Schneider National, Inc. (SNDR) Earnings Call Transcript & Summary

Why don't we kick off our next session. So here joining us we have Schneider National, obviously, Prominent trucking company, but a number of other areas of business as well that we'll be digging into. And we have Mark Rourke, CEO; and Darrell Campbell, relatively new CFO. Darrell, how long have you been?

2.5 years.

Okay. All right.

I can't use the new card anymore.

Yes. Okay. Fair enough. It's like fair. I guess, yes, we've bounced around a couple of...

[indiscernible] like dog years.

Yes. Exactly. That's -- and it's been a tough market. So you may be experiencing the upswing there.

So there have been a lot of interesting signals in the market. I think a lot of folks in the room are going to care about what are you seeing in the broader market, right? We've seen some strength of better than normal seasonality, I think, in first quarter some of that related to storms, but speak about those dynamics and what you're seeing in the marketplace from a supply-demand standpoint.

Yes. Actually, a lot is going on for sure, right? And we've been talking about the capacity levels for several quarters and some of what we were calling shadow capacity. And then when you see some enforcement activity going on to get after some of those issues, which we can talk about, and you couple that with a little bit of demand. I think it really demonstrated that the supply-demand equilibrium is maybe a little closer than people were expecting. And certainly, weather highlighted that. But here we are pretty well removed from the weather, and we're still seeing spot pricing being very attractive, particularly in the Midwestern northeastern geographies. And so the staying power of that, I think, is a very good signal. And I also think we have an administration and regulatory body that is serious about public safety, taking the actions necessary around the areas of CDL qualifications, school qualifications, ELD providers and compliance and then certainly combine that with the things like non-domiciled CDL, ELP, all of those, I think, are starting to have that effect that we all expected, and it's not going to be like a big bang, maybe like we experienced with the ELD implementation way back in '16 or '17. But I think we've just seen a steady and consistent attrition of capacity and because most of that activity is on the side of -- for higher carriers. If you think of 3.2 million or 3.5 million CDL holders, half of that is on the private fleet. Half of that is on the for hire. It's actually in our view, most of that change is happening in the for-hire space. So it's almost going to get doubling effect when you see the numbers. And so that and maybe some encouragement a little bit on the industrial side, which we've been lagging for a few years now with some of the fiscal policy, some of the tax bills and you saw the ISM pop for the first time in a long time, all those things are, in our view, just a much more constructive setup that we came into 2025 with relative to our discussions with customers and where we are in the beginning of the allocation season. So a lot going on. I think a lot of people try to sift through what does all that mean. I think from our view, from a pricing and from how we think about commitments I think we have a much more constructive environment.

One of the things that's been interesting to me, Mark, when we go out and talk to carriers, it sounds like there's a lot of optimism on the supply constraints, some of the government enforcement actions. But it sounds like the demand environment is still a little uncertain. What's your sense on that? You mentioned some of these initiatives, the legislation coming around, retail inventories maybe looking a little bit more balanced. What's your sense on what the demand picture looks like independent of the supply considerations?

Yes. I think the demand picture has probably been surprising people because it's been very steady. The consumer has been very resilient. We haven't seen a lot of ups and downs relative to demand, I would consider it in the last 5, 6 quarters, very, very stable. You're right. I do think the inventory levels have been addressed. So we don't talk to many customers that are sitting there and thinking they've got more inventory work to do. It's either at or below kind of where they would be historically. So I think that's again, another one of those constructive elements. And then as you mentioned, we have to see maybe a wait-and-see story on the industrial side a little bit. But any level of activity there is very friendly to trucking particularly when we get into the manufacturing health here because not only it's the finished good move, which we get on a finished product that may come to the port or come through -- up through Mexico, an industrial recovery gives us the intermediate moves, the raw materials, the intermediate steps. So it's a very healthy development for trucking. The fact that we haven't had that in 3 years, I think is a very good sign if we can see some continued momentum there.

So are you actively seeing a more supportive demand environment in terms of the customer conversations that you're having? Or you're just saying some of these things are -- there's potential?

