WERN - Earnings call transcript Q1 2021 | Werner Enterprises, Inc.

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Operator

Good afternoon and welcome to the Werner Enterprises First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. Earlier this afternoon, the company issued an earnings release for its first quarter 2021 results and posted a slide presentation. in section available website the are Werner.com. at materials the of Investors company's These being will recorded replay is webcast Today's and this beginning be evening. later for available

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

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

Derek Leathers

Thank XXXX and by and with market results. latest followed plus customers. update start financial and strategy, assumptions. me Steele. you of on while a wrap associates. our by our I'll on discuss record dynamics, the I'm Werner Today, overview operational sharing pleased first that and by metrics quarter, our our on and an our sincerely meet John outstanding significant our health developments of earnings to laser perspective is the needs up today produced the achieved maintain XT's I'll on report team good the contributions execution, CFO, current the exceed of the the S safety first to call guidance of we Then afternoon. in I our from quarter focus an With appreciate Werner entire our

inventory business by size One-Way Mexico lanes and are vertical low provides U.S. from segment. inventories solutions challenges replenishing of over to helped to combined a of the in last same expect COVID trillion the payments $X supply XX-year is our is base, amount multiple freight has freight into January. in time, their been supply-chain with truckload constrained the truckload sales personal a household to further of Slide our generated our X and produced revenues thrive metrics, with size need retail ratio At tight as as demand year strong trillion. to Werner well capacity are as half continue $X.X By market of industry the update our revenues pump XXXX. year Transportation retail freight-base almost through cumulative Truckload Werner Werner has well in as and by offerings top-XX. in fleet with food Logistics cross-border segment, Design, industry-leading our Nearly engineered and fleets, primarily Over revenues customers segment. in an by with dedicated key of XX% These supported preferred the Logistics. and customer. our consumer-centric top-XX strong driver demand relief this primed, Retail comprehensive XX% X/X of freight sales triple our capacity result stimulus Services, remainder market. over in due as beverage. our revenues are business nearly coming to and and driver a from has positioned this retail-oriented a Werner environment, the We our savings

successful companies. growing We have relationships longstanding with and

summary financial our to for of first performance. Slide a move X Let's quarter

mile, higher gains strong Adjusted and per to effective on to million, of revenues For Adjusted increased increased while operating of per margin net TTS grew $XX.X XX% and the We total income EPS XX.X%. share. margin from million. revenues XXX generated trucks improved sales cost trailers. grew fuel to performance, basis safety points expansion our $X.XX $XXX quarter, adjusted to X% XX% operating management

flat weather, a communicated last few mile from pay avoid pay the to by truck miles, steps factors we TTS including driver quarter, X%. in turnover. risks drivers market, retention truck safety percentage nearly during off times and per resulting proactive and to difficult we was the company X% holding in pay increased due shorter Driver of line total with we severe fewer took increased and company are in higher January fleet that As mileage year-over-year, increases our driver trucks. a implemented decrease mix Despite of we paying are efforts winter more of our the team a on Dedicated lower an driver haul

made our generate operations. quarter, February beverage to severe combined income, Truckload winter to abnormally discount factors efficiency limiting industry-leading best first choice, logistics safety to in our strides an focused equipment our largest Despite market, customers with several good improved program. the stepping retail recovering training hiring in disruptive as of of revenues events dedicated continued by tight freight In in strives a be first and March we first attracting retail, providing and with quarter opportunities, remain improvement the home drivers. retaining are better attractive the freight truck robust addition operating truckload professional daily recruiting and Werner trailer our strong. lead and driving demand modern growth The stringent a both results. we Logistics economy, wide and including weekly technology, One-Way in in were positions very operational standards driver demand remained maintaining a employer The and was sales. freight market. fleet home-time driver to compensation, strong latest pricing in weather to the quarter, further driver and and segment also capacity, and seasonally on and up Dedicated variety in We resulted

the our park resume As we each until actions increased pay highest made experienced other driver operations. weather-related priority drivers to we safety and working it with developed, per event to These costs. trucks truck lowered by miles and was maintenance, safe our their

quarter million focus quarter. first cold a increase outages also The certain driving first power in accident DOT resulted our XX% miles decline safety premium rate capitalized end, gains in severe quarter XX% Dedicated share. for and chargeable We substantially our unusually weather and higher of million. At Truckload. equipment pleased the that million impacted was $X over this Werner $XX.X trucks resulted financial decrease TTS negatively resulting our in earnings for fleet of quarter by trailer, mid-February schools However, quarter, I'll to that achieving our One-Way X,XXX we more turn an in used and market per quarter fleet point, close first winter and with higher total unit of in sales, XXX were in terminal in which decrease sequentially. gains XX a $X.XX We and of At detail. XX% weather year-over-year improved temporarily our locations. TTS, per ended an reportable the to call a by in on trucks average truck our estimate and and trailers truck John? results discuss the in John sales first of first

John Steele

afternoon. Derek, increased Slide X, million Beginning you, $XX X%. revenues and million on Thank quarter first total good $XXX or to plus

and which weather, high-single-digit revenues adverse mile teams. reduce of per percentage due driver in mix revenues high-single-digit to teams a by fewer XX% per percentage offset of TTS the number in distancing social per increased the winter improvement decline was increased week our a protocols and truck, X.X% miles total truck driver Dedicated. Our by COVID an caused per

let's results. as Adjusted Beginning going on Logistics truck, adjusted strong trucks. team flat vaccinated continue TTS review of of our improving year-over-year. point growing $XX.X operating Logistics to XX%. in increase and due revenues and of per to were in or improvement fuel. increases, quarter, count to X% a lower increase X, fewer expansion our net our segment. expect number Adjusted income grew XXX results and income revenues higher We TTS share was per Services forward performance due per Adjusted or basis $X.XX XX% Truckload margin the revenues In XX% miles mile, for strengthen operating Americans Slide million our Transportation by XX% first operating due to earnings were

with OR. ratio continues show Our net improvement adjusted fuel operating strong XX.X% of an to

