Schneider National (Pending:SNDR) filed an S-1/A with the Securities and Exchange Commission for its upcoming initial public offering. The company intends to offer 28,947,000 shares at a marketed price range of $18 to $20. It also has an additional 4,342,000 shares as an overallotment option for its underwriters. The company is expected to price on April 5, 2017. The underwriters for the offering are Morgan Stanley, UBS Investment Bank, BofA Merrill Lynch, Citigroup, Credit Suisse, J.P. Morgan, Wells Fargo Securities, Baird and Wolfe Capital Markets and Advisory.

Business summary

Schneider National Inc. is a major transportation and logistics company that offers truckload, logistics and intermodal services. The company has a fleet of 10,500 company and 2,850 owner-operator trucks. It also has 19,100 intermodal containers and 37,900 trailers. Schneider reports it is the second biggest truckload company in the U.S. It is based in Greenbay, Wisconsin, and it has 16,000 customers, including almost 200 of the Fortune 500 companies in the U.S.

Executive management

The chief executive officer, president and a director of Schneider National Inc., Christopher B. Lofgren has served in those roles since Aug. 2002. He first joined the company in 1994 as the vice president of engineering and systems before later serving as the chief information and chief operating officer. Lofgren holds a Ph.D. in industrial and systems engineering from the Georgia Institute of Technology; a Master of Science in industrial and management engineering from Montana State University; and a Bachelor of Arts in industrial and management engineering from Montana State University.

The chief operating officer and executive vice president of Schneider national is Mark Rourke, and he has served in those positions since Sept. 2015. Prior to that, he served as the president of the company's truckload services division and has held several management and executive-level positions since joining the company in 1987. Rourke holds a Bachelor's degree in marketing from the University of Akron.

Financial highlights and risks

Since 2012, Schneider National has demonstrated a pattern of increasing revenues and income. For the year that ended on Dec. 31, 2012, the company had total revenues of $3,489,434,000 and a net income of $68,690,000. By the year that ended on Dec. 31, 2016, the company's reported revenues had grown to $4,045,736,000 and its net income had grown to $156,851,000. Year-over-year, the company also showed increases above 2015. For the year that ended on Dec. 31, 2015, Schneider had total revenues of $3,959,372,000 and a net income of $140,932,000.

Among its risk factors, the company identifies the fact that the trucking industry is affected by economic conditions. It also reports that it has several important customers, and if it lost one, it could have a deleterious effect on the company's business.

The company reports that it expects to receive around $281 million from its IPO. It plans to use $150 million to repay its debts. The remaining proceeds will be used for general corporate purposes.

Competitors

Schneider reports that the trucking and logistics industry is highly competitive and fragmented. Competitors include multiple national, regional and local carriers and logistics companies.

We calculate that if SNDR prices at the midpoint of its proposed range it will have a market capitalization of 3.3B and a P/S ratio of .81x. This is slightly above the P/S for major competitor J.B. Hunt (Nasdaq:JBHT) and the industry average of 1.1.

Conclusion: Buy In

While Schneider National could be priced slightly higher than its peers (described above), the company has proven that it is well-established, with a good record of increasing revenues and income. 2015-2016 SNDR's operating margin increased 9.23%, while JBHunt's fell 5%. Schneider enjoys a strong reputation and has a solid customer base.

Longer term, it still remains to be seen how competitive Schneider will be, given its targeting of generally the same market as J.B. Hunt; however, we hear SNDR's IPO is highly popular and oversubscribed. At this point, we strongly suggest investors consider making an allocation.