WERN - Earnings call transcript Q2 2020 | Werner Enterprises, Inc.

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Operator

Good afternoon and welcome to the Werner Enterprises Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Earlier this afternoon the company issued an earnings release for it's second quarter 2020 results and posted a slide presentation to accompany today's discussion. These materials are available in the Investors section of the Company's website at werner.com by clicking on Investors, then News and Events, and then Webcasts and Presentations. recorded, evening. be being beginning for is this later webcast and available will replay Today's

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

slide the using investors believes help past Additionally, results comparable over the provide turn to included tables presentation. Mr. is additional reconciliation and facilitate of to the GAAP now attached in it like reports measures, which directly ahead. A Leathers, Please Company non-GAAP comparison the the go performance. release information to CEO. and most to president measures of to and conference for in earnings I'd present Derek the the appendix the

Derek Leathers

good me everyone. and Thank With CFO is John you afternoon Steele. our

Second was and as our history in our Company's most nation's well. the quarter challenging one history XXXX periods of

and immediate suppliers moving. associates. I'm on-time an care to goods healthy, the and customers, and the and impact policies and taking the of to on to our proud communicated safeguard and purchased customers. quickly declaration the keep extremely products practices continuing associates that our After We make safe and non-driver for contended we with for providers while and remain create implemented safety and America and team the the employees, Our our unprecedented rapidly changing PPE associated grateful March, precautions in extra delivering for while pandemic deliveries Werner action COVID-XX. driver with to took landscape third-party our environment needs of

intensified for or discussion have in There absolutely inclusion. is or national diversity In racism communities work no the events forces. place for and tragic inequality addition, recent our

we everything inclusion based do. to on continue in values respect be core Our and

program. Our team to our strengthen words, is take and our and steps by deeds continuing to actions inclusion further diversity

sustainability, XXXX as than has of granted Excellence quarter, that received Werner Green technology proud Partner to winner Warner toward winner. Green These initiatives. our last be EPA Logistics fuel previously the these EPA million recognition's second gallons level named SmartWay named and years. the work more and by sustainability to Werner The allows award XXXX were SmartWay three a XXXX Top we by during Logistics. to than and a million pleased Moving Supply Werner Chain invest footprint High and Performer Providers since Inbound by awards tons. the Award the fuel-efficient by in XXX the us Food represent to X reduced is conserved a has latest more highest Award carbon

provide review second and the business following adapting, successfully Next, I'll results, quarter strategy details of financial our adjusting about is specific navigate how Werner our dynamic environment. proactively this to assessing,

increased lower $XXX X% XX second industry our years vertical Adjusted declined and income share. was points well story, a and investors revenue fleet on Slide of metrics, us brief as over X, X To our segment, In revenues have as fleet we operating that quarter, million. margin X% to provide let's of well size market and served has diversified Werner the the XX.X%. performance. interest financial EPS overview an size of For $XX.X many at new million, time, economic we by In decreased base to while Adjusted per revenues basis key to $X.XX the customer. move for summarize, a to cycles. adjusted overview Slide and to X% operating

quarter. or This in temporarily forced logistics curtailed we we the customers, experienced close of in activity significant freight of a were and of the quarter, the economic during and trends to affected decline the volumes who significantly think Truckload COVID-XX about businesses. As our their first related some impacts One-Way half

recovery As Truckload One-Way continued volumes freight we saw moved as freight reopened. July. these from into into the customers improving they back a a the This quarter, half of trend of we has steady

We are expectations freight forward. encouraged customers for trends conversations by recent our going about with their

Our sequentially. fleet a stages demand, X,XXX decline to more TTS, at early social detail. are sequential a ship dedicated in services. quarters quarter to of were call second state we XXX the for products. with to was total aligned John? to turn numbers in this COVID-XX trucks distancing requirements agency we licensing decrease in our dedicated the in over adjust results of implementations other and essential the trucks cutbacks financial freight decline dedicated fleet startups trucks the driver fleet This customers of and the revenues with strong quarter, to are closures I'll delayed had planned our of with driving point, ended volumes year-over-year, discuss our during of quarter aligned XXX lower due of At anticipated reduced second as that as we John three we are and schools We schools and that

John Steele

management. then challenging strong to drivers per our softer higher week trucks. revenues COVID-XX. carefully In to X.X% adapted XX% in Adjusted total our Thank market environment, the color in The TTS surcharge results you, market results associated particularly produced management fuel the impact a noting per $XX lower In X, declined combined on while by the the operating decline freight partially to Total X%. operating good quarter, our summary, due Derek, second the income review challenging revenues monitored, our per volatile April, softer with with margin offset prices. TTS company We the One-Way decrease TTS fuel balance mile to By fuel expanded Despite carefully We of and the basis to revenue June. due adapted per provide adjusted operating decrease lower margins. in and revenues Werner dedicated points. executing weaker in greater declined revenues. caused to increased The million, improved on fleet fewer a began lower freight truck. with and half operating market We and declined strong lower our by financial was logistics our mid-May adjusting in of we Slide miles operating logistics nearly produced XXX additional margin points, and operating XXX performance. X.X% environment. and the prices, detail, by freight a and Truckload afternoon. and basis second of which with and improve me let cost Beginning managed, quarter some strategies, truck

conditions. we are cost challenging helped to ongoing, the mitigate containment During quarter, numerous implemented more and programs pricing the market that which

benefits expense. large and Our of these travel compensation salaries, We portion year-over-year due payroll the going lower sequentially are costs and cost expense when to driver savings in wages well in believe entertainment non-driver cost, improvements medical likely as temporary cost, forward. medical to are are lower lower and of increase and lower A portion declined improved our more workers expense, COVID-XX sustainable costs as abates. placement

contributed $X.XX with operating share. per our dealt drivers requirements state trained we quarter, of This decline to other second that of coupled our corporate new number the drivers. the schools driver licensing in distancing and million limited delays or income for social with During $X.X

