WERN - Earnings call transcript Q3 2019 | Werner Enterprises, Inc.

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Operator

Good afternoon, and welcome to the Werner Enterprises' Third Quarter 2019 Earnings Conference Call. [Operator Instructions]. Earlier this afternoon, the company issued an earnings release for its third quarter 2019 financial results and posted an accompanying presentation. These materials are available at the company's website at werner.com, by clicking on Investors, then News and Events, and then Webcast and Presentations.

Today's webcast is being recorded and will be available for replay beginning later this evening.

release direct of to as the included the please on disclosure the begin, statements. in X forward-looking Slide presentation press we your the attention statement disclaimers Before to related as well Today's remarks involve and to factors other results that could actual materially. risks, cause uncertainties that differ forward-looking contain statements may

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

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

Derek Leathers

good everyone. you, Thank afternoon, and

call is our John On with me Steele, the CFO. today

Turning in to Dedicated, of XX% One-Way or from of manufacturing is up is In fleet. revenue Transportation revenue XXXX, with made is half which food generated Over snapshot. Werner the XX% company's other. and and Services, in the Truckload, remainder comprises coming XX% Truckload TTS TTS, XX% our Slide our XX% with was our remaining Logistics. which beverage, X industrial of XX% of and is and is Logistics retail, fleet our of

sensitive periods. serving historically economic perform that focus that slower sell economically or retailers be discount recessionary less and We tend well on more necessity-based to products, growth in

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

thus freight a with than has financial was our carried into for performance. overview the third quarter softer that year-to-date XXXX third forward far slight in and to same market move X the Slide of let's brief September improvement ago, period in Next, Overall, October. seasonal year the trucking meaningfully quarter a

outstanding increase we market record year-over-year and high rate per quarter extremely we ago mile a resulted had third XXXX total XX% a market The in third freight in Truckload. earnings XXXX, reference, ago. strong For a and that produced year record year quarter an execution our in quarter in One-Way strong freight third market

For for and the Despite third our team produced made second our it comparison. quarter third this a comp, history. tough well, we earnings the highest performed year's quarter, in challenging

For to the income declined quarter, a adjusted points share. XX% X% operating declined $X.XX XX basis basis, million. $XXX decreased margin revenues decreased an total our On XX%, to to EPS and X.X%. adjusted operating Adjusted by company to

results One-Way adjusted sequentially contributed while quarter and from X% small miles in The margin operating were Truckload One-Way Logistics, The XX% of XX%, from freight spot softer to Truckload Dedicated growth improved and earnings its year-over-year. sequential the to lower performance. up in and due decline in and fleet up market

third lower July higher produced the and several One-Way In percentage the X events quarter mile quarter. our contributed occur In began smaller surge opportunities a latter quarter One-Way XXXX, a $X.XX September. market Truckload points over ago Last loaded and per share period, in in rate the were Spot XXXX of August and miles project year to our to the robust these few surge third projects opportunities. added part very year, in and in were and freight market rate scale earnings. in Truckload to

freight as Werner quarter our X%. than cost and XX season. despite and that focus is basis and as strengthen their third expect strong we the adjusted associates we XXXX, the peak environment. through thank XXXX adjusted operating all Dedicated solid, Currently, X%, a again well, to Werner income operating performed execution I'd truck market. better freight hard-working expanded for and We like our points a strong on continued year-over-year tougher in efforts. EPS quarter not to our peak continued by softer increased was adjusted X% expect revenue per XXXX seasonally increased Year-to-date, sincerely achieving but freight fourth margin operating growth, that revenues a management delivering sequentially increased margin season in

best-in-class TTS, we investment our XXX X,XXX slightly with trucks the third ended of guidance. the up in increase trucks trucks total an sequentially, and our quarter above fleet, Reflecting year-over-year just XXX in

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

John Steele

afternoon. Total you, performance revenues good our Derek, and Slide financial drivers. declined X, Thank X%. additional On

to X%. fuel declined while revenues Revenues Truckload, TTS comps in week per X%. grew spot by segment truck average Logistics our Our primarily nearly in tough higher declined and X.X%, per of One-Way TTS net due miles trucks

TTS income These reduction in margin. operating impacted to basis to XXX XXX margin comparing and margin a to The adjusted was negatively in basis which margins operating rate due in very were Logistics strong declines third market and operating in due operating decrease point Logistics. Truckload quarter freight decrease and a XXXX, point One-Way

than third Truckload are XXXX quarter to Dedicated largely delayed. In to into plan to see temporarily more addition, last we the fleets truck were in weeks, growth One-Way trucks few trucks certain these One-Way weighted was of from our that expected, In Dedicated beginning due sequential XXX shift

declined per Slide Moving was X% our third due lower for million, fuel offset results X, our primarily week, which to $XXX by surcharge let's in more the of XX% due X.X% X% miles lower revenues by income to fleet decrease segment per EPS, in to was a partially lower by $XX.X revenue net TTS prices, fewer diluted caused adjusted million due outstanding. X% truck and fuel Beginning offset growth. revenues per quarter decline look truck detail. lower to shares to adjusted TTS on at

due XX.X% income Adjusted 'XX, less the quarter percentage. to freight in a market solid fuel. primarily margin, third adjusted declined lower Despite robust to achieved $XX.X million, operating we a XX% operating operating including margin TTS

operating net margin TTS fuel adjusted XX.X%. of Our was

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

week trucks grew million. X%, trucking increased average net per For or once Dedicated X% Dedicated, revenues Dedicated we revenues year-over-year. again by to up X.X%. fuel XXX grew per truck of $XXX

