WERN - Earnings call transcript Q2 2019 | Werner Enterprises, Inc.

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Operator

Good afternoon and welcome to the Werner Enterprises' Second Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]

Earlier this afternoon, the company issued an earnings release for its second quarter 2019 financial results and posted a slide presentation to accompany today's discussion. These materials are available on the Investor Relations section of the company's website at werner.com.

recorded evening be slides. along being beginning for is this later with webcast and available will replay Today's the supporting

we the your on direct the press the begin, the to in Before statement forward-looking related disclosure statements. disclaimers attention included Slide as presentation to of release well as X please

the could statements is statements to differ results which forward-looking contain risks, a remarks in filings actual summary may involve the forward-looking uncertainties, with This cause disclaimer company's and is included Today's the that other disclaimer, brief of factors statutory that company's materially. SEC.

company using the and GAAP appendix attached included in facilitate reports the Additionally, at the performance. which in the help presentation. information measures is the past of to results comparable present it additional believes directly tables provide and comparison to in the And measures release investors slide earnings for the reconciliation non-GAAP most

turn Leathers, with Mr. over now would conference to the I presentation. your please Derek Mr. Leathers like And CEO. and go to President ahead

Derek Leathers

you good Thank everyone. afternoon and

me today you and with Steele excited On second we're the John CFO, speak is the XXXX our earnings to Werner quarter results. about call with

providing by our positioning, for overview and we'll our by finish then address by and allocation of a the business capital current additional highlights will updated company strategies and the review our the and financial then your John guidance, I'll financials. brief followed quarter. XXXX provide start on I'll questions. detail reviewing financial our

with from Logistics our Truckload a Now, was in of snapshot Services XX% turning new segment in revenue may be to Werner, to X, company segment. the we've our included who Slide for coming those generated Werner remainder Transportation XXXX,

in half XX% consumer, is just manufacturing focused logistics and revenue the in XX% with is and in on and is retail, customer is our remaining beverage, vertical, for XX% other. food base industrial, Our the by in over

sensitive. products less tend largest focus that to sell industry necessity-based retailers economically on we discount more that Within vertical, be serving

We coming across a half XX diversified of revenue XX% have less top spread with our top than our and from XX. customer base customers

of over highlighting and as execution On X, last a there's years a timeline position Slide five key Werner best-in-class trucking logistics to events provider. the

and truck returned high it. enables we our drivers. to produce net By levels. high This and to us and new service want fleet where quality normalized Our XXXX quality is than XXXX CapEx are has and trailer attract design, lower in

our which portfolio Also financial increase remains to revenue our in one-way I'll and balanced of the second This moments. Our relatively during in dedicated, positions results. between discuss more few strategy, truckload, capital consistency allocation we executed detail the logistics. quarter, Werner a

and for Next, let's overview financial our move to Slide second of quarter year-to-date brief X a performance.

second basis, the freight adjusted share. grew average unusually freight performance strong $XXX market strong X% in $X.XX this to market For revenues quarter EPS was million. quarter, below a quarter an increased X% per This of compared XXXX. the considering quarter to On an second to

and X% by was of increased increase Our XXXX total points a operating of second margin second quarter growth EPS to adjusted XX of adjusted declined adjusted XX% company operating Adjusted this our income X% on in basis X.X%. slightly XXXX. quarter top EPS the quarter

maintaining quarter Results we continued a our well exposure spot market, saw focus market freight reflect a trucking year. from to and below that transactional low average of was challenging what the standpoint than maximize relatively a freight seasonal margin. in demand we In operating second our lower on last

our or reminder, approximately Truckload total As X% are miles of One-Way only a our miles. of XX% spot

produced robust in very the year, opportunities. great freight several search Last projects market

opportunities with loaded a second was no this and Freight in than second surge mile our also a lower demand resulting percentage XXXX, tough events quarter comp. to For $X.XX Truckload two contributed rate or and earnings. quarter in earnings quarter these points added to average per share over XXXX meaningful One-Way project rate

this sequentially. versus by Adjusted increased revenues year-over-year expanded our XX% our and dynamic, adjusted XXX on management operating by period last adjusted XXXX basis by environment. quarter margin and year-over-year a operating the X% X%. same cost We our income improved EPS through increased XX% second execution increased year. Year-to-date EPS and freight we Despite XX% and tougher points focus

Truckload I'd quarter their class or segment, the TTS working Transportation Reflecting XXX hard an increase with like within and to of for X,XXX ended trucks efforts. investment year-over-year investing sincerely total associates second downturn we thank Warner all fleet, continued tractors our our and sequentially. Services

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

John Steele

everyone. Thank second and X, versus quarter second we financial us slide performance some year. additional provide you We today. in joining appreciate XXXX last quarter afternoon good you, Derek, Beginning on drivers

per X% increased of week revenue we net trucks truck per fuel Our number average of by declined the and X.X%.

