WERN - Earnings call transcript Q4 2020 | Werner Enterprises, Inc.

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Operator

Good afternoon, and welcome to the Werner Enterprises Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Derek Leathers, Vice Chairman, President and Chief Executive Officer. Please go ahead.

Derek Leathers

afternoon, good and you, everyone. Thank is With John CFO, me today Steele. our disruptive a very was year. challenging XXXX and I'm proud Werner throughout of our the and resilience, year. perseverance tenacity team for their and changing Werner reacted freight delivered record and associates results. to work quickly conditions The earnings share Werner in adjusted per team operating and record achieved income XXXX.

drivers customers continued to protocols Our the necessitated mechanics Werner pandemic. America mechanics to despite service consumers and Werner moving kept and end changes customers, the work associates produce restrictive by our superior drivers environment. for office to relentlessly and despite demanding operational their

delivering Our personal primary focus best-in-class their continues service our of protecting to families and be health our customers. on the associates, and while safety

confident our demand for that strong services are in freight be We will XXXX.

availability expected for challenges On and constraints several the the supply to to growth capacity OEM are side, at industry least quarters. limit next driver truck continue production structural

demand On implemented. continue key sales to producing are expected COVID the packages are additional economy side, that our and stimulus the strong as customers recovers are

Finally, a customer even inventory be deployed levels low service forward more need historically in the at inherent growing market. despite for next-day e-commerce inventories rapidly continue to

We are environment when we was business was in well succeed XXXX capacity in tight. to strong and this freight did as positioned

in We in normalize at freight the the are some future. to also market positioned succeed point the event begins to

a execution. refinement X on well XXXX portfolio The is You can diversified Werner guide us sustainability a as for any versus and down and look to revenue trucking demonstrated how has thrive our T XXXX perform. laser and in One-Way to operational our throughout would on The of custom focus of Truckload allows industry-leading strengthening a earnings committed growth market our of cycle. focus we to expect our dedicated strategy to in positioned plus durability resiliency. Logistics

order. you the on X After strategy. revenue customers' brand Our to that and and our of of fourth growth expansion for a annual margin and unwavering time financial freight consistently T's deliver with processes our enhanced latest every I'll in quarter S time, and provide developments safely commitment + our designed review position results, our

are our guidance other strategy XXXX 'XX assumptions. and and logistics and almost our our market to more short, as here's overview companies half I'll from with freight from and we our our have an Revenues growing of Finally, in fleet from in introduce by guidance quarter to customers which key winning our well XX. relationship updated metrics average of successful X, of Slide size resulted points during shipments. and sales customers segment, size Over report customer. our revenues freight On as in X/X vertical industry metrics and for and industry of generated transportation XX% the with are from Logistics. manufacturing remainder revenues XX% Werner our from food services consumer-centric primarily industrial verticals by retail are base and and Remaining beverage. over revenues revenues truckload XX Werner has successful and and top percentage X% coming or our with aligning fourth growth of with top came and In long-standing of came XX% customers. very a X strong our organizations. Nearly in larger produced Many XXXX XX% X-year retail top the to XXXX XX%. increased prior XX COVID, customers compared committed a

XX.X%. basis year $XX.X XX% XX% while an increased of operating revenues grew EPS for to points $XXX million. were Let's financial fuel income fourth quarter, fourth at In of margin $X.XX X per flat overview full Slide TTS to move adjusted operating million, our our increased the share. net performance. quarter to to and XXX Adjusted Adjusted

EPS at $X.X to Adjusted share. operating per X% revenues X% increased For were X% million. income increased $X.XX lower the billion. $XXX.X year, Adjusted to

TTS adjusted challenges XX%. unprecedented the achieved to goal exceeding an despite of XX% of the of XXXX, midpoint fuel year full annual the net the range of by we long-term operating For margin created XX%, COVID,

TTS operating were fourth Dedicated strong fuel and improvement retail, largest produce revenue expect of and demand the quarter sales. we per XXXX, margin will customers discount freight For the net both upper our and as in beverage home continue of end truck improve in be robust our dedicated that range. in to

fleet with fourth One-Way One-Way Our combined financial nearly normal more X,XXX by sooner December chain trucks total is with of produces and the At Truckload. strong John increase in started of continued ended trucks our to in TTS performance it of cyclical XXX us the success quarter. trucks point, more We to truck sequentially Dedicated to and caused service, than Truckload. and over the strong decrease and call remained customers in Truckload to to fleet. was challenges of in results in peak year-end, a COVID. is season financial Dedicated and into fourth grow supply strong quarter from our detail. of year discuss year-over-year XXX One-Way manage to our quarter Dedicated the freight I'll turn has in XX% enabled At difficult X/X less third TTS XX% as supplier John? in an demand this sales October continue than TTS, constraints

John Steele

fourth fuel Beginning to with afternoon. million $XX lower X. Thank slightly surcharges Slide prices. on Derek, by decreased Total fuel for you, quarter and reduced due year-over-year good revenues

was due revenues and per the increased shorter TTS improved X.X% of miles dedicated haul which per trucks. truck, total mix lower week slightly truck increased per caused to revenues by per mile Our

Our improvement quarter. XX% the the logistics and revenues second in in third from significant The decrease quarter increased decrease X%. X%

in last and we sustainable improved continued programs better our with leveraging mile costs spend managed in Our XXXX, through with controllable cost management XXXX, rate accident annualized in procurement lowest associate effectively expenses, well per and $XX nearly doing savings. managed years. our the our improvements more aggressively sustainable We and productivity, fourth in achieved we less. million We delivered to XX In cost perform quarter. million initiatives

congestion injury drivers, our driver to professional our for performance favorable standards safety training lowest and in a other XX improved grew ongoing TTS of in enhanced XXXX, retention, traffic high COVID work execution safety Werner's our significant factor, safety Adjusted a achieved were hiring was segment. of truck result reduced and the as last due technology. While contributors operating income rate in primarily our operating XX% strong Also, the the we years.