net for to due trucking $XXX to lower fuel our mile, average X.X% One-Way week per per per lower line Truckload million. was of miles increased quarter X.X% revenues tractors range. Revenues X% guidance with X%. full prior the revenues decreased decreased truck total which year Truckload and truck per XXXX One-Way in X.X%

project business miles and quarter decline. in contributed less total spot and XXXX third revenue surge Higher the to mile per

cumulative quarter. savings Nearly XX from expected in XXX $XX realized continue expense of of we to to grew We we quarter $XX to million to in in this enhance quarter, expense items expanded calendar steps these We $XX that XXXX. additional have be quarter. savings cost the take to million structure. number savings Last over are our this and year identified last million now

expect these future. grow We savings in to to continue the

company performance-based In time, to be several XXXX. million performance to to compensation than plan. intentionally At payouts this based relative adjust structured addition, expect lower our on our for we dollars these annual business systems incentive XXXX are payouts

accident other jury side a item TTS large on ratio by the to in trailer-to-tractor this a and improved our major one New our ratio, I lowered we decade. operating non-driver a wanted Mexico. for in Earlier We XXXX mention in There unfavorable month, occurred in efficiency that truck trucking business. highest year-over-year is over to tractor to key of verdict level the X% of received a our

Werner covered accident of a was operator insurance a brief and this a Our fatality of reserves moment amount tragic previously excess result by error driver. tragic established This of liability the accident.

our to the sincere continue We Armijo to express condolences family.

which of double-digit Werner significantly Moving offset quarter, consist third In on by to lower. which Slide to primarily Logistics, brokerage to Logistics decreases. X% the price declined double-digit transactional results million, Truckload Logistics XX. were increases due the $XXX volumes, revenues contractual had and Intermodal volume

spot few third led opportunities pricing. of transactional project declined to pricing XX% combined Truckload quarter nearly lower A Logistics with in freight the

our freight which lower brokerage $X.X points market. operating we and million, was market basis automates carrier and was lower operating due year-over-year. and beginning Other percentage Logistics efficiencies XX expenses a declined Logistics from competitive softer technology, Logistics XX% operating XXX to gross as margin points freight optimizes and to margin are basis selection. income gain our declined the more

prepared remarks. to Derek? portion would to I the final Derek, over now of turn like our

Derek Leathers

John. you, Thank

update XX, our let Moving XT's on to you Slide me strategy.

to portfolio, talent, on prior organization quality earnings our steps we to I top calls, levels best-in-class the increasing Werner customer delivering service our the focused have take position continue and During enhancing attracting structural and explained high-quality financial professional with shareholders our cycles. improvements sustainable we economic management more drivers more combined results. to earnings creating with consistent expect We're and and execution, generate our across fleet strong modern efficient and as to

network years, and infrastructure is new terminal we need on our to and drivers investment trailer truck respectively. and Despite age maintenance X.X to lower an remain provides low critical to a our market competitive with unemployment promise force. to our and rate, our support delivering X.X to This service XX-year professional and continuing they deserve extremely our customers. drivers with quantity customers an continue our the with over We're better driver expand facilities quality raise we remain driver average and Our committed expectations. our national as of This to cost. upgrade our with and brand fleets

significantly quarter, and to drivers. And strategy our to service part as investment we increased customers improve our I discussed IT as of professional last XT's annual our

with strong operational paying Our investment combined is XT's execution off.

in Our years. percentage last highest on-time the is X service the

they XXth Over rated In van in a a large X,XXX Annual named August, and information be winner. Quest Werner technology, dry for Award of carriers for Management to participated on-time only Survey value, customer operations. carriers Logistics and truckload equipment was the where service one few Quality performance, shippers

category. the equally for proud the TMS Quality first time, a winner addition, was Logistics for in we're Quest that In Werner

the to help supporting fleet. Werner's Turning a to map you carefully we understand provided Slide XX, designed have network Dedicated infrastructure

schools location. Over is within Our population locations Dedicated of the driver miles terminal, us and driving of XXX Werner our with a Dedicated optimize training positioned equipment recruiting, network resides our helping U.S. fleet maintenance. or school driving Werner driver terminal strategically fleet XX% and

and generally manufacturing highlight the the making was largest has of XX the Werner's on we In ago. provide X,XXX Dedicated business, it steadily grown exclusively for of for some specific typically X a XX, Next drivers established to X center we individual distribution key plant. trailers which the Slide fleet fleets, Dedicated U.S. years a than years providers Dedicated, and Dedicated elements more over or customer, trucks, in trucks XXX-plus of

operations, Dedicated on-time shorter-haul are of with large supply high the best very who reliability return the home attractive and for and are the service recruiting high able unnecessary our to product of they're cost because and in customers freight, our have The retaining jobs safety customers' drivers requirements. extracts driving chains. extremely service typically frequently. Since from these portion predictability shorter-haul serves they Dedicated more

and the the order-to-delivery brick-and-mortar on design, online focus retail, we shows windows. ever and with our deliver retail discount intentional in as are we increasingly they pie upper-left a By their on-time sector, require producing high winners retail retail metrics. customers noting growing compete in is service extremely marketplace The chart expecting shorter strong focus financial in They our emphasis. who that