X% declined our segment, operating In operating TTS logistic adjusted and revenues Adjusted income XX X%. basis points. grew declined margin

compared increases XXXX from Our quarter nearly in basis to XX nearly quarter XXXX. in first moderated larger logistics second increases to operating we of X% half pay first XXXX, declined driver as pay the margin points. X% to Driver began by lap

going due Moving performance and We fewer income meaningful in improvements most share EPS. shares X% flat combined X% share to operational growth, are The training diluted of a of adjusted of outstanding believe leasing schools achieved improvements due to the and EPS repurchases. year-over-year to increase our driver improvement. contributed We which was on basis primarily net forward. sustainable these a generated $X.XX equipment

fleet a X% million slide due fuel to quarter look results prices more at truck growth, per primarily for lower decline and X% our Beginning $XXX grew in second lower TTS revenue week. TTS our $X.X revenues, by year-over-year, of surcharge detail. per in revenue let's segment million for fuel on X, caused X%

to achieved $XX.X due in XX.X% second Despite million, quarter market fuel. reduction XXXX, freight Adjusted in XX a margin operating declined including solid average we income X% point below the operating basis to a margin. operating adjusted the

Our adjusted XX.X. of TTS fuel operating strong was ratio net a

XX. slide on Now

quarter second One-Way and Truckload dedicated metrics. our at look Let's

million. net revenue to $XXX X%, Dedicated For by year-over-year. grew tractors trucking Dedicated dedicated, revenues we X.X%. increased week grew truck of per average $XXX per million XX% fuel

tractors One-Way for Truckload to for X.X% trucking X%. revenues Truckload due X.X% and per the for truck decrease miles quarter, One-Way X% lower increased average Revenue million. total fuel decreased truck net lower revenues to of X% week mile. per $XXX

to which teen delays lower more robust imposed The was truck market quarter progressed. seasonal than XXXX less than average the a second early the per in as challenging in decline market a and and due southern quarter Fewer freight to quarter the freight miles second this quarter quarter border, were XXXX. government driver at trucks compared disruptive

declined X % Werner due second results at fewer to XXXX. In the of spot XX. to Logistics million, project when and primarily the to quarter declines $XXX.X slide Logistics XX% on Moving lower revenue compared opportunities. to volumes over Transactional second freight quarter, slightly pricing

network. Gross generation and points informed brokerage margins across the our XX improved of benefits early analytics basis logistics expanded decisions as our capacity new in enabled more tools pricing

Our logistics operating percentage basis down points income XX declined year-over-year. X%,

We and productivity software are gaining efficiencies with enhancements. our latest

will these of users However, impacting grow. of occur the as become and to operating short-term brokerage new The more technology of the benefits quarter the margins will throughout as associates offices the all their The tools, our these transformation investments in continue are third rollout more adopt operating intended and realized across digital costs investments proficient. benefits. fully

it each minutes. to excited we're improved effective far in widespread performance to want discuss highlight is what carefully and will both and to seeing about prior tested a that application and adoption. We're is Derek this I new few generates ensure further so then piloted

our against I to would now like execution Derek, of will updated who final Derek? to remarks. our Back portion cover allocation the and capital over to turn developments, our outlook. prepared XXXX strategy,

Derek Leathers

John. you, Thank

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June share per which $X.XX dividend a Xth. announced XXX we on or was million First, special paid

repurchase a return to enhance million announced X our of initiatives these new also We Both shareholders. share to designed authorization. are

credit new a facilities totalling into cost million which facilities past, the XXX bank banks. entered we capital. May debt, XXXX maintain no lead with of a pricing through our and In more resulted These average addition In of X of expanded we attractive terms our expensive credit virtually in existing with covenants. extend weighted

By long times EBITDA revising our and in EBITDA to from manageable X.X a times the X.X no debt range modest range. goal to term of debt

capital. advantage above lower attractive average We through expect fixed early historically of rates $XXX rate the interest weighted debt In of and took to low our X.X% of cost July, for of XXXX. our we interest million slightly at May

stronger the maintaining flexible balance to committed sheet. We're more

June we Following of appropriate times. debt net an and conservative over $X billion and EBITDA the dividend, still X.X ratio equity special have of to stockholders

I'd discuss XX, to Next, on guidance. slide XXXX like updated our

levels guidance trucks for we that fleet for maintain assumptions, For expect our X.X modern near to at and age our X.X trailers.