primarily lower improved increasing million, prior million, earned slightly were to the higher quarter. produce adjusted our our than adapting the of market, Our let's our cost keep share due revenues $X.XX the productive. decreased X, and due in TTS $XX.X share Truckload was lower fuel operating our period. Slide at X% Beginning margin. TTS $X.XX $X.XX structure, or per By proactively Adjusted freight were $XX look In able a results we this we Transportation second expansion of million. adjusting Services rate fit per a year operating specifically surcharges lower a Combining segment. fleet margin. for income earnings on operating the with our to and $XX to fleet mile changing we to

surcharge operating Our ratio, net XX.X%. adjusted fuel of was

to on Turning X. fleet Slide metrics

per One-Way per average trucking declined truck decreased One-Way miles to decreased to as million. Truckload lower, were per trucking caused X.X% and to increased per increased X% mile net and $XXX miles grew In million. total a One-Way miles fuel we Dedicated declined Average revenues, truck dedicated, fuel of X% and per total per by revenue truck week Truckload revenues, $XXX X%. which volumes spot nearly XX%. X% increase decreased net and revenue our trucks Truckload week freight X%. X% of trucks For X.X%. of to percentage revenues April,

Truckload miles our As May, further to X% in began declined in improve to to XX% in percentage freight and June. One-Way declined spot

were revenues quarter, X% and logistics while increased Moving Slide Intermodal XX%, XX. declined international to $XXX to In Werner XX% volumes on results million. per declined XX%. revenue Truckload revenues XX%. the Logistics second Logistics lower revenues declined load

brokerage as are far are XX% a of to quarter. gross higher margins Our are seeing cost million. decreased began gross and back in $X.X July, to lower operating year-over-year. margin down contractual Truckload the Based to capacity percentage half costs experienced due improve market points, as what Logistics single-digit the declined volumes on to so freight capacity in high Logistics, the income an percentage XX we basis increasing

to portion now Derek. logistics declined the operating quarter margin like first of our it from I'd due year-over-year, XXX to performance. points Derek? sequentially prepared turn While remarks points to our improved basis final back basis XXX stronger to

Derek Leathers

Thank John. you,

to XX, to you Slide on Moving I update our XT want strategy.

few Over and or with with sustainable years, execution. and intend modern truck A fleet quality structural efficient and X.X We and professional our are, and our trailer strong trailer respectively. of key our keep ages X.X the truck more we ages to improvements few are average these years, highlights near drivers low past at high an and levels. created management fleet,

rigorous to our in and maintain driver continue change industry-leading trailers. market national to remained committed few implemented enable we processes trucks network, While other social labor to unemployment procedures and and retain rate with continues months, to our terminal to our talent. last In to hiring the distancing higher mechanics safety our the we the attract

we to technology are analyze enhanced ongoing our and orient terminal with drivers. train continue make We capital our to utilizing to regards tools decisions expenditures. thoughtful and And

to invest our and in IT in data upgrading modernize and continue We infrastructure security.

experience, strategy Daragh the as of our forward. we two and heroic the has During In these our search they new and and of June, superior innovation. citizens proud IT and chain to commitment be supply have weeks is safely development they eyes extra EDGE, not which the as to have on-time, challenging We're believe drivers deliver we every I'm goal Werner, of consistently during The to keep CIO. our quarter, In continue will in for who joined of safely our with an deliver drivers, our after our and goal process freight moving decades been going productivity team to our never of customer's Werner to performance continue Mahon proud last times. excellent and changed, time. Daragh technology nearly ultimate well going Werner IT going service the Werner The strengthen America customers. forward. will to the our which than in important economy more Werner differentiate extremely credentials, our as mile contributions second demonstrates infrastructure has extensive That XT launched been America's XX to

Trucking XX. delivers Slide taken goods is essential manage to COVID-XX. our during to We've that consumers. an industry, significant essential for business Moving steps

policies in driver March, proud and to remain our and of achievements during responsibility extremely I'm procedures we associates this associates take non-driver virus instituted Beginning difficult very this Our their to safe thoughtfully reduce healthy. stay risk enable seriously. time. and and

closely to continue team. monitor our entire to We local CDC, guideline company State, and and disseminate updates

features adapting rational, Werner safety every entry. we COVID-XX and execute can we on new to are support experience, that keenly to to remain costs freight then hard aggressively workflow, To We effectively implement constantly untethered the three guided time. discretionary reduced address focused navigation, and And enabled changing telematics on safe been smart a safer they installing and and logical technology, continue our book, most and our qualified all, efficient to by to nonessential more safely decision scenarios, driver operations, be deliver to board. continue safest and drivers. values, manage be best-in-class basic worked with we hiring across above the by customers Werner our against retaining and healthy have associates protocols, manual improved To so remain important has We compassionate. continue play the

has Our company associate COVID-XX positive a tracking workforce incidence national of percentage average. been as well total rate, below the our

essential consisted consumer Nearly of Turning retail, revenues in products to first for retail, packaged goods products. are top this verticals. home customers of and Slide of food XX. and basic XXXX improvement consumable two-thirds beverage in more half and economy There the necessity the XXX our our discount include defensive

customers and has beverage essential supported have are ordering We continually has restaurants and with from certain as restocked that some increased COVID-XX volumes being economy. consumption numerous of online transport accelerated. food We as retail shifted freight products essential to grocery in today's products

XX Slide and We in financial million of quarter. second off to Moving $XX position. paid our debt

target below range debt at $XXX Our currently million. our is a

EBITDA to arise. low our X.X debt as currently to during due very and net is leverage remain flexibility the pandemic Our desire at create to times, opportunities conservative

long-term debt changed. EBITDA to Our X.Xx not goal net has of X.Xx to

credit expired excluding $XX available hand have in at quarter-end, based on credit liquidity of facilities facility and July. and on We that $XXX million cash a million

ample remained well summary past Slide and liquidity. cash years. resulting with have cash of flow of We from our and is a operations. strong cushion, Net the sheet debt flow CapEx free the two On we with And XX over balance positioned a covenants. plenty four financial

new in with We to of safety continue to and invest frequency reduce accidents. maintaining newest cutting-edge equipped collision the severity technology, the and fleet a both mitigation

also drivers ongoing our IT for and are investing new adopting and truck terminal platform we are technologies. an our software of and network We enhanced in modernization

in to first cash expect excess that achieved $XXX half. We have flow generate already this in goal million year the and free of

cash improvement in delays, the temporary to state capital and plant CapEx income in of the the flow lower tax half half the first paid the working quarter. the truck in free in the as payments first temporary Also expect closings. to be federal due We of for year, of more due second delivery first the from to were $XX new was million neutral was OEM which deferral half, resulting half in net third

prior metrics results second XX; guidance quarter for current to annual compare our actual we annual Looking Slide guidance, and XXXX.

