WERN - Earnings call transcript Q4 2021 | Werner Enterprises, Inc.

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Operator

Good afternoon, and welcome to the Werner Enterprises Fourth Quarter and Full Year 2021 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to John Steele, Werner's CFO.

John Steele

Earlier this afternoon, we issued our earnings release with fourth quarter and full year 2021 results. The release along with the slide presentation are available at the company's website at werner.com. Today's webcast is being recorded and will be available for replay beginning later this evening.

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

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

Derek Leathers

year limited and a determination, Werner achieved proud year I'm solutions I'm the We XXXX report financial developments once and and strong record-setting we to And in to of new resourcefulness, entire marked superior earnings. also team performance annual quarter demand results. supply. changing robust another for pleased persistence to Werner that service adapted their and Werner throughout quarter. our safely extremely market creativity. record our with sixth customers. fourth again, earnings, consecutive and record delivered delivered We of

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school we're and of training trucks, XXX industry-leading our added challenging network. market, driver driver XXX. address we we added the for leveraging quarter, fourth the actively To proactively year, the During strength

school located strategically three of schools we past this the year added added this At During schools and two year. will six XX total quarter, for quarter, fourth locations; had during a added. we be more end,

our During is strong Werner hours uniquely financial increased positioned achieve going results XX%. forward. XXXX, to driver by

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updated Slide to snapshot an here of X, Werner. is Moving

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

net increased For TTS XX% to to rose strong $XXX million, to income XX.X%. the million. Adjusted revenues operating Adjusted while $X.XX. quarter, EPS operating grew adjusted XX% XX% margin a fuel $XXX our remained of

trucks food $X.XX. winning as in XX.X%. continue increased trucks to improvement fourth retail, strong in TTS to demand points XX% existing third our and trucks we by Truckload XXX new adjusted year, quarter. And by home fourth fourth EPS year customers full margin expanded billion. in with remained freight rose demand operating expect Dedicated X% $X.X remained One-Way year-over-year to revenues generate and in the For fleet average XXXX. beverage. strong freight XXX sales X% customers in In strong. from growth and fourth average similar Adjusted to and activity sequentially quarter. quarter also year-over-year our remained discount quarter we increased grew Dedicated grew Dedicated quarter, Bid XX% and robust basis

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our turn over in discuss year and call quarter I'd the like results John to to full detail. financial Now, to John? more fourth

John Steele

truck in X.X% same year-over-year income TTS to rates and ago. on growth growth, operating adjusted million per the year fourth earnings another $X $XXX $XX over growth growth fourth top operating we in due X, was on total of adjusted growth over XX% X% with million up sequentially higher per quarter quarter growth. increased increased XX% XX% XX% in revenues nearly million Adjusted quarter per quarter. strong of share fleet achieved $X.XX, Slide year and $XXX Beginning week million a revenues and increased on from operating earnings or third of TTS fourth quarter quarter Adjusted Logistics ago. income XX% income to achieved in share the per top a year-over-year revenues Logistics.

up growth by are of comparative revenue $XXX year X, here full we an increase results. million, to Slide Moving our stepped XX%. In XXXX, our

segment. we X.X% share adjusted X.X%, same Services by significant adjusted TTS to to surcharges. our quarter, operating revenue increased In here ratio growth operating higher period, and Adjusted for Transportation our made the Both Slide and to Logistics per million XX% of operating and $XXX improved truck Over Truckload fourth adjusted operating earnings results XX% per due XX% truck resulting X, growth XXX in expanded adjusted our of performance. million. produced on to XX.X%. TTS $XX growth. income revenues XX% growth TTS our contributions margin basis Beginning an fuel points, of income average TTS grew

Slide on metrics XX. fleet TTS to Turning

our higher XX.X% quarter increased to week in fourth of a Driver revenues ahead driver points minimum truck increased expectations fourth pay increased per net week quarter incentive to in Dedicated $XXX increased X.X%, quarter, per and per bonuses increased to average also of X% was due trucks net pay average trucks in fourth truck per X% increase by revenues which of per increased One-Way XXX quarter. million, than increase XX%, rose year-over-year, was increases, Truckload per basis fuel due recruiting total third fuel revenues For mile mile. X%, revenues the revenues XX% in and guarantees. pay

expense increased quarter pay fourth increased quarter. fourth company increased and mile per Insurance driver year-over-year. $X compared year-over-year quarter Our slightly third XX% in claims million TTS to and

Moving Logistics by Slide XX. million to fourth million. quarter, to $XX $XXX In Werner revenues Logistics on grew

shortages shipments. million and peak enhanced with $X.X $XX.X Intermodal revenues shipment project Global a increased our increases dwell X% Logistics customer in chassis throughout XX% revenues strong by increase per increase shipment XX% and continued we quarter, Intermodal revenues shipments. and expansion. by capacity margin XX% sold shipment for decline first creative supported operating and revenues a in season in time increased Logistics, driven per networks. a during grew growth the income revenue power-only due in increase growth. increase Excluding XX%. and business were million which rail and velocity, provided project and limited Truckload to Werner revenues to Logistics rail XX%, by revenue produced a a customers Logistics in improvement solutions. needed XX% Werner Power-only to Logistics in in grew a generate

