Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to the Werner Enterprises Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded.

I’ll now turn the call over to Chris Neil, Senior Vice President of Pricing and Strategic Planning. Please go ahead.

Chris Neil

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

to Please cause related presentation disclaimers well materially. the X uncertainties differ as may statements. forward-looking other disclosure actual Today’s see that earnings forward-looking as and release involve statements statement that the our Slide of on in results to the could remarks factors contain risks,

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

me begin focus and CEO; and On quarter against Chris strategy, on execution Derek today’s a Chris CFO. dive specifically a our President, results. performance will DRIVE an innovation. call update the with Derek into our high-level Vice a Wikoff, with President deeper Leathers, of provide during Treasurer our with Chairman, and then on will and are Executive second overview

closing then up questions will thoughts for We from followed it by Derek. open

call Now, over to I’ll turn the Derek.

Derek Leathers

and Chris, afternoon. you, good Thank

to Before like to true our we second to customers our Werner strategy. get I’d delivering members into providing and unrelenting for staying DRIVE core service an quarter thank superior talented results, our overview on of safely team the our XX,XXX-plus values,

solve day. their complex are our us customers choice are deep service among to portfolio most carrier to valued the every who of challenges We of allowing freight proud be and

would our capacity two we monetary second on X. be tightening excess With runs challenging Slide that, as and inventory XXXX the competitive first conditions destocking On continues its shared our freight results dissipates. earnings retail previous Fed quarter that of the course, with in turn and half our let’s calls, expectation to

and February May. in freight in moderating March, Following a weaker April and freight progressively environment was

July. However, mid-June, a in throughout slight continue seen there was improvement which we’ve

decreased X.X%. Net of grew quarter, Adjusted operating to challenging X%. margin $X.XX. range surcharges, to operating an the or guidance million. operating year-over-year adjusted quarter million revenue was Adjusted achieved environment, our Despite margin margin TTS long-term Adjusted XX% EPS $XX X% In income on $XXX XX-month by second was our X.X%. was fuel of operating TTS the revenues of basis, XX%. an our XX.X% a trailing operating within of segment second

as dedicated per customer fleet result is growth focus execution year-over-year leaning has which on performed through week. revenue and primary and fleet, of per Our truck operational expected service by superior retention strong customer our continues focus the revenue and in to into strength in This efficiency.

and focused anticipated, the elevated maintaining fleet freight exposure remain by conditions utilization discipline. As overall less spot with pricing was of We while available, long-term assets One-Way on pressure. One-Way market Truckload challenged significant and optimizing pricing

Logistics, remained and Within year-over-year. double-digit growth delivering volume strong, QX revenue

headwinds and earnings. factors to and with multiple gains, execute to interest softer progress That said, macro continue to expense freight collectively sequentially seen which program amid lower continue we categories. savings lower year-over-year sequential expense have on We cost contributed a in environment, inflationary experience and our equipment higher

a environment, puts initiatives in a business second which Even for to resilient. rigor certainly conditions and cost-saving our improve. on was us continue is compelling in to a freight excel elevated The but as our quarter combined results durable and with challenging, reflect that market diversified lower position model longer

QX XX while benchmarks to down segment, larger time year-over-year truck TTS quarters. revenue our significantly industry In compares the X. per quarters, has XX the week first last of Slide to net for declines. per year-over-year, in XX on fuel showing in grown move Let’s of this And

our conditions reliable, to XX%. economic with and Dedicated across retention service of networks of to continues easily a steadily perform enterprise premium who rate segment to for has large offering Our hard-to-serve Dedicated highly over grow years not and customers customer grown us all XX over truck, annual integrated reflective complex last and replicated. per look revenue the

Our ability time of per and in to over last eight engineer years. has optimize the resulted increasing truck fleets revenue dedicated nine

to mid-single result Within the Mexico, our engineered is being consisting outperforming One-Way of and business largely investments half benchmarks truck first fuel of build expedited durability our per industry Truckload net of despite deliberate model the business, This revenue is and also down in XXXX. effort team freight. cross-border a digits

in at with the strategy. we launched XXXX, move which transforming XTs forefront and our Beginning today strategy, to Let’s our do through the of business. Slide continuing we with DRIVE on X. is Innovation way

imperative in Cloud plan towards launched multiyear represents innovation technology leverage operational Our Cloud effectiveness. to and XXXX investment growth robust a Now First, and

business initiate We units, including launched EDGE and Reed, of organic recent by acquisitions, XXXX, full our talent scheduled to year. to migrated business TMS this other EDGE transitioning with Intermodal. of proprietary XXXX, migration a innovation. successfully We blend market Werner solutions best-of-breed segment brokerage currently the TTS our are one entire TMS and the in Werner XXXX. of plan of third-party we is integration truckload for our end In in

Bridge. In we were and to July, excited proud Werner unveil

tech-driven and solution latest shippers carriers. feature-rich designed logistics Our for specifically

smoothly Werner instant visibility manage of full orders with Bridge any shippers, from and representatives at quotes, network. to time. the of easy to makes get continue finish it book available will to our engage course, be shipments start their and For our And

further a and operations streamlines to a designed our for Bridge to Werner demonstration Werner commitment advanced Werner freight finding visibility a our also interactive revenue the provide as and solutions, reliable instantly, the booking is partner. recurring and For clear process automating carriers and recurring for of routing feature and establishing and carrier providing enhance Bridge freight service and reload matching, top-notch maps while of innovative and delivering to shippers. recommended carriers, ease guides streamlining

with have compelling expertise, to position large Bridge as our solutions grow to with large, we organically network scale small customers significant Werner alike. of brokerage and our industry and such carriers our When a combine we business medium qualified customer-facing deep tech-enabled

their to into launching congratulations associates Werner energy, next-gen the who talent poured I extend technology. all and want heartfelt this exciting time to

I the take like eyes, our first three Before over we’re with just Chris to perspective and presentation hit his the new experience, CFO, started. Chris positive moment I’d team. months in has a running, comment getting leadership fresh Werner, turn to and our that to bringing And ground a presence to Wikoff,

it turn And to with Chris. me that, let over

Chris Wikoff

With to Thank broadly and with today, operations, had I’ve and business everyone. to you, in days with great speak be tremendous Derek, opportunity the to engage Werner, all hello, thrilled to It’s and here. at XXX our for you is work I’m and can a the excellence firsthand momentum with operational and I here growth. expertise passion and for seeing together accomplish This at we look environment forward innovation a winning, Werner. that the in unique