Logistics Our basis segment in of operating margin had an XX in higher result costs of point a XXXX. second as capacity half reduction much the

increase increased revenues. revenues by were TTS our X% per fewer lower with to quarter revenues $X.XX, primarily was earnings X $X.XX fourth declined full improvement a X.X% In over Our truck year which or ago. XXXX, a week XX% On adjusted due per are Slide per results. share year We X.X% fuel surcharge a trucks.

In a margin. at the an fourth X% income higher of operating to fuel $XX.X XXX on offset to by to net fuel. This revenues due partially X% specifically Our X% expansion quarter, income of share. or let's our $XX.X basis our grew increase X, Services margin was margin adjusted EPS segment. to per in and a in expansion Beginning Slide achieve percentage look point TTS increase decreased to us Transportation X.X% million, million operating per due enabled XX% surcharges XXX Truckload truck. our point increase adjusted revenues of results lower an adjusted due $X.XX operating for basis Adjusted operating

continued favorable of fuel decline adjusted Our XX.X%. ratio its to net operating

Slide on Turning fleet XX. TTS metrics to

Dedicated, of trucks by million. truck revenues increased Dedicated to we increased grew and X.X%. revenues For fuel per net X%, trucking X% per quarter week $XXX fourth average

that trucks trucks Our Dedicated Average X% decreased drivers X.X% per and XX% Truckload move Truckload fourth to net increase and the market of to Dedicated. a as a miles $XXX mile from to of decreased strong. truck million. X.X% of week customer fuel pipeline effect the X.X%. of driver Revenues per challenging bid increased remains to truck combined One-Way total increase revenues due quarter well per revenues One-Way trucking as per due

on and in increase results revenues grew Moving Logistics decline revenues to volume load. XX% fourth million. per a increase increased to to the revenues due a due quarter, and load. X% In in a XX% to increase revenues Werner XX% per a volume logistics XX% grew XX. Slide X% Truckload $XXX X% revenues Intermodal Logistics

to basis million sale in share points. will revenues announced In this which XXXX, we XXXX. made margin $X.XX margin and Last sale to contractual margin we Logistics close is for of third gain Logistics and as XXX expect had of contractual our capacity from quarter rates gross points sequentially the basis higher basis sequentially by $XX business, Our freight later operating We improving further Logistics percentage The percentage Global in fourth in decreased week, year-over-year margin improved our gross by quarter due improvement. progress result a per much of XXXX. to truckload percentage good points quarter brokerage. improved first our cost month of expected forwarding XXX XXX the

over enabled the to million improve during logistics enhancing has freight summary XX intermodal rising capabilities less cash capital last $XXX our forward, us flow XXXX. to free truck in is cash in years. CapEx years, X Slide the flow operating focused resulting are On we American free net cash the Expanding Going final margins expenditures of variable on brokerage, past a net flow from our operations, management, and mile. North and our X a and record

our truck range strategy fleet truck and are continue and EDGE XXXX, XX range our This with more years we Dedicated, building faster to advanced, On security. assumes last out and $XXX of net guidance platform solutions a our Slide by be comparable X expect million disciplined in primarily we technology fleet, maintain allocation. that to modestly For enhanced in Werner in our trailer invest $XXX to CapEx new is grow capital for to with the million. we

we safety, with foremost, in the equipment to sustainability fleet our latest feature-rich features and amenities with and reinvest for First will efficiency. new driver fuel continue

T's $XXX last or total our in X years, allocation. X the million XX% the capital S + invested was of Over

facilities develop continues our of plan terminals EDGE, are secure. completion Florida CapEx faster, the includes Pennsylvania will in XXXX near as Valley, strengthen that that in our we and replace and expensive lease technology initiative, information City, markets. Werner Our more Lake less our Lehigh full-service to with better, existing digital those X systems

X.X fourth million. for our we X.X% During outstanding or million repurchased $XX shares quarter, of shares

dividends years, shares, $XX per price the share. million that over X-year paid $XXX an share of we period, million. X last million we Over just repurchased average totaling or X.X same of Over $XXX

share strong continued quarterly include plans Our position. enhance and and remain committed may return. to to maintaining repurchases flexible same the time, capital At we increasing shareholder dividend total allocation financial our a

to is maintain net debt EBITDA goal turn. X long-term between Our ratio to range of a annual and X/X

intentionally this uncertainty Derek. to back a Derek? final of net year During ratio XXXX, portion and turn in now prepared at X.Xx. ended lower remarks period the the maintained I'll we our COVID debt-to-annual-EBITDA of

Derek Leathers

Thank John. you,

XX. T's Moving + I to strategy. Slide on you X our will S update

upgrades our sustainable strengthening the our a our and service Over structural professional drivers more latest efficient technology, high-quality, TTS safety segment and to standards fleet with for customers. our the retention product further years, to and and with past X Werner implemented modern safe raising hiring

to cameras Our trucks closure advanced respectively. drivers. the will of our mitigation first with training systems, challenges, March, nationally be onset of continues telematics estimated trailers, X drivers. a terminals enhanced of Ts, young resource our recruiting, maintenance are an challenging few licensing for remained the the number trucks market solution in opening driver Werner's of an newer fourth fleet average by safety X state next with reduced and cutbacks, ages forward-facing industry-leading other state-of-the-art combined these school transmissions, very untethered COVID significant safety by All the tight new and professional have trained manual further Werner X driver Despite last X graduates highly and network distancing equipped training for and years, Since in be tablet-based safety automated XX%. the social months. school requirements, The have driver Driver and equipment quarter.

