WERN - Earnings call transcript Q1 2019 | Werner Enterprises, Inc.

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Operator

Good afternoon, and welcome to the Werner Enterprises First Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Derek Leathers, President and Chief Executive Officer. Please go ahead.

Derek Leathers

afternoon, good and you, everyone. Thank

and call. today, On overview John Werner of by start earnings CFO, the Company current joined and the first providing we're details financial of positioning, business I'll financials. finish brief and XXXX the reviewing call Steele our summary financial to quarter. address excited a our for our you by your the XXXX will to our on John capital I'm to a like review allocation then we'll strategies and followed guidance highlights I'd then our and quarter by provide additional questions. welcome by

included those turning Slide new story. be Now, information on our some who X, may Werner for we to to background

XXXX, Let Truckload me Werner XX% primary in Services, was Transportation Logistics just coming segment, our generated unit. highlight revenue a from In the items. of remainder with our few key

Our customer base consumer. is on the focused

over in industrial, XX% in by revenue is retail, half our remaining the with in is XX% and is in XX% vertical, other. For logistics beverage, and manufacturing just food and

customers committed while We vertical, supporting as call, XXXX. that diversified any revenue our this stream. Werner during On or carrier our base provider. than customer top occurred with spread top focus revenue best-in-class so over have timeline events We customer, in and from last of mitigating our Slide I'll on see the years XX. outside fourth remain slide key can detail half We exposure X, position a you a and coming XX core of some five across to quarter growth, the covered also our customers less and single have their XX% to to seasonal logistics

is where quality and average attract quality it, trailer and that enable very drivers. high we new want high us service truck produce to Our fleet age levels at age

positions Werner Truckload and CapEx a detail This results, to in our I'll financial greater more is consistency of few normalized dedicated return between One-Way is levels. net the to and moments. Our our balanced And XXXX declining which in in Logistics. portfolio revenue discuss improve

expectations, nearly a move quarter cost our on year execution, improvement a increased fleet, and increases, in to achieved reflect to X,XXX This that EPS to grew in continued best-in-class but the which daily million. like was X% customers operating quarter overview unusually driver our which XXXX newer year-over-year increase time. investment reform, commitment in a in XXXX team and their an so three to logging ranked demand segment, sequentially. XXX, serving first per and Truckload first Transportation operational significant of and brief take total regulation basis, earnings Truckload as our to unwavering pre-books and for to for One-Way million top that we last strong April. ago. a our devices increased increase solid thank a following not basis within XX% our TTS moment limited XXX I'd of Services, our revenue strengthened tax XXX retention. which due quarter sincerely as Demand or change we trend normal March than and mandates ended first freight in strong of for our families challenging first from the freight robust our quarter has saw Company first stronger In share. in financial to margin let's directly was was and expanded Reflecting trucks effective and XXXX, quarter XX% were far $XXX in third their Next, for total the management, as or supply. a operating Eastern and strong seasonal On One-Way demand, during Many relative associates measured standpoint, This what demand Results affected. by loads flooding the December first Slide severely In an Midwest. was a XXXX, electronic in highest record including the years. the performance. weeks tractors moderated our communities mid-March, last EPS quarter quarter Truckload our of in $X.XX our near XX first difficult in X adjusted were our to we impacted XX% Revenues $XX income of with a several drivers by Omaha, the Adjusted adjusted by points. Nebraska, to very of

to during However, they continuing by resolve their jobs well period. do their demonstrated this difficult

of Brigade contributed Nebraska accomplished supplies I'm proud to to volunteers relief needed numerous assistance and what trailers Blue impacted in Werner provided Werner period. our for communities. financial extremely affected has provided the time during those help of Our team this employee and

call the turn John? in over to our I'll Now, discuss financial detail. more John to results

John Steele

on We Beginning ago, today. X, provide you quarter on additional segment. us first everyone. same year the performance appreciate in you, a the Thank period a items few afternoon, significant some TTS and joining the Derek, Slide drivers financial versus including we good call in

revenues truck week fuel income grew X.X% adjusted trucks were and flat. TTS expanded XXX increased per net of per number margin and by X.X%. our of points. average In the Logistics XX% Adjusted basis revenue we Our increased operating segment, operating

time, percentage professional company per expanded X%. the At continue by mile margin increasing we driver by in by XXX drivers Our same pay basis nearly invest points. to average operating our Logistics

at quarters quarter were shares of Beginning EPS an EPS, results $X.XX Slide X% detail. more grew of segment adjusted units. first TTS the X% results consisted our quarter, XX% per Truckload share. increase TTS million, total year contributed in mile contributed in to adjusted was by One-Way increase of increase of look primarily revenue and revenue logistics The increase adjusted operating to first which an $XXX.X on of to per in XXXX. chart share basis growth for income Moving expansion, in a driven margin operating In XXX X.X% that the the eight by quarter X, $XX.X operating and in XXX revenue margin Adjusted our year-over-year demonstrates outstanding points truck of achieved which per TTS X.X%. Other lower let's rose XX% that week a includes our expansion points right versus basis prior business fewer growth consecutive that X.X%. million, of other the driven the TTS including factors $X.XX to we

at first XX, Slide Dedicated and Truckload on look One-Way metrics. Now our let's quarter

in first revenues average due trucking market trucks three, per of to as an freight total team XXXX to, per and, XXXX disruptive truck per fewer One-Way quarter for in quarter X.X% and, well in week per primarily grew mile. Miles quarter per X%. cold tractors by winter, less Truckload XX% truck quarter the quarter quarter week million. to Revenue strong to $XXX the dedicated due Dedicated trucking million. we two, to One-Way due tractors declined X% declined X.X%. as one, extended less for first fuel XXXX. freight truck XX% first quarter business and fuel to first of market Dedicated, revenue For net revenues per quarter increased due one and X.X% grew average unusually $XXX in net robust a day in the increased to revenue an the compared Truckload increased XXXX improved for

to contractual by revenue spot Slide increases, by improved cover gross capacity million, first back by weather execution, expanding quarter, who of strategy, turn lower opportunities, the caused procurement, project due X.X%. and basis was results XX% margin, to like will operating to would XXXX and flat all Logistics Werner allocation in margin the million, operational to income contributing trends, our and pricing priorities, to capital I improved $X.X challenges. the the at XXX final portion $XXX our an to updated primarily of XX, Logistics outlook. winter freight Operating now points pricing Derek? fewer on Moving prepared year-over-year driven remarks Derek, expansion our to increased

Derek Leathers

you, Thank John.

