Schneider National registers for public offering
Profit growth strong at large trucking firm
Schneider National Inc. registered with securities regulators Thursday for a public stock offering that will keep control of the trucking company in the hands of the Schneider family.
The prospectus filed by the Green Bay-based carrier, the country’s largest privately held trucking outfit, sketches out a dual-class stock plan that will give shares held by family members 10 times the voting power of the shares that trade publicly.
The prospectus calls for raising up to $100 million in the IPO, but notes that the figure is an estimate provided to compute the amount of the registration fee.
The filing doesn’t provide a date for the IPO, other than to say it will be “as soon as practicable.” Underwriting the offering are seven investment banks led by Morgan Stanley & Co.
Schneider’s prospectus provides a glimpse inside a company that until now has disclosed little about its finances. The picture that emerges is one of relatively modest revenue growth in recent years, but surging profits.
In 2015, Schneider took in $3.96 billion in revenue – up about 16% from 2011.
Over that same period, though, net income nearly doubled – from $72.3 million in 2011 to $140.9 million last year.
Swift Transportation Co., another large carrier that, like Schneider, operates in the truckload segment of the industry, posted similar growth in profits. But net income at competitor J.B. Hunt Transport Services Inc. rose by only a third over the four years.
Hunt, however, enjoyed revenue growth of almost 37% – more than double Schneider’s growth, and three times that of Swift.
Swift, Schneider and Hunt are the country’s largest truckload carriers – companies that fill a trailer with a single load of freight and often haul it
over long distances – according to the Journal of Commerce.
Schneider’s performance through the first nine months of 2016 outpaced its 2015 results. Revenue was up 1.5%, to $2.98 billion. Net income rose 17%, to $109.1 million.
The company fields 10,800 of its own trucks and another 2,800 operated for it by individual owners. About 19,300 people work for Schneider, including about 2,700 based at the headquarters just outside Green Bay.
Schneider said in its prospectus that it has some 10,000 customers. But 30% of its business comes from 10 shippers. In alphabetical order, they are Family Dollar, Ford Motor Co., Georgia-Pacific, Home Depot, Kimberly-Clark, Lowe’s, PepsiCo, Proctor & Gamble, Target and Walmart.
Besides truckload hauling – Schneider’s largest business – the company has a $789 million intermodal operation and a $638 million logistics segment.
The firm runs 6.2 million square feet of warehouse space, handles cross-border shipments to Canada and Mexico, and has a small operation in China.
Recognized on the road by its orange trucks, Schneider was founded in 1935 by A.J. “Al” Schneider. By 1971, his son, Don, was running the business and greatly expanded the company amid the lifting of federal regulations on the industry.
Don Schneider, who before his death in 2012 suffered from Alzheimer’s
disease, stepped down as president and CEO in 2002.
He was succeeded by Chris Lofgren, a CEO with technical expertise and a doctorate in industrial and systems engineering. Lofgren received $3.3 million in total compensation for 2015, according to Thursday’s filing.
Last June, Schneider announced its first acquisitions in 10 years, purchasing two companies with experience in bringing bulk, heavy products like furniture and kitchen appliances to consumers who order them online. The company said in its prospectus that it views that specialty market as a growth area, thanks in part to the increase in online shopping.
Noël Perry of trucking industry consulting firm FTR said a possible factor driving the Schneider IPO is that Don Schneider’s five children have shown relatively little interest in running the company.
“So converting some of that stock into a liquid asset that they could reinvest someplace else, or spend – whatever they want to do with it – makes sense,” Perry said.
Perry, who was a corporate economist at Schneider from 2003 to 2007, also said Lofgren “always has some creative growth idea in the back of his mind,” and that management might want money for a new initiative.
In the filing, Schneider said it plans to use the proceeds of the IPO for “general corporate purposes, including potential acquisitions, repayment of indebtedness and capital expenditures.”
The company plans to trade as “SNDR” on the New York Stock Exchange.