IT major security. strides making and we our and data Systems. are modernizing November, partnership In We announced infrastructure Mastery upgrading our Logistics investment with and

years, we visibility and Mastermind to integrated in the management system. and TMS replace trucking our Mastery's with Over one next will functionality systems logistics cloud-based improve X existing transportation

that addition the comprehensive a component of ESG to strategy. third we our issued as quarter drive with sustainability of are greater report, provide updates significant clarity In more which goals. updates. milestone available fourth for I'll a strong a foundation quarter core building In November, goals Slide earnings werner.com. on at the XX, our sustainability sustainability presentation, unveiled X During ESG On announced presentation, at milestone we for shown our X Werner, we each. is

keeping Navistar. emerging our trucking fuel technologies XX% We edge Last in Cummins trucking reduce careers month, by Peterbilt cell additional will by providing achieve testing company. drivers' them by the we emissions program improving technology testing with equity XXXX. with and remain and truck groups our our we an in prototype and an X are focused hydrogen XXXX. previously We carbon best-in-class a on long-term adding investment an pilot safer, we will announced leading be truck, autonomous We on of drivers TuSimple, helping electric-powered associate lives, resource helps us equipment were the Staying with the industry. end them announced

process veterans Carmen And a are for thorough associates in engagement of North and Werner first talented diversity, as our knowledge Diversity, and President and Kathy geared through encourage leader, and became forward. we joined already networking. experienced and and valuable the promote of Directors. January, guidance military additional her well leadership will This of of company. Vice quarter. Inclusion the and diversity Learning. ARG End the establish veteran provide Tapio to perspective extensive and diversity oversee for our and a Kathy position formal matters XXXX. who Peissig, is for leadership would our experience plan Carmen's has toward events President Associate in developed Board diversity implementation In are of In We plan November, will DEI Carmen spouses. the as establishing for formed comprehensive with we corporate going or a inclusion council CEO Teleservices. development experience thought business We said new education an equity

to to will social XXXX, report commitment our ongoing During corporate our we sustainability. publish inaugural responsibility demonstrate

Slide XX. to Moving

metrics of quarter results. comparison provided against the last guidance we a actual have our We

providing we and are XXXX Additionally, guidance assumptions. metrics

middle we ended trucks One-Way XXXX, the XXX trucks in in with TTS quarter, growth sequentially year-end year our During XXX with X% and Truckload. range. than guidance a full fourth truck the our the grew truck fleet by fewer truck XXXX in Dedicated decline We of XXX

amid of fleet our be XXXX, the will Pricing expect we resulted in quarter market For and strategy, Dedicated. gains of in to continued quarter fourth truck truck $X in higher trailer X% of million, modestly sales this demand, our to of $X $X our grow we in And most ahead with in of fourth equipment guidance million. million intend to X%. strengthen sequentially range improved to range which consistent used the growth

we as the of For we continue of than sold retail markets, Net we $XX as million, years our anticipated more last along million the trucks X expand the open $XXX because slightly expect our range of anticipate in gains XXXX, are with we maintain fourth of range increase terminals for continued strength in to our in XXXX the versus guidance benefit to to in our Werner expected to and equipment to $XX initiative. million fleet mix to be similar range digital age, capital anticipated. significantly originally wholesale. our quarter CapEx X million, $XXX current EDGE net used million fourth the $XX sales strategy expenditures quarter were below

Dedicated. a We are new introducing guidance metric for

X% for X.X%, fourth XX Dedicated per XXXX, our truck growth performance Truckload the to last One-Way X% to per which guidance this with season. increased X% metric per range to peak consistent We stronger-than-expected quarter due of of revenues week X% a improvement superior in exceeded and mile execution total expect for revenue our quarters.

assuming to mile first of per For One-Way double-digit single-digit XXXX rate the contract high season. expect to during compared of XXXX XXXX, X% half to low increase total we half Truckload range a the bid increases revenues of the first to in XX%,

age in our quarter, to our we constant rate held XX.X%. tax a tax be in fleet in fleet XXXX January, effective exceeds million of the One-Way rate our driver we $XX our trailer The and was typical have X expect average weeks expect guidance than In in of line in XX.X%, that we and to compared unit fleet truck XX.X% for in quarter and XXXX. trends range, continued Truckload to range fourth our the first with implemented new Our XXXX, keep fourth effective or February. our annualized increases be to Truckload of In X%. and January in stronger early One-Way pay plus freight demand normal to

and as driver pay the are in $XX driver Dedicated million for implementing least total be year. pay our at expect We increases needed will to $XX TTS increases million

industry manage several truckload the continue and we areas vaccine increases, for distributed factors of remains limit Clearinghouse results. training that growth CDL the pipeline demographics likely licensing. due an fewer challenging health there database that and positioned While Drug widely as care, to is Werner are issues school to the & expect will market. factors believe COVID limit also state the the that superior and drivers recruiting an aging aggressively travel, Fewer we insurance that in team to with premiums. entering sustainable supply yield a continues continue build, strengthens, foreseeable the to include insurance new future. costs, and eligible liability These cost truck truck driver extremely safety the We drivers there driver and will talent and will strong driver well controllable some as economy in active notably will Alcohol be

for to continue demand program looks runway quarters, next the to for the will several as very economy likely Inventory expands. the and for expect we We to good least 'XX. national believe vaccine also gradually restocking at the strengthen continue occur freight

like that, Q&A. call expect begin We the opportunities this in over bid turn at to pricing this to strong contract our season. I'd operator time, to With the

Operator

[Operator Instructions].

