Schneider National, Inc.

Previous wording

In this section of our report, we present the following non-GAAP financial measures: (1) revenues (excluding fuel surcharge), (2) adjusted income from operations, (3) adjusted operating ratio, (4) adjusted net income, (5) adjusted EBITDA, and (6) free cash flow. We also provide reconciliations of these measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Current wording

In this section of our report, we present the following non-GAAP financial measures: (1) revenues (excluding fuel surcharge), (2) adjusted income from operations, (3) adjusted total operating expenses, net of fuel surcharge revenues, (4) adjusted operating ratio, (5) adjusted net income, (6) adjusted EBITDA, and (7) free cash flow. We also provide reconciliations of these measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.

Previous wording

Management believes the use of each of these non-GAAP measures assists investors in understanding our business by (1) removing the impact of items from our operating results that, in our opinion, do not reflect our core operating performance, (2) providing investors with the same information our management uses internally to assess our core operating performance, and (3) presenting comparable financial results between periods. In addition, in the case of revenues (excluding fuel surcharge), we believe the measure is useful to investors because it isolates volume, price, and cost changes directly related to industry demand and the way we operate our business from the external factor of fluctuating fuel prices and the programs we have in place to manage such fluctuations. Fuel-related costs and their impact on our industry are important to our results of operations, but they are often independent of other, more relevant factors affecting our results of operations and our industry. Free cash flow is used as a measure to assess overall liquidity and does not represent residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt.

Current wording

Management believes the use of each of these non-GAAP measures assists investors in understanding our business by (1) removing the impact of items from our operating results that, in our opinion, do not reflect our core operating performance, (2) providing investors with the same information our management uses internally to assess our core operating performance, and (3) presenting comparable financial results between periods. In addition, in the case of revenues (excluding fuel surcharge) and adjusted total operating expenses, net of fuel surcharge revenues, we believe these measures are useful to investors because they isolate volume, price, and cost changes directly related to industry demand and the way we operate our business from the external factor of fluctuating fuel prices and the programs we have in place to manage such fluctuations. Fuel-related costs and their impact on our industry are important to our results of operations, but they are often independent of other, more relevant factors affecting our results of operations and our industry. Free cash flow is used as a measure to assess overall liquidity and does not represent residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt.

Previous wording

Although we believe these non-GAAP measures are useful to investors, they have limitations as analytical tools and may not be comparable to similar measures disclosed by other companies. You should not consider the non-GAAP measures in this report in isolation or as substitutes for, or alternatives to, analysis of our results as reported under GAAP. The exclusion of unusual or infrequent items or other adjustments reflected in the non-GAAP measures should not be construed as an inference that our future results will not be affected by unusual or infrequent items or by other items similar to such adjustments. Our management compensates for these limitations by relying primarily on our GAAP results in addition to using the non-GAAP measures.

Current wording

Although we believe these non-GAAP measures are useful to investors, they have limitations as analytical tools and may not be comparable to similar measures disclosed by other companies. You should not consider the non-GAAP measures in this report in isolation or as substitutes for, or alternatives to, analysis of our results as reported under GAAP. The exclusion of unusual or infrequent items or other adjustments reflected in the non-GAAP measures should not be construed as an inference that our future results will not be affected by unusual or infrequent items or other items similar to such adjustments. Our management compensates for these limitations by relying primarily on our GAAP results in addition to using the non-GAAP measures.

Previous wording

(3)We define “adjusted operating ratio” as operating expenses, adjusted to exclude material items that do not reflect our core operating performance, divided by revenues (excluding fuel surcharge). Included below is a reconciliation of operating ratio, which is the most directly comparable GAAP measure, to adjusted operating ratio. Excluded items for the periods shown are explained below under our explanation of “adjusted income from operations.”

Current wording

(4)We define “adjusted operating ratio” as adjusted total operating expenses, net of fuel surcharge revenues, divided by revenues (excluding fuel surcharge). Included below is a reconciliation of operating ratio, which is the most directly comparable GAAP measure, to adjusted operating ratio. Excluded items for the periods shown are explained below under our explanation of “adjusted income from operations.”

Previous wording

(4)We define “adjusted net income” as net income, adjusted to exclude material items that do not reflect our core operating performance. Included below is a reconciliation of net income, which is the most directly comparable GAAP measure, to adjusted net income. Excluded items for the periods shown are explained below under our explanation of “adjusted income from operations.”

Current wording

(5)We define “adjusted net income” as net income, adjusted to exclude material items that do not reflect our core operating performance. Included below is a reconciliation of net income, which is the most directly comparable GAAP measure, to adjusted net income. Excluded items for the periods shown are explained below under our explanation of “adjusted income from operations.”