softer Due the very of in fleet and in implementations XXXX Truckload first dedicated quarter. few Our by half freight an One-Way declined suite decline fleet a our X%. intentional to in past this market

due discussed lower We and driver declined enrollments challenges to also closures had the delays. licensing and as state distancing school hires with social previously

to third We anticipated fleet dedicated growing based implementations. in our on quarter, expect fleet the begin

end guidance the of is from XXXX to of range a growth truck X%. full-year Our negative to year of now end X% year XXXX negative in

low of shy challenging demand, limited As in the we due expected, to market the equipment sales quarter used gains remained truck which just to $X million.

improvement difficult slight half to the recent very market, equipment gains some the used remains used seeing we're truck While of predict for in it back the year.

million. remain We mile months June. improve in entire we half freight was Beginning first market be expect to revenue a of in first remaining freight XXXX compared the going we of When total the net in range to $XXX began second quarter. late capital for million of half One-Way the difficult per XXXX, expenditures of to April that to continued assumed for forecasted the very that Truckload $XXX in mid-May, trend the the to market and

in guidance peak we compared X% for We've two half range One-Way fourth a no recent guidance the to This also the positive metric. in programs. a same second This XXXX quarter. order more freight to our and season exceeded stay-at-home in normalized X%. round reflects the assumes assumes the of in there As period established of per revenue total widespread is improvement the Truckload this XXXX mile result, negative of forecast the for

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

fleet average remain our and We at levels. truck or age near current expect the of trailer to

trends in normal, in unit improvement than of a Truckload July, So mid-May. been have the weeks freight the far, of four continuation our that representing freight started in in first demand One-Way stronger

Xst. renew policies August on annual Our insurance liability

As commercial policies expect noting yet the coverages million a in tightening basis, currently trucking we on capacity $X result insurance increase least the the premiums markets, are for not rates of and at these the finalized. of to annual policy's by an

new claim policies. also million be under We for responsible these to expect continue for $XX the first to

of months have and beginning rising How start weeks next to United deaths last is As we been a of back supply with truck to July, including demographics, sit return-to-school Alcohol month. and below the continue Clearinghouse build, in and and scheduled challenging company replacement positioned the are case next strong few builds, as the that level Drug to in truckload There will I cost results. weeks the a activity believe an manage will as here increased the continues with society half we States, insurance over and the half at on the near-term and end going execute COVID-XX Werner be counts remains truck there Class a economic if fewer slowing controlling several of aging well XXXX, trucking will over will controllable. produce factors eligible in superior driver determine that expectations of driving lower will virus extremely we the few and uncertainties a or trucking failures. forward. We focus school there strengthening constrain the market team to continue believe, the enrollments, for drivers database freight X

proud challenging and of my will built. insight, the continue and CL going like In are confidence lead fortunate isn't CL our during knowledge. care company the strategies, very wisdom and watch. the reinvesting I suppliers. with June, giants we will he his his that while continually retirement. founded Driver the of be opportunity our future. by drivers, to our to to my change times. CL his priorities balance CL our sincerely me one for XX trucking our thank began long-term on near-term in Founder, would That First became industry, of to Werner company summary, ago for this in associates years available customers, We mentor The for for results taking and relentlessly am I In

and strong demonstrated during a Q&A. variety economic to performance call like cycles. to the operator execution begin the to now of time, with that, And turn our at this have We I'd over

Operator

begin [Operator will comes from Ben question-and-answer Hartford Baird. with session. first ahead. the now question Please We go Instructions] Our

Ben Hartford

the Hey, where perspective your very cycle can quarter where got good it on mean, Derek, pricing where here a some guys. just is are today obviously belt. you've and the go? sits and about Maybe we on evening behind fleet strong there I debate

the to a XX% it pertains about talked kind mind average segment You've margins, it TTS potential top-end the profile? maybe it's full the of over where Where margin a be in or is a relates cycle years, of today few target. all as your can to for TTS as cycle fleet next in terms the

Derek Leathers

Ben, so Yes. question. first good and off, thanks afternoon, the for

quarter on I second how side few the about the stride think things are of of one, think we finding forward. finally The equation. our our results a indicative and we're going cost

years think per is for of And ones built really say went have I like should story revenues we tough couple the performed or the at relative one see I just and in is we truck kind in week. revenue through. the to that cost through you of last culture and volatile Werner a years on better get those to need efforts. and can quarters per But the side, shows yield the results top that quarters of the over

right. are you So,

going and for at not and and management. said, a in that, that results With you long-term of we half already But a for be With we'll right premium we've to I those cost to to of time expectation speak forward, approach work as we more with look as restating long-term issued. pandemic some is can is, tell guidance we've good we the what and controls the As expand goals. about being relative our to back coupling in the can tenacity now the expectation more that is in at a we've together, aggressive me we're little we'll think been premium the middle paid that I how same time, continue my the All it's the we service. cost where think push to the couple confidence -- that, for that margins. on a be -- fairly where is, around ever as look and perform, we're at, apparent and forward, have

Ben Hartford

Okay, unusual, some going little -- in West as maybe difficult the to today speak just know the and forecast in that stands, of out you some baseline the we're about the But few go. kind sets there where great. already. scenario network's it could little what July the little I But constraints. becoming tightness of we're next finish guess stands anecdotes and you case here you as stands about it follow a is on the strength it's on what And up the pandemic, to what's that, be peak a should a over best scenario a I up look being a as I bit clearly Coast very bit of, supply the and rail talked know about that's midst to going tight some or bit today? as say third into I might the as July quarter months,