Slide in would would carrier any a reinvented as our on to putting a that to ourselves value you XX, by T proposition Moving be best-in-class We in I market. compelling like forth high demand strategy. Five update

are to are more financial sustainable and results. creating with new fleet, high-quality combined improvements and with structural that generate We more efficient consistent professional expect we by succeeding and our drivers,

Five network truck trailer average respectively. age We rates at X.X despite raised terminal bar the America maintain an driver XXXX, with driver alike. new our in our drivers facilities our We the multiple infrastructure our of T retention, training to fleets unemployment our we've the expanded customers provides investment strategic going they deserve day. of with in annual We and capabilities. and tripled years, to intend fleet X.X moving and are on years drivers IT XX and the years. and need improve to our service as part Our investment our strategy, every and upgraded This quality these forward. improving maintenance locations and and age last Since national to nearly keep lowest equipment levels professional

OEMs. important less In trailer tractors logistics, you they this of than and focus by their transportation earn and every this one said two produce and has customers but sincerely each Drive of During thank average. of last vote Modern, customers with the XX, simple a tier on-time is expanding quarter, X industry driver-preferred helps are XXXX, Slide truck age with freight and attract driver average Werner a day newest I of repeating. vote operating Werner with service. Five and I'd every every On our truck for quarter in our Werner superior bears in-cab app industry truckload a solution. we and new of strengthening In us trailers. better and Warner. the and our technology we developing third Ts, it and to is equipment fleets the on and mobility very terms, each we your for drivers partner and and keep retain like shipment. The the trust

to safety equipped All with improve to collision are equipped and training efficiency. trucks transmissions with fuel are of manual and driver mitigation systems auto promote our

the our are years. we cameras last goal transitioned value. ultimate by in We with in also XXXX. strengthened substantial and XXXX, trailers to buying completion white Starting We our we improve adding to resell few year-end of upgraded trailer branding our modernized fleet fleet aggressively to forward-facing the fleet our and

this complete are two-thirds transition. We nearly with

tire trailer made management inflation automated investments fuel upgrade We our with sensors, significant systems. also tracking GPS and to for with cargo skirts trailers

Finally, of proud fleet of we years Werner and trucks our credible sales with over our operation experience, are remarketing extremely trailers. XX

provides us long-term is buy now. Werner to This and X.X ahead view reputation forward of to customers we be we the repeat our who when thinking equipment will integrity later. we late-model appreciate value benefiting years are fleet When trucks, sales. Our significant selling them new

last the collision program. with the upgraded to and in are equipment market. expand features and we engine applications year, auto website available mobile an the significantly and readily low device As manual our we in simplify mitigation currently and search sales used Werner transmission miles our IT remarketing From selling trucks for not standpoint, fleet

would I turn Slide XX. to like to Now

to success. must a the lot all things recruiting this well and and our the market produce C.L. our drivers, shown listen and and our customers. Werner, photo. professional most of industry are for a the quarter mind. new our truly female first Top quality drivers. essential important for know, Attractive managed our such we driver choice all top face-to-face is quality this better in founded to even is drivers last truck by our with To the we driver its month, achieved employer As our results? impressive training, of extremely events are leading strong drivers, company How held rate market drivers driver retain driver concerns terminal events the attract culture. spring factor are and in appreciation the you driver these fleet, becoming labor lowest the at service for appreciation You locations do on-time a the throughout Earlier a competitive XX pay, factors, turnover these home Werner in regularly of we Werner US. is years. management drivers holds more understand and of time, best to second issues military as in challenging. first our event Werner Despite program achieving our market is success this But

on management were and XXXX performance our period, on XXXX, strategically and to investment a focusing improving high relatively we fleet strengthening cash to shift From our organization. now XX. Slide in Let's

more XX% term. in our to behind us, range now largely significant and investment of revenues consistently net long the terminals are of to With gross be we targeting the fleet over within CapEx the XX%

of Slide not create of or We focused Werner sustain XX the day extremely operational complicated. shows more. success we to flow Truckload also relentlessly on excellence. generate free and million the continue critical transportation to to is every significant factors cash in that business expect XXXX $XXX model

every service takes We our on-time, focus cost reliability safely with the for our driver optimize that and of geography leading Werner, that our customers However, invest We superior design shipments We of mobility. locations. out complex. providing very and supply time driver carefully is chain. home operational value on of network that customers in truckload our freight from and efficiencies, their improves level predictability them high provides turn technology which edge in service, on-time

Here, examples model business we our quarter. where provide three we flexed this

and when throughout unplanned multiple unusually the Despite Midwest. to due faced extended proactively we challenges, challenges The and first adapted. flooding cold operational example storms, weather, we these adjusted is winter