Previous wording

(5)We define “adjusted EBITDA” as net income, adjusted to exclude net interest expense, our provision for income taxes, depreciation and amortization, and certain items that do not reflect our core operating performance. Included below is a reconciliation of net income, which is the most directly comparable GAAP measure, to adjusted EBITDA.

Current wording

(6)We define “adjusted EBITDA” as net income, adjusted to exclude net interest expense, our provision for income taxes, depreciation and amortization, and certain items that do not reflect our core operating performance. Included below is a reconciliation of net income, which is the most directly comparable GAAP measure, to adjusted EBITDA.

Previous wording

(6)We define “free cash flow” as net cash provided by operating activities less net cash used for capital expenditures. Included below is a reconciliation of net cash provided by operating activities, which is the most directly comparable GAAP measure, to free cash flow.

Current wording

(7)We define “free cash flow” as net cash provided by operating activities less net cash used for capital expenditures. Included below is a reconciliation of net cash provided by operating activities, which is the most directly comparable GAAP measure, to free cash flow.

Previous wording

(2)Advisory, legal, and accounting costs related to the acquisition of M&M in 2023.

Current wording

(1)Advisory, legal, and accounting costs related to the acquisition of Cowan.

Previous wording

(3)Amortization expense related to intangible assets acquired through recent business acquisitions. As we finalized our purchase accounting adjustments related to intangible assets, we made the decision to exclude the related amortization expense from adjusted income from operations and adjusted net income beginning in the fourth quarter of 2023. Although intangible assets contribute to our revenue generation, the amortization of intangible assets does not directly relate to transportation services provided to our customers.

Current wording

(2)Amortization expense related to intangible assets acquired through recent business acquisitions. Although intangible assets contribute to our revenue generation, the amortization of intangible assets does not directly relate to transportation services provided to our customers.

Previous wording

•and a $3.1 million decrease in Truckload segment revenues (excluding fuel surcharge) primarily related to decreases in Network volume, offset by Dedicated growth;

Current wording

•a $75.6 million increase in Truckload segment revenues (excluding fuel surcharge) due to Dedicated volume growth driven by the Cowan acquisition and increased Network and Dedicated rates, offset by decreased Network volumes;

Previous wording

•and a $25.1 million decrease in Intermodal segment revenues (excluding fuel surcharge) due to a decrease in revenue per order;

Current wording

•a $13.2 million increase in Intermodal segment revenues (excluding fuel surcharge) as both volume and revenue per order increased;

Previous wording

•a $64.6 million decrease in fuel surcharge revenues resulting from lower fuel prices;

Current wording

•a $12.4 million decrease in fuel surcharge revenues related to lower fuel prices in 2025;

Previous wording

Enterprise operating ratio (operating expenses as a percentage of operating revenues) increased on both a GAAP and adjusted basis when compared to the third quarter of 2023.

Current wording

Enterprise operating ratio (operating expenses as a percentage of operating revenues) decreased on both a GAAP and adjusted basis when compared to the first quarter of 2024, for the same reasons listed above.

Previous wording

•Purchased transportation decreased $49.0 million, or 9%, quarter over quarter, resulting from declines in owner-operator purchased transportation costs within Truckload due to a reduction in owner-operator capacity and reduced third-party carrier costs within Logistics due to lower brokerage volume and purchased transportation costs per order.

Current wording

•Purchased transportation decreased $23.3 million, or 5%, quarter over quarter, resulting from declines in owner-operator capacity within Truckload (partially offset by the impacts of the Cowan acquisition) and lower third-party carrier costs within Logistics driven by lower purchased transportation costs per order and volume, partially offset by the Cowan acquisition.

Previous wording

•Fuel and fuel taxes for company trucks decreased $21.4 million, or 18%, quarter over quarter, due to a lower cost per gallon, partially offset by an increase in company driver miles. A significant portion of fuel costs are recovered through our fuel surcharge programs.

Current wording

•Fuel and fuel taxes for company trucks increased $3.6 million, or 3%, quarter over quarter, due to an increase in company driver miles (due to the Cowan acquisition), offset by a lower cost per gallon. A significant portion of fuel costs are recovered through our fuel surcharge programs.

Previous wording

•Depreciation and amortization increased $5.1 million, or 5%, quarter over quarter, mainly due to additional depreciation expense incurred as a result of trailer and tractor growth within Dedicated and the cumulative impacts from the increased cost of equipment.

Current wording

•Depreciation and amortization increased $10.8 million, or 11%, quarter over quarter, mainly due to additional depreciation expense incurred as a result of trailer and tractor growth within Dedicated (from the Cowan acquisition).