Almost very their the well gravitate our same-store customers attractive assistance to with operating recessions when unloading in merchandise. X/X specialized pricing of retailers following large in business Frequently, discount Werner produce larger retail is and growth Historically, XXXX, XXXX DC margins. to consumers superior and driver store, deliveries training, slower driver and about Dedicated that retail performed discount during multistop sales of economies retail is evident or as rate retail recession, require our was discount customers discount. the process. and X/X This

Logistics. our and the portfolio Truckload, middle Werner revenue of stable is of Dedicated Dedicated One-Way

their our has their frequent Dedicated P&L the is than time home. we in helps and grown capacity to satisfaction closely of driver's less Because and in turnover. competition Dedicated Dedicated, monitored. Truckload. work in truck our in requirements own years, This the drivers we as One-Way have service to and that high relevant fleet. Each is fleets closer has of Driver over XX% home driver far lower Over more of driver managed Dedicated see strengthens proximity

and In summary, economic consistency our in revenue provide relative Dedicated margins all operating conditions. metrics of more types

freight traditionally performer a good markets freight a performer softer strong been margin Dedicated a solid in As has margin conditions. and during result,

full discuss to sales on equipment, gains versus reaffirming our year guidance One-Way truck on revenue XXXX updated growth, our guidance. mile total Slide We're for Truckload per TTS Next XXXX. capital expenditures XXXX like I'd the XX, prior for and net of

do our XXXX. grow fourth guidance, in previous to Continuing we quarter plan fleet truck our not

we assumptions, tax effective the low year. rate range XX% be the the end of expect our to For for XX% in to guidance our

X.X approximately maintain We trailers. X.X levels our and expect to fleet for at age for trucks

Finally, interest and million, quarter our is $X.X expense expectation debt XXXX for on interest based fourth levels rates. current

our to concludes our And Q&A. over This time, the begin this to our call remarks. I'd formal operator at like to turn

Operator

first question our And will come [Operator from Instructions]. Citi. of Chris Wetherbee

Christian Wetherbee

than you're much on that a But wanted made pick seeing more maybe to of a if be made. do sense some maybe in general? what bit or bit have optimistic get peak color seem of I Dedicated far in your season. the so exposures, some that, your with comments wanted whether to you They be on earnings I retail market. maybe peers some the during that elaborate of to a up would maybe season could has it'd How helpful. just you

Derek Leathers

Sure.

that through read it remarks, we September of our throughout overly is quarter softer ago not that we're stated into would in want XXXX statements, previously is October. than meaningfully by slight in the which So about no bullish was with on double so continued down make a I commentary. the have being sort talked any wouldn't it I freight to seeing third mistake, you of and something But slight year improvements improvements.

We good. feel

have commitments you and the and 'XX. 'XX nicely. shaping that us macroeconomic with with in of up that's place certainly or is the like and together market the overall, and that comfort, as uncertainty uncertainty. shaping still We've the place that some especially in 'XX would give But demand this coming filled in up more tariff peak is a peak on is trade quarter season the is We seen a like projects not all got have side, backdrop traditionally but

Christian Wetherbee

That's Okay. very helpful. actually

just of as your to revenue you towards the year what sounds of the glimpse bid range obviously like little bit, that a appreciate lower that know maybe playing give into but total here mile end much too look of -- half towards you maybe Maybe us a like. maybe now? out drive of expectations you sort the season a feeling you can probably pricing, want Truckload want I One-Way about but might just into sort or follow-up the give don't into how rate towards a full the So to next take XXXX, the set a of the year stretch how how first maybe range, it little are maybe the dynamics of get sense the sort sense get per bit out as to decelerate -- to of commentary. for of a right a on you're I guidance up of expect sense

Derek Leathers

rate question items, asked the We to question the right there Sure. I would is marks tariff on out resolution came economy in is the But thought increasingly not look, there. before a Without we like. and difficult try what a don't that looks that might first of signals. to are half still uncertainty mixed some with. better get market of first lot lot of it up. that the place trade We see begin know and now. especially be sending uncertainty those give guidance, out to predict far We

honest, committed be returns to shareholders to to We which that we've results. continuing to is more It's deliver the and we've on be in customers on is to providing going going alike, execution. what stable Our done third stable focus, and quarter. be on think

would As first year, on next look year I attack the need now at what that we half than next to we'll trying based approach be time, more environment prognosticate to visibility of but have it right I like.

Operator

Ken Lynch. question Our of of comes Merrill next Bank from Hoexter America

Kenneth Hoexter

scale John, walked like maybe XXX great projects, some through? of you strides. John, or see some cost provide that side, details Derek you the to maybe us opportunity Can additional those sounds making great you're on there the

John Steele

up million quarter. we'd of that the second at run annual of rate is rate scale The end that's $XX $XX annual from identified of an Yes. million, run

licenses savings the year line, various place more we run We for taxes got expect the move communications the maintenance in salary 'XX the full programs line, and line, implemented And the opportunities line. P&L, $XX types company throughout The million to have of the rent forward. PT of year. to through are line, the as opportunities through insurance this we've identify line, that wages

P&L. throughout expenses company's multiple So affect of these initiatives the categories

Kenneth Hoexter

one, like it's is it's opportunities. different multiple a So there not just many big

Derek Leathers

every There really and is we're to do bullet. continue stone grinding is unturned. we're no we go And the to going not several across everything. leave day so forward as no This challenging to trying P&L done, we're

Kenneth Hoexter

prove just you? against to it. on are compete shifts my Got particularly the that others you of returns segment, seeing delivery, some seeing in switchover home you And Dedicated retailers? in we've the other Are increased the follow-up. competition as of that Yes, kind seen away field the discount from to you in sustainability