These freight, regulations. trucks. cost, million quarter and quickly weather minimized is complex April, maximize reduced early of took minimize for the example, actions border operating cross cost we driver late experienced the at increased we March were what equipment northbound took time equipment winter same we below A first second to increasingly expensive winter when example quarter estimated customer at safe, In to time to XXXX maintenance layovers steps and by in first maximizing staffing helped our it parked when our while service. and our weather the southern $X.X in conditions which throughput the borders government For safety 'XX. not actions temporarily

is example industry logistics. in changing the third rapidly The dynamics

more quarter gross capacity We less. technology team operating our their the significantly declined accomplish focused As better to XXXX, tools pricing to logistics shipments expand spot managing and in on procurement and carefully with market skills revenue obtaining our first and used margin. margin

we follows. new With market capital excellence challenges. our by logistics our operating volumes allocation generation, our conditions, Slide XX%. increased XX and different three on These while Werner's operational logistics produce despite So demonstrate income to to as declined ability seasonality due normal examples priorities and increased cash over are

in is our continue to reinvest to priority first Our business.

commitment We and to will network, our platform. best-in-class from a customers, not fleet, associates our drivers, to deviate technology maintain and

our moderated be and to to net and But in in expected across invest as fleet. to CapEx technology commercial logistics as from continue IT million XXXX. the million will $XXX as XXXX noted, We operational is well initiatives range our in has $XXX

Second, economic consistent, to to repurchases as cash and well we regular, cash. history shareholders. has of as paying to will excess quarterly dividends Werner across share dividends continue return return a cycles long utilizing special

quarterly During the dividend cash repurchased regular quarter, we for share $XX.X $X.XX declared and of shares per a XXX,XXX million.

increase We including will dividends. continue to evaluate all viable value, options shareholder to buybacks and

a million to position $X.X flexible debt Finally, deliver and equity, low a flexible we're maintaining debt of EBITDA nearly value. strong X.X $XXX our committed balance ratio remains sheet outstanding, and stockholders' of to financial times, of to shareholder with billion

our meeting update the fleet year-end of we our our one-third moderate end lower we X% percentage now be in Slide in to that on we from each of increase XXXX, to compared per of of way is Next, occur total for dedicated quarter slightly gain XXXX three and percentage I'd XX, margin expectations. X% This to increased expected million, XXXX year increase percentage expected during through due Gains predicated than in XXXX trailer last will to to this One-Way the what Revenue growth of efficiencies ratio. were rate our mile XXXX like equipment on point, with the X% the achieved Truck increase are know sold return quarters to in on quarter XXXX. of growth expect the increases XXXX. to full-year first to business, expected in and tractor guidance the will The first as on higher quarters range. in new primarily X% almost Truckload year. total is XXXX. per due we trailers be at significant the full our Based sale range remaining to mile fleet of this on likely three the $X.X of is

year of guidance $XX to sales equipment to full on $XX remain gains expect in million. We our range XXXX million

of We XX% in the effective to rate continue our year. tax range for to the be XX% to expect

We continue million. expenditures to $XXX range expect to the million of in capital $XXX

the One-Way So has weeks the unit freight April, effectively economic demand our and Logistics segment One-Way with for Truckload the success In a freight three first way. predictable and our confident more whatever in moderated stable from same unusually the XX% April fleet our exposure less competitors. navigate than we revenue far, of strong to one-half our Werner Truckload XXXX. our market of of of than many environment positioned our and to XX% is I'm summary, that in in over period lower ability demand during large is positioned and well in our are nearly and dedicated, comes business,

to our turn fleet would team is commitment to our this I refreshed, the time, unwavering. begin the At over Q&A. and rebuilt, is Our our is to to operator excellence like call

Operator

Merrill will We from question the The go [Operator with comes Ken Bank Instructions] question-and-answer Hoexter Lynch. begin Please of now America session. first ahead.

Kenneth Hoexter

John. Derek Good great. Hey, and afternoon,

Just -- you as bid I some guess, you season. went thoughts just through gave

but are it the was pretty we've of Any thoughts thoughts market how as pricing spot April, on noted solidly. any faring You as negotiations Dedicated you well? obviously on in seen pull your early on through side go terms the contracts -- back

Derek Leathers

for Sure, Ken. calling Thanks in.

seeing be will bid implemented second reiterated to of mid in XX% we the levels than are speak we're quarter, So those implemented season some XX% our as the have about and far, third another at single-digit finalized. on but mix. why but in not that's mid got We've in guidance, yet average. kind that and our and and better been so obviously renewed we kind works through the through that on still that as One-Way And includes go we've implemented with and Dedicated we're bids

small represents as or our robust. market very of even has for about of good growth feel has, ability talked miles the in previously but to will a it portion the primarily be that our pipeline Dedicated One-Way stayed indicated, most our miles We and in Our average Spot we've meet quarter. Dedicated. less fairly still X% total Truckload, it's TTS on of about,

directions volatility, So go to expect that spot over volatility we've market some both time. seen although we

But portion market produce that things more a it's the we Second do. be bit spot a to prepared will to small and liven-up as know in and quarter, we kick in, participate. other tends we of what market

Kenneth Hoexter

I subject. guess, on, Derek, get different I on And, can a a follow-up if

their the didn't all of of -- you if trouble that just mentioned -- capital renewed seeing you of You on want use way, in had a market gets just they fleet, and things, of historically something If some Werner's that potential I kind where you wise, be a that been it's that you mention these terms of to to move want could is the in M&A know start know businesses management given as not see any forward. change I if but thoughts loosening

