WERN - Earnings call 4 2023 | Werner Enterprises, Inc.

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Operator

Good afternoon, and welcome to the Werner Enterprises Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Chris Neil, SVP of Pricing and Strategic Planning. Please go ahead.

Chris Neil

Good afternoon, everyone. our XXXX with results. issued and fourth we year full today, earnings our release quarter Earlier Release in of werner.com. the a Investors and supplemental section our presentation website are available at replay and be recorded being is webcast available Today's for later today. will see the as of our release well Slide statements. forward-looking in presentation related disclaimers disclosure to on the Please the earnings X statement as

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

are and call XXXX strategy, Chris President, Executive Vice with today's CEO an highlights XXXX our for results cost and quarter on On cover CFO. Chris provide and me savings will our of Leathers, detail, results Drive and XXXX Wikoff, relative in will to update market more program, provide outlook. fourth and and Derek including financial Treasurer of Chairman our the key the our Derek operating accomplishments our financial metrics. achievement guidance

I'll now turn the Derek. call over to

Derek Leathers

operating prolonged challenging all joining the you and We call of Thank XXXX Chris, appreciate afternoon, Clearly, was good you, a everyone. and today. environment.

earnings were did Our our and meet down not expectations.

will success normalization as improvements structural future that returns. made set us we for up However,

durable and Our resilient. Dedicated be business proved to

revenue and our more was mile year benchmarks, trucking Logistics volume industry Our full per One-Way business than decline rate business growth. generated and favorable

the top team on and talented and Werner customers. course, strategy, our provided the safety service and reputation leadership nearly our upholding highly priority team our valued members backdrop, brand the Werner executing superior to Despite making our XX,XXX stayed

X XXXX for and in Slide that some of to XXXX to beyond. turn optimism created Let's highlight our accomplishments

our and showing in of industry. the inform most years last our despite XXXX, in XX-plus acceleration and continues decisions expected, margin across and In lead to backdrop, the witnessed returns. margin our year, out Dedicated TTS core challenging that Our durability expansion help And one businesses. ninth see revenue resiliency I've year Dedicated We per my as in Drive strategy grew target the for our performed truck environments decade. normalization to operating the performed the to market of we for within business Dedicated when operating expect the

excellence cost in per within results, executed mile $XX rate on our savings. million we On addition One-Way logistics and operational to growth decline, mitigate structural to changes, realizing of

also to We offset engineering optimization, values cost of network inflation equipment. greater declining helped which improved and and productivity, resale pressure, rate leaned into

average reduced We an X% increase the Separately, operating cash remained flow age supported the debt solid reinvestment in capital and dividend returned our in of to lowered our and fleet, business. margin shareholders through XXXX.

investments made disciplined continued pursuit our We industry of innovation. leadership and towards

modern, safe, fuel reliable fleet remains Our efficient. and

TMS solution. brokerage, business Reed, EDGE our also stack We advancements in transitioning technology significant including new our and by intermodal to truckload cloud-based made

committed platform. all of and channeling to are cost business freight lower One-Way continues experience journey, Werner. all long-term XXXX, execution Edge about and we be across we to of visibility are In the value. to transitioning through remain Werner we EDGE, our Werner to By but customer optimization a a the excited better This improved

ultimately and built we stands and what every service moving. guide behavior day leadership. the pillars innovation and is foundation, for, Our keep integrity core our values of America our Werner as With decisions on inclusion, safety as community,

and work safety parents greatest our and low for realized preventable rate hard to XXXX diversity, working in one America's our workplaces proud as due in associates accident drivers, a together. the were We recognized We to mechanics families. be of XX-year of

always, top time. day one and As by mile team every demonstrated is members at a remains safety our priority our

Independent Board a trafficking. notable and ESG, to naming for doubling third social bring Director to These to hours detail hours accomplishments our in include report described X,XXX to of awareness driver Directors, blue milestones our released training and over human Relative are in November. responsibility hours lead other brigade increasing volunteer corporate more our in

of promotion I the acknowledge about we this Before not want the progression to Board be could January my X, history. more Enterprises. our unanimously on, next the President as I approved move On of appointment the Nathan. Nathan Werner of at excited in company's Meiser recommendation,

leader nearly Legal and transformative Werner. Officer, at decades Nathan a for has Chief X our executive been

and what background Harvard being servant with to his And the to vision I'm culture. anywhere. not Werner integrity, going me about more leadership, partnering clear, Nathan including is going embodiment is be stands a excited our of While I'm graduate, impressive, Law most future the out Nathan's and School forward.

Let's and move to our on Slide fourth highlight results. quarter X

was surcharges EPS Adjusted Adjusted margin nearly X.X% the X.X%. versus was fuel fuel of TTS decreased margin During prior quarter, surcharges. net was the X% of $X.XX. operating Adjusted net operating revenues year.

another a the solid half of the second and fleet and strong revenue and year stable XXXX. of resilient, margins delivering customer adjusted all per in quarter retention Dedicated for double-digit of remains truck operating growth,

pricing as the quarter, utilization nearly focused X% improvement by per the continued and engineered trend. fleet. challenged we of remain the long-term consecutive As Miles remained we anticipated third discipline We further increased truck Truckload on ongoing the quarter into pressure. One-Way pricing in positive our heading by quarter,

in quarter this, revenue our demand remained resilient. durable, logistics, despite continue results slightly stable and In extending and peak better-than-expected a rates the Within customer freight is model grew was business of reflect spite growth. quarters lower year-over-year, to strong XX quarter and over X% the volume. straight fourth with conditions that year-over-year of fourth short, volume diversified challenging In

our current of view to Moving X market. to the Slide highlight

market We expect through to half freight XXXX. first the continue of a challenging

restocking. leaving largely although be supply. are mixed levels suggest themes and an will not and seeing consumer appears to in pace, While demand accelerated impacting have points exit And leave Inventory it sentiment point near-term focal modest, trend spending to data excess points should cautious. The that replenishment. broad we is complete, normal normalized data be reality the continues us capacity has remaining while at consumer go-forward the improved, destocking