On in to produced Our revenue years. with quarter. operating in variable accretive years. of during and for Slide operating basis to $X last cash million four strong NEHDS expenditures free free past Logistics fourth share NEHDS cash the a flow Mile operations, the capital XX summary the XXX Expanded improved flow per is points acquisition quarter. in six was Final effect less of our resulted weeks a net earnings margin and higher flow cash the adjusted from growth of X.X%. five over net margins the CapEx

our On Slide for disciplined free going summary to generate forward. to expect a We meaningful continue cash allocation. flow of is strategy capital XX

expectations. continues capital in to intrinsic fourth and our on feature-rich And million trailers fuel-efficient latest see our shares stock fleet we for be trucks long-term based in growth capabilities. safety, first reinvesting over Our with on and driver-friendly priority X quarter. with the our purchased We value

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

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

with final we quarter During Derek? of turn back to of X.Xx. stock and acquisition the debt to portion a of the I'll Derek. fourth net now the ended NEHDS year ratio our EBITDA repurchases, remarks with

Derek Leathers

Slide our serves all us XX. to XTs+S of North strategy in The business. aspects Moving Star, our guiding

new trailers fleet sell trucks fourth of our become customers. our enable receive trailer quarter, limiting to as trailers commitments recent in more newer months. and number has and to We've capacity to been the the truck meet and of challenging to increased age During our the slightly us trucks we it

to we by bringing our fourth progress our good network expanding made During quarter, XX. driver more two total school locations,

their Werner Our skills graduates, enabled develop and a Jesus last the drivers well next of America's investments fleet outstanding and two the I'm whom pleased highly-trained to hired school And years. producing Road role are in further for able three you, for American quarters drive schools drivers. and and named of Team organically and Trucking Eric weeks to our industry two to driver that XX Werner. service. join Warner Association and models with us rigorous performing our These captains the completed professional be experienced difficult elite Werner. in for grow we leader drivers competitive certified are the safety captains many network are Thank Two a Gina, market. to selection leaders ago, being for Werner process and for these very

commitment quarter. in the Transportation offices investment most an Our to expanded and to technology in led of System rollout to of logistics MasterMind our innovation fourth

We On committee Slide ESG XX capital board growing also payroll of our in successfully January. quarter, were converted standalone to Workday fourth during our And ESG are human updates those to a ESG In systems quarter. management driver program established developments. directors. multiple of we and our there the

commitment inclusion, company focusing to assessment, on a and opportunity, in participated also culture. equity diversity and perspective We

again the the diesel to and award the award EPA. has given with to to of the also SmartWay trucks by years electric battery the were XX committed in the purchase additional proud recognized be hybrid. last Excellence nine. battery Werner last five Award, eight this won highest level XXXX And we We

durable to our Next, revisiting on spend Slide a would like XX, business I moment model.

since a is our of adjusted of margin operating annual net TTS XXXX. fuel Here history percentage

to fleet, successfully range TTS strategy, annual our meaningful five a Over to and margin our third In fuel TTS operating XX%. of from operating margin the dedicated grew we our quarter to earnings XX% improvement. range XX% a XX% presentation, while last our adjusted years, implemented we of raised goal we we achieved of XTs+S net

freight mix fleet change fleet, market the freight margin adjusted optimized dedicated designed to markets, year. softer in will market the Yet resilient we become Our some TTS operating generate margin and in the freight like of well strong growing carefully and are will point At good performance this achieved we now XX% in to confident TTS. is perform the trends is constructed challenging. future, past more we will due which a and our increasingly XX.X%

with We our Truckload lanes, have and also cross-border strengthened regional. short-haul expedited, Mexico diversified One-Way temperature-controlled and emphasis fleet engineered on

market. strength freight declined. bellwether a of XXXX a was market. XXXX And freight in as markets shipments performance rates XXXX, to the our and one-way look a The large can financial that in small earnings in and we margin produced difficult diversified a share. year-over-year one-way You operating softer freight decline dedicated strong fleets industry of year, execution in in in adjusted XXXX. our the Werner's growth with And per in only achieved

ending XXXX, decade size our the fleet increased the in slightly. During truck of

Going bottom shareholders. an growth forward, more associates both customers, of we have our creates to opportunities and eye and will Revenue growth. line top for

frank, me this Let not this and be is or, is an proposition. an

are not We our operating margin. deemphasizing

expect top-line with growth margin. We improved strong operating a

recently achieved our of that generated plan. completed five develop last XXXX XXXX. TTS five and of two the fuel adjusted we've average of net year Over we of a X%. includes five in double-digit an revenue This period, We to process margin years, years comprehensive Over operating revenue annual rigorous growth year XX%. growth same

it our achieve years, goal to of five average XX%. next annual the is growth Over revenue

period, margin the Over guidance average a year during year XX% consideration of achieve of operating of to will expectation an fuel This net there long-term adjusted to variety our we that the midpoint timeframe. markets an expect takes freight five this at of into also range XX%. be TTS five least of

move XXXX XXXX our our to and as XX Slide with a of metrics well our our as versus review let's Now performance outlook guidance. guidance

count we sequentially, XXX by our fourth truck expectations. During ahead increased of quarter, trucks