Yes. I think those are probably a little bit more forward-looking statements. I think our customers are trying to get what's real and what's not in their world, right? Everybody has been under the same pressure to get inventories right. And I think the fact that we're not carrying that inventory, I think, can be a catalyst for a replenishment cycle, not calling that just yet. But I think all those signs are much more positive, I think back to a year ago, right? We were still dealing with more of the capacity overhang. And I think that's what's probably first and foremost on the mind of the shipper is what do I have at risk? I think the brokers are the first ones to feel that. I think you're seeing them come under tremendous stress on the contract business. We're seeing a lot more mini bids, things that suggest that customers are trying to get things back up in the contract world that are holding together as much as perhaps we would have been a year ago.

Got it. So let's talk about the supply side now. Some of the government enforcement actions, maybe give some parameters around the impact that you think it's having? I know there have been a lot of estimates out there, 5% to 10% of capacity potentially being vulnerable to being removed from. Do you see that as a realistic target? Do you think it could be upside to that? And you mentioned and I like that delineation within the for-hire market, it probably has an outsized impact. So how do you see that kind of impact flowing through?

Yes, absolutely. And first of all, we've had the pleasure of being with the regulators a few times as they're listening to the industry and trying to understand from the industry's perspective what's going on. And there are some very, very competent people at the DOT and Sean Duffy and crew have done a terrific job, and they give them the mandate and the resources to do it. So sometimes when we think about government, are they as effective as their programs? And I would tell you, in this case, it is a very competent staff with a mission to accomplish. And you're seeing it in a consistent drumbeat week-over-week, whether it's the ELDs that are being that are not compliant, being pulled, whether it's self-certification of truck driving schools being pulled, the actions are -- and the enforcement is backing up the words. And so I think that's why we're actually feeling it in the marketplace because even the threat of enforcement has some self-selection that people make. And I think one of the underappreciated elements of this, we talk a lot about what's capacity in the industry, but it's also impacting the top of the funnel on the replacement capacity, if you really hone in on the school networks, they're in a much different condition this year relative to number of people available, what's coming through, where the funding is at. So we're seeing pressure on both the school at the top of the funnel of the CDL creators and the folks that are in the industry coming out. So that's a pretty powerful combination in our view. And I would not be surprised if the 10% number is not where we ultimately land.

Wow, that's -- it's quite a statement. It will be definitely a different world than what we've been in for the last 3 or so years. Talk about how that flows through, right? So we're seeing higher spot rates, how does that flow through the different parts of Schneider's business? And obviously, again, we spoke about, obviously, you have the network business, the dedicated business, the intermodal business. Where should we see that impact? And how much of an uplift could we see in terms of rates?

Well, as we've talked about, we have more in the spot market because we've been disciplined relative to contract renewals last year. So even in a not entirely constructive market, we were getting mid-single-digit increases. And if we needed to, we would put more trucks in the short term out in the spot market.

In network.

In network, which is now more beneficial than it was a year ago because we have better pricing and above contract pricing in the spot world. So very constructive, and that's pretty immediate, right? We're able to -- how do we upgrade and how we do that immediately. I also think it gives us confidence to go into the allocation season with getting paid for our value and starting to work our way back to what we need to cover for all the inflationary impacts. So it affects how we think about our going-forward position. In Dedicated, people think, "Oh gosh, you're not going to be able to get as much recovery there because it's more stable." and true, which is really our intent of having a more consistent earnings stream by putting more of our assets and long-term sticky contracts. But almost everything we do, we have some level of backhaul, some level of opportunity to help the customer lower their entire expense, and we get to keep a great deal of that. So that's -- enhanced pricing helps our dedicated margins as well. Then ultimately, truck is the biggest competition, as Keith was saying before us relative to intermodal. So as that hardens, then that puts the equation to conversion, and we're indifferent. We love work to be on the train. We love it to be on our trucks. We've tried to present the value to the customer and let them decide where the value is best served.