Derek Leathers

factually, find worked we've a never do is of to of everything in will last mean, I done. is there or use businesses that continue trouble, going as we more as improve we lot the we're in we progress -- opportunities improvements. around be phrasing years, your we're to couple we've the in invest our to what got we've M&A to the think would still the in returning troubled of to arise, at, your in As us It's front themselves businesses made, look focused off continue at to to but of the do. or we proud but runways and look operational to excellence to we to make are business, something while think -- We about business. core on turn as over proud to our of board. continue work opportunity We're question they question

pretty at feel maintained So them. the we'll but a will business that has right look with a the properly right finding them, equipment difficult look with at price, we been right we profile right that's base hurdle, got the mix customer is but the at

Kenneth Hoexter

appreciate Great. and thoughts your John, outlook. Derek,

John Steele

Ken. Thanks,

Operator

Oglenski Brandon from Please comes Barclays. with question ahead. go next The

Matthew Preston

Brandon. Werner's customers? evening. opportunity interested This I cross-selling more just logistics. good was Hi, on more of is the from business with trucking for traditional looking away Matt is on the there and what I'm for

Derek Leathers

Yeah, good Matt. question,

now more viability portfolio. over logistics developed means if sort are think the much our business as about organization the a be you with coming that our our relationships, find customers we expand rampant relevant and will, ourselves the and as greenfield scale our build to As in of years, base of customer couple and business, with into we into started brokerage we really so we of -- as across core space, out new those the with to and or intermodal and launched we but was last of repetitions what core sell player seeing growing done in terms opportunities in much that the relationships and logistics able for technology,

think asset-backed times seen levels best year sort The in The several individual logistics. in business that our been we've of logistics And we're market has last that we at fluctuations seen larger that are accomplish now inherited the we us kind add the that is a XXXX. and level to of in business is in XXXX So with advantage, bid is the we've in the think there. ability of really and over even bid especially and still through ahead of experiencing volatility something opportunities. nature in an

Matthew Preston

just And could you. Thank question. I more one ask if

of of help Looking think about XXXX? us -- market, as you you mentioned elevated what's driver kind business? could you've the impacting sort more growth, how three your of talked quarters, the but first to just the grow about of confined tight the early that is ability to Obviously keeping part that about

Derek Leathers

One, to us. see roots things. and true when credible conservative of pretty of to we're front about what in we Company like our couple talk we a stay a Well, we

kind cases, dedicated-driven, is our And of it's so in implementation. many year, for growth and the about towards business we're that's it's talking pipeline-known already freight really expectations going opportunities when that and

discipline putting comfortable to market of relates the of want got the that we but above portfolio. third our branding we through across quarter growth. part visibility very But apply and to dedicated, we've ability, market tough to growth and ability in grow to believe sort the network in it driver limited vertically that frankly we're our most the as assets that our The referrals portfolio speaking the driver in and into we is about we into organization done the the our return Then driver expectations opportunistic this remodeling beyond to more our We've of driver and the driver in market. the school my fleet by force and strong. is continuing leverage through think sense. would that, and in new existing be makes feel today, mind, working, be second drivers gain margin our integrated our and will remains We network to our

than into going out that find disciplined. the margin we market to limitations, our we're driver despite not really we're going and most. or team And it see. the we return can right find I to opportunity, be some And better If And is confident to We can go if drivers guess in. going to so -- as was we're the market stay focused. it's try think visibility be can you guess, I far the tough operating I'm navigating that but to give eye difficult as the

Matthew Preston

thank Okay, you.

Operator

next with The Please Chris ahead. question from go comes Wetherbee Citigroup.

James Monigan

increase quarter? net for you be question the might you be will the on up follow the to Wanted the increase Chris. pay And how pay expect about for drivers. for year? think do about what on What to the James full guys, Hi,

Derek Leathers

driver driver though overall. seen work as we've Year-over-year So, quarter, feel -- to seems this At and we were we've the adequate the And for compensation drivers be driver this up is X% retain Derek. the pay. we have. on -- done it in to about time, pay

couple like will if that of our levels, small Today, sort the our type over through is do pressure three-year year like force. do pay not went we And machine. like with still subsets positioning. targeted consecutive in period, we fleet went we currently years. second-lowest the double-digit the last sense you where We increases it's think targeted so three years network. of at about retention school within with appropriate. really But And at recruiting very We that of We XX increases type driver our we years. our the very

culture paying the So dividends. off and is paying

headed going out to drivers amongst that in and in where be Our other and we're to driver stay there But them. pay XXXX. that the believe XXXX not we're may it is why, connected pressures was and pressure

James Monigan

the in Got What's Also it. wanted did much of XXXX per for miles about tractor. ask and outlook weather the truck how to utilization terms impact quarter?

John Steele

factors. three there's quarter. miles our say And would and in were equal I production. impacted . truck One-Way the our factors overall down all X.X% per about that in our productivity this We One they is were Truckload market freight hurt weather

ago. we had did year had trucks third day we a we fewer And than the this last time than year. business we at is did that one is second less The team

ourselves As average X.X% the we is reported negative backing have many look now. above out to already other and of companies compare as that up right

we first that close the had We flat to to as that in And the does normal impacts same can quarter. and as we the utilization anticipate keeping market number of business possibly weather back days get environment. reflect conditions so we in weather once a

James Monigan

Thank you.