Derek Leathers

people an doing struggles to be It's the One-Way hard Yes, positioning. I it's market, to and they gravitate to put try ebb like that there trenched. replicate product We well may always as like is in others the think our We tend do. additional what in to forth. and we flow find successfully. and toward difficult It's

And going that. so with to we're stay

for the unseat relationships they We to table. we will is the and do proven in we with, up make The and to up. a how people question we think a job their change. bad companies hard long we good and show last? decision showing of can to us. service that It mean I businesses there types It's at built it's the ever the times with our want the it records the be with track won't deliver, doesn't do, And see in people customer entertain exceedingly product to difficult

Operator

Sterling of next question Seaport comes from Our Kevin Securities. Global

Kevin Sterling

too. and been at John, Derek, you obviously this

on have going to up the bankruptcies it's about at what You insurance particular rodeo. kind supply these some relates and for I to time, thoughts your business? you cost you're what share just of side nuclear exposed unfortunately, side? equation One-Way on you Truckload the nuclear and seeing not And seeing long of kind your the been hear been continue some of supply verdict first it of of before. verdicts. know smaller We Can But to this as we're carriers guys on general the

Derek Leathers

watch or in. discussion several take feel with stay And stab it used do Look, got a I'll to last to got it. in just term and weigh the at this the multiple here it's days even. to we Like, we times the is a and to I'd we jump my the we got math, detailed John Sure. over about math free essentially, had to long math. close team

months rates and dropping replacement of order XX see below consecutive dropping You levels.

You that to negative the see year-over-year month changes negative XX depending on were XX.

You through see half XXXX. bankruptcies it think, versus, the at year way year I XXX XXX for the was full

to north if unreasonable project of of that further that year So you before number not and XXX it's will maybe the cross end believe out, the that.

change large on thing carrier think to levels, structure in actual blow it's absorb well carrier and the that's as yourself, actually nuclear of of verdict. insurance that I missed impacts rates, maybe that the passed have the insurance touched insurance cost every these have sometimes because impact but you America, verdicts, one through verdicts in those at as obviously large in that rates is renewals You

needs we this to climbing at economic backdrop And at tight heads You I Clearinghouse it's got in do is "It's before we've put of out." more quarters coming kind it's reasonable extremely with is conversion costs. January, come down put point now. how couple anybody couple against our out look guess that we've of December, all into get for to coming think and got Alcohol the & and final uphill where together, still a of on in that question my much focus best what The it you and to and back And say, to Drug out ELD market.

service. our eye of off We on ball got take not the to

doing ready not prepared sure We we'll have watch customers, we'll underinvest fleet. that in and the of and be but we to to that it with and turns if be bullet, our And the we're it's competitors. make ask kind keep do to kind a around execute our going operational have excellence, still got delivering all is expenses, X when it's comes. of There and and old-fashioned win no silver way. But we're where when going that to couple we've to quarters away and be paid time to be appropriately to our quality outperform of

Kevin Sterling

about question just you gears great perspective. you the was IMO factor impact prices? kind color at That and some switching your all diesel a Does XXXX do One is that and little into all? of on -- here How bit. fuel last thought are concerned thinking

Derek Leathers

a to coming shift make outcome it. the it. Yes. at of it Concern, magnitude you throughout at to going of agrees We've what cognizant don't to look and on sure We've that us be year. have looked concerned know is and you have that this I stay have we studied when anybody like.

somewhere $X.XX I $X I've seen the I people seen where the I've with middle agree type people a think they think set. say have to nonevent, it's that. talk relatively it's in don't diesel. of goalpost about also in been spikes

that's think bit a I overstated.

We've places costs. it think to sure turn our think I it And got adequate we've the every burn and to customers. surcharges for can our making based improvements do it What falls out. less in. on where work we is goalpost it got that and keep appropriate make -- creep we whatever about sure at working in are sure to we've is whatever of somewhere make do got MPG is on

empty is right think prepared I and We to the don't engines it, are the going anywhere about. in things trying on $X.XX some save think go don't going that's have operationally number preparation to where it have any to of right advance elimination diesel make rate see ball freight well some we to believe make have in going need improvements and better. save of Logistics are, there to it's we I we're And But looking rating make see our all rates -- it's be the wise going all-in may think feel is change that in rating of sure at as that of we're like do happen. group the to there execution that and minute and We'll our do eye obviously. well, type type be can to talked going things and we exist other that confident If we deadhead We're miles day. up, we or that anywhere way. to thinking but in our our to focus last the I for don't the on activity I it.

Operator

comes Our from Oglenski Barclays. next of question Brandon

Brandon Oglenski

So and from you there's in the call. your it demand-driven more the away perspective? weakness couple I of balance, just I seeing think supply-driven that is or or mentioned feels market that because a weakness of it I freight apologize quarters another driver But here continuing here jumped what the from market, off more we're the is of

Derek Leathers

perspective, side. supply From relative in the on side put But a my more is would would than term. more I I think little demand the I a

year It's look as you is tonnage overall a not late. tonnage, but it's of in micro strong it's ago, of demand in macroeconomic was If metrics. still trends it overall terms most been cetera, up relatively activity, strong, as as soften et by still some

I has issue, it been really think answer supply in think is what covered earlier with of and an kind we the happening supply. we

you a I is start I think couple balance, if I said meant is, I quarters it didn't what mentioned quarters get say this reenter. to the see couple of to tightening when say You way to a of