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

low to coming X% end dedicated Next, growth growth in the in TTS occurring range. we remaining third With that XXXX the to XXXX the in our quarter. yearend of truck growth be expect to of from most our and year amount truck X%

add We expect the we no the In more truck XXXX of XXXX. in XXX planned half added first trucks. about year growth third currently in XXX quarter quarter fourth trucks with to

lower remained On way demand weeks side, in freight one the load a typical truck first unit our for of than so July far in has July. the half X.X freight average

during X.X second were first in quarter million quarter second to Games in XXXX. on sales the equipment of of compared quarter million million X.X X.X and

market. used some truck moderation begun in trailer We pricing to and see the have

As been market has the freight sluggish.

realized equipment of Year XX.X we to million. gains date,

of XX low and gains million to the expect of XXXX in the expect of range. XX equipment year be for to full on to this currently million of sales end continue We

the our net million range For to in million of the range. low XXX CapEx, guidance remains be XXX we expect to and end

Now year for of to the the Truckload are trucks we mile fleet, the and for per full to guidance, let's is X%. expected of negative changing. be the to total discuss way XXXX XXXX flat XX% compared in now Revenue one our range XXXX our

average contracts contract date in to approximately recent While low are range. to the on renewed year digit increases single X% with pricing XXXX flat

few miles. rate and higher XXXX The projects has surge rates significantly provided lacklustre market lower opportunities empty and freight spot

As with a expectation current assuming continue seasonal trend we pickup in in third will that such, are the normal during holiday the will quarter freight there and rates quarter be an fourth frame shopping season. the

in significant few XXXX, Third increases in quarter total due last be the to per same lowered occurred and expected year. in is the fourth One-Way last to Truckload project rate and activity quarters that quarters revenue mile

third $X.X quarterly Finally, current quarter a we approximately XXXX on run in and our to debt interest our to expense rate level rates. increase expect based interest million of

As our cost structure. to cost and savings To-date, months, several last rate cost lower identified over accelerated management in the categories. we've freight spend $XX markets we wide the million multiple company our initiatives moderated annualized in

grow We continue expect to forward. these cost savings moving to

over summary, In than dedicated, operational excellent. and exposure One-Way fleet well from Logistics of our nearly stable in on a and XX% our a focus positioned more Truckload in XX% is and the many of predictable continued Werner business, with digital to our revenue market industry our less and segment

comes operate our We a positioned economic fleet. to successfully way, we whatever are and new environment have

and have producing our to increasingly service We we’re engaged and high quality customers. energized team an

call this time, I over to begin to Q&A, At would the the to like turn our operator

Operator

the We from go question session. Wadewitz will question-and-answer come [Operator first Please Instructions] now today will ahead. Tom UBS. Our begin of

Tom Wadewitz

and the Wanted the cycle, a at if XXXX. the Thanks guess and terms we’d recent afternoon. cycle see for on to XXXX Derek, downturn good most look in I all Yes, would offer detail. view presentation the could be of you

are you you be quicker this more cycle. be narrow, maybe similar recovery, some to just downturn think on pretty or might on the a in of to just with reasons cycle this down and that kind wanted will what to start some So it that offer thoughts so quicker there could perspective maybe see, if

Derek Leathers

for Sure question. the Tom. Thanks

think to I So, do note. there differences are are important that some

and If lack or to this winter of a of a and you talks, the about compared think XXXX had macro more better market what are of where season, the trade, of sort starts if XXXX, economy larger about or that is was influences between some per se, we've weather, very times. tariff year the of the XXXX as for from you or think think economic cycle at sort some different external not of on prior extended fits lot product overcapacity more noise sort within and we saw delayed in in things term the oriented nature that -- I true it but widespread slowdown white cycles

to I up framed the rate tariff. better term, a a time, of and growth a because freight and some sudden the trade pretty with nonetheless mid-sized carriers course ramp explosive followed uncertainty This Obviously, additions followed at capacity of economic strong think of XXXX. a small in lack for really pretty we specifically over had by rates took year by economy

faster by year of So, chugging market some sort but tightening. loosening economy a earlier I We external in the we ago large was happen of still saw snowballing correction is underlying terms think by along. saw in several the the year a of factors, the caused that

leading believe we the market. capacity is so And do

builds you look of as at taking at rates If are, fast order look current they cancellations if as falling place. you

some, this what -- for out trends sized that cycles. than could turnaround there quicker more especially could say would in to I are prior opportunity before think I frankly us seen just be is and be carriers. we've The bankruptcy it at even And meaningfully

Tom Wadewitz

Okay.

year than XX instead, quickly it XX, a like instead two So that. maybe more downturn and happens potentially of

Derek Leathers

us. going we've that I well still so. ones. to so. season said is going operate and believe peak -- delivered ahead And have that it of defense out I goal and our performing commitment coming as think we've we're to down are about use have I if We're continue of to that still us to third portfolio really throughout as dedicate on kind of the quarter. We've markets Yeah that our think we continue as there, to going in some to to it I and well summarize in our as was quarter, it, weather to tailwinds well ability made. weather we the relates and That advantage. truck believe this is I strong behind There the growth

like So our we positioning.