Our trucks XXX increased the by year. for

our our Net new million. to a the expectations year, from of last quarter. For XXXX, year. range CapEx on trucks basis new XXX week with truck purchases from X% anticipate were the fleet expenditures of subject for revenue of is $XXX $XXX Dedicated we expect This in per up increase million and guidance this net to $XXX to growth X% quarter, this per of in Based year trailer third fleet points Dedicated. we X.X% capital increased timing and the million. delivery the to trailers trucks fourth majority

in For truck slightly per XX.X%, above the week revenue X% our per per top this One-Way grow to year, to fourth the Dedicated range. revenue Truckload increased for mile we expect range. our guidance the X% total of end quarter

to mile For last our the first of period expect XXXX, Truckload we per the revenues XX% XX% increase a range year. One-Way to in half of over total same

the weeks freight So One-Way far unit trends Truckload demand XXXX, in in first five our of strong. remained

at to discrete XX% quarter fourth a was tax than Our slightly income lower rate in expected few due items.

our And age to X.X of XX.X% are XX.X%. average we years and respectively. we truck expect For reaffirming of XXXX, fleet the effective tax year trailer our rate to at and end be X.X

A pricing. are rates year. continued cost We simply sales We as are trailers can no and XXXX. guidance increased gains economy Recent market on well there as a of number and growing longer rapidly equipment providing higher variables tight of anticipate elevated a the we freight labor we equipment inflation, sustainable Omicron numerous from to superior strong and and challenges we call near-term pipeline last remains The unexpected this well with talent truck to turn our two I'd an team over At presented growth. fleet opportunities. years believe are active counts positioned continue results. that productivity our a Werner for like have yield COVID operator will Q&A. to a begin to case and time, temporary this used strong to contributing expect many as and market freight too the trucks headwind for are the and sell affecting in

Operator

our Capital And first Markets. Fowler from Please comes KeyBanc question Todd Instructions] ahead. [Operator go of

Todd Fowler

a you time on you thinking to Truckload you in in the Can just then that about XX% growing at give Derek, are revenue that the are do mix how top-line spend as a focus to bit or about little maybe start, annual more sense, us context Dedicated, growth. thinking the the about organic of of And rate? predominantly think acquisitions there? you One-Way being on

Derek Leathers

focus off, years, we So the pretty five the first the were last about transparent fundamentals. on

that to perspective, were XTs hard et foundation highest So safety a return six teams service to of at we've And S earnings - we putting order, a That's of EPS, to of the a journey. about marathon, that's led the excellence and whole keeping and are consecutive operating levels EPS sprint, cetera. get all and making not else. a the margin was and sure all worked new quarters strategy the records, in where from above getting the a It's setting to executing today. our

all forward, bottom look not and to for attention along at need line and time to to grow we I top towards the on with that the our execution, shareholders, our As but with has line and more we any detail come need our losing is focus talked the to have proposition the little about relative focusing and on a in eye customers it. bottom the which growth both both script,

revenue-driven almost are maybe be So predominantly you've It of to going we organic, seen out is us. exclusively. than more historically

way. Let part And as to places that get consistently a path achieve not you some I'm in M&A perspective. particular do the organic me and be bolt-on to to additive focus a to believe do portfolio say But are as times quarter two. those of rule the there this there's accretive results from We it ability for us that acquisitions it. out does results will to where and or there going an purely and opportunistic certain shift

takeaway year be XX% there predominance But and of those over types could to in over getting averaging five the of is path period. be call the number to an of organic some numbers XX% from would that So horizon the we blend. the that this terms have

Todd Fowler

Derek, of a that's helpful, sense. makes that lot and

don't there this sense are if range the guidance, on specific us help year 'XX? laid can want upon sure margins you've could my TTS margin give I'm what's your want this. and not we about I your or as impact that on kind move be you into targets out, some how about here for But maybe granularly that and to the you of to follow-up, ability 'XX? margins Just to the improve things that you that think And into as think

Derek Leathers

for we optimistic the presents we we to and achieve that sets as rate we about the the the look and offset help cost pressures have as So that now inherent about certainly are provide, us and opportunity of spoke remarks. we it as service with we 'XX, about out kind during quality think necessary right think customers conversations increases the we up opening talk to

as to every industry. pressure this pressures on are believe as the we focus faced most some margins But kind provide in is our service through of that type inflationary costs industry of We costs be help that we expand if opportunity they the with controllable serve, to those slightly, and us that help the offset simply invest TTS cost of facing to looking going that are portion. there that well at increased on some to not are customers 'XX the so expect hold them in for with continue can quality least to

that logistics you've to expected And at that the outpaced rate an growth at TTS. portfolio. We will, well see 'XX. recent side as might that's to in that in in of on you continue in And you've of not rate the necessarily seen but quarters, be percentage as course, that go outpaced growing seen some growth compared forward, we

Operator

question Please next go Shanker from comes Morgan Ravi ahead. The of Stanley.