The out our causes point bottom. little demand think to is this hesitant we relatively in. of and the I it's in the terms balance. current some trade think the And this across America and that market economic balanced is spending supply uncertainty And a have industry, limited overhang of drag today. process the question a at to an how I long and I hit that more is to in factor bottom is little to the we've think we start a don't and thought most with is across part tough industries bit habits we're for their tariff there there become consumers still in part,

sit excellence keep going cost going trying on many product not you've we're stone the times on so me side reiterate turn little in a regardless possible because to around why going the prepared leaner more and just over a quality, turn. can, to how market incrementally that's out. to and the to product make heard we a absolutely focusing series we're some of for of the every continue We're operational that as to this be, the steps little -- to delivering make on wait of to try So to we just focusing they this wait small meantime, highest company and may

Brandon Oglenski

And I previously conference. I at did allude you to appreciate that. a think

looking that have is delivering forward? definitely they there your fair some competitors business Dedicated of contracts of think maybe make is something not that be what might And rethink thought for guys Some you you a Dedicated would, that we've statement? different you your does a about then margins, definitely seen because strategy and delivering better

Derek Leathers

No.

as I you light we to sure implementations the all. not been would have conference at, place that's me, I'm but or trucks in not I has place, Dedicated how delayed only trucks all say, green in work feel been on through at what the that to had The hesitancy we've Dedicated year get to equally attributed this that caused to our get for well should So quote an returns is you final confidence in we've while disruption as put quarter as One-Way in ever tight that trucks you're about they've are await That destined market overtrucked and upturn strong in strong. Dedicated weathering land the And were in confidence caused a from some implementation, in to side. be Dedicated one on in that been. My our because Dedicated. really struggled

to Dedicated. have going XX%. push the up good continue right XX%, to We're number comfortable model very today. feel and about it we the Dedicated to gets that got to reguide, We're we've fleet with We be of stated at repeatedly revisit envelope at going that it's Dedicated be built. XX% the we'll that would return. in the If I to but

the implementation. So of third was impact delayed part quarter

we that businesses exiting or not honestly, downsizing the meeting profile part, other profit and feel requires. the The we're that was work demands the

So it long-term only do portfolio are we're stay if blend, justify but there on just focus disciplined, going the job, the our participation. do returns our to to

Operator

comes Morgan Stanley. Ravi question next Our Shanker from of

Ravi Shanker

on your of were identify would new I'd ability among Logistics ago. X or first entrance, does numbers other one the division? an having How years digital characterize or peers the that You extent in go-to-market that you to X landscape to in your say, the emerging today? impact To logistics what competitive from your

Derek Leathers

Yes.

are and So the here to stay. here digital think, freight brokers, I

the sell there the bells anytime recognize when to on Actually they that to that and have one in whistles is operating is they out hurry and more how reality get you We and thing the much marketing they difficult talk customers and commit there of they that, right that level accustomed the kinds and hurdle. how same of a about that is market executing all a service delivering to that customers. become and startups,

have a at we to openly we are We're to going obviously, we're that. think more don't to that return in profit and and a all time. our noise lot and our I below But still often stay deliver have. reinvestable mean target is admitting through folks I what that to real have do that rates talking to react phase rates work dismissively, to to in that and or it. do, they're having white are customers view from making service not to the we same to it's benchmark levels we committed a shareholders that profit the And

to that sure actually a saw can of we're several money and on you cooled also have we do make that the we We're been after add row tech growth spending negative. in quarters space we our competition. revenues to sure We're relevant make in going and that profitability. now think business So

dividends from reap We We tech to need investment to continue making. we're out are roll that more it full seeing to systemwide benefit. the

it's So to one tough a answer.

stabilized area. It I seen. think push corner, of with In the going some survive, meantime, market the of to and to to I late, we've some peak spot there'll low continue folks that seems in around they're levels some the be won't. relief have these that think, as will the to

as market of our spot the make our trucks to Our brokerage it altogether nimble of sure can, then close and as or get is capability job to as as theirs. is out any we

Ravi Shanker

just And peak right, on last this earlier season year's year. If be that follow as said is not going season, good to you actually your remember I was where pretty bad. year up as on peak Understood. to I last wanted comments

referring So you referring to are you to XQ? peak Or are season? XQ

Derek Leathers

historical Yes. We by peak season year standards. had last a strong

referring you're of perhaps results. mix carriers' to So more other a

was Our peak last year season strong.

see 'XX actually up, In quarter, fourth we year Truckload product XX% were volume quarter, SKU the packaged and those restock to we going per is side people the in selling but the agreements is well third today in one aggressively of when mile. line combination you -- you needing the mentioned, particular rate advance problem We're prepackaged this XX% per market spot or of 'XX. peak available to as market in store. -- of in quarter like packaging That is total versus then mile. kind we're same as we the see won't a the up revenue particular, is some in as for well were opportunities a The opportunities of One-Way surcharges up terms in and the in and to in revenue it where combination get have made similar of or the third

Operator

next Brian of comes question JPMorgan. Ossenbeck from Our

Brian Ossenbeck

to that's I you then one XQ a bit like here. vehicle not a quick in on market off just too long used and tractors a looks the know of you moderating lot It cycle John, had been ago. and the you're calling purchased pricing. for out XQ

just more next of something in have thoughts if more and any the you're industry broad-based you was that comment? was if early see that Werner that if Or to on year? seeing a I wanted So