Slide Let’s XX. continue on

Net revenue million, softer QX X%. prior X% flat down grew fuel despite were Logistics fuel net year. of was $XXX straight grew Second was revenues XXth freight for by market, over while a double-digit growth. nearly versus reporting revenue which total quarter surcharges, TTS revenues of quarter, the

of XX% headwinds. gains, macro respectively, operating and versus was a prior Adjusted $X.XX $X.XX interest Adjusted equipment the EPS margin expense was of environment, to decrease million, X.X%, $XX due XXX points, down year-over-year and ongoing lower was inflationary higher adjusted basis operating year. income and

our XX Slide Transportation and results. Services to Truckload Turning

TTS total fuel. flat our for As quarter operating durability down we of and the revenue with adjusted million demonstrated was reminder, report results TTS fuel $XXX X%, resiliency million. a revenues at net nearly net yet of second and $XXX surcharges

with the are we pleased the top-line environment, Given macro in TTS. performance

XX% X.X%, was points, the quarter strong equipment comp. operating quarter, Second adjusted $X.X XX% second of year-over-year respectively, In TTS versus XXX million equipment of part on was $XX income operating sale margin gains and a in to and lower prior year. of prior decline million, revenue million, totaled decrease a due $XX.X against a year adjusted gains basis or

as twice and and nearly three tractors lower. to prior over sold times we trailers compared average price year more were significantly While period, gains many

half, to million. strategy the our $XX values the decline the equipment is guidance was equipment we weight Year-to-date, gains of to of of paying further million XXXX heavily $XX full off compared year rest sales to achieved coming in more equipment $XX into expected are have million Our as first year. which to

expenses in down the improvements equipment our up per were gains X% various rate compared adjusted saw only in We XX% of operating year. TTS to categories. and modest net claims X.X%. quarter the fuel TTS were surcharges prior mile, TTS and expense which decreased insurance versus

the accidents. to per preventable but than maintenance and on year-over-year and low DOT focus verdicts X% cost claim, remains encouraged period and in and much compared same first our improvement. in down up benefits industry lower moderate year, headwind, was Driver to settlements pay the The increase Supplies continues for continue year-over-year flat We modest by we over quarter rise XX-year and to maintaining are expense an record was safety experienced in prior and sequentially. XXXX. the XX% record

We in-house, parties. capabilities work and our done the the an of trend therefore, we area, on the reducing are more and to we maintenance by of in are early results. lot We’ve encouraged seeing recognize as benefits improvement starting our are of monthly in repair reliance third shifting a this

controlling trailing we of range to to TTS XX-month We to a XX% and our are achieve basis. costs which within margin on operating performing committed XX%, continue annual

TTS of year. and compared steady X% second truck quarter XX. quarter XX% of and The trucks. per with X.X% per down fleet our million XX% generally fuel week truck count TTS now Dedicated X,XXX prior sequentially end, the quarter Dedicated down increased during year-over-year. Slide represented quarter of year-over-year revenue prior the XX% X.X% and Turning Dedicated the fleet. the to X% X%. We X% freight the year. during segment the in X.X% to At X,XXX TTS year-to-date. nearly averaged Dedicated Within demand up revenue in $XXX Dedicated with grew was ended was trucks average revenue or Dedicated TTS, expectations. to line represented quarter net up and versus

and well performing is remains Dedicated Overall, solid.

portfolio pipeline our enterprise unique across opportunities Our reliability large of relationships healthy strong our of and scale, remains customers. given

dedicated to we dialogue opportunities customers expanding about with seeing macro future monitor the continue our environment, although customers the positive. delays are remains in As some existing fleet,

One-Way down a truck X,XXX. quarter for of during One-Way trucking X% revenue to is was decrease X% per revenue year. truck million, count was down the week $XXX quarter second year-over-year. X.X% per prior One-Way average versus

with of us. behind over price in diligent XX% been discipline the have season bid maintaining We

As such, were less reversing per year-over-year, mid-teens truck our engineering uptick week quarter within of spot trend slightly multi-quarter further improved experienced and fleet miles mix, due we more velocity, in One-Way. in teams, One-Way QX a total second terminal downtime. per an reaching positive our to

portion XX. the by million we and Werner $XXX compared XX% at XX% We of growing and very revenues. organic performance strong Logistics second with Reed our the the as is revenue volume segment segment XX% total portfolio, acquisition full of year-over-year driven to now up increasing are Reed second double-digit largest Truckload growth, now pleased In as pre-acquisition and drove quarter, with Werner Slide from over year-over-year performance quarter Turning growth our Brokerage business. on completed the its revenues represents levels. the part Reed Logistics was to seeing our of

Excluding and the surge X% Reed, which volumes Truckload X% the and replacing in in year-over-year, sequentially decreased of year peaked increased project quarter. nearly volume, prior Logistics all

and see the We quarter. portion pool. Only solution Werner represented revenue continue alliance Only growing Power of our grow network the carriers the trailer Power value Truckload Mexico during domestic customers in Logistics tremendous our as cross-border and to a and both growing

business Final Mile the growth, XX%, show continues and numerous the reporting weeks to revenues quarter. during volume increased record strong

which up load. from make of both approximately and volume declined revenue, segment revenue year-over-year lower revenues, XX% Intermodal decline expected, per As a