In terms of the customer conversations that you're having, do you feel like they understand these pressures that could be coming on rates? And to what extent are they feeling it? Because it's interesting, like you hear divergent opinions on this where some carriers say, customers still think this is all a blip, it's just weather, it's whatever versus in some cases, it's maybe leading to some more constructive rate discussions. Give us some color around that? And then what can we look for in terms of price?

Well, there's no such thing as an average customer, people are in different parts across that spectrum area. But if you think about what I think is the consistent theme is I think there is recognition of the capacity situation and the state of transition. I think there's a lot of hope, though, that this has been exasperated by the weather, and this is going to go back, and we have another year of fair stability relative to what their pricing objectives are. I think that's maybe wishful thinking. And I can understand that position. I think what I look for is what's happening, particularly the more price-sensitive shipper, what's going on in their world, right? And so where is their reject rates, where is their [ mini ] bid activity, and we can certainly see on that cadre of shipper that they're feeling the distress first, which is very consistent with what you would expect when things start to get to a more hardened state. So way too early to call it. We've been through some head fakes. So I'm not here to tell you that happy days are totally here, but the environment feels -- I think our customers are understanding. Last year, they went less brokers and more assets. I think that will be another strategy this year. I think intermodal gets more in favor because it is a hedge against truck but I think we're going to have a more constructive and -- really, we've got to sit down and talk about what makes sense with our customers.

You're saying more of a shift towards asset-based carriers and that momentum continues?

Yes, for sure.

You had mentioned a moment ago, I think you said you were getting kind of mid-single-digit contractual rate increases. Do you see upside to that number if some of these -- if this proves durable, if this tightness proves sustainable?

Yes. We certainly at Schneider, and I think as an industry, we have not recovered from the inflationary impacts coming out of COVID, right? So getting more disciplined and certainly what we did a year ago was necessary. And we will not be lagging where the opportunities arise, whether that be in a spot market or contract. And so I go back to my opening statement, we've got a more constructive market, so I think that's very much in the cards. We've got to see it. It's got to be durable. All the other things that you put there is a caveat I would agree with, but it's certainly more constructive.

All fair. Let's discuss the ability to grow, right? For years, I know I've been interacting with Schneider and there's always been this ambition to grow, right? How quickly can you add to the fleet on the network side, on the dedicated side. How should we think about available capacity on the intermodal side?

Yes. So I guess if we start with dedicated, what we've said publicly, at least over the last several quarters is we see that we're focused on earnings growth as opposed to just truck growth, right? So there's an ability to be more productive with assets that we have. So we've shown that even keeping our truck count flat, we can grow earnings. There's -- inherently in every business or every portfolio you have top-performing accounts and you have other accounts that there's an opportunity to improve. So we're focused on improving the bottom percentage of our portfolio that's underperforming, but also just doing more with less. So most of our CapEx growth that you see for next year or for 2026, I should say, is replacement really to protect our [ age of ] fleet. So that's kind of the dedicated story. Network, similar, we're restoring margins, but we have to see it before we're putting more investments in terms of growth capital. Intermodal similar story. If you think about our trailing assets, our trailing assets we could probably grow earnings 20%, 25% without adding anything in terms of containers and chassis. So the growth will be in terms of -- in dray tractors as opposed to the trailing equipment. So we're very focused on being more productive with assets that we have first. And then once we've maximized that productivity then we'd be looking to add equipment.

So Darrell, you said how much -- what's the level of kind of available capacity that you think of in the network right now?

Sorry. That quote was really intermodal. So somewhere we can grow 20% to 25% without adding any trailing equipment. So the growth would be very attractive.

So very attractive incremental margins. We're not making any additional capital investment there.

So in a nutshell it's easier to be more productive with assets that we have. Once we get to that level of optimize productivity, then we'll add more assets.