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

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

from question first with Capital. comes Our KeyBanc Todd Fowler

Zachary Haggerty

for Todd. on Zach is This

maybe for a maybe if dive it of I just little does bit project for in of half half. kind the of what freight to And wanted guidance the it in into year? first Just first then One-Way guess seasonality could what terms incorporate deeper you does for the here on, second quarter? the assume touch the

Derek Leathers

Yes.

this for is Thanks Derek. the question. So

quarter, this we second freight, of point be in to for the understand All I'm how stronger what But the speak same year, developed that We with the asking, are in remarks, have time at from customers you're about has suggest for quarter normal. channel that's just seasonality, and second progress set levels end not set I quarter, the I inventory nature, up that, systemic structural a so have seasonally having their expect, overriding we itself been the sure are and up and would capacity freight far. constraints than and second a Obviously, does inventory that well we're get should the normal as expecting would be checks and now, opportunities. it's that the year. exactly as right long conversations, based those will of fleeting quarter I'll thus we and than our current that January on On February, levels as more this dialogues better prepared clarity mentioned develops. in that to seasonality and they project would the now, the mean, continue. especially current be we'll project

Zachary Haggerty

from we is a thoughts I shift But Dedicated? more terms as growth, are there and it focused greater I of on indicating more -- guess. I prepared Helpful. guess your just is of just the some flat in second the what looking more on 'XX? so into fleet understand continued move that, Or kind Dedicated. I Dedicated? quarter, kind of it's One-Way through towards -- Does remarks One-Way Okay. focused what guess, levels fleet stay with into understand from the I for Yes, But your current seasonality as

Derek Leathers

sure. I'm

it about So I strong. think right the now, pipeline Dedicated very, is way would the be, to think very

more is it's opportunity do we known of in that total, that's so implementation. today. we're in to bring based be winning new going we're soon to sustainable And margin has we're looking driver implementation in be but to a all the obtain the drivers, for business at growth now, fleet just that what's with alignment in percent and or to market, opportunities That we growth just both the Dedicated those this either We soon means know forthcoming that difficult these to Dedicated the enhancing. some move when expect structural And as total north implementation is we looking on end is where in of that that, effect onboard opportunities premise to that it customers. price be or have with from case those see

and So growth. it's not in It's opportunities so looking point, this market, the to pipeline much what the matter is been to committing time. a tight more to some investor we've One-Way ourselves Dedicated able a to limit for margin we're Truck of be through which cycle, sustain at community robust driver strong a

Operator

Scott next with Research. is The question Wolfe from Group

Scott Group

you good why XX% is you we year? as in shouldn't think, did, quarter, about getting want be the Last given upside your there XX% that potential fourth about Any mind? I margins. I And as Derek, So reason ask, XX%. in talked just XX% this quarter, margins to to that assuming

Derek Leathers

to of we work It's kind question. expectations to exceed going always a Scott. wherever can, great We're

as that's going is on guidance spoke. we're or think the guidance, range. now which I last right with mean good be point. comfortable we're of Our was the than it we at I time setup the our the end We is better this high to something is think we think

the cycle we're constraints the And market capacity in there and that overall out about where bid the so are we feel dynamics, are how conversations going. at and better those

what going guidance with think fourth given. I'd and But I but make while that XX.X% quarter we're stray customers. that our tell that yes, taking the market structure also our demonstrates we've rather to for to there, try I'll there, maximize referenced is if of the is shareholders and you potential sure the the margins the not of you, So previously from the care

Scott Group

Okay. little the a And then Dedicated a second more implies revenue Any from question. about truck. deceleration any And bit business? just just just then The on We're power-only hearing about in color there? more And of per that? curious guidance carriers. thoughts and that

John Steele

Yes. Derek fluctuate conditions. X% had solid quarter. The Dedicated rates current were, most I'll revenue market some we X.X% does power-only question. for in we let in pretty that truck, think, It I range a quarter-to-quarter, in on per but from this recent XXXX, is we the think to environment some XXXX And answer where the X% the increases based reasonable

Derek Leathers

Yes.

you about On building. topic upside a we working is of would it bit that We're a has It's the and continue to asset-backed more grow player this of going as Werner. question, that place to power-only of the being communicated. think for well. combine a in great We is we're do lot something assets best and Scott, nonassets, When an say It's here. to brokerage power-only than quite like it think a from do to perhaps that. able something on I we've it

power-only We have that particular, towards significant in right growth our area; strong have cross-border a mix. a now glide in we path and operation in

got continue we've dock. so power the the about cross We've built Mexico, a We're even and doing business our larger and to and new southern to player, the think facility And on grow to large large you just border, we'll going a a from and only that forward. where border. more lot when from we're

Operator

Mehrotra from The Bank. Deutsche next is question with Amit

Amit Mehrotra

quarter? of OR great the is that that's else to the in about the opportunity really guess, Dedicated, is those watering achieve report obviously, what was and the was. allowing I of of so it of selection you fleet -- to question, you allowed XX% really it was margins there's just And types terms yield in I was Can margins. but And the in in first -- kind strong, on strong it's the those Congrats obviously great something X% growth eye of XX.X% you results. quarter really, of types your there quarter? how kind freight over -- talk