$X.X X.X%, expenses. year-over-year, operating points basis adjusted down and margin income was Logistics combined rate XXX quarter gross driven was higher million, operating operating compression and margin Second with by adjusted

solution We Logistics broader from businesses and of less our the customers. are that asset-light diversification, seeing needs they intensive aligns and provide selling with capital are multipronged benefits our as enable

update On Slide cost XX, savings provide color our we more program. and an on

across expense As we enterprise. have previously management and around rigor embedding the discussed, discipline we are

program current inflationary in-year Through and some improve the end of process of and serving our of plus now of and headwinds, rate initiatives is operating cost-saving oriented In to collaborative towards of identified to the the reduce program cost-saving pressure savings pricing impact over the environment margin. is costs mitigate numerous $XX execution second identification, gears on quarter, Our run margins. have trackability million. we

categories of includes primary program four savings. The

First and other is initiatives. wage-related salaries driver non-driver and

a maintaining is lower training from strong and and Second recruitment pool. turnover savings driver driver

in supplies fuel updating through and and is as network and and terminal efficiency savings maintenance fleet, efficiency to the savings. lowering is our negotiating facility throughout Third capabilities auxiliary technology-driven supplies the units fuel efficiency benefits initiatives. other is in equipment of maintenance supplier lieu parts, in-house third-party and our growing and savings from that investments such from expenses cost This addition finally power innovations other in reduced repairs. And on improve

are more discipline XX% also Although And improve We’ll of of progress work the to realized over continue and second is the growth. there as to of date. emphasize innovation to the pleased contain the culture, inflationary to have do, pressure organizational future quarter, a savings. for lean margins mitigate targeted and while we end cost, investing with operational strategically we

or XX. Let’s liquidity margin Year-to-date quarter to flow $XX steady cash quarter QX at $XXX was Operating ended total cash revenue, flow XX% look flow, XX%. operating June and on prior and $XXX year-over-year million now Slide of with or was equivalents. was We gains million or million our second QX of million a revenue, up lower the Slide cash greater the reinvestment metrics in $XXX for compared and and total capital at pace points in XX XX% in of XX basis reflecting business. of the cash CapEx Net year. cash

are of equipment all the the receiving We fleet last after in years. not ordered two the up catching we

benefiting seeing well we position the trailers modern trucks our drivers, customers changes. safest lower also maintenance are of age will strengthens. us for and investment, a most and our emission market average the the With Having expense preparing increased benefits as equipment future while and

of free total second was net positive cash due year million first Free half elevated. million revenues being for X% CapEx a quarter. $XX.X the $XX.X to flow or for cash of the was flow negative Year-to-date the

We CapEx lower the half. be half second first expect of the net for the year to than

$XXX on availability Our million, total at liquidity cash including at revolver. and quarter our strong end was

the down Slide end On at ended of in $XXX first million the XX, with we quarter. quarter million from $XXX debt, the

second growth pleased of capacity and not end, end additional In with accomplished XXXX. objective increased This structure. maturing majority times by volatility times is to leverage term and for to for first one our from credit our July, we entering rate debt and mitigating debt of the the achieving the XX% primarily half at accretive long entering our swaps and until Our and rate our XX% structure provides investments over ample the debt quarter. outstanding our rate fixed was of XX% of was quarter We of with access net portfolio. compared into to therefore our our X.X debt long-term low-cost interest capital At remain XXXX. capital overall

to XX our capital Slide to on review Moving allocation priorities.

and fueling reinvestment innovation. continue in technology investing including will strategic competitive for while also fleet and We safety, prioritize the in the growth to advantage, business and modernizing

to evaluation maintain addition, X% commitment and through grew which in our our dividend, shareholders repurchases. to In share return periodic second through value we’ll long-standing of quarter, the quarterly

culture an advantages. opportunities our with Our our grow for to also align relevant and prioritize and acquisitions and size avenue clear and Accretive organically where particularly remain within remain compelling, growth opportunities of Dedicated businesses. synergies asset-light competitive

and integrate is with acquisitions have our that line to four date, in continuing executed to we expectations. progress the We’re

committed net access are while low to to flexible financial strong and maintaining liquidity with leverage. we preserving lastly, and And modest a position

to for turn of Derek XX. assumptions an on market outlook for I’ll the second year and update on the it half Slide our back modeling

Derek Leathers

Thank half you, been market in of challenging freight XXXX. has first Chris. the The

we competitive logistics moderates, a particularly margin pressure continued volume more given remains of pricing competitive growth. we have with a anticipate very One-Way that continued spot we disciplined we seen July, solid environment. can gradually into remain as truckload. opportunities capitalize we mix dedicated on. modest prolonged rate a in marketplace, and Dedicated improvement demand signs as flex expect steady, in of During pipeline will Despite

on of larger inventories of Fed terms remain second Fed the half reports We complete. tightening data our of lending. the basis. themes cautious ongoing returned in to destocking restrictive retail spending, voice and about consumer reflect continues and look collective further Headwinds still versus north the given that customers goods points the target remain mixed well services. year, levels inflation of to potentially behavior is we inflation-adjusted with for to have largely that As And indicate an pre-COVID impacting particularly

expect truck we XX market. data At deactivations and weeks consecutive freight be Further, smaller freight deactivations over period. reports pace will carrier fuel exiting exceeds we accelerated for federal have now capacity cash net of Relative carriers net capacity, generated by been point, reserves that FMCSA from XXXX this an there the lower the XXX,XXX freight market, believe and supported costs. peak DOT stimulus

reserves freight reach point it And reenter factors. is given more financing market carriers to gradually Accelerated imminent of other a unlikely depletion. seems cash as we truck that the improving much even for attrition believe and higher environment a in those costs capacity

positioned more well more reduced freight momentum normalized are demand rates. in supply, to to benefit from We improving lock upward the at and contractual

expect We the equipment in demand used tightening year XXXX, the equipment we moderating pricing continued $XX and reached range declining to to first million. the truck million expected our as for gains $XX full For and we are of with progresses. half market, year the gains for million $XX

We than will tightening. $XX to year last as year million pace of expect interest net be this million $XX Fed a the continued higher of result expense

the earlier, mentioned Chris our have fixed. to rate fixed effectively floating adjusted debt As XX% reflect as versus we

XX our quarter our With second performance to let’s review and metrics. to guidance that turn compared background, our updated and Slide guidance

our quarter, XXX we as size fleet fleet challenging resulting in year-to-date the our truck adjust to decline conditions. to During the second adapted X% declined trucks, of freight

full X% our year guidance truck the from previously. X% down to lowering are down to XXXX X% up range growth we to result, a for X% As down

greater as million that increasing at the upper We net $XXX to $XXX our the Chris mentioned. the $XXX fleet, of end year to a guidance for long-term million are range of refreshing million XX% of a net to We of anticipate result CapEx from will be $XXX CapEx XX% pace this as our of to million revenue.

increased revenue which half full guidance range, per X.X% per total end remains year-to-date. X.X% X% year-to-date, range. truck down is our our within per guidance unchanged. upper This year mile at the second first decreased of Dedicated quarter Truckload and revenue for week is One-Way

Our guidance down range for X%. third is the quarter down to X%

Our trailer quarter XX% the XX%. maintaining the was rate was XX.X%, and average truck the year we in of The range second quarter respectively. and and tax X.X in of full second fleet are age X.X, to

Turning to Slide XX.