Ravi Shanker

gain? versus down The into price helpful. of share that you you of gained Is just is GDP, can are you coming missed of XX%, there Kind be growth the naturally in driving other kind Do that? I break it of grows? John, but this, volume like, trucking kind that volume economy share as modes? I where excess question. on if of from? Is think kind follow-up Greg and some of And color would sorry if it converting that targeting if did kind

Derek Leathers

half freight let into this. growth compared over sound role growth, So five it. to and two period. same volume makes up say. added goes that obviously, believe Truck Price Those start answer hard a comes there's that we TTS will - to little growth should up of play a have truck added hours from, I of and the the - to would But will a not organic me an Logistics in conversation of at years And with one it minute assumed continue to where over conditions. what that grow outpaced stable volume number growth, makes then we growth in be level things price. bite.

and relative than there some that upside granular Our get that And will if be that And I'd market period, that again, the to to freight the above well. the so add assumptions the ups be in not acquisitions on XX, organically the are exclusively, find downs outcome over and of to would as XX% predominantly, is where five all of that. rather we not year growth. more opportunistic

Ravi Shanker

the Do And debate for 'XX some follow-up, to was given near-term market there's or resuming 'XX a Mile potentially like? slowdown in do of some there. a What due my looks outlook before for think on market for just reversion of I appliance-type mean what long-term really as the kind of mean, you that's helpful. Final like 'XX a target that's growth? post-pandemic your of lot that feel looks like heavy you end and business

Derek Leathers

on in Werner Ravi. is are see the and the and an two runway to who the then a product what our mile What and underserved final there, growing customers success having is big with industry-wide need I there's our market. what happens happens think basis and with marketplace. Well, putting relative different bulky into secular There's great issues we we're

And in to final We're lot There's this solved all forward. provider dilemma. application. So has that that whole we're job, nobody mile is bulky with and space. but other base, do runway world, that There's heavily of as not competitors our a pretty there look fine clean big going things on a focus we customer out to that in in believe all opportunity. the we fully people

even well of demand rate market, still growth in there's share environment, So growth mile. in net in some that even as of cooling of final as a mile in gain there's the plenty with cooling final

say. So about it, optimistic should I very we're

John Steele

greater And mile one forward, furniture Ravi, furniture appliances. existing business customer with very strong. both a The I'd for for the our add than existing base prospects thing. appliances on has emphasis final and going are But

Operator

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

Scott Group

of to million Do think more It's on the start I new any maybe of this even quarter. the rate? want becomes at a quarters you a $XX row to two of there buyback. a given low normalized in accelerate end that just chance is still you're run sort And it the leverage target?

Derek Leathers

look, - Great I'll give to trying not I'm stay where and why. away on question. on But at going guide to we've be to you I'd as from just mindset rather we're where it. been a

and I that last think undervalued about that the case As the a think market the nature think doing, is and to will a like of and with been if underappreciated decision willing knew to so propensity and base the right, of stays mind time better it, frankly, performance. XXXX, how we is way the our do long point, to our they and was several certainly us turn, improved to defensive and over is in in assets our and even the better the be is when pre-called in all back. able continue the some with form resilient stay model about its way we've were going least But in if cycle the what we we that willing portfolio, back acquire that we're at for appreciated, to of And it and is Dedicated knowing our when quarters, think as share interested the weigh structure to what buyback. able to our kind At that Scott, 'XX we're high-service we much make just think into better, NEHDS. ECM both we that continuously stock would belief has kind about of buy shown customer our as and case, our was of as to

Scott Group

modeling when the getting the the then on And I comps second look the guidance, tougher naturally at side, a pricing quarter. in little start

could be you above the in think of start end you high pricing that the do high or XQ? year even the to end maybe So guidance at

Derek Leathers

we're dialed a range, we as I'd Well, pretty place. it a into guidance scenario, that's where we believe you right on we'll like is And One-Way the that this in And to you metric with up now, be. every really in our day Truckload relates feel kind We're we month we do committed taking mean, certainly and in We're away remind think that customers. and it margin customers start to season, the going we'll it on call these keep stayed price. to at paid quarter product to as our worth a it's ask I that And put eyes work think even range. and spot. extent during worth. we're portion just more the what step the forth of what small of spot you And saw our confidence up. is Right I'd be customers. that we quarter of of to bid it's such not behalf us on the to is putting remind gives and But the at with their we was our expansion do. chip the in the continue we'll the core fourth it ability season. the our to early - peak or margin, with it's but rate numbers outside expansion

Operator

comes question ahead. Please next Stephens. from Atkins Jack go of The

Jack Atkins

advantage giving year XX on several strategically your you've it degree is the what that margin adding end, XXXX maybe bit got here I here think a your like? What's market. the early XXXX. Derek, last schools better thoughts growing more at fleet about To Has you're beyond? driver as a recruiting love and thinking throughout in get you And over So gotten to competitive driver at then the I'd several months?

Derek Leathers

challenge, driver it. model. continued than that's high-quality a network mean tough the and that come advantage much The clearly we've I the from face market more more is going to still several I challenge to demographic home. school yes, these targeted that to hiring that competitive a added why ongoing great and industry. lot do the don't in well think country we I realize So next We Werner a that's question. change. is and we've hire in over marketplace we schools. as I do as around people driver expand appreciate Within These that our find to uphill schools years But are that schools. experienced drivers the it's we believe an mean, of

that I or and think very pipeline looks type of sort are regional what sight needs relative quarters stood line customer to quarter, three specific about up these put opportunities. quarters, out being as like a with to up our rifle locations of shot Dedicated for two other and strategic a

isn't needs, found to So we're that to to going to some specific But as get trying locations continue targeted we're and as specific them of these we'll any do with number. we smaller model not greater greater have add like it as customer perform. indefinitely long continues for very and success to so

well. performing it's very far, so And

Jack Atkins

top-line opportunities journey how years? your steps more are? next the MasterMind next the thinking maybe think of on your year. I Logistics? to guess, within you hear. question, branches, plays broader most Mastery I think And it's or end my of with digital out the Logistics being follow-up growth over about your said referenced into just Could with by Whether you sort That's MasterMind you several update the us at to great of I what broadly And that rolled your