Tom Wadewitz

Right.

number a there dedicated we How decline Is in effect you. much do week, follow whatever freight the to against would Or per matter quarter, dedicated. just something you pricing the pricing weak you. backdrop impact there? that in per up your Thank a as Okay. kind of want be per of wouldn't quick think dedicated? revenue truck, just Thank metric you was to simply X% sort pricing refer And revenue strong up. the of the about pretty that in insulated truck expect lag in more that a see to of in it you related or

Derek Leathers

Yes.

think one had sort think a is and it. from time animal. on And completely customers I service said, to that is, in service off And can't delivered, that's of need in around different what's reporting thing. One-Way on demand in built dots. time really connect dedicated happening about those What's high that demand happening and premium create expectation, as with the every freight first separate we you market and way the One-Way we it

years, in will good said and up hold the for so, we've markets dedicated better. And bad,

Where that we'll expectation what it in that itself shows means our of is onboard.

it terms We've that guided of is, in price. not it now range. with all what at So the to provide the we X% that of we're of have service end going truck a expectations allow started the come it. X% to range. growth lower And with fair value premium with the not year a for Because to

we're And range. in where the with confident are so, at we

your is it on, from. difficult through and rates accordingly. what think where we rear. it And well coming shows commented very price line sight to to But well. you have We And dedicated with do going of do growth in we're the we is it to

Tom Wadewitz

you Thank Great. time. the for

Operator

question ahead. Baird. Ben go Hartford comes Our from Please of next

Unidentified Analyst

I to loosened over drivers regions market it Are difficulty for find for where Thanks the larger drivers? the Ben. that any for couple about to This particularly drivers. up quarters, there [ph] challenging finding has think question. past wanted you're a particularly comment perspective finding additional for bit on carriers? the is on the continued specific some Thanks. taking get your Andy you Hi. Do still

Derek Leathers

Thanks Andy for the question.

So, it guess, much about think We're than than you'll The is larger comment to a our I committed trouble my is, quarter. market if driver over a how in isn’t a think a a framed I in quarter real hurry. and longer you to and drivers, drivers backdrop quarter find term yourself in quarter. a

more so, as think what tight Alcohol you professional possibility and referring market follicle And forward really Clearinghouse, I'm think and drivers qualified remains But about is, hair the the testing you look is and in coming of into play tight. about you to for importantly, Drug XXXX.

the the schools, to leverage don't that We making T's we're driver our continue our our training raise bar that to all just need sight the of want the on expectations. reality we brand, ever leverage leverage of five investments in lose to

would to envelope suddenly, So don't believe There's of that We're the And people big to because market, I applications comment because you have of I lots it's the hire. between push excellence. difference still tight. drivers to very on means lots expect continue specifically in want that a and you that, have just going two. you

Unidentified Analyst

Thank you.

Operator

Please Deutsche of Bank. ahead. Our from Amit comes go Mehrotra next question

Amit Mehrotra

are Hey, Hey, How Thanks. you John. guys. Derek.

Derek Leathers

Good, Amit.

John Steele

Amit. Hi,

Amit Mehrotra

in the to counts Derrick, of I Obviously, visibility to we more that from and volatility there, the have on question mix that a should in XX/XX the the make resiliency, opportunities That's see ago. aggressive maybe the in one-way. Why the or not and of time between the truck of ask truckload lack just long wanted a mix XX% kind given visibility that of just continue up Shouldn't business? Appreciate the tractors dedicated. not continue market? dedicated been one-way to shift, we given dedicated, the move here.

Derek Leathers

couple on a Amit. So, that, thoughts of

but XX% so one, moving we're XX%. today, towards first The

us believe And the front about, to talked filling are up. pipeline we of in opportunities strong we've get As is enough us our there.

the about we're key side. As which overall to to abandon continue We out don't to those we can we think focus we to Mexico our what And well. going on expedited. is do strengths, think one-way two – We're building right team the want and and we market. on that franchises freight

lease there XX%. It as will on magic focus what think our And and within One-Way continue about about really Mexico way or world one We spectrum, can are to looking the expedited continue on team the is end of to But further could just that that time which that. in happens commoditized the we our within we largest world. than that be we to forward, cross-border creep and nothing ability is already is believe currently extend dependent overall the efforts lead. the provider market

John Steele

a One thing quick mean, I just add I would thing.

surge customers to during there to a them Dedicated fleet, are our times we help when with busier For need times year. our

our at help fleet use we times so, capacity with And need. Truckload to One-Way surge that

Amit Mehrotra

Right.

a line expense as in wages cost about Okay. basis, item growth sense. but we structure. a if salaries, That a of complete And Ex-CEO. year-over-year on increase John, actually The moderated and think the percentage sales makes follow-up. just that on benefits, your

expense You assume more in just sense how we Dedicated yields? year-over-year hope but some about that of even benefits, for salaries, given has on on trending the XQ mix outlook less with to just PTE, obviously XQ, a you wages and should on give the do think reliance can us basis