we increasingly freight the but well remain rates will more as us and client improving contractual second quarter. rates. is over competitive. healthy, achieve low Spot expected demand is the improve The space, retention it and benefit exists, environment rate. half but not and pipeline Dedicated to XX% performed lock supply continue customer more Normal A turnover to we more steady, in in opportunities in remain second until and balanced freight at are environment the we

to One-Way some rates while environment challenging improvement low continues be The they can. with and cost operating customers seeking

moderating season, bid ongoing expect during We early pricing part later of year. the the in the pressure XXXX although

our marketplace portfolio in Logistics, the and Within of competitive customers qualified and logistics, the network pressured, we carriers. margins continue will growth to remains our be of proud of are deep although

our With results that, more me turn detail. go it let fourth over quarter to Chris in through to

Christopher Wikoff

Derek. you, Thank

continue X. Slide on Let's

and down XX% quarter margin decrease driven Adjusted year. pressure over $XXX income and EPS of rate prior fuel surcharges, million, the mile lower variance million X% versus year. was of equipment with operating operating the margin X.X%, total by revenue $XX.X was by $X.XX One-Way was versus XXX XX% per Fourth of down down in a total down year-over-year, environment, prior basis was Adjusted in macro revenue points gains and in adjusted X%. $X.XX logistics. was Net weighing freight of

adjusted to equipment and fell Transportation Turning to X% margin or of net operating X%. One-Way gains. down XX. the fuel was lower for surcharges a and was XX% Truckload Slide of pricing revenue X.X%, points, quarter adjusted driven compressed fourth income TTS year-over-year XXX Services $XXX basis Revenues total operating million, by million was $XXX $XX.X in decrease million.

quarter, the million, $X.X XX% $XX.X sale totaled prior on of consolidated gains During versus decline year. a million equipment or of

trailers and over compared but of were XX% pricing more and fleet fewer trucking period, of prior equipment modestly offset adjusted smaller lower. we declined TTS to revenue average mile and during operating X% significantly than While by per gains decline expenses tractors surcharges quarter the were the year TTS sold fuel size. more rate Net gains, XX%

mile smaller truck. in rate mile the total X.X% third quarter consecutive with nearly improvement. QX quarter from inflation other One-Way year-over-year but X% per per production the a fleet, QX. the in combined One-Way marks in quarter improvements year-over-year, per saw was flat offset in We with from improvement to of miles This rate during expense categories decreased total categories. TTS benefiting various

For prior full XX% X%. example, insurance versus down was and claims year down year the were and

prior trend and a year-over-year, favorable in versus consecutive from a the down benefits. fringe moderate versus Driver up prior year-over-year XXXX. was to continued was down slightly favorable of expense comp driven reserve quarter workers' adjustments and expense pay million maintenance year, quarters of was X decrease, with over in continues Benefit year. now and the excluding fourth supplies quarter $X Operating

TTS operating One-Way. remains summary, In the margins. of driven XX%, environment, largely steady year was by operating to target challenging below durable, our the and XX% long-range double-digit Dedicated operating margin given unique generating and for

to margin sequential X equipment the We our operating to encouraged returning last TTS towards each are excluding improvement remain Dedicated core gains year. in target see for in We end the income, and operating of confident the fuel XXXX. quarters of in

sequentially with prior and TTS the the was Slide review year. down the just metrics. quarter, to during to count XX were turning down X% truck fleet ended versus year-over-year. down X,XXX X% TTS fleet Now quarter X% our average over We

Our position of XX of the net results TTS resiliency by the the segment grown revenue and and per in further year-over-year week, marketplace. quarter X.X% has of fuel our quarters. These XX the during truck per business grew this emphasize last

average of Dedicated of the to Dedicated X,XXX At Within down $XXX trucks. count of represented net fuel end, quarter, represented Dedicated truck end Dedicated XX% TTS decreased segment million, for quarter at XX% XXXX. XX% the of TTS compared fleet. to fourth was the X%. X% revenue revenue

of economic per during week growing X.X% the year-over-year Dedicated quarter for straight the increased truck growth X revenue and years year, out all for XX years, per X.X% steady achieving and conditions. X across last the

the year. trucking XX% XX% trucks. Revenue less for to truck a decrease X% week $XXX than down business of X,XXX Average count truck per year-over-year. was prior revenue quarter, was fourth per was million, down One-Way our In versus

to Turning revenue XX% continued and than $XX improve year-over-year to sequentially quality. lead now to million more Truckload Slide segment was as quarter, volume Logistics declined revenue our Werner the with quarter revenue on X%, Shipments the XX. up growth segment revenues. we double-digit fourth quarter. Logistics fourth In of total or Logistics work in representing

the solution a of per portion year-over-year spending Logistics Mile shipments year-over-year both quarter which of products. on declined make big revenue revenue sequentially reporting during up growth, shipment. strong in X and due XX% up power-only segment show to Our quarter. decrease volume X% despite been represented to during a the growing Truckload have revenues, approximately discretionary volumes the market Intermodal a a softer for increase continued bulky quarters. and consecutive for Final Intermodal revenue

was basis quarter given customer income year-over-year compression. growing long-term operating growing points food basis adjusted XXX strong business about down and portfolio We and Logistics our sequentially for particularly gross benefits driven technology was operating million, growing mid- a by Intermodal. and business, Power points towards in $X adjusted and rate margin encouraged the solution, X.X%, our of Fourth and advancing down and remain and beverage, opportunity our margin XX Final progress Mile Logistics contract strategy long-term and Only

will operating and integration. while year margins cost the expanding later near savings expect in remain from brokerage term challenged We the in margin

in-year we equipment an sustainable. achieved of savings were on savings XX, rate XXXX, gains. as In XXXX Slide an Majority pressures savings update offset and inflationary we On of low our provide $XX to the and million cost and structural program.

