Earnings call transcript Q1 2023

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Operator

Good afternoon, and welcome to the Werner Enterprises' First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode [Operator Instructions]. The speakers for today are Derek Leathers, Chairman President and CEO; John Steele, Retiring CFO; Chris Wikoff recently appointed CFO; and Chris Neil, SVP of Pricing and Strategic Planning. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

to call like Neil. to now would turn over the Chris I go Please ahead.

Chris Neil

issued with available available earnings results. today, recorded at our Earlier we is webcast release later section our and being this supplemental werner.com. Today's Investors will The a our replay presentation the are be in and of website for release quarter first evening.

and Today's the related the of directly that tables risks, the attached additional to well is cause for reports believe statements. in as company using X to non-GAAP the statements help we statement comparable release included presentation results measures, actual The earnings of reconciliation slide disclaimers in contain earnings on disclosure the our investors information may the which Please slide uncertainties to the see performance. appendix GAAP factors present in forward-looking and the A of measures most results facilitate and remarks forward-looking that materially. release provides as involve past to differ other could to the comparison presentation.

to like turn conference Derek. over would I Now, to the

Derek Leathers

control the freight you, of of in quarter Thank good our that On quarter inflation. the impact monetary call, be soft We cost would to and freight inventory we challenging expectation and our the first seasonality, afternoon. earnings half and be destocking XXXX shared first would fourth competitive. Chris, conditions anticipated policies to due Fed's

in Freight but soft than January was better expected.

month. moderate. down in contrast we As during typically strengthening And March step freight a to February in progressed began the it to the took see

which and well of execution. resulting We solid fleet our financial through was superior primary Our dedicated into leaned operational service quarter the first efficiency, results. in customer focus strength performed fleet, entering

first freight with less the One-way the opportunities. increased available consistent unusually in strong and from when freight competition. with overall were anticipated conditions market contrast This by a to we Truckload benefited quarter year an was price As market ago challenged Logistics and project

we driver addition, first faced including broader market moderating higher maintenance. claims quarter issues non-driver Higher insurance and and rate industry a and and pressured and In pay also earnings. and supplies freight

several markets. less last design in model business and freight desirable both better the years built good to Over we've a perform

acquisitions Our large Truckload One-Way year-over-year a industry this and diversified and business revenue our segment dedicated our services Over with X% operating resilient growth. environment, our fleet recent business complementary from in which provide durable in we and to diversified along portfolio period, difficult dedicated One-Way increasingly contributed with and us grew a more Logistics of verticals. very growing contributions

XX,XXX-plus talented to I delivering want strategy our core sincerely to to service unrelenting safely our customers. and our superior true staying thank for the provide on Werner members values team to

finance move Chris an to history. companies and and and experience, CFO right large technology an leader, with corporate candidate. Werner Chris welcome search hit last XX years strategic and has over X. at industries. After ago for in running. exciting slide months, the over financial the business several and He's to our public introduce process is Now Wikoff. new joined in formally two and the time I'm let's Chris the accomplished CFO, hired our telecommunications delighted ground we private extensive our top of this Werner, weeks transformation with

M&A technology, mindset capital he a markets, and and shares growth Relations. Investor operational Chris to our treasury, values skill our and processes, company Werner, in deep brings set

his with transition, Chris CFO are CFO, in working Chris as smooth new leadership closely a aboard, John and expect We Chris. Steele, Welcome role. entire our retiring Neil team, our

Chris Wikoff

last North the the has the Werner last double-digit was excellence, into in earnings strengths experience, steady combined and that nearly of annual scale optimistic Thank of six over history Werner years. strong and carriers revenue margin deep growth significant about highly as the role, including you, be and doubled the expansion adjusted Werner, Great such reach the Derek. a years in adjusted part to one be of here operational management a growth, a Coming of I sheet a to and largest team. balance of three results and with America. operating truckload

outstanding addition In Werner also has strengths, competitive these to diverse an culture. and

While success, continued forward with two look shareholder to partnering a business that more for after company future to compelling leadership and outsider, team weeks. the combination and positioned past value. I I'm towards very Werner trucking great Premier as is part building have and and I a is even this for say, being now, upon an Derek logistics the of well as excited

want over his in great to that been very far, done, and with CFO. opportunity at commitment tenure working I the thank legendary for has transition of John, mile It also to take work long enjoying this so I'm to has he John, a and the career. that's in as the I amazing smooth a Werner and place. that partnership, appreciate his testament the organization final is his time and during all

markets Werner, the the we greater the been and financial two I'm opportunities where with and with familiarity performance, of the and understanding associates business clients business organization. verticals compete. meeting weeks of listening, assimilating gaining outlook and learning and in have Over as increasing the I past as operations, the into well of industry leadership across

with forward of business with cadence and coming engage and the Werner in months many report to community, in weeks look I and leaders. establishing further associates while the the a you investor

presentation to first back With that, quarter our the turn financial cover to highlights. I'll Derek,

Derek Leathers

Thanks.

XX% quarter adjusted to XX.X%. Let's TTS the Adjusted move was revenues margin In operating EPS the increased for X. to Slide $X.XX. X%, first decreased quarter,

margin our XX operating line first in the by demand was our and adjusted solid Sequentially, XXX declined the steady, XX.X%. in TTS quarter last trucks. our was fleet Dedicated with expectations. For months, freight Dedicated

been slightly have extended, adapted fleets implementation lower our our to which the for size expected customers slowed new terms fleet fleet the Dedicated contract this during demand of by few within few quarter. parameters Dedicated A quarter, reducing Dedicated and a additions

do strong first Truckload At was time, in more One-Way in freight that not project occur benefited This pricing ago, first that year Logistics. quarter. environment trends and both a weak competitive. pricing numerous freight year we were freight and the typically and from quarter, for strong was opportunities, A unusually