John Steele

per $X $XXX -- benefits higher and to pay, of $XXX then increase. due million fact was and in rate XX% to the million company that's taxes, about that start million drugs. about with of side X% the we up XXXk company The the the it pay were roughly was due quarter, $XX due like of Okay. of the about to increase of higher balance that unemployment higher was had million to and year-over-year $X comp, increased drivers miles. is fringe line in from we and X% comes this medical To $X million with the driver that balance the work that X.X mile. the Fringes million other And million increase

going in year-over-year As where quarter of elements line and last the somewhere because the third which consistent to X% our that larger pay first lap be assumes market X% range in from to expect range X% I X% quarter nearly we are the biggest fourth have the up that look nearly driver today. is quarter we we'll of they at can see and with driver X% in some a you fairly would that the moderated increases to increases beginning up That the to the in second on quarter. forward, remain did freight year. we're in market basis, the X%

Amit Mehrotra

Okay. helpful. That's

you're guys. Something appreciate caller. me I that tells Thanks the much, question. anticipating very

John Steele

Amit. Thanks,

Derek Leathers

Thanks.

Operator

question of Next from Please go Stephens. ahead. Jack comes Atkins

Jack Atkins

John, afternoon and question. thanks my good for much Derek, taking so

Derek Leathers

Hello, Jack.

John Steele

Hi, Jack.

Jack Atkins

I testing. ago whether Derek, hair regulatory national moment to clearinghouse changes alcohol back conversion So, next, could AOBRD is call if drug commenting this the and something on it, it's were follicle which you two quarters over for upcoming to ELD or year the go a three these like to

curious on means get that capacity, of next for you on lead months? just If broader could that to what XX thoughts terms over expand your market? Would take the of what your of all the be sort can sort in the industry

Derek Leathers

On happy there AOBRD there, I'd the think more people I question. Thanks Sure, be ELD, for to. to realize. there's than

play -- and we've I in that we'll to moved our with that think our we'll apologize. be done done variety testing can think that, it's we've up. done implementation restrictions that is and we things there is It's and full X%, a more for process. less us August. move fleet the industry looked be more There and and to Actually, that X% of then this and trip extensive that for at continue that thought X%. folks stringent So, fleet as month. between than we into factors are have But with there's

One of is that's ready news, the if being are compliant in ELD and two lost you the things. actually different ELD things will, been

not feel but are confident have So, ELD front are that. and many We flipped in yet we fleets comfortable ready, of that switch. or

XX over billion And commitment experience approaching before service. ready be and We miles of peak electronic XX got to to years fully logs our so stand will as delivered. and total implemented true in to on season we've

to, to alcohol have chances our no national a somebody extensively drug will it think that us simply have to January and bigger realize of no test confirm a alcohol and in in or that there a go we clearinghouse deal have confidence like this and happen because, we database that. failed previously, point we system effect has followed test to drug may having know up folks competitive today advantage, and January So and I into record, we do is have

us we’re professional so does be really failures a a it qualified know light equal about, interviewing earlier drivers effect. that applicants do shine further exactly line to on understand and who and and talked will delineated, past has driver and not is What that limited allows capacity I even so

That was a the little because had tougher to we've know never right. database,

go is as fact when to So do does that live, we be we just so that and allowing Perhaps believe capacity. phase take some over we've certainly follicle simply use out follicle us the to first clean forward. three of years test will in four the and continue going the hair up hair it biggest been for testing the obviously, record would of it will of

for A, foothold, the has we do. roughly to; front accurate. that not to is to tests; greater the over originally and hair like far it's We'd combine impact That's times on one it's LD it December. that gain first rate even and follicle much, you combined the good good thing. failure two it than able for is but effect and the in save the B, effect your with much analysis safety, know do And But important drug capacity. a If have is upcoming more or industry, testing think money when XX it's this alcohol that's clearinghouse, thing in of right I will a limiting the most an us

Jack Atkins

you. Okay, got

regulatory just next I'm So XX impact capacity material to changes it industry if see could underlying have months, these you a the sum pretty hearing really up, over on correctly, we the

John Steele

I believe so, yes.

Jack Atkins

follow-up it's season And overhang what I What plans? what about just inventory broadly from are peak you your just customers. Derek second if if customers your There's weaker Obviously, for Okay. from you're to perspective. then seasonal about I then expected telling -- could been than talk hearing a levels. just telling great. you excess a they their That's you more quarter are And my get could, from about,

how they expect how of and the quarters to translate their couple next freight volumes? business to over perform that could