earnings Cost will equipment and margin continue be key expanding XXXX, term, will challenging be further that in the savings market combined decline in given with in freight the to year-over-year near gains. to

XX laser-focused that the are XX% are million program to initiatives savings. in totaling XX sustainable. is a XXXX the from year. are the that year in-year Over over and than XX% the carryover program Less program largely XXXX of get we run We actioned on again to rate structural $XX incremental on new of initiatives full during

Full the on cash Operating remained equivalents. flow million year cash for and quarter year cash We our XX% of Slide at in cash or the XX. or cash $XX increase margin XX% revenue driven flow look $XXX at Let's with revenue. improvement, ended $XX a total DSO also million basis strong year-over-year reduction largely million of company XX by was the year. and $XXX during a at and of operating of points million, X% record flow

of million $XX.X Net total and or level in revenues, million flow for CapEx CapEx. fourth was for quarter up of XX%. year prior X% $XX the the million an and versus net the $XX and $XXX totaled fourth quarter year Free year, down for million the was elevated reflecting cash XX%

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

below As shown XXXX the greater in recent year-over-year guidance our reinvestment in a of moved quarter most on fourth quarter now was deliveries reflecting XXXX $XXX CapEx for and of were reflected first Slide was elevated in CapEx of net year Certain our million gains an business. XX, XXXX is this expected the range. year's lower guidance. and to pace

percent Our truckload XXXX be is to $XXX million growth. within This in CapEx in although as terms revenue business lower expected of guidance growth asset-light of range historical million. to as a ranges outpace to a $XXX is our dollar continues

down million XX. Slide in or Moving to X% $XX quarter $XXX million year to the We debt, compared a ended earlier. with

not term XXXX. XX% maturing ample capacity long primarily and with growth the for Our provides debt of until structure end credit is

XX% debt to expand fixed. balance long-term access is year-end, effectively earnings. and our remain low our to growth healthy and As to capital We of leverage, with sheet of investments pleased fund

Slide allocation priorities. our On recap let's XX, capital

We capital will and will shareholder to continue drive strategic shareholders Werner to in the in opportunities of prioritize long-term business, outside that seek returning remain reinvestment value. disciplined

leverage balance achieve to with flexibility provides strong financial and capital goals. our sheet Our deployment low us

introduction Let's for to to XXXX turn an Slide guidance. XX our

revenue Our year mile for total Dedicated positive for guidance X% the year-over-year potential flat guidance million truck truck per Net range down $XXX a of year range to a of the Truckload to to of first the One-Way full in is $XXX down fleet full growth with in for half. X%. is half guidance second million. to Dedicated flat per revenue the CapEx is year is down X% range per X%. week guidance

market, for $XX are million For gains gains the pricing $XX.X reached XXXX expected XXXX. through XXXX, and expect equipment between continued half moderating of low the we gains demand $XX and truck first used with We in million and million. equipment

year million interest XXXX, term rate quarter, expense during We Fed of our this and would that be reduction repricing $XX debt offset driven expect flat in maturing to on timing of the is second that net interest by easing higher swaps uncertainty than loan year. with expiring are the the

rate X.X X and for at was X.X anticipate tax average full Our truck was for range of XX.X%. compared XXXX trailer staying years XX.X% to near year-end XXXX effective X.X end is year X The years We at Guidance XXXX of age our X to the and years and respectively, years XX%. XXXX. years fleet years, and through XXXX.

it Derek. back I'll now to turn

Derek Leathers

you, Chris. Thank

we XXXX average was but operations, debt. a took very our for costs the improve measured steps challenging reduce improve safety, lower and year to fleet, reduce of our Werner, age

value for the primary As year. pillars X leaders with generate met to we this creation senior strategize power across identified and we the and drive XXXX earnings company,

in range, operating year. while Expanding core and back year-over-year in the of on growing double-digit margin long-term generate utility to comprised growth percentage getting which TTS XXXX. income our driving Dedicated is revenue a logistics continuing to mid-single-digit and within Mexico basis growth half entering our revenue total First, cross-border One-Way and operating businesses, the is adjusted in returning fleet of back to Power margin Only

program. TMS Second which and cloud-based through of excellence is through focus technology businesses on will advancing at our competency, our our #X road savings our a our EDGE operational maintaining transition map cost to priority we as on core One-Way deliver XXXX safety, the Werner, resolute executing

generation on fleet streamlining cash Lastly, through disciplined maintaining and flow operating driving CapEx free working optimization. optimizing and is This and focusing equipment expanding process and sales. includes capital margin cash through processes, strong business capital efficiency flow

objectives, to margin executing generate improvement year. they earnings are the with XXX% the and conviction on during actions believe high are and to right that We these committed

to that, it proven does forward progresses. as year associates, you that open as updates of commitment, indeed providing This our look our XXXX up against have dedication road us resiliency for itself. the accelerates. to progress We repeat power the of and pillars With with earnings ability our questions. We our map with demand generate will of history on let our combined confirm all

Operator

Stifel. ahead. [Operator question Bruce go from today The with first Chan Please comes Instructions]

J. Bruce Chan

to by into Maybe want bit. savings off just the a cost start going

those You Is from. on Bridge? of to good an savings where gave and Bridge your the and a Werner filtering base? overlap more Or some are on between savings add market revenue us existing color recovery opportunity any in is there cost

Derek Leathers

We're But continue we got Bruce, Yes, Bridge question. for platform. color that Werner our develop long Chris digital Werner part about very he may looks the out. thanks ways excited like. I'll But to on is we've start to add. and go what the wants as to that a future then have if Bridge