John Steele

No. That's impacting more of it's the an industry marketplace. comment and how in us

purchasing miles, features others AMTs But with that have pricing. demand don't As is buying in have, has has impact carriers than trucks fact in on a for it because a the lower appetite neighborhood, from are that today's does we're more with good market, think a facing the been. product less regardless systems. used in lower and mitigation standpoint, market, their the we've newer challenges truck used for negative not-so-good a trucks got collision house We that

corrected. for the term that near to will more expect least continue supply get side We until begins at

Brian Ossenbeck

on maybe renewals some with rates couple what you industry-wide period. market. and coming in types a some and kind then perspective, side just the Derek, in on insurance what that well, a color as you're do of quick expecting limit you're maybe been And sure how But here the the think you Okay. of deal years? focus of to can that for have exposure industry the up from can for follow-up on on this I give the last thoughts risk know this cropping of your of terms driver maybe safety? to are but needs I'm change

Derek Leathers

Yes.

low So of review, other that, got nearly was people. that large XX% from It as our and of renewal was of many and not -- digits, the very done XX%. an low we've and increase heard it double you've and in is through really what between

of I we're what need need we to as as make be visual wherever doing what to technology bigger have our what's to available in the We terms continue to versus the need been we In question, safe provide is forward-facing doing? alleged to it's what to continue do possible. think commitment to actually be to cameras happened. happened of our able trucks evidence to invest

our and hurt nothing continue to is getting others. need do We safety we all on above hurting or else focus motto internal of the worth

The the of verdict all you that above. across progress the seeing about. is talked are We problem nuclear

business. attack that state-by-state them a of reform level fight wake good arena, leads doing to tort headway corrected right takes of public risk an these get focus to to X for how jury the unfair up laws over kinds has with it all the and continue where X categories and That all a insurance fight. to of rates issue are market, of sort you world on everybody's very are we're a made going in some make to us on day, into when the of across attacked X to ATA multiple the it combined then written. is X have any high Tier can faced cost the it's accident really You minute, of statement the with a in are to realities also and us, work at

our reflection of to the be there are It's issues in improve sort at that outsized individual outsized year-over-year. job. have We or be results risk And we of suddenly groups has terms safer of outsized as culture level do, continue message We across more delivering other of just money the the can't America to that see and verdicts. pervasive a focus actually we an I but think a this keep day. try to field facts on to and what that's time moving industry, playing having It's every to safer when our continue at other our to one group how of cases. to send reflective versus transferred the safety proportions

Brian Ossenbeck

these societal think of you follicle Or reform to that the helpful? be [indiscernible]? the you exact mentioned hair the you would were of testing broader be Do see tort and on, problem challenges if approved like do the just

Derek Leathers

verdicts is being stats more being I safety you there the made and mean, pop to I at and safety and up yet progress at at level. think across increasing a nuclear if progress made look continue the you look initiatives,

where -- by outcomes indicative court and Hair a follicle, think going. of systems sudden verdicts it's the for safety do are disregard indicative of industry. don't and I not we So more the already. They're are courts nuclear indicative of

been we have and committed that. years, will to doing for to continue We stay

a you an accidents. still I our And delivered influence that goes that. to continue driver truck, list do when p.m. we them, of the moving any on vehicles in to miles have every do have will is power that anything we're technology, to have never can one on of millions make focus eliminate opportunity yourself -- active the I troublesome. going collision brief to done cameras it We've those think one I do continue you miles a our you just to be I mean, day, could within of in accident a going lane-keeping an mitigation, to not to down sure can there by we'll under be situation we're takes never to we if a and that's everyone X:XX of and on moment but breaking, everything road. where forward-facing future predict reality think will the and on, but not any because find

Operator

of Ross from question Stifel. Our comes next David

David Ross

then not you you're for can more think floor any range of mentioned year? talk improves CapEx and if you a for little so willing fleet, underinvest range than for about there quickly the an plans about John, the bit a expected? is in to fleet how and upward market next thinking CapEx Derek XXXX the

John Steele

Yes.

number With about on plans and the we release fleet things next we and call. here, when next Fleet we the earnings not to we've in out lack decided uncertainty fourth the XXXX trend of macro fourth year trade clarity talk do for tariffs, on are our CapEx dependent put our until X growth months quarter. will also over plans quarter how couple our of and

Derek Leathers

The and those on come we've in only been assets will shift warranted. do as based thing to that new the available, opportunities returns 'XX we I have we year would add where opportunities through is that to so

duress, address to the to be that would units under So areas or incentive have versus a assets the to shifting there said or fleet unit. better add from differently, we fleet those until of become underperforming that performing no portion

David Ross

helpful. the made And training the most That's changes regarding thinking school? in verdict? Or changes then any to the recent driver any school light of training at

Derek Leathers

group and was We drivers about that turnover That this and would in schools his driver this is population at person the who The had in the he accident. know simply already was the large, short is training than not rate answer created case He program He to the accident produced the that, well issue I plain that's of did measurable XX%. by trained. simple. properly better we probably a We know school. media, won't an driver better be, was been part in that the beyond And talk results. much more. relative an accident, the of that very had driver an is training operate better noise

schools. our in We have confidence

a can or improve we're to happened always we look safe be continuously would've but We be. that them, because verdict strive will with as to to going without as

Operator

next Research. from Wolfe of Group Our question Scott comes

Scott Group

a Is relative or the revenue think you sustainable X%, perhaps lag a run do to over-the-road Derek, per forward rate that. a curious of here natural So Dedicated going there truck how up that business? about is bit