Derek Leathers

Some align with about and over of what some a of economy is concerns much the done where the trade. strategy is to or more tariffs headed, of white last it, end executed really bit noise I talked terms the at cases specifically than us about earlier, to But try as obviously, herself affects we've in them winners. in years several the the every

through And and so we're are retailers review of sure of because and less and focus make with our heavy pretty strong sensitive. have that particular a to list growing sure gone retail growing are in focus, are customer stringent that financially on making we've that tried discount that we heavy those our scrubbed a worked and economically

that With all category. to to the this strong, kind of, work surge doing They've, in Same-store been winning with they look up that fall said, well. through brought to down. what they’re to inventories chewed solutions drawn have They're plan folks sales pre-tariff. in that provide we with,

peak. what in pretty feel good see we relative so front of to And about us we

and But Now a a that in reality a we comes comes it to career the conversations me was as led service be and a around this it holidays, have sensitivity once balance the a that that when to year ago, believe year carrier service ago. perhaps. like was case year that Werner still premium the felt be going the things like that's with as all the we providing of to high -- in great last year will Black Friday core year have along carriers demand are to

Jack Atkins

Okay, time. again the guys. appreciate for Thanks Really it.

Derek Leathers

you. Thank

Operator

comes of Markets. Fowler go Capital Please question ahead. KeyBanc Todd from next Our

Todd Fowler

per you us third XXXX? can what Do mile. you improvement about and was was both Great, to good fourth in $X.XX your would comments, thanks of of the that share business numbers that the have in contributed in quarter surge the XXXX of similar Derek project the and with mentioned evening. have that quarter in you and revenue second prepared as XXX basis points

Derek Leathers

need have get may will to next can be in don't something front call of work information that I me, to I quarter. that that but our we No, in update it Todd. offline,

Todd Fowler

just quarter Okay. trended the And from John, year, at maybe about just trying comparisons mean that project and from I'm second order think how I magnitude, a in of what and the Or obviously the sense that part you guys to this half getting search the do a back the of the is in biggest you of face have second standpoint? was of year?

John Steele

third say was project bit a quarter than little would a quarter second search larger I from standpoint. probably

we an holiday quarter normal being In search in terms season. XXXX, to fourth in of project in then pickup outlier our had the due

Todd Fowler

Okay, got it.

you'd quarter fourth seasonality what was from So more kind expect typical year. a last of

John Steele

Yeah.

Todd Fowler

half that timing that seeing give Okay, process numbers cost to identified comments Or in back on, follow-up $XX you've great. I flow the Derek sense to here the kind you're targeted year? of Was that's said now? of is start you us made of that you And going through I a the there that and saving you Can the quarter second been numbers something think then were something the you Thanks. in in and just to of this some right that's think that about initiatives, million. that?

Derek Leathers

that, in have he's Go John. walk ahead, Yeah. because very through John I’m this. to going involved you been

John Steele

Yeah.

second So, at the where through XX% the about at implemented. of we're quarter, we're end

We end third XX% the quarter. implemented expect about to of by be

at So of part and have pretty this for started far the beginning along The the most year, we're continued. in process. with effective then dates the initiatives

expect initiated amount different forward. number volume in we've both growth in the thus and as that think I move items list there's like that we XX on far, we and

Derek Leathers

only And thing is the you risk It non-driver we're the is and insurance, the was figures know and so year-over-year control. salaries designed in we're maintenance. I seen work there take we've the on add talking doesn't the nature. in progress is conservative account and about dollar We're as really our would And last cost nature, it kind year-over-year. true into progress on effects of to one way the working made you've the on in making

Those we've are way pay based down of types performance structured incentive considerably the on packages, our and metrics. for

So, cost those kind to and this we a goals, be for project, to further control are is we'll to of or look spend aggressive really continue ramping and true savings.

Todd Fowler

for Thanks That's time. Got the Okay, it. guys. Thanks, good. helpful.

John Steele

Todd. Thanks,

Derek Leathers

Thank you.

Operator

Our Wolfe Scott next question go from ahead. comes of Group Research. Please

Scott Group

guys. thanks Hey,

see Maybe third your from than than Derek, sometimes through better get And than standpoint. a for we second, have about third. can just views and Do it year. hopefully cycle normal. we takes quarter you the then down you earnings sometimes back pricing to walk as next think puts you worse us So, positive second an shorter

Derek Leathers

I'll Yes. start.

commitment order And be So the because much carrier have to Their pricing rising. even, cancellations how help. rates. closely tied their is dynamic obviously then and to to continuation very going discipline folks we've seen rates build

XX% our our being year-over-year. the being industry of vast about down majority think majority you and pricing spot industry, trucks XX under the of If

Nobody was year making XX% or anything near that a ago.