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

that continue earnings. fuel durability to Our growth, clear approach advantages competitive will created our has and

We with top carrier public associates have significant carriers qualified scale within a truckload as XX,XXX-plus thousands five and X,XXX nearly trucks, Brokerage. of

We are over including customers uniquely retailers, to freight space. in complex positioned U.S. with large largest service to other half are of customers, in needs verticals winning of most enterprise addition in their the the growing who

the cross-border selling to of nationwide solution across our dedicated small enterprises growing have integrated plus offering, and Mile and customers medium-sized while branded benefit We large Final broad Logistics solution Brokerage. within with share also our highly

the Our franchise comprehensive we Mexico And footprint in the within of deep as of largest market. XXX-mile complex the cross-border and XX% have terminal in network population. experience U.S. truckload nearshoring puts in increases, country Werner reach this across operating

in both investments technology the customers and from are of operational enhancing We benefit associates. our primed more we in recent have aimed at a leading long experience greater and history and innovation, of to effectiveness

strong safety winning customers. We award-winning our portfolio in of commitment turn continue service, embrace retain qualified talent, allows out superior and carry that retain to which and us our including attract to drivers to and top highly

This coming number our I’m extremely XPL year the is recognized of and Inbound We provider, a Survey experience best-in-class Excellence top customers. for XX team. to annual a our Logistics in of testimony were by commitment consecutive six. as recently magazine our at seventh being in a proud providing recognized

call turn over I’ll point, operator begin Q&A. this to our the to At back

Operator

Ravi question [Operator is Please with go ahead. Our first Shanker Morgan Instructions] Stanley. from

Ravi Shanker

color Good Would gentlemen. afternoon love what on are Thanks. you. here. Thanks telling your views your for the customers

the of how of plays back please? normal out do of think into of cycle you kind You going year the inventory here. XXXX, levels kind back hinted to coming about over half and the Kind

Derek Leathers

it’s obviously, in is nature, a the weather. them we’ve meaning thank significant of behind largely dialogue Ravi, I’ll each bit a Yes, with, is as the But localized in majority have different I of guess like recently you customer little that destocking them. on indicated had start a the the our with subject, for setting. question. It’s customers, bit

backdrop we encouraging. data from also all So that They’re see. of that’s encouraged some the macro

to enter reports of than that, to else, what Labor arguably is people than normalizing it work in with comps to up easier little. space. customers expected. lot And be to Those was better nothing folks seems their seem discount are of retail as a be Inflation well. least if winning holding relates perception are at it. sort Jobs and waning originally better a We we’re starting faring most.

back clearly, together of we’re half, So as that tightening about still that us. But say I’d they. as we put all got think and cautiously you’ve are the ahead optimistic,

of lending You’ve got some backdrop. pretty kind stringent

to So us like but set the QX seeing what of ahead it’s could more it QX. that of say, some innings up we’re difficult difficult still early headwinds a with in appears to me normalized

Ravi Shanker

progress to super the have And significant year, pickup a as you the you a to some a in been kind there. insurance? guys I comp. it. insurance the think months. cost you of time any of items easier market you for few some this line last challenges do in Obviously, some made kind had good of And think the Got at, a talk we about there Can switching an potential little cycle? side. of That’s you’re How in maybe particularly helpful. offset bit gives cost recent looking changes inflation which have follow-up gears about

Chris Wikoff

for thanks question. This Yes, is Ravi, Chris. the

and In flat of was and did some year-over-year although insurance for and prior on terms – quarter-over-quarter, peak a claims. there year insurance specifically QX claims, admittedly, we see the benefit

challenging of expense But of in for the of some is in the the the that’s year-over-year industry. So quarter. an still somewhat moderation terms contributing comp to that continues be this category just just

of claims is down. down, frequency Our remains

positive. be to continue metrics safety Our

industry It rise broadly supplies unfortunately, it’s per That’s maintenance. insurance focused given in That issue. some be are that X% we miles, our was was of elevated other trucks last X% are lower into we any And XXX,XXX cost particular dramatically. the up to It continued September. drop there moderation still peaked year. coming and hit we’ve over broad we’ve was this see than it of couple the that By category in time But the March, and last of month low can and metrics And of low hit that year-over-year, but for almost June A quarter-over-quarter. our a terms over then claim point year. seeing hit we in a just that the a claims on. are two-year down very trucks terms and been warranty. out difficult point, XXX,XXX miles and

a So maintenance. impact knock-on and the that to has supplies

are we repairs that thing getting and building seeing the of terminal some benefit and maintenance throughout network. some period other extended from our capability in-house here benefit traction an from our is for The seeing

the those So, in-house terminals in that to maintenance. from we’ve and mechanics trucks and actually in been some trends, down. repairs significantly spending hiring building developing encouraging several And to means June. particularly was That for route more now seeing the months and fruits capability, that we’re see

seeing decisions term top long fuel a from more amortization and the terms little are of intangibles think of some and in on fuel-enhancing are some which has being good margin. from depreciation that in we comments. couple savings we some impact are our we’re about and some that of that That’s equipment. impact the fleet newer those our acquisitions categories that There’s efficiency But bit categories one So on elevated, still a talked of program, encouraging. scripted cost

with are capability as to part maintenance Mile. about our of have we Our talked in in we going count from head and It’s acquisitions. salaries, still that Final of the made we’ve been on And to also non-driver forward a in but wages terms building opportunity more then have in But that bit the in maintenance that elevated as investments pace, well integration. some category forward. again, elevated. benefits in-house go-to-market head have And order is move how still this then investments, strategy there work past some more we do we’ve count

But growing that scale. elevated. bit to a that’s we’re So – that business

there. excited for we look that, We’re about greater and profitability

Ravi Shanker

Very you. Thank helpful, Chris.

