WERN - Earnings call transcript Q1 2024 | Werner Enterprises, Inc.

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Operator

Good afternoon, and welcome to the Werner Enterprises First Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

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

Chris Neil

Good afternoon, everyone.

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

to now the earnings of CFO. are and of our over Treasurer QX for our Vice in Please cause and see company the with for the X presentation forward-looking market reports our believe earnings well Leathers, uncertainties as our may statements. our other most provide on and The President, actual more presentation. On cover Today's strategic and performance. update using non-GAAP for Chris results Chairman to included the we appendix release me an today's materially. overview that and will CEO; provide in to call Executive results Chris to Derek the on to tables slide forward-looking related directly and present attached results measures, of involve will Wikoff, which measures statements is past in disclaimers an that provide Derek the investors Derek. the on results XXXX outlook. the as our differ year. I'll detail, call priorities the financial release and disclosure GAAP turn A reconciliation update and the information the statement additional Slide in comparable to comparison help could remarks factors guidance facilitate contain of risks, and

Derek Leathers

us. everyone. you and Chris, afternoon, good joining you, appreciate Thank We

past many of our the It update, enduring is inspirational the see I a Omaha continued very result tornadoes remains to locally place associates come first and a Oklahoma. truly get we and this time, Werner difficult the community like reported would quarter this there fatalities citizens took Before Iowa, need. to but even that broader in on are devastation catastrophic of Friday. as Kansas to hard fellow describe. the our acknowledge that of time at are is there in the no weekend support to and together throughout path devastation those of both Miraculously, Regrettably, started

and disaster impacted has go to impacted those thoughts, so that out prayers results now quarter. horrible attention turn to this many. I by support ongoing will Our of the the my

favorable solid and customer first production, market and continues be revenue controllables. challenging quarter remained savings, that the by truck quarter freight debt was industry-wide weather additional focus by cost another our controlling our on Our and high for one-way these further retention. We reflect maintained flow dedicated proactively the results per during shares expenses, the QX. reduced quarter. repurchased increased generated operating in on the reality adverse managing and Despite compounded cash headwinds, realized We executed to

macro, control to Werner cannot focused tighter are success in our for and we market. we long-term position eventual While on strategy the structural improvements an

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

quarter Despite customers resilient isolated and losing chain truck competition. fleets the in growth. undercutting, Dedicated to remains delivered net During Adjusted Adjusted versus of operating margin noise from Adjusted fuel margin X% operating the revenues the X.X% a solid supply approach for competitive and year. quarter, few In changes another per was select X.X%. more prior year-over-year $X.XX. was EPS were there's TTS and Dedicated, surcharges. revenue lower of was

maintaining agreements. are in our given Dedicated, long-term particularly discipline We price

left and service or look reliability. enterprise offering in and as strategic, inexperienced Accordingly, carriers. their to to is mission-critical that scale, not value Dedicated supply sophisticated less superior chain large customers Our we

per setbacks ongoing truck consecutive improvement. weather, As expected, quarter the miles from rate marking pressure. volume revenues One-Way XX%, of The remain consistent. by Truckload increased seasonally fourth and was Despite steady challenged

than less Our prior trucks. to similar X% XX% nearly total down year were fewer miles despite

operational further that volume the results with reflected drove with impacted maintained new to cross-border excellence seasonality normal less by first wins Logistics, in we been while pleased quarter retention a were volume, similar rate and has building capital Still, and are customer achieve in intensity. Within margin, XX% volume pressure. volume strong business gross both and saw higher meaningful realized intermodal. Only We Power increases domestic

comp lower are to a and customers, miles preventable elevated customer cost In have This, driver impacted progress expense, Inclement service a in rates in to short, for school initiatives. truck savings insurance network. further That XX-year for our and demand, per high to despite achieved weather seasonably limited combined low caused addition higher-than-usual level first stable operating freight health of negatively throughput conditions One-Way and lower resulted remain our challenged. benefits on proud we and workers' accidents and One-Way record to with income. a our said, quarter improved Logistics

Moving structural to implementing that for with Slide challenging we to environment, improvements X. success normalizes. position Despite continue forward push as rate the will Werner

results, decisions durability, to values, associates the representing the term. our over drive our Our inform and continues long framework innovation, environment. our to commitment

week, Werner Forbes XXXX. announced to made Last it of Employers Best America's we for Large that list

in outstanding a category. highlights list generate employee quality, excellence satisfaction Werner's efficiency. Werner honored transportation placed and an They capital competency to This last business, core as quarter, drive companies and our communicated in beyond. for objectives, leadership. Relative driving award we Forbes selected core and XXX X XXXX in and driving and power industry #XX are: creation priorities its and XXXX to earnings growth operational driving overarching value logistics

cycle other time growth in market on In continues pressure of business. our increased core priority, depends first seek to Relative Dedicated, and the Topline carriers see we improvement inflection. and shelter. pace driving as down