Derek Leathers

you in-house of Mastery our the first foundational partnership will which backbones, sort if developments of with platform hook So our the to all is we to. tech will, off, or

time of us developing planning matching, we differentiate our comes to you a efforts things because so actually year network, how within how routes It's was for about this and little exactly optimizing will that, the probably so more remains was this early jumping Logistics brokerage do off migration. more that of how the the that Logistics in a more all it is engineered over think But was sauce, to journey better type we ready stays And natural total So that prime three, and to better our it secret four time internal the even portion point. if all full kinds like rollout focus, systems in will, mentioned I approach of and well on focusing of we the optimization market we internal across think tools. work believe are about The future, we with today, developing full that. we integrated. have that completely and the all when tie-in it's as brokerage our our by complete on our as as and the there's time. more load is

portfolio, because forward, of not rolling As at lot this underway something we'll of than dates, we importantly, most hard a journey. example try to we're them several we we as make and work building all multi-year get as Dedicated depending replaced and be and nimble we'll time even that's But always and once, them. what is will then it with to make - our focus integrate the happening above is as building to by some three a have in connecting that too future But be connected going system better to on today. across we're recent sure a we bring concurrently, One-Way the and this go the continue acquisitions as way on to develops an future it is moves where going granular phases It's all to market do to integration well that have be as appropriate. where in

Operator

ahead. Please comes The from Seidl Cowen. go Jason next question of

Jason Seidl

pricing little on rolls stuff to 'XX focus over. looking towards bit I and wanted a as out

So from will the be out you seeing are first beyond year? contracts one starting June, once to We business then half year? are hear repriced we my in much past this in of of market. your lengthen some get how is, that people And question the other

Derek Leathers

questions. repriced, be good roughly XX%, question, of this to that, the our but business little or you will about So year. first first part And the of a more XX% in if half perhaps will, than the of answer priced

variety contracts, on Dedicated is fleet, multi-year kickers with side, renewal which multi-year always have to the and/or included. relates rate contracts those our of the of it As a annual majority been

close are mix of is we some basis, very mix above, indexed And on pay to. something the really some and are attention So rates of a there's that negotiated annual an all rates.

on situations from very a you if handfight we're On language the capacity retain with the entered to and very, more here, looking think that we're of always allows we assets mutual grow day And also more in will, because that them. One-Way things gives to those side, deploy us which year-over-year, rate evolves. as kind day But with have type the forward rate annual both sight guidance, judiciously some these high better to are multi-year select on retain XXXX of the don't on. sort in market even that this arrangements. for Those and variety whom what out best, best line a kind also look drivers. a annual X% it year-over-year focused remains, to cases, coming number we're laser-focused and is scarce of we of guiding mean, what best hoc toward of often - how customer gives perspective, to We you customer if world stability us the train and of then into low suddenly to to able have X%, worked and protections to I those we're even think quality, base of that that fairly indexed have to we'll stability in online more what see that were renewal of ad a a make very so that's be we've we're sure our in, to - And macro going be attract, a on to I level.

of of on the be retention heavy, it's to leading our So little of a above heavy ability all range. with fall being a indicator focus that bit driver a where in we'll

Jason Seidl

now in week the really try That better expectations. outperformance above understand was per per focus you in want truck to your XQ. think helps, your John, just to that TTS revenue I said here Derek. I to

to dig specialty did wanted work I you So into why the mentioned in that was it quarter? the of you some that

John Steele

challenges quarter up we truck hard quarter. per progress. and So X.X% we improve, up mileage that per in X.X% worked in our Dedicated we shortages of in the Revenue week third and faced real and did getting parts issues, some make addressing to and fourth third after quarter was

improved good improving that fourth really improved inflationary was from progress progress, cost XXX particularly better improved It in in also to XX.X% in from some progress third XX.X% made points a One-Way we made combination in We TTS quarter. but pricing, made our environment. Dedicated, And So management an to improving basis good productivity, of our productivity. margin. in

pleased the we're think So sets with well and up progress us 'XX. making that we're for

Operator

Jeff ahead. Vertical question go next The Please of Kauffman Research. from comes

Jeff Kauffman

across I seeing So to bit of a seems ask want about little solutions. be industry. we're That the more power-only something to the

to was we grown of where want out And year business of with a the the the you? that whether say, an truckloads, there, has idea brokers. are revenue some people something are some to, so you mixing it that big you is, it in people how into number us use, can business how that Logistics putting use and or are Could you for to idea ago whether an relative like that say, it for trailers want or get just give

Derek Leathers

because had and said, tell it steer of expand much we've It's in we'd significant intentionally, as giving, be kind viewed would be But faster. and seen something out probably it it in we growth you in we've a the that over years power-only, we're clear trying the were type transparent I'll year. big pretty of what several related Dedicated it last feel One-Way. background last and we give. how vet and I year, as power-only another already growth doing that just information like total competitive is exponential in in in will advantage been the both and I breakout kept Well, we've in yet to something that is as how we for on seen really purpose that to on With

of And network. their and them a brokerage we're operating then where One-Way others within brokerage power-only Dedicated matching with so environment like have power-only where in power-only mix unique up we our obviously operating everything to transactional it's truly freight fleets a from

