL Intermodal BROKERAGE Temperature Control Flatbed Sole-Source SUPPLY CHAIN SERVICES (3PL) Supply Chain Management Supply Chain Design Supplier Management Procurement Cross Border IMPORT / EXPORT SERVICES Warehousing Port Drayage Transloading NORTH AMERICAN CROSS-BORDER / INTERNATIONAL FREIGHT: 9

10 Differentiated Offering From First to Final Mile Focus on First-to-Final Mile for difficult-to-handle products Delivering As Promised in a Multi-Channel World INTEGRATED PHYSICAL MOVES CLAIMS-FREE SERVICE END-TO-END VISIBILITY REVERSE LOGISTICS Schneider's portfolio of services virtually eliminates problems like dropped handoffs and high claims BUY NOW INCREASING DEMAND PORT PORT DRAY TRANSLOAD OVER THE ROAD / INTERMODAL DISTRIBUTION CENTER STORE PORT TO DOOR WITH WHITE GLOVE SERVICE HOME DELIVERY SIMPLEX Consumer Order Tracking Vendor and Customer Communication Inventory Control Reverse Logistics END-TO-END VISIBILITY Leader in E-Commerce Driven First-to-Final Mile Peer 7 Peer 1 Peer 4 Peer 2 Peer 5 Peer 6 Peer 8 First Mile Vertical Coverage Geographic Coverage Technology Claims Last Mile No Offering Comprehensive Offering Sources: Management estimates based on SEC filings and public investor presentations 10

11 Premium Intermodal Segment with Upside Potential Strong track record of growth and profitability with a clear path to margin expansion through transition to chassis ownership model Asset-Based Operations with Significant Scale Balanced National Network with Strong Eastern Core Door to door truck-like experience with company dray drivers and owned containers / chassis In leased to owned chassis conversion: lowering chassis cost by ~55% Economies of scale are key in Intermodal (only three relevant and profitable Intermodal providers) Significant growth opportunity: < 50% penetration of the addressable market, particularly in the East where the largest competitor does not enjoy a structural advantage Stockton Seattle Portland Reno San Bernardino Los Angeles Otay Edmonton Calgary Phoenix Denver Schneider Driver Location Rail Ramp Location Schneider Driver and Field Dispatch Location Laredo Minneapolis Kansas City Dallas Monterrey San Luis Potosi St. Paul Mexico City St. Louis Memphis Houston Green Bay Jackson Richland Toronto Greensboro Charlotte Atlanta Savannah Jacksonville Montreal Syracuse Milwaukee Boston North Baltimore Chambersburg Worcester Chicago Little Ferry/North Jersey Marion Philadelphia Cincinnati Baltimore Louisville Orlando Miami Portsmouth Strong East Coast Offering Rail Ramp Location BNSF CSX KCS/KCSM CN FEC NS Concentrate spend around two primary railroads (BNSF - West and CSX - East) to driver operational excellence and high levels of collaboration 11

12 Fast Growing Logistics Offering Complementing Our Asset-Based Network High return business with little incremental capital ~20% of Schneider s adjusted enterprise revenue (excluding fuel surcharge) Revenue (xfsc) ($mm) $588 $639 $738 Managed approximately $2bn in transportation spend and leveraged nearly 23,000 carriers in 2016 $467 Significant cross-selling opportunity Serves a large portion of the entire Schneider portfolio Growth strategy capitalizes on expertise in: Decision support technologies Collaborative solutions with assets Brokerage ~ Supply Chain Services (3PL) ~ Import / Export Services Generated ~$147mm in revenue in 2016 for our Truckload and Intermodal segments 12