Derek Leathers

so conversations thus ongoing we continuation has I certainly mean, the multiple of than having say of I the would seen really now years July It's of continuing at in on certain in year with been encouraging up customers. week focused then ago. improvement right We've back is the stronger what continued data. now half quarter. second the saw an strengthening, prior times It's a the our Yes. stronger far more we're I'm

next that how we're of out. of orders, regardless secondary Again, mean in doesn't our all we and our focused are couple time mix, forks space. being on portfolio that I the round Those the we also shelter-in-place no they doing discount folks all about those the play retail, assuming reality talk focused of which during preface are think on widespread within to think, is through and right go strong pretty persevere the the entire geographies and across country through over The west in now. or the is The sure attention, we strong serve that. talking as there issues make the talking peak one now, wanting to be west all way about really indicative that our did they'll to hotspot you focused well, got most selective we customers. kind that start really performing you with it road that right of It's the dialog to the the pricing, pandemic, about improvement, if and southeast. on win survive of about pronounced is we've that well may do or can't of about and everyone's If home well will, south guidance talking

to started the going you be about stay be on One-Way last thought now. opportunity we've a ability pipeline. nimble and economic go think, the got think about in going of them, to ask we're different our nimble, and is I asked that might lot where to got right we'll over mix in We several nimble, a be we've you fleet quarters going determined customers. shown their forward. We've the I understand could our needs I mix, and front, environments to to dedicated going really listen strong by But

pricing expectation continue forward. on is hopefully, to will progress to reflect options we results both we with that certainly, and that those so And for need to our options our those But dialogs give go our them of we'll us. and customers, works something close balance as show out

Operator

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

Brandon Oglenski

left look decades to out obviously this CL an and thanks no he means there afternoon, question. public just my by you forward And Hey, respect say now at we is of way conservative has more maybe Werner, have going good a this bound, cyclical, your been long around range for so and previously. But John, has more that fleet margins that Derek, taking Mr. What for changing could the approach maybe investor, do to you as more company. this objectively, float wrong everyone. maybe lasting with legacy Derek, now have is that becoming it? put run been but now a risk, enterprise two plus X,XXX is see for an

Derek Leathers

Yes.

world else. the old don't We're best above culture, chart the really But My what -- and Those growth. got customers, count know But to prosper I that's and line done, to our But been all actually DNA, that make require mine. I'm forward. sure that and we the enough have think going continues pandemic, the to answer where may drivers, drivers need the and CL's mind. want going the know, be customers with improvement it. back roots going assure about That's me opened focused forward answer. that and clear talked opportunistic which on and have we've of to but of to putting I'd him to and of they exactly laser in need -- company The keep the it's us through to we He in to are it. so with as them changing reinvestable part are can where that's class, financials clearly, a going you've at we're that I to him go how willingness also subject. only and I we're remainder be dialogs us. kind next have committed to know, integrity forward. not to is going not we XX bottom has they're to as of can done stay deserve. exist, matter, years. up with you going put that CL where focused to are right to kind have been go me me get navigate educated upon and and touch we But really and expectations, said, things go and we'll we is to the you're of return that it true respect all to to it'll you but with stone again, going that But all of environments going those the that eyes be expectations customers numbers I and are on on they yes, that with trying I to has have and the putting belong, to and there a Brandon. the service, when being we that changing. underway himself it's going on above we But this And our transition us And giving now, but thrive risks change grow looking a if top asking are here's So justify be to our forward. keep operate our take change. don't this being up That's a look, that is that to place those as of indicative with things and right them grow short-term to includes look

Brandon Oglenski

Well performing I during appreciate in down pandemic, the difficult And know middle even the But guess, I it's response, pandemic. guys -- you if the have I could Derek. you relatively pre right been of that will what really the your look and and especially Werner. years? you right have shareholders want out next at bit metric involved maybe to further, here gotten a What investors do few measure be under that now the little to watch watch, new well

Derek Leathers

you you I I but one, mean, -- give I'll think some I give not Well, thoughts. may so,

you, end bound range and as being mentioned we've you I'm top range late. living tell dispute that. But things of decades couple of going for in not few So I'll to that been the of a

expectation, of that we've that that's push So higher, for. team's this what terms in my end of signed expectation, we're results to going up top range continue that's the to

But mean relates going opportunities. growing truck aggressive growth expand revenue kind going We're be not that We're truck against to looking that appropriate, put at just to our to as that's it growth to as line performance. may is is mean understand or But it an the are going We growth all. for the in bottom expand fuel organization of needs. all to going entrenched which of clearly be and that doesn't backdrop portfolio. logistics

part But our eye going just you. just equation. worry to night do sake, can of investors, So wake not an that that you're to for I growth team. is not create growing for I that towards opportunities the and our we're leadership at associates, our assure our drivers, but up have Growth reality

you, about do into and set best carrier can level, not their ourselves And compare one the at want and place. where So the class best it. at and to ourselves level don't whoever to that's to logistics bar that's and division we'll to organization I I'm there that's the we assure lean we're toward to segment talk I place I quarter eventually case. want that and in and to anyone. that And compare take company be a the truckload looking is just going leave we every it is. to

Operator

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

Todd Fowler

Great. evening. John. Derek. Hi, Hi, Thanks, good

Derek Leathers

Hey, Todd. How you? are

John Steele

Hi, Todd.