Slide on X. Turning fleet to TTS metrics

net rent we truck was Dedicated offset challenges. trucks week weather by grew by to per due of per $XXX miles fuel lower Dedicated, to X.X% increased XX% growth per revenues truck winter partially increased strong For Year-over-year and revenues average million. X.X%.

of net market. grew to trucks per due due bid mile, customer the One-Way Revenues X.X% to to decreased fewer a truck remains per due per Dedicated pipeline XX.X% Average winter miles X.X% and challenging increased moved Dedicated strengthening strong. revenues truck weather fuel total XX% of week into decrease to Truckload X.X% Our per that teams. revenues and decreased $XXX trucks which driver in million.

increase to million. grew a in Truckload Slide XX. increased In handled on offset revenues quarter, Logistics decline by XX% load to to volume. X% quarter. a revenues nearly in per due XX% XX% a solutions in the Werner volume. due increased and increase to Intermodal per X% XX% revenues a XX% $XXX in load Logistics XX% Logistics Moving revenues increase Loads in by power-only our revenues first grew

brokerage, our capacity, Truckload and first decreased February. Intermodal expanding the of share of brokerage, the we intermodal contractual management, margin XXXX, in freight resulted previously gross our truck We and total enhancing our Logistics and for of logistics Logistics mile. the had XXX of increasing business, year-over-year, on $X.XX gain points truckload a truck XX% of of sale Logistics forwarding sale WGL, of North The announced reduced WGL percentage Global closed end annual the at capacity XXXX. in basis Our from in to to cost due million XX% freight American $XX remain cost revenues shipments higher address shipments. contractual quarter shipments. To in capabilities per focused final and

the through us cash in improvement see improve we Slide summary capital margins the expenditures margin X from XX forward, variable cash from free during we cash and revenue flow expect continued CapEx past is our years. Expanding Werner growth a As of years. growing move Logistics less net On over enabled and expansion. flow operations, last free to net performance X flow to our operating

flow to free expect generate meaningful We cash forward. going

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

we The fleet, in in will City, Lake open rich our Florida, February, with trucks June, safety, is trailers in Pennsylvania, with we Lehigh facility leased leased capabilities. also in built driver state-of-the-art a a fuel-efficient the newly replacing replacing friendly new feature terminal facility. Valley, Florida latest terminal another In first and reinvestment a priority and market. opened the In smaller smaller

IT meaningful are sustainable Werner platform. Edge progress We making initiatives our and enhancing and

rate our repurchased XX%. and and and repurchases will acquisitions increase both we forward. quarterly confidence our ongoing quarter, that by raised XXX,XXX performance our the During quarterly our plans moving initiatives share business consider additive shares And strategic strong cost and The earnings creative. dividend are dividend we in reflect in containment

position. are financial committed flexible We to and maintaining strong a

Our long-term net of to to is ratio debt X.X leverage goal X annual a turn. EBITDA

back the During Derek? and prepared are maintained now X.X turn remarks our Derek. a level portion lower intentionally of final times. currently debt COVID, we I'll at to

Derek Leathers

John. you, Thank

XX, strategy. Moving S plus our to here's X T's Slide

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

XXXX by our service, Carrier focus testament As on were to of Year Walmart. intense named week, last the an ongoing we

We this are entire team of extremely proud for Werner earning award. the prestigious

driver with trailers telematics Our trucks tablet-based average mitigation emissions of and X transmissions, continue competitive Werner safety T's dynamic. collision years, and fuel first an and have fleet systems, automated equipped respectively. is trucks X market technology, advanced The very forward untethered, and X mileage to solution. All industry manual ages and leading young cameras are facing

driver our quarter. locations training increase continue by enjoy third network that of strategic XX to XX a school We with to advantage will

issues. network terminal in strength maintenance integral for ability our part and and fleet retain the Our best to is an of drivers attract minimize downtime

cloud well is and Our at cloud pace. now underway progressing first, strategy

over to systems integrated work transactional We our provider fleet. During cloud improve Logistics are telematics functionality transition our first new non-driver our the cloud-based the converted volume existing completing migrated EDI the of EDI XX% the Last completed quarter, Mastery Systems plan payroll quarter, leader to to Connect with second to an entire and and in a new Edge our TMS we quarter. and replace cloud-based we solution our solution successfully X-year day. communicated rollout of visibility. truck We HRMS to

updates. year, strategy. will we progress, a project As as added And status we make sustainability our element provide we further of key last

we environmental, XX, October, governance Moving social to Slide last formally our and launched effort.

through will ESG to strategy these continue Our key evolve themes.

a First, we formalized framework and ESG strategy. established

In measure, performance addition, monitor, we to and report and progress. are identifying ESG and relevant goals on metrics our reportable

For impact trailer innovative building foundation and industry a our a and environmental leader modern fleet. we're our on truck through as by young, reducing environmental, strong and carbon footprint truckload

also We to reduce XX% goal by by announced carbon emissions our our XXXX.

in testing trucks are the expand We testing providers currently future. to electric plan with and other

While various technology participating technology and the developments leader, truck will we whether clean actively in it's one as unknown emerge programs. are

adopted We and added culture a core that equity we to upholds and social, and equal our core vision all. opportunities inclusion diversity, our provides and For an values for inclusion statement. are values, empowering fostering inclusive

XXXX, and formed ARGs Werner going group DEI to established of far, the in associate new veterans, council development So for forward. a a oversee we resource additional