and We first executing XX% then we achieve of TTS long-term purposely on set well. is as in position that cost are stronger increased much per and achieve continue claim, equipment used and reining further Werner stronger certain leverage We years and our most backfill but opportunities operational we or focus up pipeline a long-term to fall cost perspective, range an savings target though range. From strong would growth. reductions this with going rates, down, plan, see to through. see operating within adjusted cost a we years demand, in this come could a of insurance will is fleet and To of on margin, operating the dedicated exceptionally our which basis confident isolated XX% market in a better to be are

by as market in environment day, this forecast. very end the remains However, current the headwind reach the longer, If XXXX. it lower freight to may a challenging goal for of to the stays serve

and record, our driving to synergies EDGE the enhancing Relative our of progressing platform while excellence value competency, Transitioning core single technology our second revenue as favorable savings to program. journey, TMS our to and we priority, reduce a maintaining multiyear a safety advancing cost. strategy we remain and operational are additional a opportunities our a experience by encouraged visibility and providing grow is customers' our and platform, freight cost

operating third capital quarter another had flow. of cash priority, driving our We strong efficiency. finally, And

We Net equipment continue year. the capital a on we our to track with with remain our intentionality greater are continue in leverage in Despite and and lower expectations spend CapEx gains used of allocation. all fleet later values, low. age pace anticipate

these calls on about more hear quarterly will forward. going You priorities

provide results our over it quarter, want Before the current financial of the discuss our for to to passing to I market. Chris view

X. to Slide Turning

challenging second continue a of and half market the freight into through quarter XXXX. second to We expect

slower Attrition behind haven't While destocking pressure and is inventory result, seen levels at restocking. a as but have of competitive us, significant remains. largely happening, pace, we normalized signs is and pricing a

is put on experienced on in isolated seasonal We our on have XX% managing losses a We Coast can demand customer environment, we certain fleet in in focus yield. losses spring see while pressure trends truck specifically to a growth Recent retention our April, well will related normal continue supply/demand Dedicated more with freight better year rate the to pathway maintain backfilling to a guidance. Dedicated, full and fleet West more projects. although first performed

early remains The to and One-Way environment competitive operating season mixed bid led results. challenging with a

profitable quarter in operational us segment. With to to in technology discipline. and let to environment our be continue detail. network position customers, deep for our in logistics our results and over portfolio competitive of turn this still that, pricing me long-term is Chris growth through qualified will of investment go very margins our initiatives our to first it more continue The We term, in Longer carriers, well improvement will pressured. exercise

Christopher Wikoff

Thank you, Derek.

Let's X. on Slide continue

Adjusted XX% and down Logistics. market totaled $X.XX down EPS revenues versus million, in quarter $XX.X gains X.X%, with the X% lower rate a and pressure Adjusted used basis down of respectively. and $XXX equipment was income softer million was year. points, operating of combined over prior variance, First XXX by operating margin One-Way adjusted was driven with XX% $X.XX and

in $XX.X million, TTS to fuel Truckload to revenue Turning quarter surcharges adjusted X%. the was for total X% down Services $XXX in first points. million. of and year, Slide $XXX down prior versus income fuel nearly Revenues gains equipment net operating margin of was of half drove operating basis XX. income. XX% operating fell Transportation down decline XXX decline TTS X.X%, net million, adjusted was A the

continue the We lower, operation. fleet and of we and are gains, into see sales expertise leaning albeit to our national capability

year. on million totaling of from consolidated quarter, last $XX.X a the with sale a came equipment $X.X comp gains million, of During line expectations, in tough our XX% or decline down

and maintaining longer. half per a fuel may mile trucking values half held decline and than X% total smaller operating fleet more versus equipment improvement were modestly gains, TTS size. One-Way the during but be year. second of X.X%. surcharges used our declined sequentially, X% quarter decreased and year-over-year first TTS the for of are although prior rate equipment per of rate offset view market, We Net mile down versus in expenses by revenue

and pay was Benefit were and excluding down a wages quarter the health quarter. Dedicated and expense steady Driver supplies prior and the in salaries, improvements and $X was January in or million versus margins whereas basis, costs down various prior XX-month categories, of driven challenging. in One-Way outsized terms in versus expense especially TTS benefits insurance million double-digit $X operating maintenance down nondriver increased nearly trailing year, benefits. that by X%. durable fringe subsided $X operating expense remains In remains on generating million in year, later the X% quarter

a achieving margins, and mentioned, the quarter will but achieving we higher year this margin more Derek results. challenging producing operating focused range TTS end remain operating As of our is goal priority, long-term on given by key first be