Derek Leathers

great with yes, a and of. something Amit, really thing blocking I board guess also is is. a we're lot involved. We're solid of is, XX.X% really question. tackling proud clean it the XX.X% of first how Yes. across it's I'd say I the proud the mean

and P&L, it's at So lot of to that long It's and we've about a by throughout execution the up down time. team. the for talked level work getting a the focus

look the are with a had the a time around customer potential cycle more not product that. I'm about count can that quality still And We we look It's give at always that we parts if XX% is like the those through XX.X% strong than a And -- what rate only all market cycle here, -- dedicated across the for of vision facets quarter, the any equipment, have total rate metric, about. I've able business holistically other which representing that here. secret prepared portfolio when not of and you expense able systemic with It think right when think the at drivers and long and think production ever you points I why, sauce, been proud mix, runway focusing folks to we result that right? the they We have that. one, lot be that be coming. at right one truck built excellence, in exist. It this if not to around at how uniquely if a But why to the that think it also comes, or So only yet so better we looks cycle fact or vision just We got right the multiple of we're turn right capacity to is for to I'm and it's And being strongly. on the and doesn't be it the execute a that's of that nature the It's We've may offerings. get back or held the service. proud still proof have did. Dedicated any it constraints per could is of other shows that a maybe to is to it's production raising about think achieve mile be XX.X% any than one able fit together. it's yet just different of the metric we've simultaneously. had execute that on driven across there, day is not internally be the

we're we so it as look And forward. excited about

Amit Mehrotra

that's And Yes. helpful.

bit. maybe little be perfect advocate quarter of also fourth to just a good storm things. Just Maybe represented the devil's a

big haven't really guys increases. -- driver You done drive pay

or I this come year, that's this then inflected. sort and already coming at start demand of of have maybe think the year

moving So $XX the million driver million to of headwind we $XX parts into think as about pay. on all you've XXXX, got maybe

You've as got some probably congestion expense on rises. claims headwind

gets the and you XXXX, but difference year -- structure? but you year between think what puts one stays you got And given this as just XX% of XX.X% freight you the it guess that sales. and there. environment of have the the if no tailwinds factor the split XX.X% for strong the just long-term on opportunities, You've on you you demand takes gains Do the some the again entire a is kind target is. do as to target cost expecting of think guys is then that But X maybe selection I can of long-term kind

Derek Leathers

Yes.

some There's that It's very injury of ways way to exist, obviously, on are strides as looks inventories. So simulators unknowns. that that yes, tailwind. a the utilization freight their results is The that done lot been early show we dealing a other we've is they would, we training to the it's from our it's that truck. made I and look COVID for revamping thought called but market and are -- the assigned rollout is the freight in The the congestion, a systemic. We're world and somewhat they initiatives it's day programs, true. does several and of that aided problematic. we've day of remarks, the is still driver But out through where lot that in start vaccine rate, think paying year. recruiting in accident dividends first training restock the that stay It's driver-focused and in got launched dive we've that deep market of rate, by have we to people technology still now quarters a first through

right tighten, On paying wouldn't our we a, huge we And because, to the some Werner wages continue equipment life side, hear and them market going cycle. the to continued announcement focus were bettering the this lifestyle drivers pay into the paying right as wage. expect that the to driver giving and competitive on them from I have,

turnover and fleet. in results the to morale continued it where improve, have is Our think I shows

offset bid there's yes, headwinds, throughout that but And this necessary will so by and those be the negotiations rate season. we'll having needed be

and mentioned down sort so at earlier, than the lifestyle setup, I sitting make, through a we're a sure where for of offering as the improvements just and pay they up more paid making competitive continue treating that while I be the like service the our today. want that levels on P&L, to That's and stay And yes, opportunity we're based rates part to we're to then of. drivers want they us market to to

guidance may the first usually to call that always As we the that we give. when changing I'm not is guidance. out look upside But of January going start in forward, to gate certainly, there's

everything level. had the quality on achieve our the service at goal that that's our on continue metrics to be above focus fulfilling, to driver So best-in-class winners, to are quality, stuff with to else of that, we places alignment where our plan and and given that of will network It's guidance go-forward from previously. of to strategy, even the terminals our of to will in quality continue include gaps terminal think, to We've aggressive. couple the all I a equipment to range in be top throughout now expansion we

Operator

The Jack is from Atkins question Stephens. next with

Jack Atkins

about Okay. of Derek, the guess investments strategic And back announced you and time profitability moment you about for of And on taking partnership that Werner about we the that But next get a it. over perspective? that color the partnerships maybe little your you in a Great. more that to appreciate partnership a the thinking looking line to think Really with gave bear bit Mastery? this how and sort talk I of can from fruit what should of longer-term years? starts exactly you a for prepared comments. of before are step really both out quarter. couple

Derek Leathers

the secret that, for sauce, to continue per believe entrant anyway in entrant new legacy unencumbered network is, than to and strategy. us an industry has cloud-first, is per separate in sort for to that would things here is us lean In -- the like across still but we instance, base. what accelerate we're that investing that meantime, Jack. the group robust the present. is roots, to our quarter and accelerate proven that partnership to things And some would of fourth for way We're the in in with The view, best still truck Sure, asset our systems develop the a strong. it's going it logistics lead calling. frankly, more our a fact It's obstacles at into to what One-Way knowledge we start-up revenue way see, to area and by Thanks otherwise and for of Mastery build us and today industry. entire the cloud-now Werner industry-leading new have integration deep It's with and week because across Yes. or IT I a be industry legacy a expertise Werner. base ability our be this still systems a to Werner like leverage for