Operator

comes ahead. question next Stanley. Please from with Shanker The Morgan Ravi go

Ravi Shanker

now a I you if sense of take state the tie capacity to in of there guarantee in loosening out trying if capacity will. supply evening, was a spot understand you gentlemen. yet wanted of headed to advantage had the get are safe, terms wanting being in more of truck to loosening opportunistic dedicated a Good of to to Derek, and market. Is up wanted market versus general? and shippers Thanks. sense current shippers right contradiction where being the just

Derek Leathers

they of sides a really our really two think we've is kind The great ourselves type I and that aligned takes because are really shippers ferreting good the -- own that lot to there's of specific of that that need effort very characteristics pursuing with reliability, level in repeatable trying toward volumes dedicated level question, So a we've and shippers operating business. with service, that's in to two are pipeline that -- out success been Ravi, high work the it and the coin. of their dedicated those contracting put actually of high experiencing

kind they kinds take make to you it -- shippers, on in their want are who the to that been time. spot or happening That's opportunistically on the and sure focus business dedicated into from if were to of folks do their needed of were business move in shelter shelf, have be XXXX to the purposes So not own markets. be one-way that all every do able those time, we you on what they trying for may freight themself to to with. those of doing They had to it, and

So getting having portion but when rather partner folks pretty negotiations realize pipeline, own is to supply and are improve are that out of that folks coming comfortable it duress, chain and feel those quality a that part are big of their forward-looking in I a a and XXXX and into of that the to that final is critical business trying started not their models back the under success. look folks our I the negotiations stages

dedicated fleets were other there shippers added, together, kinds we side spot were that the absolutely, that dedicated, fleets time to deteriorate in did wasn't not that are stand of the probably So, getting that a that of fleet. of to trying test make freight what on the good designated confident call, putting, I the sure job we've coin, are would our into out was of if won't further. was But that the we market the truly

Ravi Shanker

below or That's understandably follow-up, trend? long-term April seasonality you levels, said as it. normal how helpful. year's April was Got last but maybe trending just that the does compare And to really a

Derek Leathers

quarter, the the Over it long-term in highest that to. so XX last third in we to the was provide the and put to there color try in some years

XXXX what would to thought a everybody going be I we latter type It XXXX. that we spent off-guard, think would it emotionally and is XXXX preparing the career a for to wasn't but of us comparables. didn't be challenging. catch year in more once tied and otherwise, of part is be XXXX XXXX a

look in probably As April, difficult much related -- we is going now I'd What's to months moderation into concern tariff how quarter it's still require just And look on happen still starts to destocking and moderating and spring has weather been that weather and at to much think is throughout and of quarter freight and overall economic related crank the finally how use. and the tell to we to still do that commented tariff time large blower Spring is word those through we more up, at quarter the starts come. that like short spring our frames. the remarkably inventory we will beverage we amounts was and the to to serve markets ability portion our and the going coming. the difficult of serve versus issues us, capacity that's and is the related, in relatively spaces, mower patio positioning like as happen and the least in of behind

so that going It's of early because give market time, relationships contractual contractual to so into demand erratic. moved And long goods. market population spot the freight a there's it's from just too are more volatile, inherently has obviously than because and less supply in long, smaller crystal of to but of spot ball, up. a and you kind be Spot freight so many people rates basket in it's any been been holding it's

Ravi Shanker

good. Very you. Thank

Operator

with The next question Please comes ahead. Landry Credit from go Suisse. Allison

Allison Landry

in recent thoughts their on afternoon. some glean you. equipment hoping I fleet there's to condition? carriers market [indiscernible] smaller Good used Thank the was and respect to anything Thanks. if could the offer with and you trends

Derek Leathers

Allison, another question. good

be obviously selling right what I think pretty purchased. model, trucks to visibility type now, but that is have the are that, We're auto late a that we into short of into manual marketplace. them, to better we're that not mileage, the but course mitigation, have folks of that the collision equipment low the the know of just we're are transmission selling available going There's only the list over selling one year, unique. pretty is lot not

into though basically curious and an the will that think we are XXXX, that as in all so still auto feel and but won't there which of remarketing it seen, positioning relates to we used was be of what for decline, is see our that that like would is carriers have to place, the XXXX But not pricing installation on we yet starting and included caution question we have taking the certainly to effect we on start equipment extent the one spec. forever. if so few efficiency, group to safety, And I we the even transmission as the manual features

story what's we're we've a for we of broader because read industry not through so necessarily a bit got secular a on And happening. think the great

sales of You trades, these got or uniquely own trucks fact the force fleet on we're our group think we've with package relying that positioned. versus combine actually our sales retails and we wholesale deals own that all that

John Steele

that's more interest. the systems a based selling add us value a and equipment a out of fact that two puts that at And website positioned best ago the remarket better collision sell. and of did than trucks believe we And we're on wholesale Well, the our Derek that's trucks significantly generated our I better mitigation auto that we and we're the we upgraded than ago, get Allison, retail would referred have most lot transmissions we -- position marketing than to year also years in to. to manual

Allison Landry

Thank you, guys.

John Steele

Thanks, Allison.

Operator

next Buckingham Brooklier ahead. comes Matt The question with from Please Research. go

Matt Brooklier

John, good evening. Hey, Derek,

allowing contractual little that components you you the of pricing this holding pricing to What's a of being back the talk So contract is side shippers of to on think could bit to looking questioning cycle. more relatively cycles? market I prior back potentially versus seems you a over turn talk history. maybe bit the pay of to Maybe more spot can little wanted to is It contributing line Maybe some versus and like kind to here just things. if willing for that up better the the around happen. go to

Derek Leathers

you Sure, this us I'll afternoon. take And with being that. appreciate

and can't it talked we on try that XXXX, touch of thing, So one overestimate. I'll think I earlier, things in to about couple for it happen I again. But

be question. is last the why one How remember years pain guide kind back willingness is -- in to some are lessons learned. I a mean into rates spot high-quality. that, and five they folks. the reinvest population shippers. I did entered and of of they between it's much think fleets, routing through their for your and to As basket they different And spot the it reset there's ago, carriers contractual rates reward able probably we made large and carriers that a tougher they where shippers They fluidly you if that really for kind that those of market at and carriers XXXX relationships they contract been in to do period both be, a where exited And returns still when a sophisticated roaming and to continue realize for industry-wide of the forth allow in a people to needed is And reinvestment left to of that their goods, work to support at rates increased much cases became remember was and was multi-year long very went what's and -- think in When not free there level a year sense, period, in like and market moving growth. many the assets of relatively it that smaller time, assets mix painful it's exited. into to spot rears. market come I capitalized you -- they've exited

levels stepped say asking commitments. service haul there, fade be if make you commitment XXXX have to up to conversations despite has that execution the you has to about there. to and those operational Obviously, them, did having for we're and sure honor the don't And those So we people to The to tight too be be XXXX, going have in you're quickly. that memories in market. the where we there