We of resource X are more in associate this the year. groups launching process

During Inclusion first and our Kathy Learning. as quarter, Diversity, of we Associate Vice named President Peissig

named and Sustainability Operations. of Sales the Shawntell Associate Kroese also position We Vice President of to

diverse Finally, Directors We're creating ethics our skills diversity we strengthen practices, governance uphold filed inaugural our with Werner. to more align to our of a more will strategy. third the quarter, our Social for us. and in And much excited In lot, Board our recently governance, report. there we relevant upon with and at on energy, efforts while are set publish with creating nominated an end, capability enhance complementary opportunity integrity we Corporate sustainability, accomplished long-term that election. embrace so is new that with Responsibility continue X emphasis that of experience have in transparency, our their front about we in proxy, further will our Directors will a To

of XX, our actual against a Slide have results. guidance we metrics we to Moving XXXX comparison quarter last the provided

our assumptions. updated We are providing metrics also and XXXX guidance

the During quarter, in the X% with of to on of decline driver and our One-Way our training schools. market challenging fleet driver truck the declined first due impact most the weather Truckload

range consistent For XXXX, in in market which the to truck and strategy truck the equipment fleet gains in we grow trailer sequentially in the continue of million. expect our this amid very used And will to our be Dedicated. modestly year we sales first accelerated full with X% resulted in of growth $XX.X improved to demand, expect X%. Pricing quarter strong

gains $XX second quarter, For range we the expect equipment million. in of to $X million

used that We trends to Net the pivoting equipment for to difficult million. new are quarterly expenditures $XX given quarter were markets are in first guidance, predict. and capital

weather. We modest X.X% to truck $XXX impacted the truck $XXX and and miles which was continue truck and fleet to to in due trailer revenue million per Dedicated CapEx our growth. million, for by first net winter XXXX allow quarter of range will fleet maintain increased week lower ages expect per per in

continue first to guidance this increased we revenues to in a X% due Truckload growth the quarter of per range pricing for metric. One-Way strengthening which X% total full upper-end for expect to was For mile of year, to market. our the X.X%, of X% XX%,

For second changes seen expect range quarterly also the this increase to due quarter. XX% so quarter, strong metric in to XX%. to have of pricing pivoting this we far to a we guidance We're

April, X In be for constant range, trends in our average the One-Way and the XX.X%. continued with The our and our first rest line have year. remains first unit demand guidance our and is of truck held full-year the weeks the strong. of guidance to freight unchanged. Truckload same was In tax effective rate fleet of in Our quarter our trailer guidance age

team about talent negotiations high-single-digits were bid Dedicated to Contract we season with a contract per tracking active annual in and Truckload are sustainable tracking far, results. per trended through week positioned consistent range. strong low-double-digits rate favorably, increase pipeline halfway with an that One-Way percentage continue percentages our rate are well yield revenue increases remains the have superior also Logistics. will and our Werner guidance. quarter, this truck and contract higher and month So to in each

the vaccine strengthen quarters. Inventory to and and economy We the runway likely With I'd to freight time, at for will continue occur restocking that, the operator this to to the stimulus to government continue believe next And also dollars we as the national continue turn to spent. our demand expands very program begin to XXXX XXXX. are like call Q&A. over few the expect into looks good for for

Operator

now session. Chris question-and-answer will Citigroup. Our the come go Please ahead. will [Operator Wetherbee We first Instructions] begin with question from

Christian Wetherbee

thanks, and Hey, guys. good hey, afternoon,

So…

Derek Leathers

Hey, Chris.

Christian Wetherbee

market rate. I can we the that volatile. on understand just And maybe Hey, is start

sense So, strong, - on? XX% of quite play I goes And though, to feel I as guess. XX% the the quarterly cadence that it'll to of let lower season, you think sort sort is there Do dynamic, head forward? makes to we frame to like it might this up soon? the top it of towards little but maybe up look XQ that are a this, maybe start as could sort obviously, Or move like rate other going the of the might growth towards because robust, growth sort actually you guidance. how guess, is is move sort we stay you anytime of of and the Could bit of out year we capacity particularly expect, peak nuances doesn't rate as

Derek Leathers

I'll Sure, thanks for and take question. Chris, that the

visibility. current know this now the at and know we was, progress making. obviously the thinking we're We tight market right we're in had we've season We So good bid where how the got is.

my changes would confidence be. changes that on I how tight and view out that As you and nothing nothing market look my in third the this fourth, see capacity,

kind the in it in data, strength through of we're that rate continuing comps. spot of the have, what's and worth And You of however, more year. elevated, success what are far some main forward, happening this losing be, stay the today to kind confidence guess have I'm rates message sight in strong and of degree quarters today I would that frankly, guidance point clear through blending And contract in QX a where X specific the my side, of a end will do to as foreseeable unique the market having, market happening end rather and of when continue tougher felt rates. was the on it be going it on for being we see sense about than kind to rates spot to of we future that I the of looking outpace XXXX. made give came better year, the But about contract what's specifically, specific into we're to

Christian Wetherbee

versus as I appreciate And talk the we from about but then, mix as the Truckload, you fourth of I think grow just the quarters, expecting helpful. bit most you're could so that's think the little think a Dedicated and where question you're about year fleet, a but okay, Okay, to I asked if obviously you that finished maybe this down I little One-Way bit quarter. on, the color. goes

fleet stays about So on dedicated that just seems do obviously, can think flat, while actually the like can you to maybe that? when stabilize sense give grow the you think the come size you maybe a side. But us Dedicated? add going is to of it can the - and that Or now, One-Way you Truckload, you you growth

Derek Leathers

tight would stabilize about start signs to It's way stabilization. think Yeah, I'll seen driver there. market to be we a I on want And - right, we've One-Way of think out side, very that. the it the

aware think of well everybody's I that.