13 Financial Highlights

14 Operational Excellence Translated into Financial Performance Key Takeaways from 2Q17 Enterprise revenue (xfsc) growth 6.5% for Q2; 5.8% for 1H17; all segments grew in 2Q and 1H17 year over year Truckload revenue per truck per week increased 2.9% for 2Q and Intermodal orders increased 10.6% for 2Q year over year Weak market conditions, inflationary driver costs, and reduced gain on sale of used equipment translated into reduced earnings against 'tough comps' Market conditions improved in the second quarter in excess of seasonal trends; market improvement combined with the impact of ELD regulations is expected to favorably impact 2H17 Strong cash position and balance sheet Continue to diversify end-markets and services 2Q17 / 1H17 Results (values in $mm except EPS) REVENUE Operating Adjusted Income (adj.) from Operations REVENUE (xfsc) Metric 1 2Q17 1H17 Operating Revenues $1,075 $2,082 $ $1, Revenue (xfsc) $983 $1,899 Adjusted Net Income Adjusted Diluted EPS Net Income (adj.) $68 $113 $22.57 $40 $63 EBITDA $0.23 $0.38 Transition to Intermodal 'owned chassis' model on track for December 2017 completion Adjusted EBITDA $0.14 $136 $249 $ Note: 1 See appendix for reconciliations 14

15 Consistent Track Record of Strong Financial Performance Adjusted Enterprise Revenue (xfsc) 1 Adjusted EBITDA 1 ($mm) ($mm) $3,004 $3,334 $3,588 $3,752 $387 $474 $529 $ Adjusted Income from Operations 1 Adjusted Net Income 1 ($mm) ($mm) $244 $293 $293 $136 $163 $158 $174 $ Note: 1 See appendix for reconciliations 15

16 30% 25% 20% 15% 10% 19% 17% 15% 13% 11% 9% 7% 5% Driven by Growth and Margin Expansion in Each Segment Revenue (xfsc) & Adjusted EBITDA Margin Results ($mm) $1,977 $2,091 Truckload $1,744 $1, % 19.1% 19.8% 16.5% % Revenue (xfsc) CAGR +270bps Operating Margin Change Operating Margin 2 : 7.9% 10.8% 11.0% 10.6% $665 $723 $790 $758 Intermodal 12.2% 9.6% 10.2% 10.2% % Revenue (xfsc) CAGR +16bps Operating Margin Change Operating Margin 2 : 5.9% 5.7% 7.4% 6.1% Logistics $738 $588 $639 $ % 4.2% 3.1% 3.2% % Revenue (xfsc) CAGR +126bps Operating Margin Change Operating Margin 2 : 2.9% 3.1% 4.0% 4.2% Notes: 1 Adjusted EBITDA margin is segment earnings plus segment depreciation & amortization divided by segment revenue (excluding fuel surcharge) 2 Operating margin is segment earnings divided by segment revenue (excluding fuel surcharge) 16

17 (%) (bps) Outperformance vs. Peer Group Through Economic Cycles Income from Operations CAGR Operating Ratio Improvement (bps) 1 '15 '16 Change (%) '15 '16 0% 1% (17%) 6% (27%) (35%) (37%) Change (35) 23 (209) (97) (400) (328) (266) (bps) (8) 5 6 (200) 0 (400) (600) (355) (413) (5) (4) (6) (6) (800) (10) (1,000) (989) 2 Peer 1 Peer 5 Peer 3 Peer 6 Peer 2 Peer 4 Peer 3 Peer 5 Peer 1 Peer 4 Peer 2 Peer 6 2 Sources: SEC filings and public investor presentations Notes: 1 Calculated using revenue (excluding fuel surcharge) 2 Represents adjusted income from operations. See appendix for reconciliations 17

18 Non-GAAP Reconciliations

19 Non-GAAP Reconciliation Adjusted Enterprise Revenue (excluding fuel surcharge) ($mm) Q17 1H17 Operating revenues 3,624 3,941 3,959 4,046 1,075 2,082 less: Fuel surcharge revenue Adjusted enterprise revenue (excluding fuel surcharge) 3,004 3,334 3,588 3, ,899 19

