Transportation company Schneider (NYSE:SNDR) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 6.3% year on year to $1.40 billion. Its non-GAAP profit of $0.16 per share was 15.3% above analysts’ consensus estimates.
Revenue: $1.40 billion vs analyst estimates of $1.40 billion (6.3% year-on-year growth, in line)
Adjusted EPS: $0.16 vs analyst estimates of $0.14 (15.3% beat)
Adjusted EBITDA: $154.8 million vs analyst estimates of $145.8 million (11% margin, 6.2% beat)
Management lowered its full-year Adjusted EPS guidance to $0.88 at the midpoint, a 16.7% decrease
Operating Margin: 3%, in line with the same quarter last year
Free Cash Flow was -$5.4 million compared to -$14.3 million in the same quarter last year
Market Capitalization: $3.77 billion
“We delivered results for the quarter in line with our expectations while navigating the fluid operating environment,” said Mark Rourke, President and Chief Executive Officer of Schneider.
Company Overview
Employing thousands of drivers across the country to make deliveries, Schneider (NYSE:SNDR) makes full truckload and intermodal deliveries regionally and across borders.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, Schneider’s 2.8% annualized revenue growth over the last five years was sluggish. This fell short of our benchmarks and is a tough starting point for our analysis.
Schneider Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Schneider’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 8.5% annually. Schneider isn’t alone in its struggles as the Ground Transportation industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.
Schneider Year-On-Year Revenue Growth
We can better understand the company’s revenue dynamics by analyzing its most important segments, Truckload and Logistics, which are 43.8% and 23.7% of revenue. Over the last two years, Schneider’s Truckload revenue (road freight) was flat while its Logistics revenue (supply chain, warehousing) averaged 14.1% year-on-year declines.
This quarter, Schneider grew its revenue by 6.3% year on year, and its $1.40 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 9.6% over the next 12 months, an improvement versus the last two years. This projection is noteworthy and suggests its newer products and services will fuel better top-line performance.
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Operating Margin
Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Schneider was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.7% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
Analyzing the trend in its profitability, Schneider’s operating margin decreased by 3.3 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Schneider’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.
In Q1, Schneider generated an operating profit margin of 3%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for Schneider, its EPS declined by 10.3% annually over the last five years while its revenue grew by 2.8%. This tells us the company became less profitable on a per-share basis as it expanded.
Schneider Trailing 12-Month EPS (Non-GAAP)
We can take a deeper look into Schneider’s earnings to better understand the drivers of its performance. As we mentioned earlier, Schneider’s operating margin was flat this quarter but declined by 3.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Schneider, its two-year annual EPS declines of 46.7% show it’s continued to underperform. These results were bad no matter how you slice the data.
In Q1, Schneider reported EPS at $0.16, up from $0.11 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Schneider’s full-year EPS of $0.74 to grow 32.4%.
Key Takeaways from Schneider’s Q1 Results
We enjoyed seeing Schneider beat analysts’ EPS expectations this quarter despite in line revenue. On the other hand, its full-year EPS guidance was lowered and missed. Overall, this print could have been better. The stock remained flat at $21.52 immediately following the results.
Schneider had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