Despite spot and revenue One-Way to mile rates, which exposure of nearly that freight is us diversification spot per in the fleet, minimal limit our year-over-year, decline declined enabled Truckload enabling XX% of to the end selective, be in showed upper experienced retain the improvement as to unemployment at more we us market drivers. The hire of guidance historically driver our range. a market, X%, low and signs

food XXX sequentially beverage, snapshot. quarters TTS with with winning quarter from X, Revenues Slide revenue revenue entered X,XXX and the $XXX million and in year-over-year. XX% were in our their of is in up We customers Logistics. retail on our and XX% Next comes with verticals. down trucks XXX base and Three

not have intentionally products delivery do focus growing that to recurring our on the half requirements. Dedicated second to the We in on plan fleet companies We year. of the who grow orders consumer We second in repeatable on-time grow ship essential plan and quarter.

not our eight. to and extremely competition. is Dedicated Turning high of We replicated providers by customers which Werner requirements, US. slide one service in are easily serve the safety largest the with four

haul freight, Dedicated typical length serving local geographic shorter markets. of Our fleet of and regional consists

over with avoid out-of-stock customer product steadily on-time of rate the our help for and Dedicated Dedicated a customers XX%. The of superior surprises. annual has years, reliability our provides last grown them with service over predictability high their consistency XX-plus retention to inventory

that are total a period, discretionary is and Dedicated of performs to less this they income confidence with spending. as retail over During recessionary we trucks discretionary XX of focused is growing added look business approach for Dedicated our shoppers we points. of two-thirds with value. to by X,XXX percentage indicate share in and retailers. when trucks TTS consumer retail discount Conversations Discount Nearly spend trade have more two-thirds down to economies, and customers numbers seeing better

and years. Historically, segment truck last freight has per Another beverage are per Because is that less than of consistent more service increased Dedicated relatively high Revenue companies eight XX% nine revenues Dedicated requirements consumer ship of and truck has products. the volumes, of staples. this revenue food variability. discretionary recession-proof the with

Dedicated During first revenue truck increased year-over-year. per quarter, X.X%

to for update nine growing on Turning slide segment. logistics an our

grew Logistics $XX our forma by freight pro a of revenue million the $X billion. has and rate last acquisition combined quarter revenues annual first the run $XXX of ReedTMS to nearly With November, in million Logistics asset-light

ReedTMS our refrigerated revenues to our of in has business freight temperature-controlled expertise segment in Logistics QX. in this business of growing the beverage of our from in verticals. revenues food The addition expanded XXXX for aided XX% in diversity and Truckload and X% Logistics

ReedTMS of integration Brokerage track. and The on is Werner

integration acquisition. and significant savings are goals pace These with were prior synergy We to systems QX savings as in costs meet early making were we identified that we procurement progress offset integration, the and our on absorbed. making automation to synergies remain and

higher quarter grew XX X% in dive increase surcharges $X per Turning on and driven X%, in deeper trucks, million to our revenues slide growth. for first slightly truck, fuel Total revenue by an revenue a Logistics growth results. average

mentioned soft freight headwind As unusually ago. quarter a was year to market in first period the in same market strong compared the significant an earlier, a

like At the presentation over John? to John discuss will this who our results. turn time, I'd to segment

John Steele

Services and Thank operating revenues basis you, increased points declined adjusted operating increased adjusted the XX Truckload Transportation Derek. TTS year-over-year XX%. expenses. income results. margin X% due TTS are slide to operating On XXX decreased

and compared net rate net which of increased TTS expenses operating X.X%. X.X% mile, fuel, mile, adjusted Our increased per of fuel, to per our

a having expense impact claims. pronounced driver margins. and more and operating and increases insurance on is our maintenance pay, largest TTS Inflationary within supplies pressure in were The

moderate Supplies This for XX%. Driver trailer expense pay per mile increases costs. increased continue maintenance X% caused by and truck were first maintenance million and up higher-than-expected and increased $XX or tire was over-the-road quarter. and to

to signs spend have continue in and our second we continue taken actively we control to moderation cost quarter. steps costs these see While inflationary far to of thus be

or expense and XX%. claims million increased Insurance $X

and safety We preventable and low number on with last recent our of the low by by investment continue an experienced year DOT our claims equipment. for to technology and best This cost we our is encouraged record claim. driven in industry's frequency XX-year are be accidents. our both highly seeing the our said, quarterly and focus That drivers in per elevated trained combined

We to and claims our claims firm and the frequency are cost. reduce holding continuing safety to claims by on resolution laser-focused being commitment on of

million tractors equipment year-over-year. decline we $X more a significantly trailers $XX Gains a quarter, of of per sales million unit. on revenue were average and first at gain sold In lower

the between grown rates will decline focus improvement. in With to leading to This rates, an spot and in greater in XX%. on failures small is continued to carrier over yield shortfall costs carrier and the operating numbers opportunity freight has spot result

truck market, equipment and for the used Conversely truck we used will trends gains. and anticipate gradually these pricing demand trailer lower

We are to margin range of within our operating committed to TTS annual performing controlling costs XX% and XX%.

lower from as We have specific for turnover savings initiatives. cost-saving and cost and equipment as company-wide supplies. initiatives savings SG&A include ongoing efficiency, opportunities driver fuel maintenance expense, driver These and implemented recruiting well

Now net let's metrics XX. One-way increased revenues X% TTS net trucks Slide in trucks miles Truckload Average revenues declined Truckload fuel quarter X% market. freight increased increased and X% move softer for fuel of to Dedicated average fleet X%. truck revenue first acquisition the lower of X% to to per truck Baylor a and X% per One-Way on rates X%. due declined much grew due Dedicated

a XX. Truckload by the Werner partially to intermodal due acquisition XX% shipments our shipment. Logistics Slide pricing on XX% driven in acquisition revenues. offset by in revenues November In volumes and first ReedTMS grew growth Moving organic the from per increase increased offset quarter, in to lower revenue as Logistics brokerage ReedTMS growth revenues decline an Logistics and

to in shipment Truckload volume a year-over-year. freight both first to strong our a primarily in Logistics quarter Werner Despite Intermodal decline due compared in quarter the market revenues XXXX ReedTMS units XXXX shipments. first and weak XX% grew declined market