One of the concerns that I think a lot of investors rightly have is that if we see this constraint on driver availability, it pushes up driver wages. How do you think about how much of the rate increases that you might be able to secure ultimately are going to have to get passed on to drivers? Do you think you're going to have a pool of available drivers that are desirable and that kind of meet your needs in order to grow in order to expand? We're certainly coming off of a really difficult margin period. How much of a headwind does that represent to getting back to kind of where you've been historically from a margin standpoint?

Yes. From my perspective, we are in the margin recovery first. And at some point, certainly, there'll be a sharing of that with the driver community. But that's not going to be on the front end of the process. We've got recovery work to do. What we're focusing on our driver community is that we can give them a raise with asset utilization and asset improvement, better throughput, reducing friction, all the things we're investing in AI. There's lots of things that we can do to be self-help, to help increase driver wages out and changing the scale. And at some point, we'll have to adjust the market, whatever that market is, and we'll be there. Nothing is more satisfying to me than when our driver recruiting team is helping and really after trying to find -- that's our best sweet spot that when the pressure is there. So I don't see that being a 2026 concern. And our goal is to get each of our drivers more money in 2026, but do it through how we utilize them and sweating our assets and improving our overall book of business to achieve that.

So you've been proactive, I think even before we started our session, we were talking about some of the Mexico opportunity. You've been proactive in developing partnerships, especially for your intermodal network. Talk about what kind of growth opportunities that's opened up, how much more runway is there to go? And especially in the context of a tightening truckload market, it's really attractive, obviously, to be able to go to customers and have this intermodal offering, how do you see the opportunity there to grow?

Yes. First of all, we're really happy with our underlying rail partners, the UP and the West CSX and the East are performing well. Keith and team are just doing outstanding relative to taking advantage of our strengths in Mexico. So from an overall service and fluidity standpoint, we don't -- we're not operating at any barriers with our customers relative to reliability particularly with our model where we own the trailer, we own the container, and we own 90-plus percent of the dray. So we think we have the best mousetrap, and we have really great underlying partners. And we've done that without a lot of help from the truck market to hedge for conversion. So our whole goal really from intermodal is where is our differentiation, right? We're differentiated out of Mexico. We just launched Fast Track, which will allow shippers that have time sensitivity and reliability sensitivity on the rail to be able to take advantage on a number of lanes throughout the network. And we also try to differentiate with who we align with. And there's a lot going on in the alignment world, as you know, relative to being an asset-based intermodal provider, but having the UP, CSX and the CPKC combination. And so we go to our customers with, hey, this is where we're differentiated. This is where we have the best -- we're probably not as strong here, and that's what you should consider with the other guy, but be very clear about what we can provide to you from overall differentiation. And that's really 7 consecutive quarters of growth and intermodal and certainly, those differentiators is what's behind our success. We've been leading share growth, and we would expect we're going to be able to continue to do that.

What do you see as those differentiators? And if you don't mind, what are the areas of weakness or where you might go to a customer and say, maybe we're not the best provider for you?

Yes. So as we look at a customers' book of business, we can really go through and analyze based upon our tools, based upon transit, based upon reliability, based upon cost, based upon perhaps location and closeness to the hub or the terminal so that we have the best road solution based upon where our ramps are vis-a-vis our competitors. And we can be very clear about what those differentiators look like from those combination of factors. There are some places that Amazingly, we win business that we don't think we are the best option on because of some of those factors that we don't think is in our favor as perhaps someone else, but they like the fact that we're concentrated or they like what we do in some other places, they give us some other opportunities. But we go in being very clear with the customer where the best use of the Schneider intermodal network is based upon underlying partners and based upon our performance. And I think that's been behind the success of 7 consecutive quarters of growth on an order count basis, despite not having a lot of, as we said, truck conversion push behind us. And if that's coming which we think it is, that bodes very well for intermodal.

Yes. I appreciate that level of candor. I'm sure customers do too in terms of building that long-term relationship. You have your cost-out initiative that was rolled out really when some of -- when the market forces were a little bit different than what they are today. Maybe talk about some of those cost-out initiatives, how much momentum there is, how much more opportunity, I guess, there is? Is there any scenario where maybe we pull back on some of those things if the growth opportunities materialize in a little bit more robust way than expected? Give us some color around what's underway in that regard.