Previous wording

•Insurance expense increased $9.8 million, or 37%, quarter over quarter, driven by an increase in auto liability insurance costs related to an increase in premiums and claims development.

Current wording

•Insurance expense increased $10.1 million, or 32%, quarter over quarter, driven by increased premiums (due to the Cowan acquisition) and claims development.

Previous wording

Total other expenses increased $3.2 million in the third quarter of 2024 compared to the same quarter in 2023 mainly due to a pre-tax net gain on our equity investments of $2.3 million in 2023.

Current wording

Total other expenses increased $3.3 million in the first quarter of 2025 compared to the same quarter in 2024 mainly due to an increase in our interest expense, offset by increased interest income.

Previous wording

Our provision for income taxes decreased $1.8 million, or 17%, in the third quarter of 2024 compared to the same quarter in 2023, primarily due to lower taxable income. The effective income tax rate was 22.1% for the three months ended September 30, 2024 compared to 22.8% for the same quarter of 2023. Our provision for income taxes may fluctuate in future periods to the extent tax laws and regulations change.

Current wording

Our provision for income taxes increased $2.5 million, or 40%, in the first quarter of 2025 compared to the same quarter in 2024, primarily due to higher taxable income. The effective income tax rate was 25.0% for the three months ended March 31, 2025 and 2024. Our provision for income taxes may fluctuate in future periods to the extent tax laws and regulations change.

Previous wording

(2)Includes company and owner-operator trucks.

Current wording

(2)Includes company and owner-operator trucks at the end of the period.

Previous wording

(2)Calculated using rail revenues excluding fuel surcharge and revenue in transit, consistent with how revenue is reported internally for segment purposes.

Current wording

(3)Calculated using rail revenues excluding fuel surcharge and revenue in transit, consistent with how revenue is reported internally for segment purposes.

Previous wording

Intermodal income from operations increased $4.6 million, approximately 41%, in the third quarter of 2024 compared to the same quarter in 2023. Factors contributing to the increase include the revenue impacts cited above and a decrease in rail related and dray execution costs, combined with other cost control measures.

Current wording

Intermodal income from operations increased $6.8 million, approximately 97%, in the first quarter of 2025 compared to the same quarter in 2024. Factors contributing to the increase include the revenue impacts cited above and a decrease in rail related costs.

Previous wording

Logistics revenues (excluding fuel surcharge) decreased $94.2 million, approximately 9%, in the nine months ended September 30, 2024 compared to the same period in 2023. This was mainly the result of decreases in revenue per order and volume within our brokerage business, as well as reduced port dray revenues due to improved port fluidity in 2024.

Current wording

Logistics revenues (excluding fuel surcharge) increased $7.1 million, approximately 2%, in the first quarter of 2025 compared to the same quarter in 2024 due to the acquisition of Cowan, offset by decreases in revenue per order and volume within our brokerage business.

Previous wording

Our primary uses of cash are working capital requirements, capital expenditures, dividend payments, share repurchases, and debt service requirements. Additionally, we may use cash for acquisitions and other investing and financing activities. Working capital is required principally to ensure we are able to run the business and have sufficient funds to satisfy maturing short-term debt and operational expenses. Our capital expenditures consist primarily of transportation equipment and information technology.

Current wording

Our primary uses of cash are working capital requirements, capital expenditures, lease equipment, dividend payments, share repurchases, and debt service requirements. Additionally, we may use cash for acquisitions and other investing and financing activities. Working capital is required principally to ensure we are able to run the business and have sufficient funds to satisfy maturing short-term debt and operational expenses. Our capital expenditures consist primarily of transportation equipment and information technology.

Previous wording

Historically, our primary source of liquidity has been cash flow from operations. In addition, we have a $250.0 million revolving credit facility maturing in November 2027 and a $200.0 million receivables purchase agreement maturing in May 2027, for which our combined available capacity as of September 30, 2024 was $305.7 million. Our revolving credit facility also allows us to request an additional increase in total commitment by up to $150.0 million. We anticipate that cash generated from operations, together with amounts available under our credit facilities, will be sufficient to meet our requirements for the foreseeable future. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that we will obtain these funds through additional borrowings, equity offerings, or a combination of these potential sources of liquidity. Our ability to fund future operating expenses and capital expenditures, as well as our ability to meet future debt service obligations or refinance our indebtedness, will depend on our future operating performance, which will be affected by general economic, financial, and other factors beyond our control.