Final Mile increased revenues XX%.

shipment million for $X.X shipments income operating and In total, were with X.X% $X.X operating by Logistics challenging revenue of quarter more impacted achieved discretionary a adjusted a First the sale margin, per down adjusted negatively products. macro year-over-year. million of

a facility Slide Moving ended quarter We of our last credit first to syndicated financial position closing in strong XX. December. new following the

syndicated Tier large commercial ratios with low strong debt-to-EBITDA $XXX X of positioned in X.Xx. liquidity of facility our The capital over well healthy have all credit loan-to-deposit banks are six ratio a and and million ratios. We net

operations flow On robust in of margins in summary cash million Slide $XXX five of of our cash cash years. net Expanded operations, from ongoing the And operating net first CapEx over free XX generated less past is variable flow million cash $XX flow. and from cash free flow we capital a resulted free generation. quarter, and flow expenditures and

Turning to and capital allocation XX slide our framework.

to Our our capital reinvesting truck first enhanced fleet technology. continues priority and be in trailer and

related average our on-time helps as and trucks of which and driver out age. truck and improving, are improves strengthens is our Reducing our New from average service priority reduces truck back to warranty OEMs a recruiting age deliveries years lower expense our it retention. our two

of capturing With our criteria. are currently fits for remain within acquisitions but and quarter revenue business strategic that on we open Trucking our cultural right cost fourth the and ReedTMS for focused Logistics, Baylor synergies acquisition integration and financial and opportunity

We value operating and strategy and capital will in low invest allocation initiatives take to margin. a to providing maintaining expand financial returning by growth balanced shareholders our our to leverage, flexibility

on Next resilient continue and to as we on building our we strategy slide our Drive execute durable portfolio. balanced XX, revenue are

sustainability and to investing committed a service technology is the progressing leader innovation in stakeholders. Werner on-time long-term industry, that in exceptional relentless on value are associates our on for on our a focus We and journey. focusing logistics drives all

our EDGE TMS are fine-tuning Truckload leverage drive improvements. business real-time currently units to that the insights Logistics, of in platform updates. a development, Werner more are in Here We've with and new our we Logistics deployed operational few

our to stack have platforms customer and also We enhance continued and that experience. invest deploying integrating tech back-office by the API operations and new in improve CRM

of achieved by the low rate with we invested addition quarter in record injury also year. evidence our we rate low low achieved cohort in record XX% work establishing to we leadership accident frequency our improvement of last to in XX-year frequency the rotational We And associates a inaugural year-over-year. quarter, PACE, first first development accomplished in our As safety commitment program. accident

half stewards units of installed new fuel first good idle auxiliary quarter reducing in power our were be environment, placed tractors on consumption. to during work the truck engine service we As of

That with As we in in vehicles began Southern week, received our And April new XX-liter Cummins. first with we electric search we for natural remarks. battery partnership this market. truck my the freight transporting with gas technologies, in California renewable our connection concludes two

now turn Derek. back it I will over to

Derek Leathers

John. you, Thank

is updated guidance metrics. review of XX slide performance our to our quarter a on Next compared first and our guidance

declined fleet During adapted first fleet our conditions. our quarter, market size to we truck adjust to X% as freight

the X% lowered As year for to to we result, a our guidance growth truck X%. negative

We $XXX guidance Dedicated are ahead million the to are slightly first maintaining that our revenue X.X% year we per truck the guidance in year CapEx for retaining. million. $XXX increased net quarter range our at of full

our Truckload revenue quarter end per first half guidance mile One-Way the X.X% total upper first decreased of for at range. the

half down first X% the to X%. down for range guidance Our remains

average our X.X XX.X% first quarter guidance Our and the full was of trailer tax fleet rate in first age in range truck our respectively. quarter for line The year. with in was and X.X

resulted of concurrent demand declined. system market consistent our move discuss timing to market updated let's XXXX rates fact The and assumptions. The challenging with Logistics experience for Now, March. slide spot which with typical the and and in improvement and One-Way freight Freight March not April standards. in Truckload and low occurred did March tighter the lending modeling remained banking has our seasonal in in XX freight outlook failures, and in

muted half XXXX that quarter. the and expected second we call, trucking of time, that would better replenishment peak earnings normal with economic season quarter's we more At resuming, in forecasted inventory exiting capacity have last a backdrop. a On year a shipping fourth relatively

Our outlook a but the changed, months may has not uncertainty few by be the delayed recent improvement banking caused failures. due

and course, We runs retail potentially expect to and challenging as in monetary tightening. inventory destocking Logistics will completes quarter the its and Truckload and continue third One-Way second remain freight Fed

in the facing in that financial quarter half. spot We second market expect the on freight begin tremendous carriers rates to spot will bottom second Smaller the improve rely challenges. then and are

for increasing. trucks deactivations XX interest and revenues higher activations weeks, truck the last between consecutive trucking FMCSA exceeded with and standards, up. lending XX,XXX failures backs Starting truck shortfall data over bank tighter the September, this with deactivations of period. interstate are net costs rates, Given company seven-month much over

show fourth a acceleration. by market improvement holiday and expect the to is the freight confidence shipping macroeconomic we driven trends By more in season. quarter, will This for capacity inventory begin than

we freight expect market, financing and should gains market, which used a as declining year the in the demand equipment progresses. pricing For truck moderate gradually and difficult

be We range debt full higher $XX $XX expect we a $XX our than the gains to continue net year. to higher and million. Due interest that interest expense this year level, million higher equipment will of to year be million rates will the in for expect last to continue

show anticipate will expenses maintenance We help rest gradually retention. will and truck to driver the this age should OEM turn production truck that service continue on-time This year. to in our us fleet, improvement and which trailer of decrease the with enable of

