Schneider National, the largest privately owned US trucking company, plans to raise stock between $281 million and $359 million in net proceeds in an initial public offering company, and an additional $217 million to $242 million for other shareholders selling the carrier’s stock.
The IPO will deliver a shot of capital Schneider can use for acquisitions and to fuel the expansion of services for shippers, whether in traditional truckload and intermodal markets or in specialty markets such as chemicals, temperature-controlled freight and e-commerce.
The company is considered likely to target speciality markets that deliver a pricing premium for service compared with general dry-van truckloads. Schneider last year acquired Watkins & Shepard, a trucking company specializing last-mile delivery of heavier shipments.
The maximum aggregate amount the Green Bay, Wisconsin, transport operator is shooting for is $665.8 million, making Schneider’s initial public offering the largest, and pretty much the only, IPO in trucking since Swift Transportation went public for in an $806 million IPO in 2010.
Schneider launched its IPO, announced last October, Friday through an updated prospectus filed with the US Securities and Exchange Commission. The company “should get good reception” from investors, said Satish Jindel, president of SJ Consulting Group.
“Schneider is going to come into a market that’s had no IPO activity since 2010,” he said, noting that several publicly owned transport operators have been absorbed by acquisition in this decade, including Con-way.
Schneider is also rolling onto Wall Street just as trucking activity, which was flat for most of 2016, appears poised to pick up as the economy gains speed in 2017.
Approximately $150 million of the IPO proceeds will be used to pay down debt, and some additional capital will be used to purchase intermodal chassis, as Schneider phases out rented chassis. That chassis conversion plan entails “significant one-time costs,” Schneider said.
Schneider, which has been family owned since it was founded by Al Schneider in 1935, is the only privately owned company among the 10 largest US trucking operators. After Schneider the largest family owned carrier in the United States is Estes Express Lines, the $2.1 billion Richmond, Virginia-based less-than-truckload motor carrier and 12th largest trucking operator.
Schneider plans to sell 16,842,000 shares of its Class B stock, while those shareholders will sell 12,105,000, at an initial price of between $18 and $20 per share, Schneider said.
In addition to its 28,947,000 shares, Schneider expects to grant the underwriters an option to purchase an additional 4,342,000 shares of Class B common stock at the initial offering price, bringing in another $78 million to $87 million, before discounts and commissions.
After the IPO, the Schneider family will retain a majority stake in the company, which had $3.8 billion in revenue in 2016, excluding fuel surcharges, and $4 billion in total revenue, the prospectus revealed. Truckload services accounted for $2 billion in revenue.
The prospectus provides insight into how the privately owned company, the largest US truckload carrier after Swift, fared during the 2015-2016 slowdown in the US economic recovery. Schneider increased total revenue 2.2 percent in 2016. Excluding fuel surcharges, “enterprise” revenue rose 4.6 percent. Truckload revenue rising 5.8 percent, thanks in part to Watkins & Shepard. A $77 million drop in fuel surcharges, however, cut into total revenue.
Dedicated trucking accounted for about 33 percent of Schneider’s truckload revenue in 2016, or $682.5 million, a 9 percent increase from 2015. Intermodal revenue dropped 4.1 percent to $757 million, as low truck rates took a toll, but still was up 4.8 percent from 2014.
Schneider’s logistics business, which includes brokerage, supply chain, and export/import services, grew 15.5 percent, bringing in $737.7 million in revenue. In the past three years, the logistics business clocked a compound annual growth rate of 16.5 percent, Schneider said.