Yes. Good question. So I think our cost initiatives started before 2025. We probably were more vocal about those initiatives this past year. So we look at those initiatives that's ongoing, and we're looking at things that are structural. So we've been talking about productivity actions, productivity actions have dual benefit in terms of revenue per truck per week, but also a benefit in terms of cost. So a lot of the actions that we're looking at are asset-based productivity and people-based productivity. From a head count standpoint, nondriver head count for 2025 was down 7%. We believe that there is more that can be done going forward, and it's not a case where we start to grow and all these people come back, right? We're very thoughtful in terms of where we're kind of taking those costs out. We're also looking at third-party costs across the board. Intermodal is a good example. I think Mark mentioned, 90% of dray moves are done with our company assets. There's some third-party drays who are very disciplined in terms of those costs. Facilities cost across the board, we're looking -- we've been looking at the footprint. So we've been talking about structural actions. And to your point, when we start to grow, we expect to see leverage as opposed to cost returning.

Let's talk about some of the cost headwinds or areas where you're seeing inflation. I think you spoke to in first quarter, I guess, for 2026, right, seeing some inflationary headwinds around health care costs. We talked about some kind of unplanned auto shutdowns or extended auto shutdowns that represent a little bit of a headwind. And then, of course, on the logistics side, anytime you see the trucking rates start to move higher, that tends to squeeze margins. How should we think about how much of a headwind that represents for first quarter? You have your target out there for the full year EPS. How should we think about the cadence of kind of earnings through the year in the context of some of those cost headwinds?

Yes. I think most of the costs -- we had a $40 million cost and productivity savings target in 2025. We doubled down on that for 2026. It's another $40 million. I think there's a recognition that we are in an inflationary environment, even though it's more stable. So we're mitigating much of that inflation, but it's not all $40 million goes to the bottom line, if you know what I mean. Most of it is second half weighted. So some of the costs that you mentioned, we don't see them as ongoing. So the health care headwinds that we saw in the fourth quarter, for example, there are some specific reasons why we think usage went up in that period of time. We don't expect that to persist. In the third quarter, we had some auto liability claims expense, some of that normalized in the fourth quarter. So these are not ongoing headwinds, if you will. You also mentioned the carrier cost on the logistics side. That's short-term pain, we think, for long-term benefit. When you see spot prices elevate and impact carrier costs, we think that's a precursor to contract rates recovering. So we saw some of that inflection going into the back half of the fourth quarter persisting into the first quarter, but to the extent that those costs remain elevated, we believe that contract rates will also increase. But if you go back in time to kind of the COVID years, there are certain costs that are compounding, right, which we've mitigating. So you think about equipment cost with Paris, for example, that's a headwind that obviously kind of carries forward. There are certain maintenance costs that are higher because of tariffs driver costs that you mentioned and Mark kind of talked about the strategy there. So there are certain costs that just given the magnitude of the P&L that have an impact. We're doing things to address those costs. But then most of the costs that you mentioned, we think are more transitory in nature.

Thanks for that color, Darrell because I think it's really important to understand that some of these headwinds are temporary and then start to fade over time as you start to get perhaps the pricing that you'd like to see and hopefully, that flows through. So you have an outlook for 2026 adjusted EPS of $0.70 to $1. To what extent should we see in that -- I don't want to force you guys into saying anything that you don't want to say. But to what extent should we see that as a conservative target if we get a more supportive rate environment? And how quickly can we start to see that flow through to margins to earnings?