We have business fleet, with dedicated a Truckload One-Way fleet and powerful Logistics diversified a a growing large model a segment. durable and

in the we largest in operating franchise and market. truckload expands, nearshoring have complex experience cross-border Mexico this As deep

building rapidly home for high Final Mile premier growing are service customer delivery. a Warner-branded a service solution We to need

continue EDGE. through Werner and We to prioritize Cloud our Cloud-First, technology strategy Now in invest

the We operations experience are and streamlining of stakeholders. are our enhancing

our award-winning with and of customers continuously beverage aligned with a on transporting service. we superior and winning record are quarters our Three improving safety most And focus freight importantly, goods. base necessity-based is retail food

I call to our Q&A. to operator begin the like Now, would turn over the to

Operator

Thank you.

now will [Operator question from the And Stephens. will company’s be This go X ended Instructions] central from time, Instructions] session. following PM will Jack closing ahead. begin Please We Atkins question-and-answer remarks. first [Operator the call the

Jack Atkins

guys. and it. Werner, Legendary retirement. John a your welcome Okay. to put Chris congratulations on great was Good Great. way afternoon, to

enjoy your So retirement.

you mean maybe couple you're halves, Easter of of peak picked April guess, capacity then in things somewhat? of the second you Are more half. I whether it's like rationalizing weeks encouraged So bit your challenging maybe of month. half could that business, the was up little bit start feels last half anything seeing first And seeing spring in make April. maybe just tale if would right the a sort we Derek, two or with in I a about, was now? it what the the of very first a in

Derek Leathers

the a two Yes, for halves the this. approach but might I say little of stop of Jack, thanks short tale question. I would

seen produce to draw refrigerated We were then find that we other had as market. explains as that way relative in obvious into to that that that by starts general it. both but a think capacity its market the that impacted have way work delayed and products definitely capacity from through, of does I especially spring And weather its part but

destocking and inventory think our through know are to differently. starting customers that We their further getting and prepare

We with has food on that our positive impacts our of as beverage XX% warms flows well. freight also business as of that in market and know it and part

So yes, if in we don't we've of too trend couple we this the weeks want But to to continue optimistic it I develop. and are to seen I'd what rather see encouraged by be some at this point. of continue observe certainly see cautiously can of last April.

Jack Atkins

I a John appreciate guess for I range. maybe have range from know Understood. to XX% here No. of a margin perspective. a lot And from macro But supply-demand believe follow-up I perspective my reiterated to the TTS Okay. longer-term then the we wood that of and both XX%, chop is I that. question,

expect quarter, the that – out despite below are sure there be cost but the range entire opportunities? to range On to thinking in the is end in able year make quarter. on stay year? one you about, guys can first to range? I can Like efficiency said what I'm that. able this challenges. soft you opportunities, it's last to were bottom But We seasonally that you you make do are you were even to stay to sure organization need within stay How of quarter that needs you be it's what to know we sure a this within market quarter, the that happen focused

Derek Leathers

in right is taking cost pretty I I site out mean now up and I it Yes, the the time. of laser-focused are cost right you well. for mean of Jack, a the side long now we trend equation. business would say the on you summed passion know, business a

have, ahead results. and what we as to the not that QX do maintenance. look certainly and because But within happened we got us. celebrating of we've the confidence guidance We maintained supplies know about are forward We think that we've work of

the differently. in having reality XX of kind just Some were of that QX. of the the we're well, toughest insurance both days work and know that integration to takes two there's first acquisitions it to severity the always on that's that took bad it just middle costs ongoing success relates it's place – we ever the that claims, of a one The work frequency, during digesting outcome predict move – as as – one for and because comp to

also is thing QX going in benefits being are to that we that continue most And safer. within started setting control One-Way network over XX-year XX-year can time, would now, to we're production. encouraged has further the work relates we're I'm lower. in say, I But simply we as line the engineer drive to new record it and because to continuously to that doing XX-year, reap

turnover signs as think our place continue overall to And doing is That then, seen is allows -- more as utilizing thing encouraging possible and economic backdrop, busy. a if them we've you on work. front, the assets been why great can't more get certainly to real rate the a we our actively becomes we're to the can some to present compelling to Werner drivers, and And to keep story us next to sure encouraging. backdrop job has it the make best best I

sure So is which is we all guidance make this that point, you feel to large still and the relative XX% at that done we add long-term that deliver there But on that to you that a of is to something put on. together be deliver that can caveat, to XX%. work we range lot

Jack Atkins

the Okay, appreciate Derek. Thank you Really it. for time.

Operator

from Scott from come go Wolfe Please next ahead. Group the And Research. will question

Scott Group

luck Hi, Chris. and of congrats, best and guys thanks. John afternoon,

understand if down the how, I of want margins just some of I one but we're were XX% through Dedicated the XXX margins quarter? seeing dedicated overall talked the helpful. it resiliency directional look One-Way Maybe points. cycle. I we've color and on where So performed margin basis get to pressure. quarter, you just this Can be just revenue about quarter, the in give dedicated the it's margins But and would

Derek Leathers

Yes, Scott. Great question.

So with Dedicated, this. let me start

the We do It largely, it through softer expected if performed QX. on as you premise will believe and well Dedicated out we remains that some the those cycle in both freight of impacts the But held largest to and Dedicated in continue markets. about One-Way. there, Our perform to good as claims, caveats both as think intact. and are of both headwinds a couple are well supplies and maintenance insurance

so and have on have impact And of the outsized supplies made line. did costs, on of and progress we've and we that we've seen some around the progress the got our arms already specifically, maintenance

increased On and clearly. the do. a issue, thought was per exactly revenue opportunity per cost truck that to it we continued find it did improve the would It to metric. increase week, what efficiencies It