much, there. going really having of play nonetheless the rough we less think I cleanse go, exists efficient out and your quickly. is don't in a there's any of duress to marketplace, of we portion So out a portion it's operators, That but know, lot that and pretty

this react really And think more lot and seen XX% than prior we've certainly internally out. a what you saw marketplace what end about half if down talked up this both that played and cycles. where will XX% and and rapidly XX%, of that now in in Scott and the has I about believe we first day we've

on question. So that's thoughts pricing my of the kind

then XX% set up. I would think

think IMO it to expectation isn't more XXXX, believe in diesel pay comes technologies logic, driver those that coming diesel increasingly year. Oil you no to about follow going to Equipment and waste hitting you certainly pricing and would be and with up better isn't go advanced going reason If and down. my when price. next there's

how is by much. question The

market's our forum, market at because And be even time all a to have comments, going And choice time our to whether and attendance headed are when to in And we want we We obviously fair record be ask customers loose, in of more our put and attendance. so and there's to market. to more pricing the is the to it. we're go market understand on what where share. valuable activity out they spend views time take the the time on and all paid and just when time got at why record attend going had the our --

there's an So level. interest clearly

Derek Leathers

used to And second the from develop. factors in then like trend to It's on third the market, we the insurance guidance. is freight and quarter don't difficult how going market provide truck they predict the how here fuel will quarter and question, claims, other

look earnings, quarter quarter of years. Typically, averaged have makes third earnings at over predict but to period to fairly XX third produce can quarter hard a we we long, to forward to and least second. work out level strong long did we're second in it consistent almost of as difficult as we As in that a going as as as

Scott Group

we can you don't Okay. going held chance over have the it what per forward? share that think lot by dedicated Thanks. like it history, about And the last just the really might XXXX? then revenue dedicated well verses cycle a understand truck if can I in could how breakouts to do We be ask just helpful. you so I up road did helpful think any of

Derek Leathers

revenue have truck XXXX, Dedicated the four in quarters here. per the of I numbers just absolute

quarter per X,XXX, fourth X,XXX, was quarter of was average and truck are second was quarter First these week X,XXX XXXX X,XXX, quarter dedicated. per each third quarter was revenue

John Steele

data there's other did did the we history available of made our way it. out we've on that a we And website break and data that once

Scott Group

the website, so Did we on see have can the we you also -- do year the before year-over-year?

Derek Leathers

that that there. was are year and we XX think announced quarters out XX have XX, I two XX the show of XX we first

XX got data. of you've quarters So

Scott Group

up per if lagging we're want Tom's clearly guess, understanding revenue just going were truck strong? one know or I we -- Okay. dedicated if show right and you very if is to guess earlier, good down? they it’s a question I now, or was this follow-up just, it's the -- to much understand just how way so year-over-year the do of sort I'm But were to

Derek Leathers

on the it rather Scott, calculate just would to Well, this say call, it is than I trying just website. the on

to our think easily that it’s we still in out But know moving meaning in traction where shift to where an versus at that be mode where happening get are about is what tell we we would were, to I about calculable. sort more trucks you it's which third we're that if basically plus to think will we you transition fact aggressively XX and of were call So guided and want the in to XXX today think back I dedicated aggressive roughly the quarter.

turnaround, our the to is fleet post XXXX. Our selectivity revamping and ability higher of kind today of post selective in than be it was

I things. gleaned. saying just So look yes be some is fundamentally may information positive. haven't to done calculation is versus I'm the And two The today Werner of even there's XXXX and the very market different different. state

Scott Group

makes lot That of sense. a

guys. you Thank Okay.

Derek Leathers

you. Thank

Operator

Ross question ahead. next David Our go Stifel. Please of from comes

David Ross

afternoon, Yes. gentlemen. Good

Derek Leathers

doing? are How Dave. you Hi,

David Ross

Great.

on you I comment is spot the question made First exposure. the about guess

rate, XQ. the in was You X% of XX% of it in ago year What total quarter? run said

John Steele

somewhere be was would use that it of be a on sorry, was it you matter there's you it, looking your times, and in to in portion fluid need actually it because it's to quarter that your freight a rebalance best but there, with commitments been or no is don't fleet always and you want out at how the simply much the have fleet. fill just want eight, to year that It make to for seven -- ago fluctuated roughly, neighbourhood of going between I

focus item it's right So ours of yes, major up a actually it now. something is that year-over-year is and

David Ross

way X% of one last year? to X%

Derek Leathers

Yes.

John Steele

of Yes, way… one yes

David Ross

Okay.

John Steele

was a smaller dedicated percentage. And slightly

of back your with year if higher versus -- the call it's that miles dedicated because but year it is X% per is and your fleet, math, and of that's is revenue ago XX% X% So mile. X% this lower X% that anybody is of a end how wondering dedicated productivity to XX%

David Ross

more ago. used year or that. moderating, just pricing much today said on get it was the than quick truck selling is less the real that a truck And how then you for approximately market, I

John Steele

Because much That's one a is as tough what in so one it a is the -- it doing, times. price of I don’t dodge very many just answer is isn't to water. questions best but that seldom

a think be about retail talking seller secular clearer, when I'm you as different If I us should others. our that's about many than story

It's trucks, carriers are sorry a takes times And uncertainty freight out. to buy take who -- there time looking to are choose when really I'm simply shippers, hold.