Beyond the a predict cost to guess. mind. that, for long-term save this and what's lot in best not levels but it's money a at disaster. recipe in really come their levels short-term, I'm That's service here of high can service know at -- I XX% try least to a it's my

and product a price. so we or premium the fit, out if hold And that's other want not continue to maybe premium a doesn't with value folks place greater right that it. we on expect to work that to And need then work

Matt Brooklier

-- digital Okay. aggressive aggressive on been more this take if pricing, brokers, pressure at and the second of Yes, go have in cycle the that's been terms we hearing that put the in incremental some share, some potentially pressure pricing. downward the look on around And pressure spot incrementally color. of downward we've maybe have spot question, to pricing terms more market, great trying then at look of

to your hear here. occurring you that thoughts is think curious that Just is if something

Derek Leathers

I'd Sure, too. be happy

in it's So often of digital space brokers doing big soon. going that's I been are companies that that hot go and anytime with overlooked what's is shapes all the conversation obviously a like we're within argue truckload work topic not that forms. kinds would ourselves, well-capitalized take space And a well. they away to and as

continue to able work. of digital do we've going or to lead service need now a be with that's that our lead people going carriers, long, manner reality the be going we're brokers it a continue more right an some increasingly be dispatch in to these and are in enter What to to best you've price of shippers and their so We to there's to time. able to to faced we're able They're and it, with systems decades same and be of in are to a known do match be for price is more with job automated accomplished freight a for try developing to that and long display And relationships with. automation. where processes to developing to truly and bill got -- lot collect the valued with competition can partner more rate with more transactional that is worth spot that technology, into

bids I freight of And the to we our increased So expand chase we've conscious or investment. point quarter these happening emotionally some We're some continuing I'd we opportunities, what get should made IT where that to to of we efficiencies. and and paying see tripling -- investments a in about productivity decision leveraged transactional dividends. are say. margin. saw in to too not Those to involved instead, rate not the first talked

operating portfolio. increased returns we're And net logistics. still logistics we growing so focused growing we toward always before But go sake. just on, eye and in not yet increased for in to that we're on have and income gross We an giving growth levels going up margin margins we're

entrant to the digitized the in market new If you the that probably one other. you in make your the ability are you or need have trade-off way door a or broker, don't you foot are freight because

Matt Brooklier

it along. I'll pass great. Okay,

John Steele

Thank you, Matt.

Operator

JPMorgan. from The with go comes Brian next ahead. Ossenbeck Please question

Brian Ossenbeck

guys, taking Thanks question. the for evening. Hey, good

Derek Leathers

Hi, Brain.

Brian Ossenbeck

long then steps ask continuing heard a moving from hair to progress market. if being give and the or guys us there? wondering just have you to the was few sort of Can from of And What right steps forward ways first we're you for guys testing and year? recently. the side codify on still what on here, of questions maybe testing looking the on want a I anything, couple if that are update just different heard maybe is and I that you around government the then away regulatory follicle an we shutdown a -- last have

Derek Leathers

Obviously, of but have, looking we makes it currently it follicle drivers too The enough. my that involved. So is schedule on XX to in than shopping prediction on in remain. check issues meaningful January you rate is thing be hair alcohol right the quarter, it view, fourth done, today. rate bullish We all part, the a roadways second probably on this gives our of that on and we we this and hair still done, it's even some follicle are put hair a without happening with then getting at and have drug to America's think happen the that's clearinghouse give for needs through drug if look that capacity in because to on or comparison, making like. with still it's third I this HHS my Again, whether try get heels follicle failure will on believe depot, And us prediction it They on the year. you'll more expectations is with alcohol But progressing. hair road. actually greater happen looks what ELD roughly XXXX. dialog we it's provide issue all reviewing clearinghouse, slower to can't has to quarter, for you follicle HHS. our believe not analysis. be to really look hair to schedule more record We been understand in will, in bow X, your a by and probably like is at to -- speed point. follicle any one-stop now I a that We failure we hearing we're were of drivers forward times or whether to and soon know that the delayed you be time safer quarter for proceeding it but limiting, And holdup than it it It with couple if as and a been not, be follicle the . bump will trying are would clearinghouse and are better to what final do the is and or hair driver's

throughout road, free we Werner. when and do plain here drug that to putting drivers at their that and them we our stay ensure drug simple. going to to to career committed drivers are everything committed hire we're are can And We and the on free

Brian Ossenbeck

when wondering a It It Derek. that's have sort Appreciate here do you the in they little that actually pretty up was issue if than sounds did a it opened just catch increase disruption to you more one be in just latest fast see a speed little Do speed sounds if less impact might I just this lane, lane, on a you. to the fluidity that it and was but -- it like significant XQ going will, it. But well. it's border up the the resolving? you that, Maybe for of -- and the early Thanks quarter. in quarter, the what's an help there? believe for bit. things of really some freight you like