Operator

is question with The ahead. next from go Please Bascome Susquehanna. Majors

Bascome Majors

evening. Good

dedicated with about both fleet the think largest other or customers how of either growing you the and there? engaged the you. business private or strategically efforts offset you is have or from As just you your talk strategy other and in-sourcing can to some overcome over to customer impacting business stay that about that Thank time,

Derek Leathers

Sure, for Bascome. certainly that that us. solutions has impressive. moving the with They we put take sure largest about interest And our I’ll as a making think both as in that the have start And one. have customer. parties I’ll in we both are – such, some vested place are them of excites sustainable impressive, growth Their been will it’s I remain us. forward, something obvious.

going diversity to growth portfolio. avenue as because, we’re the to within you stay We can’t or disciplined for exclusively be that know, that them partner growth our

disciplined is. geographic but going importantly, customer as any one both probably We’re most our what our well with diversity representation to approach, diversity, as stay to vertical

executed all strategy. With We that closely. said, them mutually very a work it’s with

with actually We’re growing them.

makes to opportunities have addition in where they that we’re so But strategy we private sense a it aware have for well do that. to continue recently, a us. to Here fleet to have

more exposed We private have believe of They many the freight. better I to other it in fleets, Dedicated are speak. that to better of educated makes there, their capacity. side. for they’re out they buyers acquisition because often weather have And customers yet so customers who better understand become side and and operate by we

me of all things to there. lead in – believe those good we’re That shape

ago is across making continue us multiple continue some verticals, forth anyway, force that to on going to to diversifying We’re we’re plan have to time open sure going dialogue. long, it’s what what good really and have a we set geographies which to But which expanding is existing. been more we’ve service that deeper and at new long as quality customers time, a well growing and product as multiple for with to the is we offer broader do

Bascome Majors

that expansive that. you of one you’re them despite you on the you Just in for to that fleet, trucks middle make to say sure made touch answer. I I it. customer? heard this with wanted just Thank growing point still their wanted that growing Did

Derek Leathers

Yes. I’m growing fleet, customer, saying to as we are still we opportunities – up this new pick with have opportunity they their as yes.

Bascome Majors

Thank you for the time.

Operator

The is ahead. go Elliot TD Cowen. Please next question with from Alper

Elliot Alper

Logistics talked stabilization back out on outlook Final in Thank and between out you that Great. you. the maybe Can but some the or Truckload, the about called of the Mile you margin half pressure Intermodal? XQ. Maybe in in parse year side,

Derek Leathers

with I’m my mean going Truckload answer. focus on to look, Yes. I

of As what it look, organic Brokerage there terms the revenue importantly. volume, only amount largest outperforming held relates on we’re holding of we’re to not more market we’ve that really serve is, And to Logistics portfolio. the business and probably on in proud is our really reality, the of portion the and saying sort very that of of

at our from the acquisition with but time, be to since in and ability time Reed grown having capabilities But not further that we’re on their acquisition pretty space. just scale the bullish of that

efficiently platform ability as love our we as more to business. grow our also We time that to where the we’re operate conversion over within EDGE it relates at into and

be that pressure does All there’s offset as market to obviously turn, space. this in by going the non-asset is of that the reality

ability that the with to pressure same You’re perspective. see always isn’t that side from going to sell-side relief a gain buy synced

to be going takes our there’s so that. through And way and as work of puts all some we

an Only One-Way up which of in pleased the integrated remarkably well. within though about within really especially we’re is is product, Power product That holding the network, Logistics product. What particular, is resiliency our

more our bit to on – a operating freight very exposure to our have to via be that, Werner ability give format and as really lowering a asset-intensive time. Bridge optimistic at seamless of give their and we’re to and little continue while partners but providing ourselves a our able digital less same customer experience customers We ongoing the grow costs

So pretty I outlook. about exciting over next, it, three to think call year time two as business the that

Elliot Alper

it. Right. I appreciate you. Thank

Derek Leathers

Thank you.

Operator

is Stephens. go The Jack next from question ahead. with Please Atkins

Jack Atkins

afternoon guys. taking Okay, my Thanks questions. great. Good for

year, this recession understand of think have half to one year? And anticipated. Derek, the XX% still has fourth bottom context the margin for do is So for want take I so, in feel be that the as of I the sort more need better if you as what this a this to like to into the could freight back of you guess much don’t end do But sort you know, if the quarter that we I there? achievable been range, is than think head to of I sort to anybody of if this you Chris. But TTS about challenging here XX% trajectory of get if longer-term range see or able

Derek Leathers

with that’s lot a over some of still those three although season, may we we’re variable. price. Interest have being of the to to values for bids Yes, quarters that got used that rates debt continue in question. of bid the through that through they guidance work Jack, where continue reality of our it our on that’s is portion QX. Hence, are There the challenged. the way relates and thanks deal and implemented updated got go as to headwinds to the Clearly, to to declining We’ve we’ve going be volumes. truck on

I But the side. mean making to of we’re progress cost through. think a there’s on lot things

half finding the and serve in in efficiencies further for Dedicated we work The positive even and and We’re pipeline is revenues of go productivity efficiencies in to proud volumes, that on good. the we’re time gain first we’re our for is seeing in Dedicated sort the One-Way be there. of the implementations year-over-year encouraging. encouraging. that We side, more yet and do are quarters optimization of some to to multiple believe opportunities have in network. holding frankly, – The second implemented one relative positioning looks And to

line or guidance. may for of to belong. it of we live, out course believe two. and the we’ll drive a But long-term where feel very where changing the from worthy We our year, term, challenging. it’s fall forward quarter don’t over Bottom we us I That’s of we’ll still comfortable. this continue That’s there. long

Jack Atkins

you’re I’d last appreciate context to of love the kind you more going comments sort and Okay. for Bridge bit second the to question, get And back there. you of Werner thank that, into I talk question questioner. about – No, as or I last for But Derek. prepared both but to you little the a my the guess of within of us within this Bridge doing kind journey, context an within the go-to-market within what strategy Werner term? more something your help is technology also of this TTS about of longer kind really think that think term integrate longer about can mean means – this is I business what integrated broadly, for Logistics? your