Todd Fowler

Thanks, well. doing John. I'm Derek. Hey,

environment you based think revenue have you on do this now. for So think there, you the help per XXXX. you pricing to or total easier guys that understand tightness a for And about to us the I in guidance second right mini-bids the down on the bit see in of then, half X what that comparisons market opportunity this the pull some contract seeing for But can the you're some X, Derek, rates, that assumptions mile spot up just creates half, the have or based some the in second either you forward little side? the in on of

Derek Leathers

Yes.

ultimately to -- where let's first how we're these But to our going with when to range. asked dictate do we I to market baked be strategy. did is. pull-forward what's going conservatism work mean, able deliver. as exceed we think And we're that in end-up, I'll ways say, into the So you what primary to comfortable was do got based to that assumptions feel we there. off, looking fact about start is were on conservative. going get assumptions, can to quarter last it we I'm But not and like we the just the

it's is weeks. I clearly needs and to we'll play additional done. role be above will going additional to moving implementations going a customer to relates fair got But drive the projects volumes as to a that XX the commitment with we're commitment support, recently been widespread respond ledger, to We've excess that increased and and share. our be place side to get volumes that's and revenue priced to increased the in mix need some think, of per Those we will lot volumes that have Those new last fallout opportunities, have. per truck of to made to covered. mile, bids that been have my of you market seeing fleets to the all stand where of the that. a us there's week we've to as some new our will work continue the just volumes, we'll a move relates rate and right-sized we're it The that bids things. many and behind it those many going dedicated decreased our of been we've make going normal, we'll opportunity as to view appropriately. be needs seeing for per That's take for sure completed, that get the frankly, plenty needs spot it's bids, really phenomenon. with to One-Way, And of we referenced. in stand commitments need and volumes be eight going to over total We're for And existing that's and on commitments fairly to as that them from there pop-up work and customers spot levels on

So we future look growth. can forward reinvest we continue to to as

Todd Fowler

that Okay, helps.

of a now? half would that versus priced of, appropriately second work rate a like some in spot-rate commitments, kind So the right above contract's the when say, more, and be you

Derek Leathers

the and that market, Yes, it discussions. volume the we're going going from. is the could It above be to pull great and agencies depending months be of We're what is or up spot the need by then spot of that the social We somewhere supply the is. going have further capacity issued frank in licensing open across on classes out an the how retirements worked what where to with less real now. about could bow market that the far cost their can't side. at it. We're demographic doing now. in of seen on fact along, so that the the the because with side, did their coupled was country that was appropriate overstate that XX% have we've that industry there I the neighborhood But came to capacity, right That on graduates year entrants when around of America And to they retirement some leadership the good CDLs first pre-COVID. companies, to preference that's accelerated about especially order -- additional add that new of XXX,XXX in six near fair going distancing of to anyway talk be as with is and COVID backed a them to are and from in a producing and issues

sleep, And for make can't a gap so, that's up lost There's there. of kind you it.

and trucks first are we're they the constrained constrained, pretty volume. especially just in going the focus to there. in of that not out the so, that reluctant where are be they're their to second have lot a industry. there's that's financial prudence of just across networks, going trucks, folks that just of going be but on just in here, rate I pain side. rates against focus to to need need And lot be throw They but think I and direction, think relative yes, quarter, the driver right We'll And had going adding a to to

Todd Fowler

with here And you is good. that the can there us, anything very John, Okay, follow-up. makes a was sense. lot just share margin a performance of

side model the it's things the quarter. that that some out got here that think maybe that are when should perspective, gains about It best third second perspective? like help maybe XQ from a in you'd margin helped modeling in than a we usual Thanks. think point we XXXX so sequentially move my you even as many there won't or from quarter that cost in higher had What better could into seems I've the reverse are in that patterns. XQ factor-in should we seasonal that I on just the

John Steele

Todd. premium here be estimated significantly logistic July. while risen in prices to Xst. increase of that are that The far the no the they we'll consider. moved we're have out March or A to $X.XX another April, months that assuming July. the Fuel into a goes we that's third few effect challenged but Logistics business. coverage and of what a and policy. next That's pointed the gallon Thanks, at days currently and two in August side, and as increase We changes gallon from margins to through side $X million Sure. after for seeing that so things of going million of based insurance to then cost good finalize rates our $X.X in $X.X for run-rate million quarter the dropped on capacity April creates a has a $X.XX from near-term for truck it up couple challenges

-- we the will that then, freight really out won't we which help COVID the last second in third that of is happened plays quarter quarter. don't and in right expect in bit the seeing we strength from lower market now. a how stay-at-home a So, item, affect had little fuel And is and the here we're prices programs

Operator

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

Amit Mehrotra

is the in was the on half per mile appreciate Thanks Hi, your be obviously on I comes you conversations back the and wondering evolving given and it, environment for total obviously well. was operator. in you like. freight Derek. I think terms how appreciate, on market of guidance hold you One-Way. the to the to Thanks, heads taking freight, look where 'XX these Derek, John. you kind how also can is how customers to revenue based Hi, curious outlook your see moving, the hoping, with as what but supply we yield the with the question. 'XX, not if may folding going side under quick respect I We're opine of did at just

Derek Leathers

Amit. Sure,

thanks is going It's still for But tight even thanks can me the -- for it. I to me to despite to going the will off, back question not now. it's and you're it. to predict probably the First fact, hold for supply side, 'XX. right try the early us to to What not tell holding you

tight. remain to going it's think, I

look in size of partially the to the of have even got and strength forward it be and with customers, delays is. our new licensing about our we're and only that back on tight the think but going classroom be all other the and guidance going the network our and as still that at truck or belief training restricted I we've in open, and yet relates reduced to industry. cavalry that trucks back our the retirements they're bring and many as across to with it lot enough given suddenly are side of a on customers able there is not network, to As that's volumes There are as

continue to And a drive so, to for forward from at. up be where 'XX is rates to upward year setting clearly or they're

would talk I become find a bullish think Meaning, it unlikely really just wanting tell, -- as the to might about hard it particular become we because I'd to the how extent cautious about number plays is more to tight get. it's we being I'm out. less. quarter that might

to too a it's talk this number about but early a or So range point. at

Amit Mehrotra

Okay.