As that and and there make OR was our put One-Way share Dedicated. to than as where the this get more the Obviously, obviously, focus time. severe far of around where is it to lion's degradation in turned focus that sure much TTS, we the got at we've is in that was our

upgraded where appropriate. work predominantly to quickly see costs to toward that as realized toward not to maintained the had the synergies and then being I'll integration the And no just issue, mobilize but -- to we clearly again, although on by wanted where getting offset early are point we they're standards and take say, them ability was I'm fleet lastly, quarter getting acquisitions, to that place trying there this on, being equipment

integration. networks the not side, on secure we to significant And work that sure post did system made then sure and vulnerabilities some have any those make we

we work We're see far, it's going So, is that, mistake. some that still We we market no we of overall out we but perspective Make tough kind and forward, a from to by an we're as of that, to accordingly. adapt encouraged what quarter us, stuff behind with. have there. so and cleaner look recognize know

Scott Group

And cost to any is second expect, you the you to way think opportunity about could any in So that earnings talked around the much maybe improvement then, just or margin quarter? cost to point a just take way how how out? sequential about, numbers put much Derek, potentially there trucking you'd

Derek Leathers

Yes.

start earnings given it faced I to neighborhood look of is that now. So XX%. mean, I'll Werner's the from do a we're the the case QX this you XX% QX normally go up, period the economic with somewhere multi-year We if question. backdrop with quarter, first call over right historically, not in that believe to

that is not in we think that's So, the something cards.

quarterly give but I XX% the way in the know, is are QX, up not about to do don't as We you want guidance, clearly, improvement thinking frame very that. we

four. We have for and some that moves better and the headwinds, good, I've feel QX that on quarter, took cost and indicated very maintenance quarter they already the increased we supplies made in they as in up three of first although a set

need to entire some prior The and is insurance some what line we I hopefully safer least see volatile and predictable line. that's the safer and safer. and of this work most put us clearly through And behind at claims Again, reiterate will point, the itself period but we and can do stuff continue to us be P&L. in

too to there. And be want to trying anything cautious so I about just specific give

shown it to has year-over-year off and found be careful be we going I couple of on want down bottom, couple credence significantly much and how the that rates sequentially of with still but appears itself have of weeks a a to they're spot weeks so market as The stabilizing put though and both.

to that's any positive. So a see we certainly start true from lift is if that here and

But some this now away identified from through we're implementation partial about only are see numbers being owe there's cost category. up of of at the overall it's of impacts, get neighborhood speak. But point $XX many annualized going started the and to the are continue not we we've we as that you initiatives, some implemented but yet so as you going just those specific and to I obviously, think to talking cetera. We're we have to sit already numbers. in dig mean think of million. it say and till And, here, in I started cost savings find. year investor On have May we've stay aggressive and already started these Those shied we savings that those come et about more can community to to we

Scott Group

guys. you Thank helpful. Very

Derek Leathers

Thank you Scott.

Operator

And is from question the next Tom Please from Wadewitz go UBS. ahead.

Mike Triano

Mike this on is Tom. for Hey, Triano

Derek Leathers

How you are Michael? doing,

Mike Triano

Thanks. Well.

down for X%. that down mile after you between pretty could X% be the -- XQ XQ. and One-Way pricing range half down a down anywhere in maintain X.X% for That down for So posting X% to wide revenue per first in implies three

drive the Thanks. just for what per lower the the mile? would So guide you're wondering assuming and revenue of end higher

Chris Neil

Mike, this is Hey, Chris Neil.

held a others in was we've One-Way you're So One-Way in higher February. improvement. right? end decline half X.X% built winning the at little some first and mentioned bit -- as there. think volumes That seen rate and definitely weakness with now choppy of customers a We've right X.X%. at guidance, in us down little January March pretty of the second and then good were out by March on is really the Trucking and April portfolio And there of I it our was yeah mile and there total the half And waters in we per

rate the implemented in be got some we've negative. have bid of going will quarter. to more are them in but those terms of we're Most and be I been some mean had renewals of some rates be second that will In what are of that now thinking those -- place we've

QX. QX, trucking One-Way than XX%, rates effective then XX% XX% about have I'm QX, about in talking XX% rest we more specifically expect than less a the little a to our In QX. were be exposure in little and We in -- of

There's implemented pricing. So had metric. we'll our and disciplined as One-Way little are we've exposure we've renewals pressure also on as increased increase the maintained those spot with to bit effective, trucking a some negative see rate

as most think I So at we expect decline trucking total you One-Way would mile that those look negative likely, our per mainly because would renewals. of sequentially, rate rate

not area. are there. could we continue see bottomed. perform a there But little like to some It there, feels spots we're in bit to have if that We improvement of that see could opportunities close

second that towards And and improve up would market -- it improve just end talked the decrease see this as but we're our just out spring to upper continue the a to we guess the would number bid has which kind expected. of tough in kind to -- to volumes exposure point help contractual gone could spot, bit We we're general. pick and a that it's as range in of the it's our I of relates best the But environment you season at going produce quarter. can there as do little

Mike Triano

Right. just on to side the have is demand go I just question Then that. the other back to

Thanks. how curious there at retailers much forecasts? demand biggest customers demand from if And your customers the they're in and of an so was just those inflection replenishment their the Has Some changed outlook advanced you in inventory there viewing get are or businesses. all? would largest ordinarily their out notice change how

John Steele

Hi, is Mike, this John.

value-conscious more what consumer, seeing. our been less it retail attractive to a are of inventory what sell lion's big we with the high that's staples retailers has demand is discretionary but that our than As relates pressure goods of share their to and they a really business. consumer definitely declining, you're customers seeing are that's percentage Clearly, discount concentrated

increase closer growth. inventory of inventory group of in compared March stronger think sales dollars Seven to one in they're freight they well from retailers that reduction January along and all their of destocking in to in the large replenishment the XX. had than store would achieved they our to per store per when that they We inventory early a way November back Every a of a and growth they're as inventory environment. February late normal XX in shipments which reported same-store reported did destocking getting

of pace our Inventory last to last moderating A actions our half level rightsize to similar to inventory rebalancing. first we strong Units And execution finally We've is is the of summer is the the per store as shape. quickly at moderated periods. had few inventory take good levels inventory pre-pandemic We the in a XXXX. action bold comments a of growth inventory. expected. elevated, one took after still significantly are is but

hard this we are closer think demand a that we're see we'll we in at to overall levels Obviously predict, the but recessionary things with economy. So of type latter think is destocking. getting normalization stages to

Mike Triano

John. Thanks, Right.