Derek Leathers

Sure, that. Jack. I’ll do do my exactly best to

us more overall you the MasterMind the EDGE of visibility about the of got next sort will, to TMS with get on platform, – customers’ years strategy. before continue the on the of in and broadly our platform strategy we as the integration, core all that if backbone allows we flexibility thus I that think really and Werner land with kind to of execute over That’s I of to needs. back couple how up talk full one to with Bridge you portfolio

us make within efficiently be to Werner kind sort component customer customers that step come highly forward and able this That our a of with especially at human the allowing still us of midsize where to space. small Bridge to to is that’s service in digital that in a operate to puts engagement that customer expect. brokerage with large required, a position, support have level,

the pure Werner all Power like analogy brokerage brings bring and But of be sense. would nature brings. is mind. and plus brokerage, an fully and And that effect that within in Werner Brokerage somewhat to Only least the network. Only integrated variability asset-backed that of Power Bridge at flexibility versus and is that going qualities that similar all Bridge in attributes my

the and that be where out in Werner pure track, be not is to more that tie and tie is their that utilization up it the necessary it brand That’s transactional much to how to not use to inefficiencies means, brokerage and – more the business. that but efficiency, ability reload, maximize their network engagement high-level We kind do marketplace the is we and required of purely minimize who are. give that predictive ability is of able we That’s able and that human digital which still lift expectations human AI customer to engagement visibility, to people to and what want less customer-centric. to

going be a is journey. this to So

over path quarter the two, happening but not It’s that or excited call or we’re journey overnight months XX that today. in about. next on it’s We’re next, it, the really a

Jack Atkins

Thank the great. you That’s time. for Okay.

Operator

The next question is from Jeff Kauffman with Vertical ahead. Research Partners. Please go

Jeff Kauffman

at if last Thank looking was an year. this dropping how if differential. affected dynamics marketplace bit change situation could to just I’m per you very it. XXX haul in – I just But can the haul part was in similar of I length revenue much. a about you with length little backed the Dedicated. miles One-Way talk Truckload, And XXX I something the of you in caused was wondering port imagine year, about XXX big in the that in of the just us that big drop there the of curious was might idea mile? up, that total much have give that

Chris Neil

take the question just our as Chris your that TTS has, contraction – of related. industry Jeff. quarters, things over haul the think Neil. several with to of different length having really Dedicated Yes, is one, I’ll a rate, of due last number been This We’ve regionalization is I the

TTS. haul years, regard specifically Trucking continues regional to last the So what what more fleet do And One-Way One-Way footprint much that percentage our shorter than of two fleet our got a ECM side. than we’ve is as couple Dedicated a average organic on length grow acquisitions on with Dedicated had. of of the a then we to had over

so in little acting resulted bit together all haul. lower things length And a have of those

increase overcome or did but will truck negative Trucking sequential declines trend miles that to this we quarter. declines in occurred You had One-Way significantly, sequential year-over-year year-over-year multiple this One-Way were the the end up leading we notice on per quarter, finally to able a that over Trucking. quarters didn’t It

And headed that for cross-border reasons different a we utility of on built We’ve future toward in we’re here. segment think the Trucking number do that better Mexico. One-Way

We’re three relates we’ve fronts, focused on length of expedited corner focused on all kind made on which engineered business, I those as of to think, progress turn enabled the have us And business. to, it we’re and of haul.

Jeff Kauffman

XX% XXX, reduction that appreciate but I One-Way a length is down of that’s almost clarity, to haul. in just Well, Truckload. this XXX

So of going the to you’re a at showing That’s downside, call it, haul excluding in for that in I’m accounted revenue change X.X% what wondering change reduction. here. I length was of total, much X.X% this how fuel. per out

Derek Leathers

and heavy, further belt tighten we Yes. the to which get to during and random this our application focus Well, in the shortens to heavy the of on less clearly, downturn, as the as engineer of haul lanes length look of a engineered fleet, been assets. more has less try and is

length higher to someone per shorter going to a positive the rate have a because to the rate. is going of to see You’re mile haul offset carry

on in and a why, utilizing revenue assets terms That’s and metric often to ultimately, we the per per those analyze trying revenue more sure truck One-Way back make will we’re we’re look day constantly it’s that of efficiently. talk week side, actually, of or per

the larger of translated, prepared now, lot our pricing, frankly, were felt of with remarks a portion the we we market. right Frankly, in disciplined and to the to talked our We a indicative as being at in that fleet fleet which compared sustainable season, about the not rates that bid not very went were pricing stayed that prepared business. do binding spot willing We necessary contractually serve and to to we discipline. reinvestment that to

the for what shakeout you you market. in discipline higher see price, those so turnover One-Way it, cycles, several more in in the bid bid in mix the was And little whenever unexpected But was bids change your experienced the in a last a call a award. down – we’ve hold not than

than what integrate the you of And XX% a that difference. makes mix. hold You business different chased have like, sort that’s in amount about of would have it’s right into process. it And less spot environment then duration right the for with might we’d exposure low than we place through and with and that rate revenues but come we contracted the out had engineered this new think accept but we’ve of been bid more the a

Jeff Kauffman

you. Thank Derek. Okay,

Derek Leathers

Thank you, Jeff.

