In an encouraging sign of revival in the slumping freight market of America, one of the biggest trucking companies, Schneider National Inc. (SNDR), has successfully raised $550 million in its initial public offering. The stock will begin trading on the NYSE on Thursday. (See also, Truckers Need NAFTA to Rally in 2017.)
The Green Bay, Wisconsin-based company, along with its shareholders, successfully sold around 29 million shares at a price of $19 a piece which values the company at $3.3 billion. The targeted price range was $18 to $20 per share.
Schneider Banks on Solid Performance History and Stability
The IPO is significant, as Schneider becomes the first company from the trucking segment to complete an IPO in the U.S. in last seven years, reports The Wall Street Journal. Amid weak demand and depleting profits for the trucking industry over the last 18 months, Schneider was able to convince investors on its long history of steady growth and stability, including new age investments made by the company for bolstering technology.
With a fleet of around 10,500 trucks, the largest privately held trucking company of the U.S. (pre-IPO period) generated $4 billion revenues in 2016. It also operates an intermodal unit which uses transport freight by truck and train, and a logistics business with freight brokerage and supply-chain management services.
Owing to operations in three different segments, Schneider competes with a variety of companies. For its truckload segment, it competes with Ryder System Inc. (R), Swift Transportation Inc. (SWFT), and Landstar System Inc. (LSTR). For its intermodal segment, it is pitted against J.B. Hunt Transport Inc. (JBHT) and Swift, while for logistics it competes against Landstar, Roadrunner Transportation Systems Inc. (RRTS), and Werner Enterprises Inc. (WERN).
As per the regulatory filings, the company plans to use the IPO proceeds to repay $150 million debt, and for capital investments. Prior to the IPO, Schneider bought two last-mile delivery companies, and is open to more potential acquisitions in related business segments. Amid expanding ecommerce business, Schneider expects a bump in its ecommerce fulfillment business segment which caters to special handling needs of items for online purchase and delivery.
“Schneider shouldn’t have any trouble getting interest from the institutional investors for the initial public offering,” Satish Jindel, president of SJ Consulting Group Inc., said before the IPO priced. “How the stock performs over the next quarter or two may be more difficult to say, given the market conditions are soft.” (See also, Mercedes-Benz Unveils Luxury Pickup Truck.)