Derek Leathers

Well, One-Way. predict we agreements not on stickier are than give tell to to revenue I'm in can guidance in have than They're that I those place try or per What to Dedicated is in of longer-term are going you they One-Way. truck. the future they are

that going stay what our or Revenue to so. mile. per above shy doing promise hyperfocused is why we're we going we That's and on so at committed varieties. Dedicated end truck per something away comes are from per to on, week on we stay is delivery altogether to total expectations, Our because in rate many

how pipeline has is, all to to will bid probably both as the on so previously above time. kind looks activity businesses to active, fall, miles, growth can way for that not depends and What fleet so and the about take win earn We're XXXX. stay rates can the at, the going us stay to and good full designs into really looking the the of continue committed, we're given focus that to we the our of tell you the into make and any for we It we'll has amount growth's at productivity looking sure the bid going now work push I be to customer. the we're or of rates of that Right feel sake.

Scott Group

sense. curious. Okay. then Derek, makes I'm And That just

that? already do metrics we've cycle. that I'm of curious, at tells just the that troughed what made comment You look terms in you earlier you the

Derek Leathers

Yes.

corner I of the The you're peak how I is here. I and markets hit stay driven by regardless bottom to statement of the of sort that long we're we've don't know said in. predominance think reality going of I what being think around the is,

back demand see fourth peaks quarter, So bad increases even prior cycles, is Christmas from prior markets when at our we go third prior simply coming. and -- because you to prior and and markets look valleys in

XXXX go we impetus I stage to as balanced think an set start the conversation. that's for into to a more

you to believe the more to tough we the tough quarter large of we that's just best that trucks is first you when picture rate not but that the become fight think actually capacity going Scott, we the when we the bankruptcies is put quantity about the about think and and some We're more ahead sustainable. quarter, When Sustainability these different all to market that. to over the need more X number importantly I and we're that's it's tough of on months, visible still market, taking come look apparent going the ones. be next have picture and lot of got visibility, going steps to structures you I us. It it's X leaving is a number are fourth clear are leaving I bankruptcies the What visual for be until based bankruptcies, of do have at the anything a we're in that than can probably for starting will not together, we larger outexecute and and more do paint. in these talk to of think to so. a seeing

Operator

Wadewitz Our Tom of question from comes next UBS.

Thomas Wadewitz

a full preshipping at or if there inventories bit a to maybe the that's just to a kind risk favorable on and you inventories you activity ask And freight? view whether in wanted I you to that's to a reasonably about the closely. think have are customer are that bit a level wanted see helpful inventories, going little improvement look at be was I if think if that you and of

John Steele

of is to customers part few coming expectation increases it could. the getting in those most as tariffs quarter, some larger try see delay company recent concerns as place the John. was We inventory of increase in this of the more that and the vary our of in that were with by cost they had tariffs in the The but to wasn't It advance board. did inventory did levels to they Tom, getting company. their driven long from it across trade -- is cases

levels inventory levels wouldn't customers in based like excessive. at reasonable at currently But and they're are either lean with are point It on levels not time. conversations I this say feels fair,

I will Most season the So in think a week how for retail the which it of on customers -- will out third based and of season where up. end numbers retail they'll that is this depend November. holiday lot be -- plays based end the October, the of on report consumer spending of reporting the number end on their determine inventories peak will how

weeks. So an we'll in update three about get here

Thomas Wadewitz

Right.

thoughts Okay. And addition taking favor in it in like the work whether like face, that second whether pay you're question just cost inflation it's in seems might ease. or kind maybe look what helpful on how factors it you you any driver maybe might that's have then inflation XXXX, natural a inflation to your of next other on year? might the Do actions and

Derek Leathers

we think It So about ago. -- been on wages we to of stay we tough, market make when the that going we going we're possibly and best of you tough big we still impact have may to drivers quantity, the but can, don't foresee pressure year went clearly, above make hire us, kind 'XX. it that. sure through as but factors it terms as We're committed driver the expecting in quality to that the not tougher a is in

of comps lot to pressure. the relatively that's driver of wage a So we're through speaking, the be going

that suddenly so were could it. If the suddenly economy change take market change, but would to to the off, and along with were rate obviously

give Trucks, a -- to it's like. stay only been buying there. fuel other the of there components do to it try We market little going I you to safety come we've than more that earlier that the to these natural tech fuel. a caution been work those big to talked tech-enabled about bit purchases those are The side, So a tires on has and cost. is look going we're committed is what trucks through better trailers would things all hedge and and at equipment be the

everything the tailwind no to so for do to focus look There to have silver to It's coming. why out going And continue so one that's else bullet, to is is on is cost ways the be lower to our going there lot way fought old-fashioned category. 'XX. we're our heavily no into a and with going

Operator

comes of from question Jack Atkins Our Stephens. next

Jack Atkins

guess, continued which revenue growth of it growth tractor couple the you in we week in of terms was quick was a in second nice when per business, the harder up line within I about type the Dedicated Just questions. year-over-year with of saw on same think the quarter comparison. X.X%, per a

you that I So and on that of think is of think components guess, want nice a rate that increased kind we of growth but more truck? is miles us I know don't components per too the there? the about granular of directionality year-over-year that's some possible. as Or function get function those, sort there, the of of that a seeing basis, are to a help if momentum you Just of about

John Steele

rate more it's I'll Yes, say than without miles. being Jack, too specific,

Derek Leathers

mix with do well. changes, to mix has in fleets that impact and of you an lot -- Dedicated as A new does have as add