So, XX% you're I that? basically saying that. Okay, understand fine. to X%

that phase. productivity to per of fleet the kind growth to side, X% rate the and revenue X%, quarter in tractor terms the stabilized opportunity a of very strong. the productivity here Obviously in get dedicated? have you of per utilization, continue On And of increase back week? tractor the of growth counts do the still kind kind opportunity What's see after at counts still tractor is the to dedicated decent

Derek Leathers

willing sustainable per because run-rate a So at week just little not the also but and closed think that's yet are that tell as this just sign getting of fully we time, can revenue yet implementation long the of went per pipe a it's been quarters implemented. up getting a a time. comps couple a haven't -- tractor is better. is But I'm committed, full it's is but is in obviously tougher, really and you our businesses that through that in we've market to were What row I

because as to as python that the of have to to and reopening to little fleets on been won, we're going looking of problem we conversations. they've those six the we've been stuff lot we're of and get at done. We that stage, bit that already, when trying now, want year. for the implemented, dialog's rabbit months a through have to our implemented for stand-up a those of people the get better but work we So it threw the start those can having if get burner half to way back what delayed And it's

you're And right think do getting higher it's to us But now, truck going a QX, versus may growth. total do it's I struggle work there. got of we Dedicated so, lot some a we start to assumption, because safe the count got too. end of to QX growth see the One-Way that in on a range demand

not they're put going other they're and lid that And really to so, these when growing, including here. related. I capacity of obstacles all not the are -- It's to freight a and obstacles real they're talk on about

some to And have going to we conversations have have. tough so, we're

be well at somebody be of now, do because think to create a re-looked with even appropriate. to as to try very cap going maybe very grow We've going it's But network to was got a fit it's some going off inclined. bottom. and to continue tough needs so to grow I our the freight right we're for that's going is it certainly to yielding fleet, as that to aggressively room it some the -- to and trucker some we're was priced some maybe And or work doesn't time if

Operator

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

Scott Group

Afternoon, thanks. guys. Hey,

'XX pricing extent some not getting now? probably right magnitude Derek pricing right color that I not there are the a some, the any maybe we're there to or now. are extend there's to on know direction expectations, the but get of happening I but bids So ton,

Derek Leathers

Sure, Scott.

There that like through XX% back network their the right be are work over start or I'll and where residing. the mean bids this way bid the now. to so is are season still point predominantly I So, isn't at some with going done we're bids -- half with are our working it

in for to work on bids those would through got our that, positive those now inflect That'll take right and it portion sense at to customers for on what those to of to that bid pricing We bids Our continue our that. expectation do given of fleet, reflect the make market reinvest that our our is landing to only to to up in to to to be up decide drivers. need we've care we're with Werner. conditions continue ends

in project to in so in positive positive still positive bid are are going territory rates in that that's and in and digesting will though is, type bids our those having that be and the wasn't into that you be to now rates opportunities rates on environment on network that might territory mind priced bids, many And territory where to be April April a right with getting made starting live were in be for might been to in have good to real and April are and have decisions while. little you you're live a with spot

back roots dialog the and And of beholder. What's to positive try in but do. tell about today to work that so character Current can thing, still integrity, in work the if and they out on we're true matters going going to we've and eye stay exactly were to to our stuff But to statements going yes, and our through come right it. those right our can the do have to be We're assure you that's bid you. all and the lot I that I pointing not run it. a to and territory from price those got --bids, we're will just of

Scott Group

then, to ask And thanks. about I Okay, drivers. want

driver like seeing need not in big evolves the you tightens really here? when we're market the tightening unemployment -- you you right the of now deal terms of think a market is tighter market usually markets and see get sure to now Thank a increases. pay we now, do this are think I'm Are up and So how driver double market you driver you. right -- from seeing and the right driver driver some how

Derek Leathers

great Yes, it's a question.

So, right. drivers, for market driver quality the especially is tight,

many look our applications this to in retain because seen got week a take It's and of and we and our CDL's right. do many that them to it yourself fleet those all find from drivers during because need what one abundant, there and morale at it's out to times a it's to So how momentary tight them, worked out treating real when and you one. their that's and are them our ask a to cyclical can to trouble. on applications of there's meet support. is to a pandemic low driver We've have where and keep And difference safely. them them, about we matter or them equipped is the keeping how communication doesn't and filmed a in think right of that not attract can get really now. that That's do or positives we're do low it and market to matter are I job are cognizant think, and the of need, have hard that in to and us a tried be not headed with But this criteria tight. in we of I going we're We've I've regular and they that drivers. is through safe, can driver aggressively their to higher talk videos work strong above looking wherever our culture for the don't suffering mean is to those to and continuously the important, have the and know the that witnessed the to find market make is that of trucks that honor for need think a the positives be pandemic fleet. the And with pushed you morale drivers say lived keep the And able what suppliers to basis we're where why, today. you at I'd we

do. do extent, the months my where so can with to six I'm doing work have driver So I'm it's commitment going do part right I all Because wages. would this, side deliver. our those then be customers, the work of wage to over needing on driver only some reason on that turn work the I their any I'm is, that next wage conversations we'll to freight and is, in the

that were wage you rate go -- should in And see rate moving, see or greater. moving lines driver two if And so the glove. hand you to see if at you

that they our cares because they've hard we and the now, not of why matters we're what that's when feel put to like position, so that. stay steps safe it and lot And and wage really, a working them feels feel expectation is. in the like Right feels to really company taking on been right and there or pressure they are want doing

Operator

next Our question Ken with from America Hoexter Lynch. of comes ahead. Merrill Please Bank go

Kenneth Hoexter

the up Can building orders here, are Class seems Derek hurt your the always you capacity the yet comments and scaling just to in some talking net truck to about X market evening. that But on contrast you of when John, used good hard compare be on turning. kind seems higher rates were the market. of insurance,

the not rates why improve? should this a nearing peak up kind if we're, is, to we're we're to to of to you've why peak of if got continue why So it be net going know or I I start the investors to build again? expect not, we questions think question guess lot want seeing is if so on orders into that if XXXX;