my of as return strong retain the on through attract the in feel in Dedicated. anything an drivers build both would level season moves the want just pipeline that package some of higher the half well at profile mix. and drivers It engineered we that be can through driven bid into how group, from as that to the that One-Way that the making that what now expected the to One-Way a side. first by drivers moving is And much that freight of be are is. Frankly, We predominance the Dedicated would But appropriate as into jobs really year we as growth still growth is that's cycle. see expectation as

but will on X% So as us fleet sequentially forward. get some will we'll the go That'll it that in across be of of still growth we see Dedicated. come the to threshold expectation the majority X% One-Way as growth,

Operator

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

Jack Atkins

my taking Great. questions. Good evening and thanks for

to So, you critical think I and thought guess, much take levels I to go? subject. and start whoever at of I further to I'd perspective? It customer or absolute an to we year. your sort John do seems long guys to through customers it's going topic think take the want where your of still guess, like next do back particular we work think very be end we're on And the Derek, low it's a you inventories. to to on around from this, do how get of wants into I maybe an lot inventory basis. a there as know how year have get is - them love could think you And this they

John Steele

like levels see going for few I and think inventory But we what this we broken on I Yeah, quarters, will the forward, know record challenged. last sound a Jack. be

economy, are If lumber, able restock, that large overall areas, very V-shaped who our really be that to lots retail sales we've housing, challenging steel, the trucks. you is our are recovery got customers of in base suppliers of customer inventories achieving. to at retail, especially levels chips, new are at This look low on strong part going the

going for end. challenging, that a happened think take it's weather, issues thrown same-store that XX, the restocking quarter a quarters. issue. really the So more quarter, recent sales to their even X Canal to that Suez did is the predict few to growth at higher in inventory mean, a challenging this restocking their We we inventory things to going with delays, while be it's of most to rebuild lot than expect all it made retailers, had a it more port there's they difficult with And the levels. I store when been growth. different of making just

So continues them. challenge the for

Derek Leathers

all and $X traction middle now Jack, And able stimulus in begin Jack, sitting pushed scenario, in if don't with the It at peak. right in savings peak, they case to they're the dry make make money you amount anytime all would all. add coming this we that, of to would and traction in call is way see probably to trillion of a them I add I - that, back best powder, any probably between into out sometime XXXX. just year and it's in lands

Jack Atkins

Okay, would all sense. I to insight. second appreciate thoughts your guess cross-border on makes And of I right. That your my get question, that business. a I love lot

Can about business? You cross-border guys KSU? folks, terms interest more and couple where of in more folks How remind franchise. your rail next thinking Mexico, in in fleet the you that your for either and over years? news unique you That's going of just in perspective a cross-border terms today a guys just have that you given represents And asset see a really U.S. topic the investing what revenue? do the of are or becoming all from

Derek Leathers

been well lot are of people we truck Yes, of the it some OEMs have aware or type businesses. cross-border to of. start duress, other shortages auto a as some quarter, actually In the all under that business do pressure. business reality this. I'll Those relates The with is was so southbound with and our under auto-related

is And the is feed southbound really so, activity. northbound you made your money through which business, where

quarter was so, temporary we've about, And I given to of kind things real duress. the earnings we're the particular believe of the results under that, talked and be and that first proud some franchise record of what

so, like. upside looks there's what about that And here. excited We're from

do that As isn't it Intermodal business that relates thing, is other today that to it is we certainly that speaks certain the ourselves. I going the away. its going trade position. of will But naturally and that really reality a role will Mexico/U.S. still rail. component a in There merger move play to and truck play some to think of

we the invest volume And so, We continues profitability earnings quarter, that Even and we're or above pressures our to going the in the with be segment to to at well. averages. network that business. it continue in understand that had of

We're like I going look continue quarters some So has And potential of these some next behind business. several we over place the get we think if as the it's to we forward stay unlocked right it. to us. one can that shortages with now,

Operator

Our next question will Evercore ahead. Chappell come Please from go with ISI. Jon

Jonathan Chappell

and more a you. to it Derek, just first Good revenue on comment story the have relates had half headline the a I Thank afternoon. of in pretty first second They less big February, from with quarter, logistics, least call so start XXXX, a to margin. of recovery operating in at half. as

And step kind So a for did that of the half Logistics business you natural bigger a up this was year? the Or lot get envisioned? second even lot you progression better there's a of the sooner than envision you that thought?

Derek Leathers

I thing they couple in Yeah, recognize I the around it a hoping were seen, things, bullet go great that of of to focus to the direction. it. some question. seen and of in think one, put to levers gains on it's the get work no in A we We've important get There's we've silver and right But productivity lot say, pulled. cost some would more line. smaller the turn

have. with certainly that to some us as we aggressively. do. customers, allowed et more loved would if have worked them, case. to transactional which seat, division, expected in to to at look a cases, But contractual to is it in that have model, per We certainly move We market one it role that more wasn't do of our productivity could retained we the all that The a cetera. you played load relates If

away scale we much and paying And underlying is get a then a across shippers, that through businesses but first of quarter with as transactional it's had the multitude from quarter we second and space, walk some that more we're lapping strong larger in to volumes dividends. so, that results replace reality those smaller many

more to is lot I'll we're all be I the go. that good. the remainder that's pleased I'm think don't where today. yeah, completely upside satisfied. through progress. with we seeing a of the happy from one certainly But year. ever I'm I out But know got look So, is not we there at as that stand trajectory And We've here,

Jonathan Chappell

great. turning for maybe business think Dedicated Are little on it right side more clearly, year. of issue don't a of One-Way. the Dedicated opening I of as the from can driver you new your bit away you not mean, business. you way attain then, I labor mentioned business the pursuing the any follow-up That's another that the even that second is better new quality across half you the know with side, you life just the And much of is ask you network the the you're But because shortage. that the are than service kind to entire schools my drivers to potential Or now? is as because have in