Derek Leathers

market best also can putting a execution. add to your that this that showing would simply I of outperform. customer like -- part about would The Derek. only is front one thing and here we is in we're foot I the just forward it's of battle It's today about add in that the your in

to one there so they're what where And their is then doing. cycle. the There's relative is is about obvious how inventory the doing And sales their which question are we share. important the the equally at last one

the and are And continued think is pricing those to. to to bright be on side for dedicated so to and being type both It's what you me And share from work I with through especially of of discipline and ask do. the others of in some spots quarter that serve paid service service. appropriately able wallet difficult keeping one if hard have the the expectations expecting do, we taking the hard work we

to so customers. further when It of. well something this able positions And I'm be with turns grow proud that's also winning us to

Mike Triano

Great. Thanks a lot.

Operator

from question will Ken Hoexter be from America. next go the Bank And of ahead. Please

Ken Hoexter

going Hey, great. best in kick welcome. he afternoon, chair Chris luck to and Derek's forward. said, boarded question. look plane he's retirement going of ask I I a Group and working of longer my to Scott forward course you and the and Good a with I just John

the indicative to now? spot a time the state So Jack's I trough past? peak right talk bit a Did you've that the and above spot guess let market maybe the dig into there in following should of at between experience cost what of kind given say question. what markets about maybe your was and me historical you've seen of just frame how in spread spread seen Derek look we you And rates

Derek Leathers

don't that, start Sure, these on into Ken. plane. any the Well They by like fights don't I'll saying get anymore. days

maybe So be look carrier high XX at today rates at that, you There nice. you where operating look are as our strong to -- costs. as could several ways spot to Relative below even XX% it's if are XX they the belief that.

You traded group, operational ATA does should could think puts cost about average trucking. carrying operating I also and say, across really publicly Atria of strong out the

brokerage course, our and to work power-only then and lots in of groups. with of carriers And talk we

with unsustainable. many peak are are ways rates spot bought not simply They tough of looking cases market the of going spot be both it high overnight driver pay, that These a high-cost equipment on to if and in arrangements the just equipment, much expensive And folks it. are they're these inclusive kind high is today, that and going to lending of becoming variable at today cost now to different time. very of So during almost exposed of more fully many market. make it high-cost capital

go and I go. quarter we yes, believe a low that, prices. for said, ago, is prices low So it's do have low back. And they the to bounce it it low only cure too so can they Eventually,

of now. but are in exodus that's like experienced part of that going fleets, efficient of confidence isn't to those some and spoke lesser that operators are ending it large So sure and the some are up company growing continue they company to of either deactivations the we up straight XX as of met now weeks exit ending drivers right fleets those are

the down in frequency this frequency kind truck you're every simply the very drivers in getting accident step and sure the up work behind to step raise possible to bar a It's make best take opportunity in to service. comp on further wheel an of and quality

wait go better to So performance are these all forward, while market for turn. kind we we as of this foreshadowing

these of and of maintaining are can and it we completely equipment little got we've and snuff like, getting necessary markets they've been take and have as when that care to if And sometimes that year-to-date pay up watch you actively find price Another a time, slow to things presents like, reality more of that, is arms to bit got kind and We've doing when that And it slow our you have to things for to opportunities been equipment you have speak. more get will. that. fix. around you drivers we more we're time a

was about of part last your trough. The question to peak

through If XX certainly our they the there's of from historically months six seeing over up. I spot look when in bounce our further, come end you rates We're and on -- we and mean start months to no negative kind working more outer before go. but going belief start way cycles it's to XX

You from can't go lower here. just

I when settles think will the April bottom. the represent dust

QX is happens total have discipline We're in still low long be, where in you improvement. very basis, bad that come. The in up. like QX we'd that But inherit the than business be to the mile into question that's a for And that worse second to So live to about north or on of half. this to we're to is see than does spot some was it But we exposure exposed QX right? bottom before going to quarters QX. it total somewhere is a sequential on and to I'd of still I but really X% be with digest of south drag take how still disciplined our terms And little QX miles. it's in pain rather see slightly conviction going contractual spot have

That and play think It to a was relative it our it's was tough XXXX results. beyond. QX that as strategy. stance. presents relates our to But right I So spot the

Ken Hoexter

then my get left pay the is market? and on driver acquisitions, this guess perspective your there? rate cost you can Really you John, do the which integration I the off Baylor was follow kind from reduction ReedTMS just is is helpful there of if for is cost into and just right? potential that what with focused -- built side, What that commentary or when I on Derek happens

Derek Leathers

Yes.

last and you're yet years one a here I couple is can was what's pay looking forward. here mean, where that really dedicated year happened both people significant. driver many And opportunity with over really with industry as at pay for home So really of $XX,XXX you driver give a certainly wages but we certainly pay across cases the the driver the industry, in jobs and daily and that more jobs, really bit upgraded time go quite make than have to lifestyles that really, surpassed moderating.

several especially areas north and north accounts our in certain are of $XXX,XXX. geographic of of many $XX,XXX are And

point to more to a think is a to your things just lifestyle. of by market I you continue its got i.e. to other further. for unemployment likely macro up the that that -- on can't focus we way with try like And tougher there problem itself. isn't be it most and behind any We've pay of which So, more is solve what us, pay on pressure especially is way. labor backdrop employment to mean,

spot. One-Way stool in our working through aggressively We've of further for forward goes legs that I Team-expedited question how seen just is we lifestyle of as fleet it well. around the engineering expansion of think, worst moving yes, the we've it up. in goes positions especially of before and sideways the and been some think long now QX us really the the And some But cross-border well

Ken Hoexter

Best Thanks luck so insight. much for of John. it. the appreciate time I and

John Steele

Thank you.

Derek Leathers

Thanks Ken.