Derek Leathers

if and it front and on don't want that. replacement part much going and you it's detail sure those in how to fact question all the forward we having elevated earnings orders move with help it accomplished going remind but equation, here, not keep relates to speak at of we rate no kind into right quarter to was to will we've and a if on rates are Well, do, back and where need you now make can say be you in of under even all, put too it the going market -- it, an rates those know is first for to from that cases got numbers you The to I it had order it's just can quality that and and you keep the you order driver put and the disruptions that and kind of or driver in all equipment we have in manage Scott's industry side will new so what of tight like whether thought the to order relook are fleet capacity of the right mean sure that come our before supply of as insurance need about OEMs it we more think the now But I half. able yet because in this CapEx there's to to I and were I got we're the around these they as got as as ever and our reality, on those to make right really things in certainly in additional in to drivers, market our I numbers. than But this relates up to in peak Back only direction. clearly of kind deliver that's make some to we've them relates net that some the goes to and rate with results, clearly headwinds case, I young. it

got get done. work some a and coming in we've 'XX entire whole that do So, of work cycle to to bid we've got

more and do That's and really and find out discipline So got our and specifically find there continue expectations team and keeping at looking it. we've cost to And embraced think, excel at still was of got is has and and to they're to ahead around I and run cost side. I take a keeping lot where that to we to today where I'm go. religion better. more the direction are And and the we've we're and there they'll Werner going of plans, think to the internal control I'm the speaking fanfare us of more the got we've I to that I onus that's continue initial got on is my mean, do. given still there's room is around to work on

Kenneth Hoexter

really And yesterday to talked orders their exciting, about lot, Perfect. follow-up, about Werner another of take about used and then talk you excitement, Schneider my and and kind bit seem for talk frictionless really about you systems trucker get little to mentioned to it seem Werner EDGE a the can stand. move a in. And you maybe just rolling a minute where does digital

in to what advancing kind new talked was the what on jump Daragh of see for the CIO. talk Maybe development and opportunities You that? about Derek. going Thanks, about as you

Derek Leathers

Yes.

with of the doing metrics been the driver, are percent find of days shipper, getting in competitors pretty whenever how satellites about into an efforts good to same out on more the the and feeds EDGE productive. and we're saw it's a for there position where applaud think and those comes of and to feel we to some with really that today of departed where business of those to environment the of against redundant That's going over intuitively type you that really of a it, and these our go that over etc. looked they frictionless part about are we and asking been to in have order dispatched start managing our that there or benchmark in and been a is continue to both our send into several the drivers SG&A on the locations, the last last of if some progress we're exactly good still crazy have years. it's game of it's So at going we've we're We for results, arrived our stated we're with we're automated that We enter and doing to is format, think you automated, arena. them people other part constant that a trailer and doing interaction why the benchmarks start automated workflow and sitting we where network messages. about shipper because good making freight year-over-year they're go know on kind and feel arrived are to that things is internal we're need satellites work lot category, have announcement trucking, as truck couple work lower I enter the taking. and yesterday of more to more becoming look I that to Werner continue ways forward That's and

as and to you useful in you and the you more these about because the do. not to other issues should are and auto particular it, some So, than more as Werner of and a loaded know AI little educate to people do Data and get We're filter on them asked excited and use process they safety we're more alerts information, on the coming auto more geo-fencing, we're and it's driving safely with if where over other using will, through work you EDGE at us to if make all things very in can't problem real quickly we with is had can all. --we things all real drive and have at usable automation it where Big these doing and breakdown it

is where focus overplay can Werner Daraghis he's and I'm and of being our to EDGE fresh where headed. just the sits platform take I'm that's a and but tell about built that's about where around going and hand excited he excited I'm not stack like about really us, is so, our but breath it's -- air and here is more where whole trying And to excited where you today our I tech

Operator

comes Please next with from UBS. Our Tom ahead. question go Wadewitz

Thomas Wadewitz

demand think plays of to terms July. third And I this another demand? are were replenishment 'XX inventories out that, was quarter, historical a of exactly pretty a market how really outlook. strong has I drive going customer a the what through the and thoughts market to do you it -- results, know as of been period and and analogous the Where think on is you kind Wanted of just questions but inventories congratulations -- and on quarter then, a do in of way fourth afternoon, to at things in it the know low feels dynamic feeling do think you lot. you same, like good think this you and maybe here's this your -- similar couple get looking seems obviously, June it's to? really freight Is in on and up tightening Yes, guess, backdrop. strong

Derek Leathers

their stuff are tell got question their on I So can because that up part customer-specific. are recall to because sales that a will think tougher Those pushing have and their in -- phase, continuing at that's a of are so type to point winning items it's then -- have and consumer any I maybe you inventories, space answer networks first I that further they they've really replenishment. we're go in consumable to discount been replenishment and that

our be on are on that be might do the that have have to heightened. we network that So that of inventory spectrum, customers other levels clearly going end

both they're at sure that and consumer make as to and net where least about at in engaging think that back the we're aggregate is have we net, still that their sure is of of in that engaged. that's the all about knowledgeable I a job -- but think we half the think make cycle about Our we

have some on starting will, inventory aggregate, have of that sets now out to peak, relative a replenishment all work demand, in prior pent-up of orders coming to and that have in you well. up -- their the We activities people shelter-at-home need and some you if levels to

and that of with keep other place others through to in that, first out going people to some what the our and coming poised of are for we're a and time ready working through That the a back closed, trying that for really of are know of is communities and customers. the both an pandemic included of because the parts that of those ever that for other we going opportunity open, to we opportunity we're and on we in that and parts -- cycle stuff through in on are on. going the country social all a hard more are is never to the and some cycle, suffering those social terms In now country. crisis are totally backdrop sheltering respond frankly, deliver What our any of country now time, within so that compare unrest unrest right it's totally had shelves we've deliver multiple the will committed to and issues and

exciting challenges we in to overcoming it's these have to And want because so, play them. a part

Thomas Wadewitz

guess collecting potentially I that -- then, kind follow-up on And supplemental and capacity that a component the about the come the you I the think, if could unemployment clear constraints. of can supplemental see the just a of or message benefits that about great. talked of do for kind of don't cut What -- that's bit capacity Okay, back come latent driver meaningfully, a back capacity the you've do unemployment market about you that back as think meaningfully is a think to how view? we in that

Derek Leathers

Yes.