Derek Leathers

Yeah, so that. few comments on

year. those of going off, First in schools the are first half the to open predominantly

side. So acute shortage than Dedicated be And attractive. will clearly across us affects although on the the That that's driver we'll One-Way later. helpful. coming more have sooner some more is relief the business,

that gives And shelter economic running markets. that we pipeline driver a far the have come concerned. gives do benefits through Dedicated that shelter cycles as with from through also So along perspective tight an business as is

be I we I way is can more would think think that it about we selective. the know

that the up represent. well that would where taking at as But the these you're with more kind able that in view. put of to from the of be a our surge the to in selective surges call chase One-Way. turning we're it to just pieces versus certainly business choose we're We that or spot business, very not for, our being market being of once a a Dedicated with away patterns geographic puzzle again, operate make geographic strong in by strategic numbers industry of location very of I so fleet others fitting predominance together chase it did may can or these where so, Dedicated they existing their And we type area, the What lens may looking a business. are vertical are point

on? the it's rate, engineer Dedicated your X you was things fit By drivers, and much that get out to going you're throughout you've you're this because to a purpose you going know, or And freight part go to get final and is you point, to more things it's versus market? those that of we're make landing on sure we how fleets get the to quarter and for right. have of a you're just that usually. pay those you fill lifestyles major able because strategy be a pretty this can a do you into fleets. at driver drivers then, round, month it you're tails do X, you don't how them salaries One the more that One-Way We're fill seats. price seats. the get like not it those them, just And And fleet, if overall us, the able How taken fit how do figured in in that engineer time it, that is there Dedicated build X-month to so these going where around and doing to what to look emphasis

Operator

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

Brandon Oglenski

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

through Derek, can So, equities profitability investors to think whether now And not, have the could I outlook be what speak issue think trough trucking the there maybe to and upside what volatility, or is the you mark because I a on your long-term can targets? cycle. do with that how just the right you reduce there. of fairly to lot in valued are stocks peak the perspective, And because

Derek Leathers

And by the are a right the we be all to range, market it. and at through to so we upper- that's range I'm about be that beyond that mean, reality new the the talked XX% we times. laser-focus sorry, frankly, efforts about through - of how now, cycle, talked out. to that of our we cycle, guidance our clearly Right the when of the the we're of end XX%. about XX% I be now. driven lower-end squeeze the at of reissued we talked TTS can need think upper We in at XX% we to some and Yeah, we'd going volatility what a toward the

driver focusing first think we a up that, at we our pressures density really we others, and and quarter, of through perspective, how from talked do to the and in to to costs we put how about that sure that than really approach know actually hiring risk do of that a try time bottom choices and I that that that number. heavy tighten do perhaps better for limit As that engineered on so and to pay when the that this analytics as our lifestyle, amount end the we freight weather is range, and downside work provides have storm make choices, the about drivers, in freight

bears line to a into are it that's best that actively is the number, it sand never as of out, that in and and number downside is of And think, the we XX% in that get, majority times. make the think comes the however, industry we sure get saying number same play. to basically that as I putting the it pointing to could bad working strives

Brandon Oglenski

to Yeah, I industry the through more later your broader go year, folks get what's there road, guess, wanting a I back appreciate population, potentially lot the supply as on vaccinations that. then? on this especially is view

Derek Leathers

I don't think so.

of about truck in of they a So wither and understanding, at ignition early in driver, vaccine, all, the the if the the got think was you during there didn't no key American lot put fear, the drove. and little stages they truck, COVID,

new that replacing lifts waiting there you And it however, that a from from they're vaccines did you then vaccine to for pressure have aging might economic courage of and work. retail, look basis did it distancing, lift, is now, lost lift so all activity X-to-X lifts social any sleep What into demand. and retail puts through sort So not from an throughput to forward, happen, factors, schools a out as limited that on of COVID we're happen What goes a sales, crowd throughput. of also the stayed other and benefit we demographic variety and into up of entrants the get the further XX% overall from that is of we at reenter we're a year crowd the consumer, workforce, of the market. on because somehow had is not

with there capacity certain ahead drivers United are Clearinghouse pull & entire of to pursuing taking us to very that return gain just workforce balance which some in perhaps believe Alcohol to lifestyle infrastructure not of wise in Drug across liking, You've that I got the version of from States. continuing place life within will it. it little areas certainly be as is is is viewed reality The out preferentially. and trucking, just will work steam frankly, jobs more a And pass, work which a the relates but

of coming But talked and probably the public I'd nothing they is is any And seated, get And see, that they from toward about yes, is mentioned we from capability full. where the my the now all I order translate about last about fact, comes and our an engineered, reality that XXXX. strongly provide changed very perspective. ultimately things don't if with need. because But we in OEM production And, are known because bills, view, call, online. they a coming it I a you're The reasons think And, about customers on capacity we recovery what's doing taken don't don't that's going about matter doesn't out feel costs, a think think retention one, think don't more to perspective, bills we of last so, long. I yes, multi-year really of today. capacity a are relief the capacity that on into X that capacity I has mean it's is we're eye boards how that backlog lot of going at jobs the view Dedicated, an think building sustainable, the

Operator

will come Please Research, with Wolfe go LLC. next Our question ahead. from Group Scott

Scott Group

Hey, thanks, good afternoon, guys.