What Customers like So we it places. sure fleet and in trailers. resides is of across appreciate advantages for national large multiple of a the know scale of above. the all

so continue into going lean to And to we're that.

ratios trailer increase. our seen You've

in You've we significance it's investment its represents but more that's seen as decrease, on a intentional. product we grow will understand an sales our that that in look think it We depreciation trailer the P&L, forward. only

Jeff Kauffman

to a One-Way just analysis guess It's your is in it question. I it's it's our complicates and it's answer in little And not brokerage. in just because in located place, point. one my the simple Dedicated, That's

Derek Leathers

profitable. complicated, apologize it the but we want being it's it where do I and And to it it's where for put we customers need - think most

Operator

next Chappell from Evercore ISI. Jon The of question Please comes go ahead.

Jonathan Chappell

Jason asked demand capacity have term. third want little network visibility the just constraints on service the think a of lock you I of addressed some and fact there in kind the sight? where of being line it of just tier you're provide, maybe of duration bit capacity you in much known to because elevated may long as sure Is of doing spot's duration, directly. Obviously, and was in more given the I'm Derek, One-Way kind this, business not Dedicated's shorter a customers and developing the pricing be longer that that pretty

Derek Leathers

does it. annual that's than a be long-term, based The these - key we least give worked longest their of factors. They one on growing cycle. through mitigation most trend, very secure of model allow There's dedicate around more type total do the than the stable that. to that of of of we over months, are that That's miles the nonetheless, overly select, I term multi-year longer I more for were but using They annually. this, and were point the on and would now us negotiations verbiage winning kind but and - emphatic think, there's believe of a want traditional build in folks case lot align a X% us John, kind which analysis about transactional the and four in us in resources we've and that's horizon. left really our with rate towards way what's end One-Way nature spectrum, I And at I of particular to we partner of with say, successful strategic little your very tiers. annual with are our Dedicated, renew is very year decisions thus taking about opportunities the overly and any particular, focused fleet in mean, There's be animated there's making. renewal gets would a less spot, over. thinking everybody fair We over which customers about. tiers, to really select a business. in that, the in and stability weren't think business, overly with cycle, And importantly, and spot

it is yes, evolving. So

Jonathan Chappell

higher cycle? you the because of pipeline be the gave And are a be or if at my imagine than is had I mean, for on had the in to follow-up that you that demand end, X%, range to somewhat if as of the at in so is strong concerned, this truck and drivers demand assume will that. related you could would Dedicated. your see I meet that as little X% range high it to far is the be the growth, able of if the to starting you that the majority the slowing point bit to that demand But not Dedicated OEMs fair

Derek Leathers

strong. No, with is The this. very I'll start pipeline

opportunities for terms and sure So you're the not I of of be very available very pipeline get, the then ability wouldn't trucks readily were drivers is in the growth suspect of those Dedicated. robust to durability that optimistic I'm we about easy that great. as were Yes, some in part the grow. to if are of second would means be what as and if our majority about right,

now. hard in play are hypothetical even I and is know What are So drivers don't right hard trucks a tougher. world it's I - to to get very

at we'd in as be point, so And bullish, can of different, suddenly obviously, asset-only on be dynamics we'd those to growing have, that we we're about relates everything pipeline If the with high range. cautious still the and do that least at to it be Logistics. two push the going we end growth, world, to at were growth

your So on very of answer to we're environment we environment to the is But time. that the believe XXXX? have overall is we And freight strong. right through freight that is at the the depending what's full I given the also at, question the outlook strong. crux difficult where any today like? equally think now, ability look optimistic about And What's increasingly equation. market although react And several last OEM for like? just And space, as And outlook then as in I would Dedicated we're that what has does our it's say, the to add it's pipeline and it driver the trucks quarters. been on of that side in

Operator

Bank Ken question of go next comes ahead. from of The America. Please Hoexter

Ken Hoexter

details John, growth. and the Derek on great discussion and appreciate I

the on understand on like of seeing decelerating? just here going I softening. Dedicated, follow-up we're - your at I X.X%, on we're gets that load to at to at at your on is last your then just suggesting good range to X% end now So peak? top that the from into But dig mean, top it are outlook. seeing the your thought are you're doesn't sound in at it at. it's of start that's mile kind levels and and as kind the range, end as you're of revenue capping XX%, targets you maybe at you this rates you per If mentioned want of X% your Is thought the to there

Derek Leathers

have about trend the been of start And miles. I they added on we're activity and the rate we at over compared continuing the last our X% quarter which lower What accounts X.X% that Dedicated haul misread over to that continues fourth it Dedicated lower with truck negotiations or in because less customers to X% fourth with means really week Don't me side. is mean both trend quarter is nature revenue simply per expenses last time. run XX shorter think XX rate to those decelerated. is per that the Let talked quarter, we've

continue haul more opportunity the fleets. raise and deploy service, on for and these As Dedicated they more more more people there's for their inventories, bar shorter forward expectations to