Operator

ahead. The Barclays. next question Please is with go from Eric Morgan

Eric Morgan

for your good X% for pricing, year. on Dedicated X% ask you’re half. I to X% I guidance specifically up for Hey, taking in wanted question. to first know the Thanks the afternoon. my

back So half. implies the obviously midpoint the flat for

wondering negative dip rate? there that maybe are what and into discuss puts at So and the of XXXX takes outlook. bleed of And the if just even some could you could kind the that chances and early

Chris Neil

a years, I Dedicated we we us has indicated, think. of has mean a truck I nine Yes. been while. for And increased eight per as the strong, per week rate for last resilient – business Dedicated

positive year-over-year as to multiple proved on first that year, are able I again half, through the do And maintain basis. that X% to you that up position we being a a So cycles, this mentioned. in through we we’re good think

result We we’re the But a head do lower year-over-year we half slight half. into inflation. one, top efficiency and both might time, but some result mitigate as in line. a utility second with business to able contractual in comps something that’s that improve that do the escalators second improvement some have increase, at in the contractual some some of will will well as or as that We have with a terms year-over-year Dedicated help same

customers percent between ratio in to to enables to we the productivity Dedicated, with business customers, have their integrated that us closely eke business work And to out a think with we in really and become work how continue retention improve do continuing so the XX-plus do we’re we gains that. And operates. that very

Part the of of and per of it’s part line. in gain truck on part in it utility. top is is then efficiency, in revenue So

drivers partnership really strong offset inflationary understand as some cases, We’ve many continued got with relationships. that the just the in impacts their of lot of inflationary many and customer They staffed they keeping a helping in. in think fleet we environment professional the of are rest of I with we And with this we’re – during importance cases, customers environment. year tough And go the pandemic. environment. we the last with benefits as half we’re enter the these seeing a that prior year I tough stuck really And of through think year next good and in partnerships the understand through now

Eric Morgan

run we sequentially here on operating maybe on a in income? a digits reasonable be on helpful. would mid-single margins in quick income that. thoughts Logistics. there op or Are just follow-up kind rate And Appreciate Any of the

Derek Leathers

Yes.

starts start the the continue offset able is I the to out think productivity we’re op that utilize is some of in the cost ability quarter, to side reality by a some belief on eke on income the our going more to represents to in in burdened side behind of the advancements to to that in pricing. equation, sort spot gains, sell tech a the of it And as is relates some buy the through the enter side bottom headwind in you as start market to Logistics, work through that worst us. The been pricing that to as found that and to pressure customer. fully be – and it has bounce back the by you into Logistics basis determined then that

a savings a very at think feel a particular, maintaining share, serve, transactional into focus quality if in in efficiencies but recognizing cost I times. where and on customers that portfolio, to growing we’re business, unlike finding multiyear, more focus nature, not is So that holding very Dedicated that’s sticky, the has at on it future strategic disciplined gaining today

were we that the if found and right And more would sustainable if have, be And because I Logistics, mean, we’re at and has, in that rate, spot it – seeing well asset a market. fact, or in that that side be capacity means could that business the we’re in for Dedicated, fact, dissipate so ongoing I the in improvements apologize. likely pressure to started there bottom, happened, simply of rapid bodes in

and takes segments. across will operating be And the various puts so there

Eric Morgan

it. Appreciate Thanks.

Derek Leathers

Thank you.

Operator

ahead. question from with Bank. Deutsche go Amit is Mehrotra next The Please

Amit Mehrotra

recovery it’s know about look the below. Hi, versus a Chris. below if TTS they’re I Wikoff. Derek, real I earnings, this a from earnings, guess If is, path XQ think, look Welcome, Chris or Thanks. sorry, at XX% at You’re now year the we just XXXX, cycle I pre-COVID look Hi earnings We all guy. Derek. tough here? what – question XQ trucking levels. market. does

we the where look doing a time. been for from trajectory long like this What does You’ve normal really are today?

it time idiosyncratic ago? to get It you just guess to COVID couple – simply assets. of brought terms exceptional is freight, a take the majority in where Dedicated back of business, inherently were And several And years kind exacerbated it’s I years just given the of of obviously was to or in less which going the guys volatile. is that by it’s

just to understand. I’m So trying

look We’re in to pre-COVID or back the here below does recovery opinion? pre-COVID. What from trajectory your

Derek Leathers

old, I I appreciate question. Amit. think than but Sure, part the you. certainly was the different. thank this cycle where Look, Other is implied I you

closest a is – all The freight as don’t the different. it as give was go. in would high high as seen comparison You’re cycle XXXX, right. was, as the be but Really I We’ve this I XXXX fall was where the XXXX and to ever XXXX XXXX. it seen robust think in was further cycles, was would crisis. financial where we’ve several

during to have surprising that So how consumer greater the what the isn’t been how idea pressures they me those than or were much pre-COVID COVID given the the years. – behaved

would from the that as could margin line in of that in certainly I analogy there about Werner, levels market bottoming best The think indications from until and a this indicate have, is not here? and at use watch rate point it – out and that see of pre-COVID closely I That’s seen that just but from But out is think kind you playing those entire would spot perspective. it. today, the there me, pre-COVID metrics to I step-level insurance we also change multiple fact, do we some condition industry. a are into how I the eaten across

rebound sudden here. expect dramatic What I and is don’t from a

a carriers that into slow might during leaner to how that of We’ve carrier this for them seen cash survive exhausted. We’ve I was longer is think largely months and done think analytics of climb. as abundance into come exist. them a up. we average coming But allowed that had lot one, we many the downturn that like internal allow it’s what we never think are time. now that on months And those going accumulated have this an to as to tough COVID be market a this with

with costs as you find bottomed rates see than now back and might here, aggressively the ever. although got They’ve Rates, prior expensive moving up fuel have rise. seen looking from and are as equipment. environment interest Now rising or they And their on an not up we move themselves to in higher bottoming cycles. finance

put two here to returning You three know, I we’ve you years. out do where believe together, to I recent before it’s not all us in see been that years

making approach building, taking to having of disciplined talking margin our focusing and burner, of all the I about the asset equation, what operational execution above side led else. on and think we’re the in instead the that fleet cost our that bit growth of side work a focusing more much our and side sure a sort on on our the stays bottom on maybe little and on putting improvement engineering we One-Way line course, the

in logistics, to think tough most. gaining and The peak share of for see start we’re season continues, has consumer holds bid as up, I it’s like our improvement we the showing within market year. is us We turns. One-Way is the been – predominantly the tell. opportunity and an in cross-border I that there if and turn that as And we When here surprising close us. that as do a into year over. having hanging franchise think franchise is out durability But ahead next thing is all this well happens that of embracing while our still I the to in precisely, bit obviously, If to positioning the success Dedicated season as

Amit Mehrotra

follow-up, little slightly. quick do the I in leg tiny may. got be revenue another kind a bit down sequentially. the Do It just and and Or One-Way then your recover there? in take we up guidance, now on from at based in And to gains Yes. flat another holding OR you a the obviously, down leg But Are both if fewer should point we looks is line like Dedicated OR XQ? of where here? take we