That's tech to well made at More we've major Reed, as ultimately longer the the and XXXX relative on worked includes as the specifically, a year. sort Brokerage, should by Intermodal One-Way EDGE on -- the this Werner of first I end TMS Logistics on relative the or say, both already it's platform. really milestone getting throughout getting in of year transition Werner stack, largely hard platform to journey focusing that

the to through not impact we're up are cost in about programs As we that it's the real are and But for tangible with early building the savings organization. because diligent of actually expanded visibility, opportunities here believe thing. the point that, numbers innings. in the at our most I probably turns. talking market to What collaboration we do freight this as the not important sides cutting ways better P&L those various start respond cost down start see those of to to ability do savings across That's

cost that right up culture end just bringing they're in don't do cut and in think That's it why all for been The It a cycle what to of last better some is to needed year. to time. want board. we've has on on over cutting's sustainable. here us enough one we We've worked structural, late address costs position. then those aggressively the We're back we sake that for puts they're the

and crisis better I the moving forward. execute a think a puts think controls. toward over finding even a I last we're stride ownership top in rhythm better to year's backdrop cost of And to better this position finally like really us bottom freight

J. Bruce Chan

expectations then the heard outlooks. towards similar at looking your Okay. up We've your cycle. late some being I few follow are around commentary imagine to are that data on now helpful. the maybe enough in That's of inflection. And and carriers pointing a super customers from second half just

So given you maybe conversations for in can we tracking Or are firming how terms that consideration, starting see just been some going still that share Are to early your based of expectations have negative? recovery? renewals? on we

Derek Leathers

Sure. -- have that by in we're on that date. actually single than end we I the have to mean pointing renewals of are start and out digits their less closed I'd just -- we're still at kind

season. looking fat bid there stance that especially clear last And it's network. stay are of disciplined. side the to one customers we've bite Clearly, One-Way is early to the take the try But early, the pressure, so at got to in There's our are on apple.

this across, reinvestable season, carriers If you levels. make especially it's earnings current look a rate glaringly obvious cannot at return that

to shown going if They're to that XXXX. to fleet size they're already we've that we're willing difficult. -- We've going shrink So be indicated And be. need through be the frictional.

from that pretty -- good serve news stability of work. cross-border, to side, the really well. gain We And to better what focusing portfolio the good on of better do dislocate in feel as continue that And have of just we focus into our and and the One-Way the those that. position on that's do do puts is a on Dedicated price we we've in We're business to of out going the to touchstones relative type built engineering engineered to hard lot lean also up continues difficult going the with well The to that to relationships. portion lanes That keep us us well. network to Mexico we're productivity. to stand going a of kind

Operator

question comes Jon ISI. Chappell The next Evercore with from

Jonathan Chappell

of looking the just want One-Way a that fleet I actually down Dedicated the truck a to we fleet? guide, to going count. growth more second the fleet X% you at favorable this them think Dedicated relatively a X% be the static as Derek, until in to see we're talk decline there's slightly Is you continued as should both of to Are until backdrop? pausing of in just well as see about down for you the and still being again inflection glide and

Derek Leathers

Dedicated Well, the performed year. as we during course very of pointed out in the the remarks, well opening

the there, So we're But looking to about a trying shrink there's landscape. competitive too, intentionality no it's reality the fleet. not dedicated is to --

that as expectation the year. some remain return-focused, be and Dedicated in in And we could half very price on so of there our disciplined fleet churn Dedicated it's first the

Dedicated already But opportunities flat maybe We and end to robust we pricing net with back that considerable have that we're of first a very as half speak. is be of amount a in of slightly half the think the we pipeline that the growth by built in. will up

right now. On side, at a that's not of One-Way It's more it's as story. the half, result, overall going guided what go will to grow and a trucks the down inflection. to. we in fleet an first least reinvestable we've see not numbers And TTS in One-Way simply We're until different

Jonathan Chappell

insurance and 'XX? Werner or 'XX? the to somewhat maybe both to than at 'XX, level I insurance full inflation lower about a noticeable for It's that we've rest Or about lesser the mentioned a peer contrary something across group It down, quarter distorted you'd year. Is heard something and you're in just in of know running renewed into comp -- the obviously that claims of that claims level there is a in way overall would the that and what level clear. grows think safer industry. most a fourth at structural function of line Chris, we network, think structurally the Okay. and should of but some seems a the different item

Christopher Wikoff

comp. we've at safety, and ours look is of have the that come back not occurred when and it's simply the last elevated yes, peak to but it you have mean, being year I couple #X of minute really yes, that's million on, charges just insurance The early recent XXXX in it's your over last a reporting was not address just fourth the large We've -- Jon, inflection a But up quarter down There really in decline. fundamentally, the XX%, a we're half really priority. others to XXXX. in but first that to year and just years, a down of and claims. of second in unpack question, seen quarter, But last which the that was industry adjustments $XX of -- year reserve does down been is a I of matter been think point really XX%. it half our

So it's but does metrics well. coincide early good it's to that say, trend. perform very a with to It maybe safety continue our

low. record accident a XX-year hit have rate. declining a We We

connected. So those we are think that do

Operator

comes Ossenbeck question The with next Brian from JPMorgan.

Brian Ossenbeck

carriers your going away, than more thoughts to So that down and maybe something get the smaller capacity. Derek, other the just equipment. well? the maybe wanted and They just to yourselves market other big missing low-cost in exposure back contract inevitable or before. have Is how of going terms just exit as They all is freight capacity presumably there paid fleets flowing? just fleets it we're to backing is hear in that we If is

capacity think that's the beginning to some the of been you growth end of wanted if of really the sort that time. is see here this Just for

Derek Leathers

I of I leaving week XX so going question. promised so try negative, of -- in. on I'm to net turn to we're predict with carriers great that. wouldn't being at But industry Brian, the coming more to deactivations call, try going this steer myself to than clear a

X because last, of have activations I their should now for year or a kind fallen the over it, straight. off been new trend very of seen it's call with finally Over to the deactivations weeks, -- continuing deactivations kind X net we've continuing that cliff say, really interesting

gaining, more and forward. momentum think to see we're is going that we So going of

well-run When that that through turns don't What speculate uncontrollable. sure time much never know. our it lowering we're trying do grinding making I to we're cost fleets I not well-capitalized, Werner, spending is to know exactly, on like focused while the like too on before controllable the execute, large,