-- say some overall seamless rapidly, to fruits our more -- So should the the us a parts we're able allows you going of but and be that allows and back-end to more across TMS bear them and solution and have if our neutrality continue customers of to time more the frankly, mode functionalities, to the really, over TMS some be provide of or to cloud-based portfolio. I integrate us of portfolio the optimize multiple more core with to buy easily more the will build execution then functionalities

excited about it. we're So

aspects expect long how certain They and as far The aren't that it for take? current overnight, be really integrated does launching you'll These things easy. year as we of a sure. plans of more but on functioning will traction see certainly platform this that are have would back Now would Mastery within the we do not our front. to it's progress really some late second quarter to time, start and that be going at starting fruit to half be bear but that those building

Jack Atkins

when for Okay. wide guess, maybe of we saw and we the their asset-based outcomes. fairly follow-up That logistics my And a sense. question, this about I makes carriers operation, quarter range think then,

folks quarter? market about get top in fourth about And track what plan line growth guess really to pretty on guys weren't spot guess you see in to strong when margins. how But aggressive capitalize the we from the prevented I an Logistics, you same saw performance, definitely we able think able the and guys very do action that that that XXXX? of and being Some XXXX. maybe of level on that think to sort in presents healthy you And opportunity I of

Derek Leathers

question. Great Yes.

I'll So obvious. with start the

opportunity continue got the that for and have volume to success that difficult we legacy We point, add to we pipeline, that up good performing. and it of way But And to now, is of as else. have the and we've to an I'd continue to on 'XX perhaps about real that work. we that as plans in personnel anywhere We like had got lot had in than structurally COVID to would in more much with more foundational have in liked. to third business, onboarding We manage the Logistics see that's some now work contracts. engaged -- I'll been of better of profitability. tech We've stated, towards a didn't it eye there's But of quarter and tell quarter business. you did lot made to the up area an clean onboarding on your fruit will attack the We some with as relief right progresses. of contract the to on as personnel legacy Simply in a we've didn't fourth to needed frankly, the XXXX. things we ourselves journey work right. very talked an we You're staff perform well the bear happening. the Mastery as year referenced actively we agreements there. progress it that. out both And We're logistics side we've that do that earlier building some done the

I'm still more start margin QX. you year, improvement half, happy with forward. right that growth the with the ended the go there's volume of last that unhappy that in got be believe the less then while And do opportunity sequential I performance the there. you that to confident I'm to I'm into So and that it's we as direction, And believe how the see where sense expansion think quarter for from in and we've quarters. headline the performance results I you've back QX very but of that to fourth for of gives and do we're going a but from the we QX headed of directionally, of QX. an couple Werner reflective seen be going opportunity QX story overall I

Operator

The question is from Stifel. next David with Ross

David Ross

intermodal what the that what lot mentioned, you Final interesting there freight Werner's want want brokerage, are an today you them final of on attention. Can talk be? right mile to You is you now, one capabilities about keeping and asset-light grow to mile. getting theme, management, and a

Derek Leathers

and to performing that Margins out of national overall further and more strong, grow get the network, capabilities side final more continued we sort continued have that mile a expansion presence. and going that well. need men is. Volumes to of our steadily still Yes, area is area, that the national grow in our to as tech well, have to perform on of is the also regionally, have built truck. sure. I so in big and we've building a a have today presence model and and now heavy got mean out one-man X We're

was of of which from a a story is really I'm decision excited part our on about. within there. excited It's we is. we core are divest where American structure the about to So growth the WGL That's footprint, think something part that North It focus Logistics. the and strength

One do, we we're and time we have effort against sure profile and the to to so. to that to going to of win do my return goals needs whatever make put it doing is if justify it,

results. this The new foundation the renewed improve American an focus mile -- build on final have this us logistics I currently footprint upon. to to those think ability we provides North provides that

pretty And about it forward. I I'm think so it looking bullish as on

David Ross

poor using in unique well, the of said pricing is side, margins big performing because business are the the drivers? your ICs aren't company competitors whether the and exited it doing which it's you're is reporting there were Or issue? Is anything it on one margins. a because others margins interesting You that or more cost are of good

Derek Leathers

you is most the the we our Well, were we're I least think we ready. going building there felt conservative full several one -- things, we ahead but or probably approach, taking are until meaning speed to out surprising that aren't

lot these mile on of final commentary calls. a we haven't So led with

spoken and I out haven't in the start The think now launch front is it. our part. nature a methodical focusing our it communicate to how on But about of rhetoric to of we our our it more is time -- reality. get big We let speak and

got out time that thought to leaders they think trying of listening want it of we are and to it, in mile non-asset customers execution it. We does play before they versus our also did ton needed. in I what clear And and strong we a still and knew in I steer understood think spent But we what predominantly going partners some final our dividends. building space. or something that a build we've into asset-heavy pay we launch,

takes of processes space doing resolution having having in that really it communication claims organizations things mile gaps to the that and it's that looking I other launch that the address way. we're visibility, we customer like all other those R&D heavy more hard a that lot you And systems, start conversations, board a before still longer was It do we across profits. they're to by our once working really and for. once and that And heavy so it, in here it both final we And But chances. takes know and experience. it terms revenue there and product start are way,

Operator

next Lynch. The Hoexter of America question Merrill Bank with is from Ken

Kenneth Hoexter

moving and it kind Lehigh some rising on luck age solid CapEx. others the seeing their Congrats like, fleet, a a a bit little it in to of quarter good Valley. It's place. is let The But industry seems they The are great lower. age, of recently.

the the renewal You're expand as point targets? Is driver a with just is of, in the mentioned, CapEx just sign still at tough to others the on the that standing focused market. kind this of market that or kind too fleet advantage you fleet take of