Current wording

Historically, our primary source of liquidity has been cash flow from operations. In addition, we have a $250.0 million revolving credit facility maturing in November 2027 and a $200.0 million receivables purchase agreement maturing in May 2027, for which our combined available capacity as of March 31, 2025 was $234.5 million. Our revolving credit facility also allows us to request an additional increase in total commitment by up to $150.0 million. We anticipate that cash generated from operations, together with amounts available under our credit facilities, will be sufficient to meet our requirements for the foreseeable future. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that we will obtain these funds through additional borrowings, equity offerings, or a combination of these potential sources of liquidity. Our ability to fund future operating expenses and capital expenditures, as well as our ability to meet future debt service obligations or refinance our indebtedness, will depend on our future operating performance, which will be affected by general economic, financial, and other factors beyond our control.

Previous wording

Net cash provided by operating activities increased $0.5 million in the first nine months of 2024 compared to the same period in 2023. The increase in cash provided by working capital was largely offset by a decrease in net income adjusted for various noncash items. Working capital changes were driven by increases in cash provided by receivables, other liabilities, claims reserves, and other assets, partially offset by an increase in cash used for payables.

Current wording

Net cash provided by operating activities decreased $5.9 million in the first three months of 2025 compared to the same period in 2024. The increase in cash used by working capital was largely offset by an increase in net income adjusted for various noncash items. Working capital changes were driven by increases in cash used by receivables due to increases in trade receivables, other liabilities related timing of payments for wage and incentive accruals, and claims reserves from changes in claims paid compared to reserve activity. These amounts were partially offset by a decrease in cash used for other assets resulting from changes in prepaid balances and an increase in cash provided by payables.

Previous wording

Net cash used in investing activities decreased $489.7 million, approximately 63%, in the first nine months of 2024 compared to the same period in 2023. The decrease in cash used was primarily related to decreases in cash used for acquisitions, net capital expenditures, purchases of lease equipment, investments in equity securities, and purchases of marketable securities.

Current wording

Net cash used in investing activities increased $24.6 million, approximately 24%, in the first three months of 2025 compared to the same period in 2024. The increase in cash used was primarily related to increases in cash used for the purchase of lease equipment and the issuance of a note receivable, partially offset by a decrease in net capital expenditures.

Previous wording

Net capital expenditures decreased $153.7 million in the first nine months of 2024 compared to the same period in 2023. The decrease was driven by a $172.5 million decrease in purchases of transportation equipment mainly due to higher spend on growth and replacement equipment in 2023. Proceeds from sale of property and equipment decreased year over year primarily due to lower proceeds per sale.

Current wording

Net capital expenditures decreased $14.8 million in the first three months of 2025 compared to the same period in 2024. The decrease was driven by an $8.9 million decrease in purchases of transportation equipment and a decrease in other property and equipment spend.

Previous wording

Net cash used in financing activities increased $86.4 million, approximately 237%, in the first nine months of 2024 compared to the same period in 2023. The increase was due to $35.0 million of net payments under revolving credit agreements during the first nine months of 2024 compared to $91.0 million of net proceeds in the same period in 2023. Additionally, proceeds from long-term debt decreased $50.0 million year over year. These amounts were partially offset by decreases in payments on long-term debt of $69.3 million and treasury stock repurchases of $21.5 million.

Current wording

Net cash provided by financing activities increased $54.2 million, approximately 177%, in the first three months of 2025 compared to the same period in 2024. The increase was due to proceeds of $100.0 million under the delayed-draw term loan and $50.0 million under revolving credit agreements, partially offset by a $95.0 million payment on unsecured senior notes during the first three months of 2025 compared to $5.0 million of net proceeds in the same period in 2024. Additionally, repurchases of treasury stock decreased $4.7 million when compared to the same period in 2024.

Previous wording

See the disclosure under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations” in our Annual Report on Form 10-K for the year ended December 31, 2023 for our contractual obligations as of December 31, 2023. There were no material changes to our contractual obligations during the nine months ended September 30, 2024.

Current wording

See the disclosure under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations” in our Annual Report on Form 10-K for the year ended December 31, 2024 for our contractual obligations as of December 31, 2024. There were no material changes to our contractual obligations during the three months ended March 31, 2025.

Previous wording

We have reviewed our critical accounting policies and considered whether new critical accounting estimates or other significant changes to our accounting policies require additional disclosures. We have found that the disclosures made in our Annual Report on Form 10-K for the year ended December 31, 2023 are still current and that there have been no significant changes.

Current wording

We have reviewed our critical accounting policies and considered whether new critical accounting estimates or other significant changes to our accounting policies require additional disclosures. We have determined that the disclosures made in our Annual Report on Form 10-K for the year ended December 31, 2024 remain current as there have been no significant changes.