as orientation capacity as believe a just bringing well swathe weren't the they're there that, you had hired, know might running already busy -- that is I that folks laid people hiring, maybe of through those entire some think of the large furlough I much already had kept Yet swathes experiences or pandemic, it's kept temporarily, welcome So their or else. that and kept stayed of because fleet. training, were kept industry's off working or PPP people they're working and back, someone other into got to went route many that for drivers don't

put participate. network, having they so, spool any, we've sight driver were of any many the can broker anecdotal this across I the said, the very as line in American to conversations those drivers of in fleets the talking game, the would do, I One broker are And places, have go getting those to to to short-term. our me up in what during about fleets thing couch, period, did and our want be went Many not elsewhere. before few really is they had they network pandemic, with to in Mexico true back try as if where about are

not huge as in so, Our that the around during it buy seen there just drivers wanted ready sat know, many make was and that many, is I years this drivers high we've and taking to pandemic available the check percentage there to the that if to the we soon. during but swathe don't wanting because out the as them difference just pandemic be overcome Werner a and enough returning all, driving don't could to work, out of we're them list criteria it's they obviously change that. hire about be there but think on to many and there's to happy to talked going they clearly that some meet is if I be folks things work, for and of

Operator

Our ahead. next question comes Please Atkins from Jack with Stephens. go

Jack Atkins

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

maybe of sort how growth sort a accelerated -- think another and the capital as it sort Just leverage -- you debt buyback low I prepared curious and maybe outlook your And on talk level could one balance sheet just running I on if aggressive, know of I guys for your me M&A in or we're little to potential and to that time of is turn your, rising that over, what's deploy in your comments, trying bit I'll guess usage may maybe sort here of dividend? was capital, the is but it of sort the you because or below ways more level. be target you do of, you terms about maybe it mind is about Derek, are how in of or referenced be to

Derek Leathers

of allocation, think capital above we when it's to always So strategy. about be all the going in

the quarterly We time, going over stray dividend keep past, changing, up. in of had either opportunistic I remarks, in said as my we've there going our but have M&A look when the see move that appropriately that, entire be appropriate, kind to overtime. to we're that that is aggressive -- fine. be. I do can't to that matter for and opening the return will have you constant relates I that if or table, follow-up, it M&A no our not looked that To the as opportunity my more if it to a more do make And be buybacks, is push an for at the of but arrays going, our history and line. if with it take it's shareholders same we're at continued conservative to it can't that's that towards properly to to will we're we and we so that is on that and do to for and as right the far has mistake, eye understand afield forward shareholder with company, we're everything I step continue Share more to time a us total that's importantly not growing stand to got we bottom methodology we've from off, a be to do don't timing, pull answer growing, -- guess, we've we'll the that

Jack Atkins

that perfectly. think very answers much. Thanks I question No, the

Operator

Please go question next from with Our ahead. Wetherbee Chris Citi. comes

Christian Wetherbee

me wire for for me maybe it keep one Thanks squeezing as well. the under here, at

offering truckload may Just outlook as you're you go to back have of of a can have what one -- -- bit seems what the the been side, you in on more there, side, has half take sort large on the this and much advantage goal dedicated be second stronger positioned, than that talk half way truck How somewhat about a uniquely you bit pricing are of year? shot on is how a of obviously I'll do the second it given you the the that. you

John Steele

in pricing second side, per revenue were I on nearly per X% dedicated quarter think week year-over-year. we truck the Well, up

is the as had of growing been -- fact a we in gains of able post in moderate positive the We needs discount achieve staying bit base year, last larger pricing retail like strong customer little definitely will particularly that increase with consists pricing but that because they've and second space the to expect pandemic, grow a in just dedicated to territory. We companies our them. half, we've that were are winners,

good there's think dedicated to we opportunities So grow going forward.

Christian Wetherbee

Thanks Great. appreciate it. I much, very

Operator

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

Derek Leathers

I Thank today, interest everybody just us being thank in appreciate with to time you. want I your and your Werner. for

never do and shown is, couple sure for be in look rate the we're are questions half have further every not plenty is time, important violent as at been Serving of able that and that. safely. last There's understand a a customers. we've now several of we been win and those the going we that a opportunity present turns with we're in opportunities drive the models to safety lot And sure the think invest selection look one one that the stay rebalance those cycle future changes. controls on us win seen every historically. our to we're about on productivity. our I few, again we're nimbleness is think how we we're There's thoughts we working to core we out Just for but we've cost and as rethink we've we more that make to the for and certainties time lot quicker behind quality properly one closing network going what of there, than day. and make doing to work customers to we'll the continue market we're quarters the a Customer bid through there best a is than season clear be it as and appropriately aligned and about those and thing future succeed to and our we more layer most support is with But in to aggressively more of to that, rewarded respond work focused today but the are going for but the the day has us ever CapEx adapt that spend and through money back support. them yet there can to of to and

to stay the about to my even inclusion some way are logistics that those them We're are matters unrest. team and of the and going for work to country to capacity double on the organization going ourselves feel customers. and I So that personally can as ways we and to forward going that And and type is short-term, shy from to excited that's people not bring keep efforts we're an difficult through the up do of time. and deliver back we front. and communities this safe. our survive pandemic, of forms We're been continue and our returns going I'm In we're pretty going support muscle half where something we that and set COVID to flex continues we're upon push because both safe. and continue all going our solutions to to and deliver find the within our really continue social including those to the over diversity to We're to going of drivers stay opportunity times, live our the going have improve communities and me constrained, to to to around to and our we and we a as on various be and lot committed our something have it's only

to larger in You're role a play logistics that. see going

more we like join push doing and been will interest to over the want Lastly, because do several but it industry With lot sit, We that, want best-in-class the welcome out that we've for the time. as and space hours, it around again, that we continue that and the in again, done I appreciate those yet, where there conversations and you. better that I your time to some relates further. to all work if of to a of not benchmark internal investment last thank days have carriers makes some automation; of your stronger.

Operator

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

disconnect. now may You

Werner Enterprises (WERN) 30 Jul 202020 Q2 Earnings call transcript