Yes. I think we acknowledge, at least, at the bottom end of the range was -- had some conservatism in it. So we ended the year at $0.63, as you know, adjusted EPS, bottom end is at $0.70. In construction, the guidance, we said that the $0.70 implies that what we saw in terms of conditions and the back half of 2025 persist. The expectation is if we have more rate recovery, capacity treats more demand in flex that would prove to be more of a conservative view. But we're also focused on the things that are within our control, right? So to get from the bottom end of the range and the midpoint of the range. Most of the actions that Mark talked about in terms of where is our differentiation. So intermodal, that's very clear. In Dedicated, we have a very clear strategy on a pipeline as it relates to specialty. We have a very clear productivity set of targets for network. We also have contractual rate renewal targets for network. So there are a multitude of things that are within our control, in addition to cost initiatives that get us to the midpoint from the midpoint to the high end of the range, that's where some of the macro forces, if you will, in terms of demand has the ability to get us even beyond $0.85.

Got it. So we understand, of course, look, again, as transport analyst, we live it every day, and we see how difficult the operating environment has been, but we're excited for kind of a cyclical upturn. Let's talk about what some of the opportunity could look like in an upturn. Your truckload operating margin was 3.8% last year. That's against a long-term target of 12% to 16% if memory serves correctly. Intermodal operating margin, 6.7% versus long-term target of 10% to 14%. And then logistics margin was 0.8% versus long-term target of 3% to 5%. What's your level of confidence in being able to get back towards those long-term targets in an up cycle? What's the process by which it would happen? And if you don't mind me asking, where do you feel the most confident versus least confident in the ability to kind of hit those targets?

Yes. I guess we should probably described that as getting to a normal cycle, not just an up cycle that we think we're capable of doing that. And so if you look at where we are coming through this downturn, we reconstructed our truckload business to be 70% presently in a dedicated configuration, 30% and in a network, and that's by design. We want to get after a more durable and consistent earnings stream relative to longer-term stickier contracts. We sold 950 units last year. We also had a higher turn and churn year than we typically do as customers may have looked for a one-way solution to save money here, strategy, change, a plant shutdown, other items that just hit a little bit harder relative to the churn factor and some that we directed and so the ability of the pipeline to get after the new business that we want to get after to upgrade our portfolio where we can and where it's needed. We feel really good about it and really gets us very close to at least the bottom end of the range without a big market recovery. The drag for us has been on the network side. And you've seen a lot of stress, not only us but with our competitors as well relative to the network side of the business, which we haven't got in the black for a couple of years now. And that really -- we just need to get into the mid-single-digit range on the margin targets in network, and we're really on our way to really where kind of we've laid out is our goal. I feel really good about intermodal as well because we've had no price in two years, and we still are able to start to move margins based upon our cost disciplines, our differentiators. So getting a little bit of price, giving a little bit of volume on some of this conversion is a great deal of a flywheel for intermodal business. And we're not all that far off on the bottom end of the target. And then our logistics business really in the second half of the year took the margin hit. And so with our power-only offering, a more normalized balance market that allows for differentiation between our assets and how we can feed our logistics business, 3% doesn't seem out of bounds for us and maybe even one allocation cycle change. It probably takes us a couple of allocation seasons to get our network business totally back, at least contributing to the level that gets us in that range. But dedicated is our wild card because we have a terrific balance sheet. We're going to really focus on earnings improvement and earnings maximization, but we also -- success in the market, we can really put our balance sheet to use both organically and acquisitively. We made 3 really solid dedicated acquisitions in the last 36 to 40 months and have an appetite to do more.

Can you give us any indication on what the margin profile looks like between network and dedicated?

Well, right now, there's not a margin profile in network. So that's what we're working on. But in a normalized market, they could be very, very similar. And typically, if you would take us back to the COVID era, pro-COVID, very, very -- you can play similar to just the network side becomes more volatile, more upside, more downside with the dedicated, we really take the top and the bottom part of those markets off, which is what's attracted us plus it's what our drivers like to do, right? If you think about labor, if you think about choice that they have, whether the market tightens, where is our driver community, in general, want to be something like intermodal, where it's very predictable. I'm home virtually every day in the market more dedicated where I know what I'm doing every day. Those are the two things that labor most wants to get after, and that's the strength of our portfolio. So I think we're a little more going to be resilient when the market does get tougher because of what we have to offer and the network is really the hardest, most irregular route, most irregular schedule business. And so that's why you get paid so much on the market as well, and that's what gets really punished when the market goes the other direction.