Derek Leathers

the right area margin decreasing. be is on The big in will used a We – unit volumes it’s role play the now. that to lower is know Well, will answer. gain gains per know be a and lower. We gray line going market

the we mentioned, able portion immediacy of we know also as And currently negative, the with improvement we’re previously the the market what that of side opportunity sort gaining We the upon with we have is I’ve this spot rate which to be is outsized momentum quarter. in if a as cost equation. in – to fleet on see of improve an some

to to and – word if Werner really you flattish back At QX, this is describe point QX the historically kind look it. of at best

are OR. I to And grind think to as this And also Dedicated, not a looking fleet, fair got implementations to through One-Way has that that in migration that about be from will the have this that the One-Way it do to we’ve if opportunity on exactly we certainly going of more we this got that’s well. tell to year environment. pressure think way off some take fleet the I grow to year focused some in is that But through. can unknowns team that. you doing

Amit Mehrotra

Thanks. sense. a it. makes in Thanks Yes, Appreciate See weeks. a lot. you couple

Derek Leathers

thank you. right, All

Operator

from go last today Ossenbeck The with Please comes ahead. question Brian JPMorgan.

Brian Ossenbeck

of drill taking rather. mentioned you’re think I you Do spot, of for or some that around the that that with can which back start spot Derek, shorter-duration if So does maybe XX% the the expect the inflect. of as mid-teens, the point, market is evening. latency about upside when and well you about to talking go and maybe that and which in speed question. you turn Thanks have the to just just benefit contracts you’d inherent Hey, Maybe, help? think about extra us could there good sort down with One-Way help on

Derek Leathers

Yes.

that So to cautious can move fruition either volumes. as opportunities within actual fluid essentially the and optimism to their in mid-teens the up support and/or we’re spot through with is about comes spot and on in immediately needs customers’ better side, right capacity One-Way, that

those time. That’s some within positive the in encouraging. far. we’re So movement We’ve even thus of seen all July and dialogues

of obviously, as remaining and seeing our some As trends further only into entrenched capacity. half the to on renewals, get it with environment relates year the contractual the we’re based we discipline is back

speak allows that are countered, optimism taking being are with that some effect there. half the reality we as for and course, first So bids in some quarter. of of the actually the implemented Those

play and season The we normalized yes, of active percentage more at playing biggest role, the the role some – are a a would And with even that So given be movement – have that fall traditionally mid-teen out pivotal at. up. fleet come we is would a peak well. that significantly two but they fairly can moves in than biggest of muted to cautiously make as seeing relatively we’re we’re spot would or activity XX% optimistic one and within in at lower operating that where rates operating moving

don’t that going we’re to So – things to that’s this good tough in want up that to quarter – of There’s still or ahead incur and a two, I clear. still encouraging, make lot a we’re sure fight fight. I that a look but put we’re for us of that

Brian Ossenbeck

side, more follow-up. much talk in a the you to just program, savings you little And cost a of structural think might more run where Derek. $XX of you these million variable? even Thanks self-help the can from are Understood. to on And terms actually, the bit maybe about I currently Chris, are maybe rate. million. versus what be number How raised $XX volume

can you Thanks. those. address if So

Chris Wikoff

salary quarter, target the do have progressed it. rate we is identified the Yes. Over earnings savings that and through and and over realization for call and XXXX $XX in. Multipronged Hey from changes, has new and million, a of changes, to The particularly or combination driver targeted happy through about up Yes, It’s makes for terms be and through head non-driver Brian, count in of is $XX in-year drivers that. structural coming last realization. first just wage half. that realized the yes, XX% whether the million. what also raised the

train savings to pool, into turnover. and turnover. expensive in just the from get onboard place and spend It’s less There’s driver having overall reduced on lower by a having driver to recruiting them see turnover only and impact

more turnover, significant there’s reduced having savings on and So as there less a as focused strong just that on well recruitment. driver we’re the pool spending

that margins Then opportunity we units with and investing invest improve believe other seeing looked going certain in other and maintenance, a has that we’re we fuel that efficiency, earlier. gallon. a topic per at we mentioned data, forward I through helps power – in efficiency, just to we’ve things is as and as And be initiatives that fuel then whether a we track that the big equipment that in auxiliary increases supplies equipment miles certain which in

where we’re going. the And across where we about So we’re it’s and good really process Its It’s multipronged. organization. oriented. at feel very

Brian Ossenbeck

Chris. you, Thank Okay.

Operator

concludes call comments. session. sir. the Leathers, will ahead, This closing over provide Derek go now I’ll turn Please question-and-answer our who Mr. to

Derek Leathers

to and joining quarter nationally. consumer a staying on Dedicated I held environment, price and strong. Thank will on represented to And like call. Inventory disciplined rightsizing on extension our holding thank well maturing, up to has disciplined We’ve The in labor just remained Logistics. while the second execute. organization and tech is our challenging our complete, would And our lowering while as is cost everyone is further approach capacity freight of an is us investments up the remain focused for growth gaining are market across destocking QX largely earnings our industry. already you. momentum across

him to was entire situation police. of men every And speaking a a long I been committed it driver that’s vulnerable police passion standoff I want for then Ohio, excellence, part that of and hostage And day. situation moment our high-speed team, in him exit here for just driver fugitives to was Werner it abducted the the in two their to million-mile team one We thank Werner a situation driver, able a Ohio, yesterday. of safely. efforts through us the take remain last and professional a women with he operational in very deliver on time the They comment kept police truck that to the for with held force where and in a and the multi-hour our the thankfully in chase. truck was, of It with

his unfettered because for just we with every often what truck are I this like this it add from all and thoughts I on And But folks Our efforts do make day moving. also, have support these they the economy are there industry; tough family. that work drivers of to and think to the and out is backbone keep COVID and is country. the forgot him quickly a would to about moved this America

of And driver want safely eliminated for Ohio so the women of thank of returned family. – the for in efforts. state threat I but thank both our to having in to more all and the to importantly, them Thank to blue I that want And you. men and us, those his

Operator

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

You may disconnect. now

Werner Enterprises (WERN) 3 Aug 232023 Q2 Earnings call transcript