Derek Leathers

afternoon, Scott. Good

Scott Group

how fleet in utilization? now should through we're think the John, forward, winter, we to utilization positive do we year-over-year going get One-Way about back Derek, that

John Steele

how challenge XX% down One-Way on utilization team occurs we're we in most The of talked teams, One-Way. on is about and that count,

easier it's back will country, vaccinated half, got teams opportunity that again, the And that do throughout a the better get so that and second put think, in freight second From think for a quarter. help. however, as standpoint, to then probably I we together the I and we

third now be and less farther I to think farther get positive, it'll to but I So miles the be get closer quarter. per expect I negative and right we year see as improvement predict that'll flat truck, through as on that to wouldn't we do

Derek Leathers

more widespread Coast Florida, lasting is got and tell geographically very everybody's seen are in the thing, down But and Scott, other you our it, then think are if couple dense I anything impacts network, of quarter, we with pretty than storm. you and decades. as the then was And we've up East East different. through we The road utilization, just, a the significant call hit And relative Coast, strengths first closures more Dallas frankly, well. to in that would longer storm Lower hard by from, about to the slightly

in - was long larger Dedicated others, Werner no impact We that. over hurt if John were storm-related utilization perhaps the it support One-Way. at not pandemic had into during And on don't But the part. built if to were first. pushback not our I quarter, in silos that on took And things team decline stance, first really as the know I and So read at our chance retain your and networks safety in count, comfortable read around hurt I wouldn't like well. culture us as a that wouldn't our in than there and drivers they've into a some here than large it's always their said, you've as that environment. And We been pandemic true, them the But of split period. a go for be they just all and maybe uncomfortable, let to all we a not wanted happy want haul, has all to for lead. was culture and to more us

going we're go teaming, to and going to that return indicated to seeing as as encourage are back forward. folks John We we a

Scott Group

then, about aggressive any M&A, any, and terms to should you're leverage what expect Thanks. as board, anticipate? sole over you if should do sheet think Okay. Derek, we in of think changes more meaningful buybacks, balance And chairman as you the of changes, take we

Derek Leathers

look to almost to at to flow that about generation. Yeah, And look, the going And excellence those we've to aggressiveness several for yes, the perhaps it it relative than a we're think be been if times. buybacks, now, relative where will cash is, same those look consistent, comfort terms it's times higher ongoing we'd say been to for free better the wake is they've that - part with. there's really, and We historically. and for of ourselves last things I've leverage that continue X at from the And about the indicated call making M&A. not going years. to I years, changes been we time, debt We're we're I thinking the all mean, first level expect at changes that the indicated going already and X Werner would be comfortable up think and going But at of continue. to EBITDA, I that at look progressing probably quarter-over-quarter the what last in to of reality talked going you're is we're dividends. and

But we're staying our things the is us those takeaway opportunity for change well. each changing while same analytical XX culture, table world pretty going the the our to true that so to But opportunistic around to evolving take it. and will years has darn are on and the with worked and either on to time, of and something be roots, themselves. holding those, at they're would critical, biggest an when real, be the And present

Operator

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

Ken Hoexter

Hey, nice afternoon. quarter. job Derek the and John, on Good

Derek Leathers

Thank you.

Ken Hoexter

Dedicated this know, current mean of there you thought increase maybe I to in starting environment? any further, why that rate bit Maybe about obviously, structure the bit little talk you X% the chance the does a any that the Can a chance threw to you just the you cadence that's you rate point? get delve percentage given And into Is contracts, any good talk X% touch is just about Derek, get here, year, can contracts little work? a and renewals. better to multi-year

Derek Leathers

margin we quarter. very drag And that, not enhancing business. to the I think per number. some. first But per its to Dedicated rate. is be market a truck order to X% in is In and know we become in cycle, well, Our our is enhance drag overall so business intriguing the revenue in spot market continue through week I can It's to impacted the to tight the can it unit a half and margins, to a performing perform want X% clear, to as utilization again, both

As takes those majority I eligible that relates or there say, more there's driver are it fixed, negotiated, are perspective, place for from rate current available obviously, today, and market in are themselves, And, to rent that a with than activity the contracts aren't. X-year the some contracts conversations negotiations are the should indexed, generally type X-to-X-year ongoing. they're

driver or we have customers that we returns, contracts, we continued shortly, have And enhance so those the majority can enhance be pay, of continue and because have those to either continue to to customer. so conversation and having also with had invest grow will to

because that's of XX% point there in will a retaining give happened out been attracting those pressures be good. the increase, I pay out that didn't as year, drivers. be or higher simply, that if I with and you there, some specific So of X But percentage. overall touched mean, majority rate of whether throw quality year far, the the it's already number was progresses, to than would driver likely it's this I at

Ken Hoexter

move and increases your wage thought Thanks for just through bit guess, that, maybe Derek, a X I little more we parts then year. on, on as the

$XX that just insight a million some $X terms want so pressure on in that from You out the this accelerated games at said maybe noted put Are because seeing peak you I pressure? think on you Thanks. you noted million that? guess, asked $XX.X that mean Does I your deceleration. we're quarter? million, means Or to of you sale, X% that I increase that? there? at a maybe

Derek Leathers

in it take reverse I'll order.

I gains is The volume think of question. it's great related. deceleration a

I that. want about to just be So clear

are We trying on OEM focused partners. in communication really and with our constant through to manage be

we first quarter in market what first to given as in it that secure and sold the so to equipment, relates And quarter. were volume was where we the given able higher the

perhaps, arriving we got or The to need and and little on about more will a about trucks sure prudent is on it, make schedule. to way little incoming think probably we've sales are more conservative, because time, second those trucks numbers quarter be cautious a

almost production disruptions going that's reason driven concern volume than any potentially down. only disruptions the by production And more And so as it's for exclusively driven that's or the other factor. much is it by

slowing a indicator or my mind. kind of issue not So in peak any that's

large in As we their side. have relates also and we're their in have it our time as Dedicated, managing of working do they that of are those mean, market. happened a by were with insulation One-Way wouldn't to jobs wages, if offset the relates But That much this need there in pressures fleets support, customers where to from paying support benefit, and provides all We're in getting degree home. at be better general. to I a XX% They're those lifestyles it higher have we to those.