And we've seen encouraging signs even in softer market conditions. So as Mark mentioned, in intermodal, we have no price. Pricing is flat, but we've grown earnings even in the fourth quarter. Revenues were down, margins were up, right? A lot of that is the self-help items that we've been implementing. Network is the similar story. We had some significant headwinds, some of those onetime items that you mentioned, even with those headwinds we grew earnings year-over-year, right? So with some help from the market, it's not unfathomable that we get to those longer-term targets, what is going to take a couple of cycles.

One of the challenges that we have as transports analyst, and I think transports investors face sometimes especially for the truckload carriers, we're used to cycles. We understand cycles are part of life. But historically, carriers, and it's not even a Schneider-specific comment, but carriers have kind of struggled to compound earnings over time, right, to show that you can kind of have higher highs and higher lows through the cycle. What's being done differently and maybe it's the cost-cutting initiatives, maybe it's more of a focus on Dedicated. Maybe it's some of these partnerships on intermodal and focusing on load growth. But how do we get comfortable with the idea that Schneider can kind of compound earnings through the cycle?

Yes, absolutely what we're focused on. We have a number of initiatives, particularly around technology where we can ramp our business without having to grow the people count to the same degree as well as historical level would be. And we just we've never had the influx of a nondomiciled CDL holder to the degree that's really recked the capitalism structure of trucking on a recovery basis, right? So as we get through that, and I think we're seeing evidence that we're getting through that and the structural changes we made in our business, the dedicated concentration, our differentials in intermodal. And each of those have different asset intensities and margin profiles, right? Where most asset-intensive truck, less so in intermodal and virtually no capital outside of technology on the logistics side. So we're focused on return on invested capital, how does that mix play out. That's all a function of our mix. But I think we're structurally different. And if you talk about a frustration, we've done some really good things in our dedicated business, the acquisitions and our network businesses masked it all because of the really once -- I would consider I've been in this industry for 38 years. I've never seen a 4-year cycle and now we're just getting the total evidence of why that was.

Yes. A remarkably deep down cycle. It's remarkable. We have been talking about rail M&A a bit. And as you know, Keith and team were here just -- I was a little while ago.

The guy was a [indiscernible].

Yes, yes. I mean, Keith, is great. How do you think about Schneider's role in the rail M&A debate, right? Talk about what where you plan to weigh in or where you think you could weigh in, how you see your positioning for a world that might have a future UPNS, how do you think it's going to shape the North American rail network and how Schneider benefits or maybe in some cases, might be vulnerable.

Yes, obviously, we're coming strictly from an intermodal view and not some of the other lines that the railroads operate in. But first and foremost, we're really, as I said, happy with where we are today and our linkages, our integrations with our 3 primary partners. And we've had the experience and the muscle to change railroads when we needed to. We've done that recently with [ BN to the UP ]. We did that with the CPKC. So we're not concerned about changing our ability to execute and protect our customers and do all the things that we need to do to be a great operator regardless of where the landscape ends. That being said, we want to make sure we have the best differentiation we can and the best intermodal network that we can and that may involve a change and it may not involve a change. And part of what we're in discussions with lots of folks presently around how we want to ultimately weigh in on what our ultimate position will be. There are some really exciting things that are kind of laid out perhaps in the UPNS relative to what are those payers, what is the concessions, how does that all play together? We don't have all the details yet to really kind of weigh in and make a definitive statement. We've been one of the ones who have been silent waiting for that. We don't think it made any sense without the knowledge that we don't presently have to come out and take a position, but very confident in our ability to deal with it. And not that -- it's not a big deal. It is a big deal. We're taking it seriously, but we're going to be very confident in the end that we're going to be able to be stronger going out of it than we came into it.