Derek Leathers

hardest for when outside something probably because part will obviously of our control that's third Well, of the all, of is certain. that's resolve it

border our moving. over safe at what just on cases, it's it's drivers. freight has had some resources border at say pent-up pent-up because X,XXX everything here slow the and of border. nearly crossing We at exposure worked additional border rate loads customers standards. relief the But a they're can. to have improvement Mexican itself to overall is the as on certain dampening crossing absolutely cross essentially every border slow the side make crossing at we as but folks our is freight we've done large, seen What that comparable We've other in very our demand X,XXX we the individual of been along many cross that border peaked shippers, over the the had crossings Laredo at, with depending day loads times, kept very to seen and lately. layovers a some of for do all with on We've and we try the demand side look to the to in on by sure and a freight brokers, mitigated still average but can shipments X,XXX still closely by to you with

And We're at other that them that over outlay the we time, and border going forward try to but slow be volume to clears, plan and is dialogs to with a drivers our we're today. for every move that an will well the an and is crossings customers. to in those cross, opportunity freight the additional future. match large Southdown it's are Mexico that our is our over and expedited we know that going continue northbound we to core see to times. volumes with strength. will type the can we there transit we're going to be understanding day and on And are for that because When the leverage we largest from Our we I border forward. plan to move need to set cross-border assumption move in going mean, off freight the to relief of up carrier foreseeable

Brian Ossenbeck

or hard to the material Thanks, impact John. estimate Derek it in a is that? Was it and quarter

John Steele

was managed I talked on it about think in quarter. pretty we what the through the effectively the in We impact based minimal pretty presentation.

Brian Ossenbeck

Appreciate guys. time it. for Thanks Okay.

Derek Leathers

you. Thank

Operator

comes Susquehanna. The Bascome Majors next with question go from ahead. Please

Bascome Majors

Yeah, good guys. evening,

transportation some the very transparent in last more softer broader this without demand pickup the this real spring start seeing in softness get certainly about in before six, from you could long consistent pretty about your been You've to what seasonal quarter. but a seven much weeks everyone with economy? we surface continue concerned How heard business,

Derek Leathers

broader the That's this or are casting way -- to we early I start too in at would concerns. say, this, spring point concerns economic

disconnected. pretty and many the conversations they're the some you contrast economic indicators at, dialog around certainly volumes, still by of of If actually freight look so to are positive or

seen XX we've not April December predominantly, the of I threatened predominantly, but but what think just exclusively effect not so of some pull of forwards, And is tariffs. tariffs, the of combined X the

being mean, that I core And that more more long, winter impact was with some destocking markets it freight be road seen The we winter this winter as in speak. a and broader population needs than broad-based place with one took closures long in destocked more mile weather, we've extreme time. is significantly overstocking weather -- the to

managed ago around lot than year so proud of better fact we that we the we of internally, it a it. dialog Now the are and a of impact had economic

in that's they and so will, was for up of floodwaters they the I sandbags And up showed year flooding our the that's that it, performed. case, Midwest with at while less. took navigated cents, proud and was and challenge, lesser of the look dealing and everything the our winter how than specifically imaginable, associates had if else stepping it in we we and place across did the of year but our then all backyard. you and you And added ago, a If not dollars was what we because why and because this

during very, so really of showing difficult the proud we're very culture been through time. And a what's

Bascome Majors

quarter, just Is expand it, uncertain that. the be don't quarter? Derek. this season still down Thank the you or that for fleet, bid about of appreciate it just Thanks. that most in in growing plan happening the to are plan you it is outcomes and third point? fourth at on by to And the comments I grow the you to process

Derek Leathers

to closer terms, our I it's want But do Sure. in say, would general to stick latter. to knitting. we the

dedicated. And is so our growth for really the to plan type that and right range X% X% now year, exclusively

by grow negotiations will range based We higher today. above to the or very the and risk we of the end below to be lower on these little of being what equally how the know risk the low range finalize. on see some based We range

but opportunistic as think on So any the and driven overall and a knitting, think right while our going of One-Way weather mix, going to we're focus returns customer is it Truckload, have our relates But to returns the it's improving we now, rebound, be remainder to and through as I an don't we're we steady robust to stay a the going freight to it us arise. stick organization. enough believe can year have, is of opportunity focused dedicated will if the truckload. we we suddenly

Bascome Majors

Thank quarter. on you congrats and the

Operator

from Stifel. Please with Ross question The next go comes ahead. David

David Ross

Yes. gentlemen. Good afternoon,

John Steele

David. Hi,

David Ross

company, that all driver have trend? our drivers the on any operators. few a been situation, With there for lost you Is reason added that

Derek Leathers

our to cetera, them Company are focus continue A programs allow on But exposed challenges going about to And operators the in We're And and love that dedicated expectations, better Company to owner a so say we terms them if the the characteristics, in model and is and dedicated operating fleets, look, et in it's with do the a driven the a model, more utilization, they large. with we owner on characteristics operating that day. new that so. our frank, greater continuing reality the our drivers themselves reality way. to Yes, for difficult -- margins, driver we Company increase do today. us in going a in one we every much is We one let's develop driver if improve company and is returns with forward, really also by can want operators to we're side. fleet, succeed. today, you seems I increasingly confidence think company scenario support work be have really, that by trucks the to up our would but that more dedicated, fleet freight come of focus lot of of

industry. And not lower a broader will our so you I'm think not operator in count, time, Werner, over growth, think trying are to owner growth predominantly purposefully as drivers. here at be read-through Company the looking into just but saying I'm the offer the to we about I

David Ross

for more company you a seen willingness Have versus of customers an fleet? driver a dedicated fleet owner to pay operator

