Transportation company Schneider (NYSE: SNDR) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 10.4% year on year to $1.45 billion. Its GAAP profit of $0.11 per share was 45.2% below analysts’ consensus estimates.

Is now the time to buy SNDR? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Schneider’s third quarter was marked by a strong top-line performance but significant bottom-line weakness, triggering a notable negative market reaction. Management attributed the quarter’s underwhelming profitability to an unexpected $16 million increase in claims-related costs, primarily stemming from adverse developments on prior year insurance claims. CEO Mark Rourke described the freight environment as “sub-seasonal,” noting that initial strength in July faded through August and September due to softer volumes and retreating spot rates. He acknowledged, “The strength faded as the quarter progressed with August and September market trends largely sub-seasonal.”

Looking ahead, Schneider’s outlook is driven by continued execution on structural cost savings, productivity initiatives, and asset efficiency, but management remains cautious given persistent macro uncertainty. The company expects supply-side catalysts such as regulatory changes and reduced new truck production to accelerate industry capacity rationalization, which could eventually support improved market dynamics. CFO Darrell Campbell noted, “Our organic growth aligned with our strategic initiatives is our first priority, but our asset productivity efforts enable us to execute on this growth in a capital-efficient way.” Management also highlighted ongoing investments in artificial intelligence and automation to bolster productivity and support margin recovery.

Key Insights from Management’s Remarks

Management attributed the quarter’s mixed financial results to elevated claims costs, sub-seasonal freight demand, and ongoing productivity actions, while highlighting progress in intermodal growth and AI-driven efficiency gains.

• Elevated claims costs: Schneider faced a $16 million increase in claims-related expenses, primarily from unfavorable developments on prior insurance years. Management stated these costs were non-recurring and do not expect a repeat in the fourth quarter, but overall insurance inflation remains a concern.

• Sub-seasonal freight demand: CEO Mark Rourke described a freight environment where an initial uptick in July gave way to softer conditions in August and September, with modest peak activity and lower-than-usual seasonal strength. This led to subdued volumes across dedicated and network businesses.

• Intermodal volume growth: Despite the challenging environment, Schneider achieved 10% volume growth in its intermodal segment, outpacing the industry. The company attributed this to strong service offerings, especially in Mexico and the eastern U.S., where volumes grew over 50% and achieved the highest rates since 2022.

• AI and productivity initiatives: Management emphasized the role of technology and artificial intelligence, particularly in the logistics segment, to drive productivity improvements. The company reported double-digit gains in orders handled per broker and highlighted broader deployment of AI tools across support functions.

• Cost reduction and capital discipline: Schneider continued to execute on a structural cost savings plan targeting over $40 million, including headcount reductions and asset efficiency efforts. The company paused certain capital expenditures and focused on reallocating resources from lower-performing operations to higher-margin opportunities.

Drivers of Future Performance

Schneider’s outlook centers on capitalizing on supply-side tightening, continued productivity gains, and targeted growth in specialized, higher-margin segments, while navigating persistent demand uncertainty.

• Supply rationalization tailwinds: Management believes regulatory enforcement, reduced non-domiciled CDL renewals, and a year of Class 8 truck production below replacement levels will accelerate industry capacity reductions. CEO Mark Rourke said, “We believe these have the potential to drive more supply rationalization than the impact we saw in 2017 from requiring electronic logging devices.”

• Productivity and cost initiatives: The company is ramping up AI-driven automation and process improvements, aiming to structurally lower its cost to serve. Management expects the $40 million annualized cost savings target to be achieved through increased asset utilization, headcount reductions, and improved operating ratios, although some benefits will be more pronounced in 2026.

• Dedicated and intermodal segment focus: Schneider is shifting its dedicated pipeline toward specialty equipment and services, aiming for higher stickiness and better margin profiles. In intermodal, management expects continued above-market volume growth and increased efficiency without significant investment in additional equipment.

Catalysts in Upcoming Quarters

In the coming quarters, we will be monitoring (1) the pace and scale of industry capacity rationalization resulting from regulatory enforcement and truck production trends, (2) progress on claims cost containment and the durability of recent productivity gains, and (3) sustained above-market volume growth in intermodal and the dedicated segment’s shift toward higher-margin specialty contracts. Advances in AI deployment and execution on structural cost savings will also be key to margin recovery.

Schneider currently trades at $20.77, down from $22.63 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).

High Quality Stocks for All Market Conditions

Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.

The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.