Jack Atkins

John, is Then And. terms like on going of of between Dedicated help tractor is put sequentially a can point One-Way up to be it's kind you possible that, growing but sequentially, Understood in One-Way to Understood. Okay. think just it count sounds coming down it? finer through Dedicated, us and if

John Steele

sequentially But expect from Well, fourth quarter you're had. right, Dedicated to up growth ended than expecting third more we we any don't third growth fleet in overall, quarter. we

We're plan up implement that XX quarter. were this to we Dedicated our we to up closer think and as I see new some trucks was beginning here XXX. be to come back fleets

will little think out Dedicated of today. a Truckload think play we where will we a So quarter One-Way fourth as of based if on shift into I in see from things bit they

Operator

Our next Ben from comes Baird. Hartford of question

Benjamin Hartford

to what it's of Obviously, quarter wanted the on growth? just Derek, Truckload sources focus been Logistics the portion, tough third a from are double-digit growth volume a in the standpoint. volume that

being just tech or sources be going too could organization drivers where you a specific, posturing look brokerage little maybe as unit could sits there? the of the as where of some And without of to context some to the made words, a capacity us you that XXXX, tough set? maybe standpoint, XQ, does provide volume from think you XXXX bit and the XQ, you've about kind So is your into use the that talk investments about you the about what

Derek Leathers

Yes.

into So kind a in more this going offset played out. came year, our seen and rate tech. year decrease, brush just logistics in as transactional growth We did of not more double-digit early of bullish overview, year the for bullish by the but that adapted and made broad as continue stay we double-digit We've business. volume brokerage to growth sake, in especially brokerage the the to true decision in decision growth's invest we pursue to to we're part the

to So and the takes that mode. we right growth place ones of be us able across the a back variety see into margin the ready taking prepare we're are that of when that steps feel but to market fronts, compression shift comes to change we more

noticeable, sets see declines growth and growth volume start have naturally to up upside. itself more it volume meaningful rate of to double-digit rebound kind more and and when double-digit rates rate, in you therefore, With in see offset spot both revenue by

tech expand to that, be transact invest the it that all associates, been pockets and will, incremental seat and from we're prudent in from of to. that we're sacrifice day is thus not don't going to proven in really to the The the out. steps and to we decision we margins and per needing them and kind that if fix make to make the process make relevant dissimilar going of edge we the that double-digit and of We're gains seeing growing the to others. think productivity information we can. seeing get types going We're loads handheld, that because we to the It's desktop tech ability but able making increases without can then to parts believe deploy play after terms once naturally our to hear and not more decisions in happen the continue faster. the automate their continue of and going in investments level you That's far need We maybe quickly. fact. think for where try we're deliver on nationally We're covered path. level expand to we're altogether, on to versus to all errors bleeding to It's to trying to what the the right are ability at you

focus midsize into or visibility next stage starting accelerate and our acceptance think but for which year, I to intact, sets we more be we're expand to is small us as to levels, growth. core to customers to new that supply our look customer some now at remain into of the also that on able going other allows our chains gain

to of of as I to you customers matters they take supply financial corrections what too see early asset-backed continue brokerage we revenue unit. to on brokerage you be the will line in folks looks work so exclusively and like see me to indicated, happens in it's stability, taking terms think and note think still growth place And that as and their customers sand in And well the viability for brokers push it. forward. a as that terms what with on XXXX in of I nonasset putting

Benjamin Hartford

Great. Is driver from it there A unit? coming it of a the or there source that internally solution, in Is it competition? volume the a growth? on volume from follow-up what on Is conversion specific fleet? private about Is coming that talked that. asset-backed either is the a a from growth you

Derek Leathers

upside we're a as small with experience certainly unit transactional we we above, come to fruition exit little brokerage chosen but where both We've capabilities that gaining there. tech businesses lot well of gaining this offsetting reps of all we didn't ongoing It's abilities, of a our logistics as exited, the justify see and to seen in returns some some that as midsize that our and year margins relationship. contractual to space agreements have we've felt well the and the

Logistics future forward It's contractual transactional better and small but me kind brokerage point about our as relationships brokerage shippers into it's getting some that to to it across reps I better of where with the midsize do tech. feel larger go we think our of continue product. sense, makes the good now make it's entry We'll and of that

Operator

This go concludes who provide our question-and-answer Leathers, session. I closing will now turn ahead. Please the call over Mr. to comments. will Derek

Derek Leathers

the we and the perform that end good closing of, with we go an At us. or of On just a closing would build XX, bad a and have out day, the you portfolio you. and view, talk feel a Slide about markets. Thank in operational or like quarter to thoughts. to our perspective overview execution told we have and why and better in I'd invest process But we how minute take from a the

I for The window XX.X% OR third quarter, delivered quarter it's an how think. or we how into that, one. and think of an tough a Despite net fuel which the we we indication a operate certainly was

that the our will cost us There is operational else us consumer-driven As continue but look to on and to continue above a and as tariff their double we're winning stay our commitment service-focused. apart. to of excellence and part uncertainty, focus they forward, commitment clouds be lot We're we with down is to going win. help all set commitment disciplined working of to economic our we're companies growth a to trade controls, we our and cost around to the to us, endure to going side, going continue be think there on and

being you you. on your with further Thank call you thank us interest time, Werner. the today. appreciate We for I look your we forward to and in

Operator

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

now may disconnect. You

Werner Enterprises (WERN) 24 Oct 192019 Q3 Earnings call transcript