Derek Leathers

We -- age fleet that the that one renew is their driven target, to that young It's it have where bring by fleet and front. the of have there, we do but their foremost, it that we there more don't way. increase keep fight of it's I don't mean Well, try year, down. newest CapEx already to our and age to or we're like and a driven so the particular wanting is. going first to fact refresh a and the fleets by have have fleet, out to battle that think are CapEx others this I in we sudden

at And lifestyle, to growth, fight fight that that it's table. and to through to network corresponds of continue for to finished built And at cycle going and or and use as that that driver TTS it as X the growth house upside long-term margin that and -- side. the got to And CapEx talked with finally growth we're do I type in that of at proof age, going defensible driver we've that XX% we're talked years going it. we'll than about of more freight consistent if both add terminals we're we want to to comes equipment have just and profile combination about so. our But going So about growth. target And several growth where that to quality, here relates some. we're drivers. these compensation, to fleet target expectations do of then our we access kind We're it range, setting school contract, fleet win high-quality because it if we freight exceed better, infrastructure. it's last relationship, On to feel target, how down as XX% in, the revenue go infrastructure that out going invested long-term that target around and fleet experienced just the often we've terminals, to well to provides through that fight the

Kenneth Hoexter

Wonderful.

back coming Dedicated. the Just to

but rates -- back about pressure out step up about talked at X%, well. of you that talking of and to about that yet a talking were your that road, You Maybe on pressure as those the X%. Do see driver you rate pay? Dedicated you pressure because X% you of threw look margin kind rate increased for over when number outlook

Derek Leathers

No, not. I do

finished -- strong make morale. it. in driver the have will year talked retention pay mistake on that turnover, and We So X%. be the overall We that very pressure, driver -- about being targeted driver right we of about driver fleet to rate no up came now pay we

now to drivers our pay to driver rates going very appropriately. is the thing for confident market But in increases that with we're ability in. so I'm one And right we're outpace the

it's we about type begin from a to it line style with X%. separate of front of it pressure, work Dedicated is of is. to often the to stand-alone the that either conversation work is for far is pay driver if the side, come Truckload we was where altogether, pay under have of already On some reason, And Driver One-Way talk in X% the with that because make meaning out our the up our to best if driver we And together. We of and work that but or trucking the driver pay that the high-quality, they that fleet, earnings expect out need the pay because often But compensation work, customer. shore XX.X% dialogue. service, commensurate in do. is decision there tough better that some we'll to WX raise with Dedicated we have market is

So not view. I that don't an erosion will place will offset, -- my driver area in and be is where margin pay take

Operator

Shanker is with from The Stanley. question next Ravi Morgan

Ravi Shanker

us forwarding look taking noncore business give that portfolio advantage of apart the little in would kind a of peak what at the businesses like? cycle? behind the you a multi-generation And be kind you that obviously, color sale from, Can or kind else more can of of you and monetize the was on does anything what point? this think logic Or there

Derek Leathers

a question. Sure, Ravi. It's good

when every be about that enhance the class shareholder organization very value. fundamental to to want it, this leverages about sale everything you was to day they So in I an on being the up WGL in direct premise focused be do, strengths think wakes and our best

the American we integrated core outside question. think or businesses too Now call to purpose North in to far a have our to a do provide afield that of that we trying little that, we're customers, or for means if are footprint I it had of little bit any what

was in But same clear. North business some. I So believe buyer met, we arrangement we us It it that our a a think of to a is with, provide synergies that them -- be finding it where through be was customers and it, At think that on with I still business needs It sense. provides obviously we energy, was we, the we also on true, actually highly the investment better is did that here it's spent there's will to new that. America. customers dependent our that with can for time, profitable. to focusing core time, that want reciprocal was to their value and able provide this value a effort a went get solution real business be And to economic growing company as that -- in where we still the them makes their while was

view, buyers' just our for even this in improving of and execution in avenues business continue opening opportunities base. the was potentially a our focus synergies core while on lot via customer markets, -- still to my us this with up to new there new deal, their so particular And

And the so we're outcome. happy with

It to versus focus an through really isn't to us divest inventory of products businesses opportunity the part of we're like it the items. no, other portfolio your rest think I of second list looking to on more gives sell. from to for put question, things or going the the other looking

Ravi Shanker

owned John, that in I the from it. switching two impact Got think quarter. on to facilities have all? that to numbers leased Is mentioned the going an you're you first at

John Steele

we'll comparable. From going to a from design work be that cost in is who from there. facility XXXX, consider we're shelf wouldn't the costs top for what an mean, from of have a it I state-of-the-art part I standpoint a standpoint, are but is standpoint, dealing equipment facility the the major a with maintenance people that a standpoint, driver recruiting, from That's a cost. personnel now

a significant. anything a but slight ultimately not it have cost benefit will increase, probably So we think rather It'll item. than be a meaningful cost

Ravi Shanker

shape. Derek, in lastly, And sheet's your balance great just

nearly You're net cash.

a lot OR with ahead a of doing of You're cycle great the still you.

be there with doing return cash everything for you're full little to with should if you be made that you the buyback story not a a a to have case and credit everything great else. probably now? digital sustainability aggressive market's and tell right the You and giving Is more

Derek Leathers

in question sure. of the market to guided We've the made are traditionally actively doubling In higher The mean have excellence. fourth debt-to-EBITDA about on reality our we our we repurchasing net and ratio be we've there's far stray the appetite from routes that's for you down for how quarter, I a us Sure. been. this we that we is an efforts case will as than -- shares. a to think saw

order and both order show done confidence our is and the house execution possible Werner. needing at quarter the this And and in We in gotten of about what's fourth internally possible. get and shown everyone have in type we've that to externally talked the to give that here house

cash -- cash flow, we've consecutive increasing move do those to all done we continue things, is here. grow you well that free And generate you flow to As from years. as four free to forward to generate of as and which expectation free our for have

move look be accretive to it's going think look And return All at going is dividends, of us to yet of And I our M&A. for at all I to enough leads repurchase. going -- we're best we get XXth look we But forward. at also and you we for both to that to come. be on regular looking have the We'll something we shareholder that opportunities, going above That's to and will the material And drive aggressiveness needle. that that a celebrated to accelerate think tell the the could we as be you to think we're just right and is So right? more table. is the is we share as other. sense opportunity opportunistically to anniversary,

Operator

Tom question next The from is Wadewitz with UBS.