little, anywhere lower even more constrained local portion entrant throughput issuances focused cases. but road the lanes, small into the in they're designed new we market One-Way engineered turnover very they the throughout the One-Way into market, apply through schools of will wages fleet artificially geographically And for year. line our regional, the with in likelihood go trucks, we will they're enhanced very new the side, going that they're wage all on held be We've over CDL some On increases, XXXX. is very the in in type short-term and lower is

pays of work. type the we so, will then and are And reflective of hand

go to that's our not needed, we we'll going enhance additional rates margins of of make outpace where part as that's confidence have forward. So adjustments. to going. think any in the to ability as do We And opportunity are fact,

operating always best worst of First us the ever this first was others, and quarter quarter and the yet year, posted. quarter for X many the is we've

we've the of got to forward So and our room to run, going execute as to abilities. we're go we best try to

Operator

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

Amit Mehrotra

you guess, kind Hi, I costs Thanks, how for to guys think trend. are on John. of Derek. wanted well. operator. Hi, benefits wages going Hope comp question and the One-Way, ask I utilization are to you

to utilization that I at the just the given implemented a make with think context sure utilization? the year, structure. bit very in the of obviously trend raises limited you in more big a of about plus cost the little beginning we're a of I thinking it's want part

Derek Leathers

Yeah, of John because they're whammy to not say quarter, I'll drivers. But with are had in. in by let but and start, track going simply this we first start, the utilization being miles double to the exactly would the there, jump our not I gains, standing

pay, would be taking the same that a had pay spent not money of down the decision been the to decision So we shut in downtime. drivers would pay and paying them have for we considerable made amount ahead go moving. first quarter, But that they them hold ones the to moving the they for or received, up,

no of the But are the back now it's own those paid, fault think storms that those miles we hit. number. right those It's payments I decision. in those their already that gain as

talked will is. on fleet is I think to has pressure telling about far. less really that morale the commentary be fairly, the that. guys a We starting we've than I'm We where lot wage though, have do to going will turnover think then some you thus of our it We're point heard with that. we Now, pay and where

as that's much dispersed how misunderstood pay thing them. the the I already be so ran, the have needs, quarter no we'll would a gap was that that now address actually and for those And taking And was pay about same place kind we with being anyway. miles. of opportunity But to driver miles fill think

Amit Mehrotra

it. Got

to be helpful. month, revert so And I question, for you're just back of congratulations the going also the at that. obviously Chairman Okay. next appointed I to guess, then, to end wanted That's

has been - should I to just motivated guys I it changes in I little company, from a new from obviously, debate I that under senior as of this the that made bit doesn't product incredibly or all rather an improvement. with Does you credit leadership. pivot that away kind a strategy, development strategically incentivize improved perspective. want simple, truckload was leadership It obviously, more mean, have stake think was think you and that Werner the which for the you trajectory don't your profitability an Chairman so away of of Derek, from, you elevation Werner this as to guys at M&A dramatically bit from you the want if the given equity you But, whether into diversify financially just to little seem wondering, M&A are perspective. M&A you gets and a has managers' getting acquisition like peak of your this continuously deal happens? conservative X much don't

Derek Leathers

debate, during it not portfolio it ears, yet peak could strong the and arguably if matter seem our ever markets. find don't Yeah, the underperform defensible happy robust very be, all portfolio you to be formula is know, with to most a to doesn't that well, I'd doesn't I'd because I trucking, deal be in

so clearly to turn. demonstrated good structure anchor be as wasn't it's And been times, an it support a during markets

all that, to appreciate remiss first to the I as all and the then and we I'd is like on things be integral and guidance, want I time business all all those, to M&A, dividends. we to have we've cash and free really and table. are part his it's share think which look energy invest provides doing shift out. in Chairman, of to forms. what continue possible to be comments, evolve that out value will in in I some And see off, technology for on the agree Those been boundaries But push relates it, I the about I continue his to for tolerance and he consistently to there's focus this. to be the if to yes, years talked have Werner several it both is is to opportunities me play all as point like on focused repurchase do return step next of that There's take see at have the As have for to a leadership, flow, been clear, to your you'll shift last think that didn't probably a those tolerance But, that our over I our time in something time. aggressive. shareholders to look of

Operator

Our next question will ahead. JPMorgan. from come Ossenbeck go Please with Brian

Brian Ossenbeck

you I think can get way? just a afternoon, maybe externally? the chips guys. M&A. develop put like bigger versus little bit Derek, Or we on business Hey, Thanks to in do then more taking cases, Are good the expand to just lot question. X partnerships versus you some alone? for want Clearly, T's, invested to a the bigger through the can comes you've through getting equity where go to is a been technology? news feel you've we've seeing to partnerships that how partner buy, the in when you the or to of need? about long-term? there's it from investments things things acquire the and build those think, like you some some benefit Mastery. in made some been you kind you do that So guess, in a looking And even down that for of medium- you've When What you get your of

Derek Leathers

the you for question. Thank

there buy products technology, the build to our business, that secret be differentiate work always the of But things. on for systems and believe think that we're folks right certainly think something us that and approach. that, And process, about. those go open-minded actually with only proprietary both at build better add to we can will So to mentioned, we're our there's we as value we'll end we robust, more those together. makes it versus creates integrating as well There and excited versus to through connective we focus relates those sauce needs those that that there, Mastery lot the that's buyouts, efforts that's a our not tissue our the development think We with and make if that opportunity an partner build things products demonstrated you to out but more we TuSimple. of we've can fit

to Werner the probably it time; for As long driver we've deals a been. And been it This frankly, appetite M&A, years. a like than doing relates seen, is there now market probably never is at has these than more it XX maybe there looked more traditionally. this been for has traditionally is the need I've

that on we the think side, fit If would into adding of capabilities, try mix you're culturally or going to adding drivers us. do be to to something the otherwise asset the idea attracted geographic

our underlying building own that's that at side, going we're is their the in seriously. folks clearly, on. catalyst a model we itself their business, are and that but and right, there they're we in more space look that early that opportunity are price out something the think generally to winning the presents non-asset both to add to, working can to and the And maybe development On if there's

serial not it to I to whatever a point doing relates and the some to may the So be shift, you've out I'm a and it. time, and commitment acquirer, entire be to buy to that. looking make making for we're yeah, that's a it. shareholders, buy think, not just as this stake my to on team of necessary myself, same table. But those continue going moves on things from move going going overnight, just our it to XX-year for not seen are subtle the as of to that's reputation But be, we're value at one leadership there's enhance to