So, the volume has has been been more depressed price. it with than

market market in although truck. for carriers And lowering simply solve think not if for in truck. a a that, They're may small would the the mid-sized you price suddenly those not the

of the we so. forward, range. the guide to some work we to wanted As low comfortable end We've of why feel got that's We doing ahead us. look

dramatically newer last and the the on safety become at on trucks everyone thing particular just more truck with than would in that side, are the that much our be large, we're technology and has trailers pretty selling then, more remind And in demand. that, population it to that on

in inventory. And they're now are used also fully that demand. automated manual And our truck high transmissions those are in

storm So, the range We low cautioning the end current up than of is our many. toward are outlet better But we'll just holding on well. trends. retail weather that think we based

David Ross

arises of issue inventory an just maybe pricing That issues.

You hold firm, the correct. been pricing actually it’s can

John Steele

can see that But you assure some now year might the I and the it level. pile over we either. inventory to rises into correct going correct, ideal not between let up under we're So

David Ross

Understood. Thank you.

John Steele

Dave. Thank you,

Operator

of Jason Please from ahead. Co. go comes question & next Our Sidle Cowen

Jason Sidle

Operator Thank and you, afternoon everyone.

you end push low or about your out the did the fleet about of orders at that cancel you the go orders into reducing bit doing maybe talked How little a the to You do XXXX. growth range.

John Steele

probably say to But just steer would that also work range of OEMs. that clear I how that have with safe go fleet orders. and negotiations translates range when our it's contracts of I'll assume Yeah. we a to

their those really high not I'm sure. order is the the on publish or of end unknown range end they to do the How of they the at me, low range. end process somewhat meaning really

to with the very the compliant partners. ranges with with for stay that our them established truck within And -- our We're be careful year. we've

year, that we to And take might means year how case in out. plays be this that so, particular the is the there like, that in on. And from have real on away time, depending something agree if what means midpoint, it we midpoint the often was may a

at But this XXX adding we dedicated, comfortable you're we're leakage point, said about talking quarter. with quarter. Obviously there could fourth the the trucks, time some any be in exclusively third into

it and turn case that of we add one market large, see dedicated way shrinkage further third slight set and as slightly, growth for doesn't in some more quarter view and us and could a in to that and quickly by truck you believe. as diversify than kind we But the with up happen as

Jason Sidle

angle, Derek, am I let me it the actually I'm industry you ask at coming of angle. way. on from a out different truckload Because not coming OEM

the of XXXX mean it trucks you've down in that taken doesn't going XXXX, amount by So, by you're necessarily. number up

Derek Leathers

is That correct.

understand didn't I But yeah angle you're was Sorry the that correct. that's for. looking

that by be year. going We went will this down not because by up we

Jason Sidle

Okay my guess I perfect. I touch on follow-up. dedicated want for to

sort customer of the bit you great a the to years. guys ideal you described growth look that's talk You've what Can good about of over dedicating pipeline. and you like? they And a been for that are a little source landing

Derek Leathers

foremost, first a with Sure. it's I mean, about starting so and winner.

be work So time space. in blue lot we chip, of we up a sort to stories coming and of sustainable identify or long-term what trying a lot their believed to of do and spend winners

Once high of it we've the truly done to or that sensitivity, service sure kind service is through and want XX.X% that, dedicated better cycle. we to it's high, make levels. service hard Meaning

that make to deliver And it's the work can something that domiciles network. frankly driver is economics our of upon. want geographically where want to in terms over sure sure it's strength and we We layered make we and that

activity out to a So, pipeline amount in amount smaller a other of there tremendous is the end. the get much

our time, issues our it, meets for what that sign-up return in our we can and we and levels lifestyle driver on-time economic said address jobs paying to continuously want make if it we deliver markets nightly good that But where weekly we and with home hire. we we're sure fits to expectations every trying it

Jason Sidle

Appreciate your time as always. Okay.

John Steele

Jason. you, Thank

Derek Leathers

you. Thank

Operator

closing provide will comments. Please go to turn who call over will ahead. Leathers Mr. now the I Derek

Derek Leathers

Thank you.

with today, diversifying are to outlined We've company final to call which the leave various years the some spent conclude in perform I Slide across three strategically on last we our investing thoughts conditions. and economic you Before better wanted XX.

free investments ahead. are resulting and flow cash the behind Our heavy our benefits to are us

The associates, high that our strengthen to levels Werner technology. industry-leading team with are of experienced new provides customer to increasingly service commitment and expected fleet,

been ahead, past are than Looking begun past. recent and our capital structure they've our deliver allocation the delivering expectations margin capital our to to and firmly higher superior shareholder changes enhanced to than positioned our committed to we're in We've have in shareholders. we today been across value strategy implement return long-term what better We're and returns the to optimize cycle. our

to participating thank for I in your and interest today in So, just everyone our earnings Werner. want close, to call for

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

Operator

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

may You disconnect. now

Werner Enterprises (WERN) 25 Jul 192019 Q2 Earnings call transcript