Dedicated The is opportunities I'm been as mix has some toward $XX lean is we initiatives, off we'll exciting. those in excited that closer to still and this it that I'm given the we've fact the technology into year about we've is that's be be. time, the gaining all structure identified to we this on we'd grow going getting than of to really million great about more meaning age it wanted long really often, excited where we finding we're cost a rhythm believe share. Logistics of across although these that implemented close. we've been team's whole industry it the year, making. really revenue, into investment success And year, both outlier early. the and The have volume and in we an of that fleet continuing to right focus of And now. the the kick fleet of want going where got and

probably, time. fair, best picking years, we're out up The is be but still that gains to on the all incremental in the

And I'm so excited really as this year. out plays over course of that the

Brian Ossenbeck

the but terms more, a really confident us follow bit too of the the you know I I was what can buckets that on you what into carryover, I give more. you you're were little just they've those wanted in cycle, a also if changed mentioned that horizon details year earlier to different bit cost not hear to on wanted this just bit a in just are, and some year. too There's but cutting little of how to and So understand that hear late from little previous savings. up the much

Christopher Wikoff

is this Chris. Brian, Yes,

So it's plus another program. $XX million

less earlier, that's than XX% it's As carryover. we said

various that's pay So by salaries, new actions, see in in wages, changes, work presented initiatives. new can terms materials in comp it's changes and of lot it's you benefits, we the insurance. from A impacts, driver both as that is large, turnover of it,

within even other and the of and of number we maintenance salaries it's in category just categories. a but there's supplies multipronged. categories materials, and then other And So some of that wages, that summarized

new largely initiatives, well So we really again, largely to cutting sustainable, where us structural, but too not positioning can. deep

current year, throughout inflationary the helping the the equipment market have year. headwinds, the not of In the first can obviously, headwinds lower some half we to the year some that and of going the we're at gains in least of combat

things sustainable us but puts right So we are better capitalize XXXX. position like particularly to and in feel aspects, to to a very on also the these beyond do a strong market, combat those

Operator

Bank The with from comes next Ken of America. question Hoexter

Ken Hoexter

the think look miles key you led as we miles during looking should company-specific we for the that how it economic? out it's moves quarter. truck I there Is truck? that prepared One-Way things your for Is by at remarks. that you the you economic, per And X% that the per Derek, trend are I reshaping is should that noted Or in in historical what turn? talk turnaround? the improved about think about second network? led to Is guess rate? at it growth Maybe in by threw due if

Derek Leathers

or low is that engineering really very do as gains business knowing walking kind doesn't to One-Way takes levels. can these our seeing within and efficiently been fits -- as we rates it us allow production rate of the like disciplined feel network result we're from no of got they've to doing longer and it's more fleet do operate much our The in what designing the at efficiencies away as we of build that pressed, that

us most with. structural But up a faced rising better they've largely and thought the it's rates, other little of despite to held of and than headwinds think interest us. been sort I clearly, consumers inflation so And probably internal

good your we've border, something of It's it's answer to of But part controlling do, controllable longer And to trying to a more our but several at. to and all question, trying the lean the haul, It's that and it, efficient it's this more of freight. talked Mexico the we're on very the length hard leaning on really cross-border it's about but franchise especially into Mexico the time. times certainly that. into heavily -- then a is part we're side work of

Ken Hoexter

for, is the turns first? trend -- first? the goes price? is it up what follow And that on to Is you that the utilization? that -- it is just What look that, Is

Derek Leathers

case, mean that getting allocate Yes. a trucks this just leading of our think suddenly of at market reiterate indicator in I gains necessarily we the point. kind to It's the where aren't Well, utilization better. getting better I just us much

were on it storms I reality opportunities sure. production or for very across were what there moving looking spot of in also hit spot market opportunities a I'm darkest for negative recession what project relates this pricing played freight had pricing days almost no in hurricanes the to that or impact But what market first yes, January. things, there or at saw is the little anything Yes, It like is, impact the with else. looking in that U.S. other we or role to as anecdotal a is winter goes think and with what on

project The at our fourth thing opening. they encouraging. that I like But volumes, over That's is were other look about talked opportunity we comments peak up volumes quarter XX% the year-over-year. in would

lucrative in what and they of capable show is problem and nearly being our the volumes that order wasn't the we're customers moved game lot those support freight there this But as was so of to in prior been years. to in get we fall, peak qualities, execution Now would that a as have market encouraging. rate and back

the conversations terms play and there to customers your is fleet, do topic, kind the early showed out, the that we're on price with it's where the be encouraging, commitment out the of now that like that inflection to predominant Because clearly to willingness putting with we're And very investment differentiate making now, of when quality I in year, quality XXXX, we right able of positioning. want a important our a to fleet ready outsized it's table. service, more it, is this we're in continues really putting we're product to launch. such than think ever in as back CapEx the the I of an we which

Operator

The Group next Scott comes Wolfe question Research. with from

Scott Group

trucking margin. guys you exited a year the at X.X% So

said of year. get to is the back end think you by to XX% this goal I the

there? one points we needs take ultimately, us step more think improvement? what the X Do or through to margin build help from -- get happen Just QX in what of cadence year? And the that about back that to then X and of

Derek Leathers

out the clearly, Yes, the Derek. of mean, of what I there different quarter, Scott, structural quarter I be is this be of lower the has that expect a headwinds. over plus any the reality combination of volumes shipping year the holiday just last et will coming to the happens back QX to first cetera. that historically QX those weather in fact decade, step don't in because terms season, this been of

to back want it's and about a but back half don't things, get granular goal. to it's -- I getting it's of that here, terms in too But several range,

be proven durable and that move continue clear. and all both this an we've inside more goal our ability perspective, Let's It's these cost it end-of-year on business more that margin even a executing One-Way further bad be continue from in further identified And markets then laid good to shift clear. stable, out. path really of be down to engineered to a takes to savings to resilient has that Dedicated of and into itself

we out obviously, -- like year, equipment that can cards wild achievable. be we're are used the get the then course that our then at If But the is market. accelerates How there. that of going play base that's one believe range, ability to And be higher we things and think, I does to of it is case, end the conservative over and our the difficult.