Brian Ossenbeck

All context there. for right. Great. Thanks the all

there's with the or to delays you're for some face here on orders, getting But quarter. you're sounded like assuming, need not Class to follow-up X you quick gains, Just a it at like sounded it I'm going whether the the some throughout year. real the least first still that trucks the uncertainty

you in give have the just of can and expect see that OEMs, rest from you order look So what you of fleet what to when terms hearing on the the maybe year, you update far. us at so an the in of you're kind

Derek Leathers

freight very for the be service, simply it OEMs sales want of of clearly on same for new be careful the our with question. and in At hearing, regardless the And where and here But relates large we're QX. we little going at customers time, a relates this to it our we're to I'm numbers. result, market in market as you I their I speaking as themselves, don't general, what don't focus risk of as a focus on specifics. at to conservative put a Thank our let I'm - supply a saw and the with projecting to customers careful or we're lack through what going and equipment. in

it's like the not down we're in great now, process. we're Right shape. going we feel So like shut to

great and my think stepped move on that part I communication We'll have been to to been has expense quarterly on We've it chase partners. outstanding. But, or OEMs communication our Our customer with on yeah, opportunities. laser-focused their They've them a on shortsighted up. worked deliverables. continue and the be be at of the part long-term would gains

just really of what to to tomorrow as don't want that's it opportunity, that. And as are point know take have the be of this count stance while haven't gains, driver cooperations. out that I as somehow changed gains I to I to I people I it will some I my primary quick relates our part or effort truck? and so, the anything And truck, you running its life. say And core gains you and maintain company a view how How it The is you you can - of. put as time think quality a price and into that to about on during that as this, you never trucking sell will. how buy entire specing But negotiated

buy. we But towards view eye we I about an We'll always we the sell, buy and quarter. opportunistic part when our longer-term what to be and with of absolutely not be as just strategy, a critical business to it So success. going it's our core a when

Operator

ahead. will from with Our next question Majors Bascome come Please Susquehanna. go

Bascome Majors

here. Yes, thanks my for questions taking

growth talking and done on recently broader be and you been and versus need know won't whether cycle, impact pipeline was before, these historically? customer you it, dedicated truck above And that, pretty in to where efforts press. but context your they've the that beyond fresh fleet sales putting the and And you not their anything us next, more about can private earnings today publicly look on their or largest just broadly give will call years? that's count expanding a Dedicated or over the call Your you add this X, X, X on historical in may

Derek Leathers

Yeah, great question.

them needs to allows instructs do. valuable It how their they frankly, that the to business, makes has appreciate So to as time. continued that's a relationship learn win to to does with and some this over help customer grow lot for strategic very the them. on is that is And with have customers starters, may business And why runs them, a they're good them and got just challenges I'm cycle. offset to going if own, such through difficult transportation our very excited customer wants it take do on things. and a successful the to better freight their highly always and It a largest have, much we several on present.

a I opportunities. So, on drag don't think our it's no,

on at help us launch plenty and in them continue the to locations. As of those with actually and discussions look level yet, various we the we our perform them. some forward, even business in support performing we're participate opportunity fleet And that of basis, to grow for a of with regular there's

And puzzle right exists have So currently that And of that of as huge in, being going this surge Werner's cyclicality the cyclicality, frankly, time, like. it the do of and they about need do footprint as customer. in during go I we something it's pay what it's referenced intra-year of part broad Dedicated pipeline that the a it's and puzzle are they we it business, to geography that when dividends of is I of call together, very I the type selective about, now not concerned as more forward. outside that fitting it pieces looks I think thoughtful and predominantly that and to mix where would we're relates and think a what opportunities be earlier about out very

that's my answer to So best that.

Bascome Majors

for thoughtful you the Thank answer.

Operator

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

Derek Leathers

It's for joining quarter I'd Werner's. Thank you, time everyone to thank us at today first earnings our exciting for Matt. like call. an

the We continue best-in-class our through journey sustainable towards earnings cycle.

our business. maintenance of has provide S in energy creativity possible. associates strategy. plus operational improvements Our the consistent office resulted the that and across of expansion free it makes Consistent cash XT's flow driver, ongoing it's margin all the strategy generation outputs execution structural durable that and passionate But are the the and and

and one nearly our a as incredible us had foresight, to Chairman, as unwavering, portfolio. be follow. him career Directors. created. X,XXX safety industry. trucks be We my owe he value. Starting proud on achieving care commitment more what premium that continuous trusting service will of and well and of in than taking lasting cemented improvement as His retiring associates right of he dear the Our and did important years truck to the talent and profits customers, wisdom, our over will organization. Founder our Inclusion is the weeks, read the here built C.L. an driver, to from this to XX,XXX Werner is for a and on customers. trucking with associates our XX sustainable our a in entrepreneurial debt firmly And great all you, on-time humbled, and story is team, gratitude long-term move by something This Board, help and come. focusing else, friend of. from Board drivers and But from above it drive shareholder us industry. honored the our as excited legacy and best legend He's been growing at here. believe that, Werner man far. one I'm to and way, complete, and Werner commitment balanced focus throughout safety, is service and his is In of it forward first Equity on and X but C.L. all the to positions And our shareholders and yet of sustainability C.L. a isn't backed Thank Werner, behalf This it's succeed we Diversity, and create so all And all

Operator

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

You may now disconnect.

Werner Enterprises (WERN) 29 Apr 212021 Q1 Earnings call transcript