20 Non-GAAP Reconciliation Adjusted Income from Operations ($mm) Q17 1H17 Income from operations Litigation Goodwill impairment 2 6 Duplicate chassis costs Change in vacation policy 4 (7) Acquisition cost and other 5 3 WSL contingent consideration adjustment 6 (13) (13) Adjusted income from operations Notes: 1 Costs associated with certain lawsuits challenging compliance with aspects of the Fair Labor Standards Act (FLSA) 2 As a result of our annual goodwill impairment test as of December 31, 2015, we took an impairment charge for our Asia reporting unit 3 By the end of 2017, the Company expects Intermodal to have completed its migration to an owned chassis model, which requires the replacement of rented chassis with owned chassis. The existing lease requirements do not expire until December 31, Accordingly, the Company is adjusting its income from operations for rental costs related to idle chassis as rented units are replaced 4 Reflects a change to our vacation policy in 2013 in which the award of vacation days changed from being based on a vesting plan to an annual granting plan, resulting in a one-time benefit to income from operations 5 Costs related to the acquisitions of Watkins & Shepard and Lodeso and one-time preparation costs in connection with the IPO and initiating the transition from privately held to public company status 6 Related to a change in the fair value of a contingent liability, which reflected three year growth targets established by the sell prior to the close of the WSL acquisition 20

21 Non-GAAP Reconciliation Adjusted Net Income ($mm) Q17 1H17 Net income Litigation Goodwill impairment 2 6 Duplicate chassis costs Change in vacation policy 4 (7) Acquisition cost and other 5 3 WSL contingent consideration adjustment 6 (13) (13) Income tax adjustment 7 (1) (2) (11) (1) 5 4 Adjusted net income Notes: 1 Costs associated with certain lawsuits challenging compliance with aspects of the Fair Labor Standards Act (FLSA) 2 As a result of our annual goodwill impairment test as of December 31, 2015, we took an impairment charge for our Asia reporting unit 3 By the end of 2017, the Company expects Intermodal to have completed its migration to an owned chassis model, which requires the replacement of rented chassis with owned chassis. The existing lease requirements do not expire until December 31, Accordingly, the Company is adjusting its income from operations for rental costs related to idle chassis as rented units are replaced 4 Reflects a change to our vacation policy in 2013 in which the award of vacation days changed from being based on a vesting plan to an annual granting plan, resulting in a one-time benefit to income from operations 5 Costs related to the acquisitions of Watkins & Shepard and Lodeso and one-time preparation costs in connection with the IPO and initiating the transition from privately held to public company status 6 Related to a change in the fair value of a contingent liability, which reflected three year growth targets established by the sell prior to the close of the WSL acquisition 7 Income tax adjustment is based on determining the tax effect of each individual item presented in the table 21

22 Non-GAAP Reconciliation Adjusted EBITDA ($mm) Q17 YTD Net Income Provision for income taxes Interest expense Depreciation & amortization Other non-operating expenses Litigation Goodwill impairment 2 6 Duplicate chassis costs Change in vacation policy 4 (7) Acquisition cost and other 5 3 WSL contingent consideration adjustment 6 (13) (13) Adjusted EBITDA Notes: 1 Costs associated with certain lawsuits challenging compliance with aspects of the Fair Labor Standards Act (FLSA) 2 As a result of our annual goodwill impairment test as of December 31, 2015, we took an impairment charge for our Asia reporting unit 3 By the end of 2017, the Company expects Intermodal to have completed its migration to an owned chassis model, which requires the replacement of rented chassis with owned chassis. The existing lease requirements do not expire until December 31, Accordingly, the Company is adjusting its income from operations for rental costs related to idle chassis as rented units are replaced 4 Reflects a change to our vacation policy in 2013 in which the award of vacation days changed from being based on a vesting plan to an annual granting plan, resulting in a one-time benefit to income from operations 5 Costs related to the acquisitions of Watkins & Shepard and Lodeso and one-time preparation costs in connection with the IPO and initiating the transition from privately held to public company status 6 Related to a change in the fair value of a contingent liability, which reflected three year growth targets established by the sell prior to the close of the WSL acquisition 22

23 Non-GAAP Reconciliation Adjusted Diluted Earnings per Share 2Q17 1H17 Diluted earnings per share $0.27 $0.42 Non-GAAP adjustments, tax effected (0.04) (0.04) Adjusted diluted earnings per share $0.23 $