us, exactly long been ahead about internally, got hit -- to theme of on we're It's controllable. now but waiting one I'll but it's external laser-focused too that. change doing us the upon for is change. it's time, way to about and There's And the a lot everybody we've with that something work again, controlling more moment of the

Scott Group

thought orders, my we point like everybody where struggling elevated that's your we're still here? for on I'm they've Do that reinvestable. with why -- just and quarters, builds, all been tough seeing next not One And it's a place and like struggling all from thing your go have pretty where happening. truck truck question, fourth seen then you all these we've about we're I'm a with at

Derek Leathers

a racing matter predominant on of my builds if to I we you we lot currently get thought of had spent a I think so, it. it consuming. you a it all folks would lot think when orders pit doing XXXX and several Scott, lot of a our We plays when It's -- as Yes. about money rotation you haven't and a pit that do -- of as believe, XXXX. we that lot made analogy, we it's that, versus I costs in your thing be, about where costs competitors? time yet, that cost our are they're it's mean positioning There mean wanted fleet big fleet and is of others doing I of that a downtime. make move. your a like miles, clearly driver because money, It out. pitted And

what I a orders like lot I our so And think positioning. are. those But that's of

seeing COVID I of year come that think clarity think order that are are America number right but into out something And builds for one the I different. board how pent-up orders be to in fleet to their entirely see because I makeup think thing, out, more happy And with now plays it demand. are just out you're relative may plays builds will carriers everyone. interesting as few the years. also Very coming

Operator

The Fargo. Alison Wells Poliniak next from question with comes

James Monigan

on It's James for Allison. Monigan

Just to ask -- about wanted sorry that.

improving have that half the wanted sort Is catalyst the and of there specific just for first of outlook in do Just intent the across year there. market see? sort the half the improving of it is second to about any the improvement you that in ask you second? Or balance better

Derek Leathers

Yes.

I the last of completely. lot that XXX,XXX at we're number, big an XX,XXX this a like from have whole I ramp more behind were There's perspective. equilibrium from industry. seeing a think that we the to momentum That's in are just less just drivers out stat saw ongoing where mean when on a went sort up really we're that I we're across it's built where circulation attrition registered CDL business week, started. of carriers

being while. storms it indicator recently than we're it to on I widespread. shows a minimize the closer kind immediate trying I'm yes, of been mentioned was severe that, interesting an did to to storm. not what that but a impact it the Yes, network we've was in balance that, the

it rebound. there's GDP-driven we're -- the And being think on one I catalyst. don't banking So it's certainly, not

a it it's base And a this kind very story of just is Our to keeping case of rather exit. to one GDP replenishment year, to close because level. get assumption thing replenishment as but very neutral growth continues one-for-one supply-side inventories obviously, on eyes

Suez COVID ports the I there. simultaneously I that But in really of we've West whether maybe outside it's don't the pause or think Canal, the if plays been with need middle, to decide And Coast that middle. around going some ongoing Panama productivity time to the plays dealing issues replenishment chains to believe really and seen present year issues supply go sort questions the ever case causing Canal think since issues in the retailers have somewhere as well. and the in they to they in we of to America in out, this just want into And be just or be in there's as and

James Monigan

real digits the prior Got price through else And And the sort Dedicated get anything margins in of just cost to savings per revenue quickly, you that highlighted sort up or increases margin inflation you of to you're improvement in able the in seeing But that look, per highlighted double over there. have and week it. able cost the are were there? of expansion fact there tractor sort across you been year? this kept get with time that

Derek Leathers

to lower stand level. get and bulk We've this of why critically the the resiliency That's downturn. more for realize at But around been our margin The customers shown consistent Dedicated. us the and of quarter results margin and that enough much by TTS seen better One-Way, out work pressures. everywhere there complexity taking there, inflationary support the so obviously, range cutting just explanations cost We're to this I of, everyone and from we to becomes the quality through there's doesn't do. the But driven even even there a the because of was damage able else. pressured clearly some long-term in to is It offset pressures how there, compression look, by the this with and but of our mean, portfolio costs up here Dedicated, wasn't we've important. we've part by inflationary Yes. held underlying got has mean elsewhere. already that

Operator

comes next Ravi Stanley. The question from with Morgan Shanker

Ravi Shanker

follow up on a that. just Maybe

guys you of flexible of that rates? reflective point maybe and be I difference for heard little that starting than potentially what room to there's telegraphing. to message b, on is Is on your kind peers, so give pricing to to of on this, pricing, been a been more this some is different given of Or who've just trying square be you some you if lower a kind the this of kind is, message saying have of a, have absolutely cut? think, costs more and no maybe. share room have may a your kind and than more cost messaging if peers try for in were somewhat that to you're take inflation of take Kind bearish strategy and to call I your -- yet opportunity further you we of think have expecting bit we maybe the pricing the up, of outlook

Derek Leathers

year the with Ravi, that this made network. we've with there concur into have with no start the or to digested But that doesn't I Well, already deal comps I'll to don't mean is things room obvious, which we statement, prior is and ingested everybody more that who's give.

it that's first Over of XXXX, to some comps. do roost so half of prior the year in the to XXXX, to going come with has course of

we a we still day. and foothold, of of to to Some want it to to live kind with places another making still that have want decisions fight has do sort on intelligent of