Mike Triano

This is Mike Triano on for Tom.

truck about ask wanted I adds 'XX. to So the for

the it up market, XX% the Dedicated a fleet is by drift from With the that tightness split and end the the could fair to the in assume Dedicated strong the pipeline year? of driver of the bit

Derek Leathers

Right that's as through of market that driver Yes, not line fleets is difficult. that is the other market to I as are of further are well Dedicated return sort coming necessary is try than it to and and -- but The the to hurdle rate now, would those something as project although potentially meeting sight it enough meeting have expectations, replacing and strong are those that that as are tight Dedicated fill that our tough. be relates we're think we driver going fair. feed enough the how pipeline pipeline to to that's deals that

the to else only to network. will like I producing side, as the scratching it school freight can do of our best you our school but they'll relates on quality. high-quality that networks an of we're going assure situation to be highest schools adding be they If continue if advantaged are drivers, we are everybody X bring on believe brought to and clawing in We market drivers. believe still we America to the have having We largest one it continues that as on

would even us that And my prepared in be that's expectation at guided to it all getting looking resilient sets be to did the of so in a we is slightly future, we that whatever today. and also with I'm much up than said, cycle a the it in point earliest more in the remarks, Dedicated larger percentage fair at if why turn, where It does view, out the kind way the sometime think 'XX. about

Mike Triano

think they come And half then the terms be adds, the gradually the of Or throughout load, it. year? Got throughout you half they kind for loaded? cadence for do -- second on in back of year, half, truck the first will

Derek Leathers

front of you have that. consistent we're at this you that's half. that at of safer day ones assume But point, and the right there is to front the to and goal it's hard battle working better for back assume on in it's known half have. yes, right this very front sort would is it continue with Step than the And they're retain already than us. just think better a on hold half to -- loaded, working or be always drivers. obviously, be out now royale you sure We're and for point Again, to every ever loaded I would it. all implementation Dedicated Now X, make

Operator

Jordan from with is Goldman question Alliger next The Sachs.

Jordan Alliger

Question.

productivity? on difficulty think little go you on you've do as thoughts in mentioned we about a situations. over past, the from to driving see curious, some stabilize talk you there can and the sort truck per I miles I'm with that from So improvement coming bit of might quarters? just some impact here your been have team expect

Derek Leathers

Yes.

everybody new start our being as here, vaccine the teams have of different tough rolls bit to you're a like quite as for program, and team in see to you with out and is, into and the comfortable, see you're the going and think hour. an proximity, as for few that capacity in weeks, we cetera, leader both all per drivers that and should more period continues COVID right now, So to more variations. they it's a more closer rollout back out continues go starts vaccine mile to seep a going I comfort people overall times Downside et bode we -- well we in that because as have and as a formats increase well and as bring and see congestion, where leader feeling industry into with start other transit

is the driver rate else, to employer now And The of got to make going sure matter fronts, and the it than you tell to probably me everything the to we're war, of be got and hires so would service way drivers go point flat. with it we fairly be think we've and right utilization more new which and retain are attract is at those sure retention levers So think as to I rope get three we've premature to about choice. and that make have, the the now to of the to execute. think that We've end commensurate a very for out tug and I and and got again rate quality time Werner drivers that's go it's this on wins setup most better providing. and good

Operator

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

Derek Leathers

Yes. Thank you.

want thank with everybody to for So again I today. just us being

with the and journey us last this trusted been You've us years. several over over

against that all with in base relative our a seen I the above think to It's else. seated clearly truck you've quality consistent industry. and executing service. quarters had driver with many our stronger better focus than in to higher in to translated improved morale more a count translated It's we've -- tenure recent

thank talked and we year, that that were we we only laser And knew us the focus. just throughout that again. stellar results has Those here. with to been that results expect them the around attainable but have results of led all to I are are want Those associates Our once that about.

portfolio, of in downs still We're the evolution quarter behind of goals trend resistant and an to winners. that to too move and we with. consecutive cash better us for before. forward. our a expect for We're cycles free continue flow, continue going we're And but are proud more ups We've trucking us. than cycle familiar that ongoing it years the so four to We're with all it's generated as grow ever make we to the of positioned growing

So quarter quarter with the pandemic, the over. management the chapters, as you acceleration forward, write the in retention, step with It's support next turned and that's that led We're record We're the But professionalism during move winning I'll as and we this tell well front more anniversary. is us. customers our earnings isn't something I to mentioned has and our look customer he's how We're during fact, us as going It's handed great to models health about as celebrating that front. the celebrating only close that show uncertainty, those earnings socially we time back we C.L. XXth a record as the tried I'll winning our of XXXX record the to with to all we're it in Founder, customers, and middle we're on forward. them. proud And to fourth time. with beginning during one I and in acted alignment taken we're think all story over. Werner. excited earlier, we our he leading both fourth of of keys of to some continue teams, winning of

So your with time thanks thanks this for in afternoon, us Werner. and for spending believing

Operator

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

now may disconnect. You

Werner Enterprises (WERN) 5 Feb 212020 Q4 Earnings call transcript