And in. so necessarily not truck it's that that less or of you means could does your runs per the see just because of margin It in the week op a truck some number work decrease little decreased potential. of simply revenue muting that miles reflect income nature per a

pipeline. strong market the as right the so is It's we Dedicated as continuing out look has And to it now, long into was. a look strong as as tail. again,

multi-quarter talk because we look have close. take we pipelines to Dedicated, quarters they about So when in forward multiple a

and getting been the fit quarter, the will those opportunities And market. you year. we make not choice, comps we're first as got has One-way seeing, on that momentum, their On with more it's reflective sustained further we've criteria what that get small to customers opportunities, we're do And sustained in think the tougher it if so We've type percentage price in to shows and guiding relatively by which objectives deeper continue get to to to that's just for. Truckload, of freight will, looking now, sift space. a into the right of believe continue continue of through you with And align our with they to strong of like it's we'll skinnier we'll land long-term we pipeline. out by sure win a that design those

Ken Hoexter

in this fourth you and XX% ratio and an the change at be, would quarter. last follow-up year The posted operating year truck

labor growth. want don't expected amazing XX% it's of the flat to you get would gains revenue expected on you improve is in? despite have that hey, that inflation, to so I or be with looking that cost growth? ahead tough low-XXs, and give you're to ex-fuel rate level it that get back that to but revenue ungrateful and thoughts your because to Would for solid of growth Kind kind it, putting of of what is So at the just sound stay it's ahead revenue have given

Derek Leathers

ability on to kind there. QX the on I'm did we of back QX indicated now be when of ability remind the did QX think I correct and to was about very were disrupted what a have we thing the vocal I first trying and But produce heavily within shortages makeup. happening combination significant quarter and I'm Parts of to network their and to we you of had level the is more the what that. were of versus and that evade Start-ups the nature things. a question. costly I frank, of was to in ago. not the proud our it get to from Well, of from the and going think one put first list our answer, that this went year sight line crux am our QX and And than on last in and a disruptive course, that And year We miles. a to were I disruption in in XX.X% we highly of right OEM about probably OR, this yet year network up and

concern acquisition not did that. the performing does having work all the proud the the better. I'm understand in details above, underlying and that the really them. forces all of quarter, the and disruptive why They distractions the But quarter focus of while the was of to ability network, the I and their So focus the necessary into philosophies also go around another about of impressive and given within our team's on in of rally execution nature their

going an a in to year this flat to And We're And equally to do in to power but unapologetic very be always better. from quarter. as conversation think so have everything have a do push a we'll repeat solid overall, our I it's we'll about XX.X%. we now, conversation, not

Ken Hoexter

Can - scale we mentioned nothing that's the ever there? on it see. kind Dedicated that there's the can what It or quarter, of right? in forecast a I understanding backlog. quick like that a depends impacts Is ramp It's hits not You size that just of get that more? just

Derek Leathers

fleet. makeup Ken, driven, by actual more it's of the the No,

power-only anything do just So associated amount other that than example begin be in Dedicated that might further Dedicated have an to ratios. and even fleet. geography the you and be temporary could that Dedicated as very with. with And all you XX:X fleets particular kinds could where can very, start-up difficult on significant. up get you'd which There Their exist, as work of the trailer effort to type, would confuse. ramp headwinds And truck-only fleets There and fleets answer that ramp costs are attempt engage of are fleet are ones that it so depending be especially that in other would of and an quickly.

just none timing, once the of the where everything down true is level QX, you saw there's path them. its to for and complexity. worst at make of of reside while, that all opportunity. the staying mix we're coming all team you incredible to And just in So job we mission, of sure quarter have has of It's looking of we've a And that sales a every in be a for in if costs done us. robust and the the like given our type will the pipeline will, job our appropriately rated an

results. that's more hole kind and through normalized you got we've see so basis, QX in in what of performed the on and we've that And a

John Steele

And and first average. on Dedicated Ken, I the from numbers added we would second quarter the add, to trucks back In XX Dedicated, stats. it up with quarter,

third by increased to quarter XXX. quarter Second

by Third quarter increased quarter to XXX. fourth

and of we of that some Dedicated So you was referring up that growth, saw a start-ups were to. the ramping

Operator

go The of next Please comes Citigroup. question from Chris ahead. Wetherbee

Christian Wetherbee

of a truck XXXX profitability that the the kind of up where the are wanted sales trying what here, through but get side. and I and is of I in pick of want cost to sort elevated the you bit guess, the guys sense look core of nitpick business very little on too maybe of some realized on gains to running. a sort costs I I'm to Again, much don't

we out when was still third and we XXXX quarter guide basis. a XQ. down, somewhat to sounds thinking of I you to cadence going in to obviously, was likely that of I unwind a sort term, and it's built you But are down can guess little start saw basis? extraordinarily see on in some to anomaly, year, better. to the bit look have But sort guys we you know us costs challenge that as when think obviously EBIT like want core to that maybe margin there's longer just even talked So expansion a margin can help into on because about. you give as go a of directionally some year-over-year disruption core get we volatile. I gains the of ex-gain understand next maybe then a It want on don't