Operator

ahead. the And Wetherbee from question will next Chris come go Please Citigroup. from

Rob Salmon

back a the much cost quarter? thinking sense the of that to inflation. to integration follow-up us Good evening in on the to on you year? give It's you about how for on working first you. the forward the you're congrats and John, Scott's for costs guys. with Hey. half upcoming Chris. incurred I And guess, how regard Salmon looking Can Chris Rob guys retirement with question

Derek Leathers

outweighed firm you more the we you really We than Yeah. the largest able behind We I us. that portion a is integration number that don't can to experienced to on give far. be think thus costs. is it What have I of -- tell synergies that,

we're the aggressively cyber attack one integration about we the world is think very live you today costs we of upfront in here If the large on side. that

Werner. to at lot represent immediately and the up that touch everything cybersecurity of we we and standards a have expense we make that do from to sure work we and And cost here perspective there's so that a a at may whatever bring of lot make

few some was synergies That as related of there's most it was away. have it to of get the costs companies equipment and had, may those of costs right the it. do. the the things part There's because during improving equipment you travel that to a And the upon integration get and work pandemic. integration they how relates teams allotment obvious maintaining There's, of to that difficult the

that You it we have But to a can get of some synergies of larger right take. away on items. kind is a fuel other lot and journey

more all say integrating better look we're we then As those and quickly of time getting doing had we've more of at realized guess, businesses. I upon I we're encouraged some I'm each rapidly where by improving getting and acquisitions forward, with the at and measured scorecarding mostly, is these would synergies one the

of is, last like, companies I'd operating very, who on their this say highly very The leadership thing in to difficult market. it's we tough, acquired also this these too fair think be so teams. to are They

to were in quarter and highlight in the earlier space, shipments. year-over-year So those our a ReedTMS only both acquired is collectively in Logistics as highlights of business, obviously on business, a organic both for me as the of on then unique really the we I'll back point well that, the mentioned in the to of our call, few players individually truckload one brokerage, up

they're product So is putting market in the winning. out there the

share. has were fairly seen from margin Everybody gaining are We compression We there. some gross perspective a close year-over-year.

that key But most importantly, into we strongly feel about customers we're footholds future. very their deeper getting

question, that's views philosophical those your we with where excited. to I give you integrations. some realize but on numeric didn't I'm sit answer So I a

Rob Salmon

on obviously, do at That's some opportunity, come the you quarter? point helpful. on then, much first kind much year. And doing just the annualized following the the And up has How in remainder in the of in the million quarter? in would already did cost of you started? how $XX back much half second of How guys see plan

Derek Leathers

would so while to up, five, ramped I forward. digits, to it to because going. That, as get obviously, get starts call was a was move takes mid-single it it and ramp get we It quarter identified three say -- it first Yes. it

end momentum the Some of working start any of gain don't items day. of still really we're to those every until list kind actively But QX.

it that is, quickly hopeful think safe will But it half it's we're identify get still in dig done year certainly to from way to going a be That tough there. I'm lift more and $XX then a a QX to to of of number, here because it and a maybe about going deeper. million, lot build

Rob Salmon

Thanks, helpful. guys. Really

Operator

from question ahead. go Evercore. our from Jon Chappell And is Please, next

Jon Chappell

pipeline Thank of to you. a environment, dedicated a Good more in April. all changed little weaker year afternoon. how maybe has bit start more you wondering kind this Derek, at just a March to from the optimistic as the of difficult transition especially

more of you in growth second I as the said XQ, it to weak you're an not out to kind know XQ? then loaded be back-end spot Is you XQ XQ going and kind really to fleet of your optimistic half. grow incredibly a the a differences laid fleet the between going

Derek Leathers

implementing tell stick not QX. really not for kind Dedicated back dedicated growth in business is, we some is up the We're will robust. the I type a today Yes. of I'm in can And -- pipeline what new hockey half. signing be you actually But

Some offset to either of made separate by we've downsize. and/or things attrition be that decisions and/or will some that

QX, in back this to sight at line point for So year. the half you no could in the we and growth even really fleet of There's that growing see now the slight through second us be but wanted of about dedicated more our prescriptive being right half. talk One-Way

to there if of safer And was half, QX in but really thought flat in would be second about thing fleet in the it with growth the Dedicated. kind we was growth talk so,

continued And it area haven't I'd yet call one really remind to on grow we Power you the Only. about has spoke that that is we -- and

volumes, has conjunction month-over-month in to success. had operates It our and also one-way of Only in tremendous both Power efficiency. but so, that improve with And network in continues sort

And take us as our so, be to of part still Only forward, a footprint be could out We're the do And Only continue like. we're obviously to that to part think intensity future look going excitement portfolio. is find in still less the true more on to capital go ways solution. -- mix some business helps major we're forward. what going of of asset-intensive going Power with an asset be gaining about of it going and still as But further because we as about Power we'll player, the focusing Dedicated of to we the

Jon Chappell

be Power on is follow-up my actually to going Only. And Great.

mean quickly. it broker less and the environment? weak I something pressure, be where been Only, to logistics the cyclical through to Power really didn't growing if Power with was a stickier you proven little bit it breakeven closer really has could have more margin Just have these the Only

Derek Leathers

with say trailer It's sophisticated Truckload predominantly more secular Only conjunction still of Power part brokerage. a end spot expectations stickier. the around to I the shipper. and Therefore, It more to with view, Yes your behaves and typical business. as going but that sure. type to longer-term certainly are inside in business our with, it tend logistics view operates in service with their than that, a have It because tougher drop spectrum and would stickier customers configurations is more operate of of we for it's are One-Way behaves that compete pure load elevated operates obviously

resilient a stickier, where So, kind of as little trying evasive, little sits between One-Way I'm be trying but Power Only your through A more a the sits transactional it portray little But be is somewhere not resides. not same to certainly to Dedicated cycle. the market to I'm where to and better where Dedicated.