And is this place. fact, it some inflection of to when, take in predict just trying does

to If so. with we'll to careful know can we we we comfortable that's I this I point. be we do doing that can giving what tend believe a range that you assure And be we're at and exceed range, thoughtful You everything say. can that

a mentioned cause try your on bit And price as on we pressure customers outlier which in already more and second doing. put a XXXX, focused reinvestable, piece, positive frankly, were some the going season we're worth is to being bite at at we that the Apple, go through opportunities as might not to us of last a then of inside the and take it not you question stay disciplined of bid because, but therefore, the forth, is

Ravi Shanker

logistics down Very We've of interesting the large few a broker shut seen some ago. as a follow-up house. helpful. very the Maybe announcements. side on months digital Obviously, a

brokerage You're strategic seeing of business structurally changed it of are but the investments the and kind the there that guys both the and making options what peers cyclical than of the back, brokerage term? what's cycle potentially operating in outlook being used of business. talking it to leverage. one examine digital short long for and kind before the comes you your also with has medium given kind be think Do player The been yourselves, kind more of has about their big you of the business term kind in now is with space

Derek Leathers

provide are. going your and your of all exceed focus kind to difficult think there's Sure. I do still meet there. to It's and opportunity the primary hitching a push, unpack a what follow of to market. digital the platform personal give a first of of whirl. only. Lots a this just are, It's expectations it their you digital I we're need of even know-how, foremost, to be portfolio. you're customers or attention, to a to wagons because horse. with all part hard our I'll lot brokerage that's place for That's institutional it's mean, if and above customer not And that attack ability all up and service the the how to

product. there Only brokerage with for may the decides labor Instead been that, way. you deal that fleet about is is that every cost to it to absorbed that I multiple customer have out a to Only are when Power customer have have rainbow and but that really previously, efficiency and lot executing with very plays, of complexity think that think purchase role service a the with there's others the Only on that trailers comes proven us by of happened that better what's well and gain Power Power all different truly an getting a of

get to more Dedicated but their be to pressure squeeze putting we're end much maybe liken And more apply would to like that that defensible. need our Power the need And arena. are in brokerage Final of relationships within the it frictionless so It's what's It It both that's as why growing it's environment. as blue-chip playing in Power that being if offer complex. possibly every think I similar folks that One-Way. get. for their only they degree, chance able Only, involves Intermodal can life support assets, one going is win Dedicated we network we Mile we're so I it's and customers -- solutions than large-scale with a easier, more and that them. And brokerage These large-scale on to do is Well, Only continue and are lesser group. of a makes to

Operator

comes The Bascome from with question Susquehanna. next Majors

Bascome Majors

the talk leaned if you from carrier this as large and base away opportunity at your can cycle little the and into a any people from through more term, has and at and have further you competition think niche One-Way? the look long that has we into about Dedicated more grow all changed As how point evolved further that to bit

Derek Leathers

new into Thanks, X Yes. things. of there's coming port dock knowing how Dedicated competition in maneuver and the haven. and safe for is question. coming Bascome. it competitors totally been that different pulling clearly, then look to -- But inside and sort new Yes, appreciate the to I

them. decades so but new not in the our has and only And ability logos itself Dedicated portfolio work attract over of and expertise new proven into to to retain customers

doing. as winning their time advantage, potentially why newer winning know what are not they're half with And their within point rate it. at at because center, these work that to to now. lean time with going view some going the entrants we to we pressures. win like realistic. continue I'm 'XX And We have pipeline the price about and good pipeline noise competitive a space that's it. yet, cost that we're in and into competitive we Dedicated as white of we're excited will in that market. and from lower customers of And of what more vertical to people be with believe know in into the that into at chain as this competitive want we they Now But looks like right first we're today we're on to that they get a very supply work because sit the to

teams end. of out we the bottom put we of make That's need speak. the no got working simply more I funnel that can what out the we'll clarity a we're our to as looking be to going meeting of matter we there was And on we on end sure back to for there go assure top from And we're hard how you, sales lack annual it. just what about are and our get --

Operator

question comes Citi Chris Group. from with next The Wetherbee

Chris Wetherbee

don't the side. of instances even of some just I think profitability. business, making on environment. Truckload on the maybe guess thoughts I this gone Truckload relationship, that suggest in other about of guess. that there I of money on to curious of that not that actually We is carriers you And as One-Way guess or heard back up breakeven you've from money your the I But sort I side kind Dedicated your One-way mix kind of versus far sort losing that to relative was truckload wanted know pick

hundreds the of of of ability and implies something And basis the understand turn to we're or little the points what as sort that points of than the opportunity then we trying a it's them the several basis bit year. hundreds up like what through like smaller margins for next on I in being that. to if Dedicated margin looks about go Dedicated guess sort side,

expansion So curious back through about just kind think the as timing that quickly, the go you can margin of goes we truckload how you that. quickly obviously, as about -- think it do come how but maybe fairly as of And year?

Christopher Wikoff

Dedicated, to margins a been been there. couple is Certainly, this Chris. continues durable, double-digit of points mentioned, as we've Chris, Yes, has have there. has steady,

lower this well large, TTS but of along throughout pricing there. So will We're the that it puts continue single-digit been by still as there's the and with segment. demand, One-Way. Dedicated -- the per more the been view. actions, year, and between than been softer that's than challenging full by certainly year. gains, market and and industry our is on operating backdrop put OI that which lot more our income volatility as we've mile, that discipline lower One-Way getting and Certainly, focus broadly although really the to believe, we faring, there major better through is equipment the aspects rate primarily And driver a specific has volatile to, But disclose can Dedicated, driven not percentages some is within low for

so TTS that major those not in are to margin. And down drivers Dedicated. the It's necessarily that's bringing

we aspects run in continuing those seen market rate the utility operating And that to the to with cost back you've that trend savings that restocking that end and half, as the of get of of production an second structural at the talked about, the some back changes, of margin. talking been targeting well to target about are One-Way. we've year TTS in improved some as in the With trend we terms