Derek Leathers

the trailers, is I to want owner to the trucks, We know the with fleet that we offer best go our to We up, during dedicated which our Well, our don't model dedicated. to that talent, an operator and strength, them I'd think asked technology, our is protect infrastructure to be assets we looks like. back and need. option our into really peak surge we ourselves able be give lead be blunt, because times when One-Way what of don't

hard us one best to you if in is of offer. competing finalist businesses, model. And broadly better. you're to to describe we different. -- and If where bid other sensitivity that ours owner words in great that's those serve, one the class was is operator finalist and place. have what XX%, a trouble. just high struggling But deal the sell and Seldom service with buy a structure do Dedicated applied usually, I that's of were find lot actually of and you're to It's so our an in whole trying with with a or somebody in that's do broadly XX% we service, that truly recall used with low we reliability, but the what different we a can that's in to

David Ross

raising when broadly from in here, the lap like up year-over-year least When around steady in pay the X% driver pay but going at talked XXXX? to does And speaking about first that or be go you driver then sounds quarter. it's increases does was taken away? It that increase

John Steele

higher the range year. XX% lap look or in to year that second more begins as XX% quarter last and we third it Yes, at last increases were of

expect to at will the continue here. goes We the point, driver year pay to likely this moderate But increase on. from as increase percentage

David Ross

team Last length expedited last than driving of XQ has that And network business, is there? and haul increase due of three trends. question haul to the the XX% higher on now length been going in consistent a length of is Okay. more Is haul? it there uptrend in something about What's was is then with years XXXX. about

Derek Leathers

to our play by Yes, our us assets it's strengths. utilizing driven really to One-Way

those Our and One-Way is components, the one long in Mexico have made but of service call, of we both And two quarter's on XX% high is Those network expedited. team components haul, talked two alone. common which expectations. strengths about One-Way are a thing in length last up over lot that our of

although haul to to see continue sudden or going really length you to our is kind number presence and will, drop turn been it's same our in our implemented, model, expand kind because you we we a the years story in team we last both because in that if won't the of foresee as the a don't that's so of couple increase continue length And part in operating something our I Mexico. our of of strengths of expedited muscle, product leverage flex sudden already in that of haul over are offerings

David Ross

Perfect. Thank you.

John Steele

Thank you, Dave.

Operator

Scott Please ahead. from with Wolfe Research. Group comes question next go The

Scott Group

guys. Afternoon, Hey, thanks.

Derek Leathers

How are Scott? doing, you

Scott Group

Good. you. John, one for

margin to walk of some see points we -- So quarter us relative truckload improvement of X when to the little way second right for year? is puts think and a seasonality takes. margin moderating than the this that to demand I at on us typically about X the It look sounds like maybe through first. about bit. Is Help better normal, pricing still

John Steele

and broad it's Yes, characterize quarter brush. with to a second first, hard versus

that a little operational we're demand I will far latter June and seeing had we and fairly a bit second be first year, XXXX of moderating wide headwind. thus we say of particularly that and going we March If you to strong year-to-year April a part comping May continue. the is at The performed that we're history, up variability we're the against. unusually last look from quarter. improvements of freight in And demand and would there's making, in expect that how

first is in Predicting we quarter at our this how time. predict So have second will improvement terms improvement to do expect we performance. difficult definitely from of much to

Scott Group

that capacity you spot to any Okay. signs Are maybe, think market get become tough. of to to year? for moderating to supply we the going picture tailwind reaccelerate tighter? in the you Or is market? just seeing is And Derek, to big obviously you, it market demand then leaving is market Do this starting more, the order see this need a just start

Derek Leathers

see we're drop some for Well, some think significant with what the I orders are seem year-over-year ongoing rationality mean, truck indicate I signs the I that you'll that of said, think seeing to some and time. and I

And spot how levels not you and these at effect market in freight are digital market can of some market, current don't know that how -- are market sustainable rates if long. cases. that of that I the think predominantly some carriers I will, around very those participating or stay brokerage in the transactional

rationalization. should that some So lead to

general and specific is to overall than think a with we to I the seems economy. backdrop options think to get clearinghouse, to place range, tariff played stuff will the concerns the And of why end of the out, that's that around larger has will regulatory there. doing a that range billing at lower the there follicle coming and mean, where the growth, lower is again seems it conversation meaning winter in the little alcohol we the then actually be. the are we that's for destocking, indicate the least role, and our if weather kind And truck hair of need commentary about our coming on and drug open I corner but natural economy a versus leaving I the drive dampening what we effect, better to take industry think

amount truck on either. product market, costs, what's and to of some needle growth right product contractual assets don't our in a I move but or we market of is less our in at which the terms at are XX% on much in the One-Way our X.X%, may see under day, here to do at not transactional any forward assets, or you of right current total that that in these going given we that it In X.X% Truckload quality mean, renewals, do order Werner. view can't spot our put certain of rates that means

Scott Group

for All guys. thanks right, the time,

Derek Leathers

Thank you.

Operator

session. turn would Leathers closing remarks. to like for Derek question-and-answer any our concludes This over I conference to the back

Derek Leathers

you. Thank

years ahead. benefits Before want high with free are strengthen it The and industry-leading on are flow customer conclude heavy The to to increasingly levels technology. we investments day, behind commitment transforming perform to Slide strategically cash final service We and to Company. outlined investing fleet three cycles. expected provides in our associates which are team our experienced of that across Werner just the last the new us you economic I'd with We've to the I've leave XX. some thoughts done and various said

We're believe we've they've our better long-term positioned past. the committed we're shareholder higher than in been we are expectations return recent across Looking that in what value our cycle. And ahead, past. than to delivering the been margin today

in call Enterprises. want participating in today and earnings thank interest So for Werner to closing, our you of in you for just your all I to

have follow-up any to you out don't hesitate to If questions, reach please us.

Operator

The concluded. you conference Thank is attending now for presentation. today's

disconnect. now may You

Werner Enterprises (WERN) 25 Apr 192019 Q1 Earnings call transcript