Jon Chappell

Got it. lot, a Derek. Thanks

Derek Leathers

you. Thank

Operator

Please question will our Bert today for final Stifel. from go come And Subin ahead. from

Bert Subin

at it and and current and career what 'XX Thank maybe on If the and a John you, bit. to really seems to you rebound to you're an about a going be potentially we incredible you that stage so going imports going looking you sort talked to And Are as prepared to congratulations XH tough, then backdrop, be are and first think the going setup is do if upswing? be XXXX that is fair setup today. the eventually is good? for rebound good Derek, rates think to afternoon, the of get the 'XX view, welcome can spot past is quite ahead of your of the to lot about Chris. to

Derek Leathers

Bert. question, Great Yes.

So, let me first think 'XX. talk off, about half second -- we

sort goes and some Let go of going economic there's background confidence to industry don't through strong is. me recovery with suddenly is banking and resilient start this around think subside. it think and noise don't We the that right We looks of the and think the consumer we suddenly corner all big roof. away what don't

all meaning is capacity do we and real of efficient and believe accelerating happening will the happening a relative is What perspective to what's taking cleansing it's place that or less operators that us less from is continue. around what's capable

to to our with We execution, is we'll continue customers. our think and commitment think model, pay later new to destocking service, the both and customer our share in will our our innings. continue take dividends, the inventory We existing

as run continues with customers And its run to in that so has its within replenishment course, our to we some key course think see network cases cycles. and you some start normal

that when to retain this but and our our think volumes, sit. for well we've We to only and for trade we in sets dollars frugal think as discount We increase have a turns. continue portfolio Logistics ongoing up the can opportunity neighborhood good the in very share live retail volumes not those ability where made is and down more they to living gains hold in that becoming with thing folks are to place the us discretionary

seasonality. and So is some the to going to and be unlike stronger are and cause move. stock people the that back half on to we still XX in some December will think Christmas buy movements for gluts a were really going return inventory that and still to And opportunities be see normal necessitate participate think ago of goods got has We to where and outperform year profound that. inventory and of

our you that's that's two -- a back half, we with think more original perhaps of that or still month all outlook from expectation. for have but put together and delayed why We optimism our

we and XXXX, into I foresee economic long up lived. personal XXXX it yes, it's better. this. mean, is don't view get sets you not I As that recession this my think much

not have through this, in to strong get see XXXX, see you environment will survived. people only the better start think I you a

quarter, in execute always against based traded make having long-term a set publicly And it's to sit a be drive up decisions a business and that. about the tough company our strategy short-term, as a We on a for continue we even here, strategy thinking run vision. to but and around to to

we're on business vision long-term years to we And two over three where month-to-month to going and see decision-making so in strategy focus this tree. a in doubt, when

we'll of stay So the course on. that's the course kind on. That's we're

As this really, really And is think I here, that long strongly for portfolio set longer-term well I in that's our believe as taking I'm up how view. when turns.

Bert Subin

imagine an seeing on you on things. give That's great. I service? other to update the us spot some just capture on a answer what you're cross-border bit stronger for maybe there continue Thanks of a business. remained potentially Maybe And Derek. demand? a your quite so that's much of that great follow-up the Can is near-shoring brighter than way parts a growing there, to

Derek Leathers

short The Yeah. answer yes. is

the We well have on to market spend to able to there capabilities. both all in Mexico if now so do cross-border money down van can temperature expand assets cross we playing will. as major dry and others. you controlled stock enhanced bullish our and and as very of ability cross-stocking invest to components are that use our business. and/or our Mexico We've our We down We've and on continued expanded there be our

into and standard intermodal. do asset we and truckload So both only out of brokerage power

So that's exciting.

more Our trusted been have the customers with interested some came are of are and days years We've of doing -- ago. in these partners us that us I for XX and with they've companies absolutely near-shoring many XX to they since telling them over worked years. Werner

And we've being your only if only and forward North-South lane to asset and power as do bear. only So network. brokerage intermodal asset business constraints. much brought only you that's other are And are we some on in the we're where so There without to solutions and can there's Mexico. look excited stayed impacting

disruptions Mexico. still with cross-border There are

don't major we that. bridges time. but to always that particular, at of the immigration international of the closed issues the border aside as have out things where want. happening not In of everything So I fits for El yet. we're We some and periods be caused We'd international see and some woods with trade, mean were trade get don't we starts like related other for of Paso. the stuff of to like see to set

across think the team experience, the here to I two and think long of seasoned But group at as having robust the with carriers about with partnerships I term yet look fold a Mexico, that coming amount run have customers same thing same and entire new very Mexico medium of decades as that management been I for of about the into really Customers the late. of some over most longevity.

I'm that competition returns we and business continue And maintained excited complexity looks of like be less excel premium going complexity, its has So pretty has that of its one profile that its to think about at. can we one because forward. to what because

Bert Subin

Derek. you, Thank

Derek Leathers

Thank you.

Operator

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

Derek Leathers

Yeah. to for our I'd today. us quarter first earnings thank call joining just on like everybody

ability price able pipeline While further cycle. both and had still remain a we acquisition. the to to and in organization dedicated our stable positioned volumes being its recent logistics enhance move certainly we on performance and QX our organically while confident through to I deliver We've the grow with remained across disciplined We're robust with for well share fleet. as our growing challenges, recognize strong of dedicated

meaningful our business and performance We sustainability from and our on only we an ESG as capital committed brokerage and the truckload operational superior by achieving demonstrated customers remain and unwavering while add team our have solutions growth excellence goals. to Power made that's progress continues exciting. intensity focus the to lowering expect our of for

with last superior the to earnings you. that career. long-term for the And Steele been an We storm legendary shareholder all generate and to drive you've and done use again weather thanking I'd to honor that flow cash word work It's positioned for end remain John and you've value. you well to contributed. by one all time free to Thank like

John Steele

you, Derek. Thank

Derek Leathers

you conclude today. call we everyone. that Thank with our And

Operator

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

You may now disconnect.

Werner Enterprises (WERN) 3 May 232023 Q1 Earnings call transcript