Derek Leathers

the truck to to One about is add with that down that's would mostly multiple the levels you add common really downturn, retention mix, to and it's continued entire network, although Yes. lack fleet into trucks, that and new the reason they based this have And X I even couple haven't logos trucks, underappreciated of thing very volumes customer X had growth just inventory seen be thoughts much we as Dedicated in is had do of trucks may on across replenishment. a that. that X the fleets across throughout and great

to As we they become and leverage X are. can fleets get across normalized fixed to a very the compelling rate adding costs are look run dedicated forward, we X still essentially trucks more because what upside your to XXX-plus to

a cost adding lot of not You're that other of incremental than other variable the equipment. cost running

so And exciting. that's

has potential realize market strengthens. more than as the upside people Dedicated so And

fact over and those don't trucks that I percentage underestimate nimble the that and to right be even number with One-Way, in want is will moved trucks then can only that high. X,XXX be time, for The And hire and are smaller. now available of

isn't it shareholders our and as market network we're not Now is news arrangements agents case. under and up that I they're we and they this run means because be continue don't others not appropriate it can love because turns, the the that to make long-term be tied customers seeing that of going today, sure levels available they're the to that to as owe type will moved necessarily But return we're to it's and a we that moved at free with prefer. valued around in One-Way the good

we'll to there. nimble be so as respond, more turns. One-Way that market able to the be you quickly mentioned, And We'll

Chris Wetherbee

appreciate Okay. follow-up quick And that. just I gain one the on side.

As about end? of very should uptick sort kind of or we first more towards material you think the the X with half half maybe flattish assuming the the first in year, be of essentially gains

Christopher Wikoff

$XX of half the first said range or we in guiding million that that we the half of as to year. the million the to challenging more are second will versus be year. for $XX the Well, earlier, the challenged year is entire

Operator

from Wadewitz Tom today The comes UBS. question with last

Thomas Wadewitz

bit. been something just seems got like where offer that's it sounds maybe thoughts a Is count It could to than of goes. let think the that I if on like see attrit that trucks kind more market One-Way you you've spot wanted fleet normal coming One-Way. to some you continue And down in down? in you the just

need One-Way? just not you of to to in hard into keep It's as reason more And a Dedicated the then -- shifting trucks those really growth? I is theoretical a do in get couple is Dedicated perspective, don't of Or One-way. there a guess you thousand strategic it's you for kind know from what keep what framework know, I

some One-Way just thoughts on on So kind yes, of near and medium term fleet. term

Derek Leathers

has is the fleet this reasons we there. Tom, to Yes, of need be not great them do as things entry get to with One, performed what it's which Derek. and service of taking only got is a engaged customer opportunities near-shoring a the and them to involved be Mexico the couple familiar one-way safety. focus to as to that. to to present prepared do variety also about, with going continue the for of and to a returns. the A brand, Werner houses One, also they all and get that the may the point culture, advantage on franchise, obvious we're as and well, the show levels commitment cross-border we themselves, It continue

significantly the less. do that in more being We've and able One-Way with increased to leads fleet to utility

we number environment of respects And freight. then the in the seamless operates One-Way, trucks. it's And sort freight a need and many don't Power of same within as same Only really of movement so

So also that dictates.

is Dedicated. goal the feet, XX,XXX continue to to grow to out zoom I if So

the I want of in also, see that we in as cycle, don't the of this are learn not It's pricing, to learn small who at Werner, know them we get to to be to as One-Way the in to And the to fleet at be us into point, kind to able ahead participate for show both pad in that culture. is come and way to customers contract. are. the so great going spot opportunities where network and inflection to a drivers we're a what and launching great are we be

give So you here it's number. not to a I'm --

and don't have the to learning it I position this market into be stands assets free as grow market for. turns. to comes able that Werner at culture to pad to what point, think I continue I the that available would coming for map want anything indicate a there's want are to in landing One-Way whatever on to drivers our be to continue road our do we play One-Way, want but up

the to border be continue I push the and matures to investments because engineer and made present southern safely positioned want in very through well lean the to we've envelope that of sure I Mexico side and it will so opportunities further we're are opportunities. on for we're innings the right in those respond. really operations to else. we asset able make the that it but cross-dock nearshoring continue to to that try into And think in significant both above mature, on as Laredo, to to cross-border now, able grow want our and we this And we're do but production, as non-asset early all themselves

Thomas Wadewitz

So you're X,XXX in if you look to a quarters, couple of trucks or X,XXX closer out you think One-Way? trucks

Derek Leathers

now We won't in in dates rate can and not we're I get also by implementation belong One-Way, close dedicated couple Whether will grow we be X,XXX quarters determined of at point X,XXX opportunities assure they to of total until trucks right at a we're returns at where be or not largely the you. because a fleet.

past to And we So historically, be -- now. in kind And decrease a assets the if in have those XX% size system no grows. dedicated about we well intermediate One-Way inhibition farm fleet mindset there see believe that you'll in we've while of growing for anything, dedicated will We're opportunities dedicated the about talked XX-XX. is our that term. no of the And be largely.

Operator

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

Derek Leathers

inventory very thank been begun. know you. and thank today do rightsizing represented early gaining But just fourth capacity what's believe further to challenging the levels quarter in a our are momentum environment. extension replenishment joining want a is we and freight everybody for call. on have I quarter innings of I us Yes, line

market are the improves. logistics addressed. We and without this cost portfolio identify remains with ability be sacrificing to the more implement operational our continue ever gains as core and respond this discipline we're us going than be to of needs and to allow focused controllable. controlling our creative We'll year, entered to the Dedicated and customers' how on share savings

promising this of improvements committed Power line to we to further go forward the stewards both our of for XXXX. Only, then finally, show our as year good like bottom out. cross-border of kick and off Mexico we're being top lanes capital plays and And as engineering opportunities and One-Way year fleet the positioning

to with spending us. you time I our just that, and want with your call today for joining all thank And

Operator

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

now You disconnect. may

Werner Enterprises (WERN) 6 Feb 242023 Q4 Earnings call transcript