Certainly being flexible, and I think it works to your advantage. I'll check if there are any questions in the audience. But in the meantime, I'll ask -- on the logistics side, I'm curious because there's been a lot of talk about how technology is changing that -- the competitive dynamics in that industry. Maybe give us your thoughts on how Schneider's positioned? And if we could broaden it out even a little bit to kind of how technology is impacting the broader industry? Should we expect consolidation there? And how does Schneider maybe position itself to continue to win in that space?

Yes. I think the revolutions that we've been through from a technology -- over time I think, benefits those with scale, right? I think the most vulnerable, the smaller, maybe too big to be nimble and not big enough to have scale is maybe the most difficult place in the market to be that mid-tier. And so I think that plays to advantages like ourselves because we have the scale to go ahead and invest in AI to do the things necessary to look at your cost to serve, take friction out of the business and improve the service experience and we are probably in this bottom of the second inning on that relative to the AI work, and I continue I try not to be surprised every day, but I'm surprised every day how effective it can be, how our people embrace it and say, "Hey, this allows me by doing this to get to a higher level in the value chain with the customer or with the business and not fighting." this because it looks like it's a disruptive force for the people. So, really, really encouraged. And I think 2026 will be a very interesting year in our development and across really all aspects, our shared services all the way through our service offering. So by being already tech-forward company, it just kind of comes natural. And I think this gives us the confidence to accelerate in places just because of the early returns that we've seen. So very excited about that. And I think, ultimately, that allows us to compete more effectively because it lowers our cost to serve. Don Schneider said 50 years ago, low-cost position wins in the end. And I think these technologies are going to allow us to do that.

I think Schneider is certainly well positioned to continue to be a winner in the market. Let's go to questions in the audience.

With your '25 wins going into '26. Can you talk about the cadence of your truck adds versus start-up costs throughout the 4 quarters?

Yes. So a question for those who are gonna use -- it's about dedicated and their kind of your carry forward from 2025, I mentioned that we sold 950 or so units of new business. We had substantive start-up activity in the fourth quarter, particularly around 3 larger opportunities that we believe largely get through in the first quarter and early first quarter on 2 of them have some lingering because of the size and scale on the third. So those are all very good things. And again, as we think about the 2026 period, other wins, we'll look at how do we raise the returns of the portfolio first before we kind of add capital. So our pipeline suggests that we're off to another solid year in dedicated, a bit more skewed to the stickier things that we're targeting, which is specialty equipment that doesn't get as easily disrupted by network solutions or standard 53-foot trailing equipment. So a little bit of hangover here in the first quarter. Obviously, the weather was pretty significant in January, a little bit of carryover into February that we'll have to get through. I think the team did a terrific job of dealing with that disruption to try to keep costs as reasonable as we could. But I don't know if I -- I've been around a long time, but having facilities close from Dallas, Texas through Carlisle, PA on the same snowstorm is a pretty unique experience. So I feel really good about that. So we're not after a magical number of 70-30 between dedicated and network. And obviously, we have a balance sheet to put if we can get everything moving and where the direction we move to include acquisition.

That's great. So Mark, I see we're effectively at time, but let me see if there are any closing comments or closing thoughts, you might want to leave us with. And I'll phrase it particularly in this context. What do you think is kind of the most misunderstood thing about Schneider and kind of where is the opportunity that you're most excited about?

Yes. Well, first of all, thanks for having us. And I think you did a great job covering the basis for the industry today. We're very proud of our truckload history. There's no question that Schneider has been known for a long time for the trucking side of the business. We really maybe misunderstood is how multi-mobile we really are when we're talking $2.5 billion in truck, over $1 billion in intermodal and $1 billion in logistics and how we can play and help our customers with a whole series of solutions to grow our business. I don't have to have a driver and a truck in every one of those locations because of some of these non-asset services that we can bring to bear. So we love our trucking heritage, but we're probably a little bit more than just a trucker these days.

All right. Great. Well, we're excited to see what you folks can do in the up cycle and hopefully, we have a little bit of macro tailwind ahead of us. Mark, Darrell, thank you both for your time and a fascinating conversation.

Thank you.