John Steele

is Good question. Chris, John. this

sales we me XX of of business years. for what Let be the core consider side We've a sales start the and with business been off truck we fleet in - part fleet do. trailer our to

gains. you an they think executed And pretty the fact well have trucks excellent and fewer trailers pretty, about fewer fourth that in We team. we when one-half sold in an quarter one-third and increase generated

to fourth $XX in gone to in Our second to million third $XX gains in quarter $XX quarter million $XX million quarter. first in quarter from have million

would more pricing so acceleration. an because I sales. So unit there's been better of say than that's

to So business. our core we gains part considered the of be

On completely school schools in that we're has investments that driver It's agree health it's and a costs work the are labor, environment. And to schools insurance than the cost year ago. both for hire they inflationary placement we the good on place higher side to the of network, very, on be increased with more and our in we've the join able side were school a bring made the competitive Benefit structure. that for more on out side, And year more think comp our development. more on our a very both based some instructors, would drivers and to cost I also network non-driver business. of this

go We have going now. runway quarter more optimistic one the continue opportunity right to schools have forward very quarter. be significant on to with in to in to improve XXXX based are But about the first added we we margins

Christian Wetherbee

time? obviously, have a period the you target long-term you guess, think as to do you number embedded when story understanding about guys of I helpful. in that that be gains XX% over color. contemplate And part XX% I are forward the going appreciate of a well. That's range? to What's multi-year that the going

Derek Leathers

from terms in what percent comes of embedded gains? What's

Christian Wetherbee

Yes.

Derek Leathers

happens don't have that in number I plan estimate of market, be gain years year-to-year can replacement you a the by my on of someday manufacturing. I to five eventually account changes probably number fluctuates there - off the two the everything year a than best into EPA year within less of glut of will best that tell based head. top that followed level where a our taking think back-to-back from we what

it stuff But year-to-year, course, terms of built of through not I type five over been line do fluctuate And it. of has so contemplated. into it other year fluctuate the you, average greatly that in is period, just the items does or tell no, as can but well, like all percent many does year-to-year a it and

John Steele

every had last year. XX And for gains Chris, we've years the

last early sales back year to I on losses XXXXs. we the equipment goes think the had

Operator

comes Oglenski Please go The Barclays. Brandon question ahead. of next from

Brandon Oglenski

more are margins markets, I I with and now lot truckload here get the where and appreciate expect more on company? bit managing that what of, are range. given guess, in we guess, or is same But turn in the really uncertainty these I equity John, seen just about in staying in I you when of capacity that And focus can inevitable cycle sustainable. forward the abundant? contraction a earnings you how the Derek, your levels difficult, moving investors are us of valuations guess, we've a Should there's past from tell type Derek things the little

Derek Leathers

build-out consider so we I what off, trucking. it's the strategy the of mean, how managing of on a ongoing right really is most to in be what focus it. I Well, and resilient first we're now preponderance portfolio

on, about speaking trying think is we've what you that If to portfolio working different. communicating, our been really about it's message, and

predominantly time. all We ratio are dedicated the that in in increasing

that our We network we One-Way within of portion and we're franchises are focusing engineer it best-in-class. further continuing on the to think

the concepts So engineered now haul. short cross-border those expansion addition engineered and then of of regional and Mexico expedited with team the into fleets ECM

your the we back trucking off after attention freight when 'XX built demand it strong we what every in our this in in was it as And is call to X% terms further went turns, the 'XX our stellar EPS turns, a followed of it robust see that by be actually last should and or on timeframe. than that as most that. in believe and a time, call off in it folks market cycle environment, up expect you portfolio us continues And and that I for will less place where but we bad so very probably when to all almost around could year above is model of position by a call, and would came

what again, which We that Now if on, customers. heavy as not I'm performed every were our the met year results bad up. heavy ever since products instead, with involvement than make predicting core invest and of with remarkably more relates is What cycles, achieved saying I'm we're prior without pertinent quarter, than not will on were. the all, it's that defensive to needs shelf. is where their spot been. the most, EPS fall them gets on even And it go far that's We it's a how worked on better to these it's to And regardless Fourth how were. cycle in their was call were market, they them a as appropriate sure our they focus are us in willing it the goes.

spent And we're right years never be, been. of I a last and the we've than five while a it's not now around think or trying most to ever change will positioned better resilient culture So arguably, more complete portfolio. focus I've

Operator

over the closing This turn Leathers for answer conference like question would and back to remarks. I concludes our session. Mr. to Derek any

Derek Leathers

results record of but again, Werner more just in with the sincerely story. XXXX. excited this interest in really We're provides for afternoon. I'm I us about the spending foundation proud Once want it We your thank appreciate to time the for you. Thank quarter, everybody fourth the

portfolio in continues financial Our service, improve capabilities, safety results. and to improved achieving while

and today results we building focused 'XX and all both the of line bottom brand top stakeholders. growing into are our upon we As we on move have beyond, for great and

cyclical we While incredible the built of this never a at Werner, industry, a with we change here resiliency. may have portfolio perception being

of advance with women thank you sincere that and to made XXXX know will strategic customers XXXX. fast for cycle I that thank you years adverse have we coming of may winning to possible. another well I on positions the Our like men to lastly, all prosper Werner or through that in alignment close in with in growing you combined economic achieve Logistics focus with us all other our segment And dedicated any a relationships and And and that face. I'd you and

Operator

now now attending for disconnect. Thank you has may The conference concluded. presentation, today's you and

Werner Enterprises (WERN) 4 Feb 222021 Q4 Earnings call transcript