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

Our TTS XX segment the of XX for last year-over-year of X% fleet. represented X%. TTS last net X.X% Dedicated XX% has the quarter through Dedicated revenue Dedicated quarters. Within truck At down quarter, economic revenue was XX% of during year end, quarter the revenue fuel revenue of million, XX growing by fuel average X.X% of per XX first and truck of year-over-year, increased $XXX compared Dedicated week the the grew represented TTS per week X,XXX to trucks. decreased per a quarters increased ago. to trucks XX% per all conditions. net Dedicated

fleet While the our well, impact into is quarter third per reductions are production and isolated truck fully continue second losses will as realized. from those trending

opportunity As the we've Dedicated said but pipeline remains before, strong competitive. in

scale, winning reliability, proven of model. We the customers are safety value focused and with service on that our Dedicated

with are versus to Demand to X.X% and further penetrate of contracted tighter And Revenue percentages underway per down improvement revenue the prior was expand opportunities. XX% competitive trucking year-over-year. a business One-Way truck X% existing truck year. last One-Way of decrease up is are that freight quarter, a will that and was market, per count new mixed single-digit reflective Average first environment. the the $XXX bid verticals hard-to-serve year. specific was trucks. well well with fleets customer we other season In naturally our for week results over X,XXX positioned million,

quarter focus similar achieving near of controllables, on but prior we with XX% versus production the year, total are trucks. another with we As pleased fewer miles gains,

production We expect moderate. year-over-year favorable will throughout continue year, the trend the improvements although to

turns. In it segment our grow. we volume addition, for customers, our combination tighter rates, provides leverage better with the growth this market when a which options translates within plus Power of improved Only One-Way Logistics double-digit ROI, more Power In offering can market gains continues and Only One-Way production to to

loyalty, acquisition proving to is density acquisition, Baylor in ECM and region Northeast shipper terms long-standing Werner in our maintain to with the continues and expand of Our brand our customers. business cross-sell valuable

segment and quarter XX% revenues. declined total XX% our on the Logistics from Turning Logistics Logistics quarter, Truckload declined quality. first revenue Shipments to representing in our now $XX decreased X%. million focus declined volumes XX%, In first XX. seasonality revenue or sequentially normal Werner and of Slide Revenue on to due

big to of in of just approximately previously offset in year-over-year our per a XX% Only Mile quarter. Intermodal again As under decrease a basis gross of products. Logistics represented shipments. driven adjusted segment to revenue and shipment near Adjusted first bulky X% Power the volume was growing small points continued was quarter, points market up discretionary the a softer rate compression. make quarter. an loss Logistics margin increase on and first million XXX for despite Final in basis mentioned, solution show loss and revenues, spending by year-over-year in in growth breakeven, a X.X%, $X.X a which partially in operating the declined down portion due revenue, sequentially, XXX the reporting by increase Truckload operating revenue margin reporting

March. that near quality integration in margins expanding will through team success. in better The the as later savings term improve year brokerage able expect our and margins the with in We progressed, quarter gross operating February challenged margins and remain in to resulting were revenue was cost the

completing integrated implementation freight TMS processes. technology improved payment audit the quarter, further and we along Reed in advancements acquisition, of EDGE During with certain the and

seeing aid in are and initiatives, this sustainable from margin fruit in quarters. coming We these the will improvement

Our should to services food beverage. produce brokerage growing to and trends and strong seasonal also on and capitalize related improving refrigerated us position

we of logistics benefits our long-term Overall, the mid- and about encouraged remain business.

growing contract Given advancing solution, growing for and Only business Power Final portfolio our technology long-term and customer a strong Intermodal. strategy Mile growing and by opportunity

continue are On In cost to cost on savings well and to used our to continue expect a sustainable. in we provide of XX, equipment $XX savings XXXX, given freight Executing will we update beyond be challenging. and program. that million largely capture to our program on key expanding that earnings savings remains over and market margin XXXX structural and Slide an

on the program. realized rest through $XX We have the a the and million first of sight line have savings quarter of of clear

$XX $XX Operating or Let's revenues, the cash quarter total of cash up million flow of at for the million year-over-year. X.X% quarter our equivalents. look CapEx basis million cash remained strong down revenue, $XX Net $XX cash for XX% or and million in ended XX. or the flow cash with flow of Slide first $XX in was quarter first Free at was total on XXX revenue. or million quarter year-over-year. points We XX.X% the X%

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

or and compared Moving Net debt, the at to steady debt X% quarter with X.Xx. $XX nearly Slide $XX $XXX was a EBITDA XX. in to or down We million sequentially earlier. down million ended million XX% year to

earnings. On allocation a balance strong capital and our fund We XX, to investments to and let's sheet that are capital maintaining committed in to access strategy. growth Slide are priorities accretive recap to

remain We prioritize will $X.X in business million reinvestment and spent the during will share continue the to on repurchases shareholders. We to capital opportunistic. quarter returning strategic and

reinvestment reflecting expenditures, capital greater year, CapEx an business. and Regarding lower year-over-year XXXX of pace was gains a in the elevated

and with net expecting $XXX school XX% equipment trucks between are to $XXX XX% and we towards XXXX, network. terminals and trailing our and For CapEx be million, million technology, towards

the for of guidance XX, our year. Slide review a on Next, is

our down down to from to lowering flat to full X%. are We X% year down X% guidance fleet

X% to known losses additional from visibility isolated year-to-date with Dedicated. in We are reductions down

surprised than competitive Dedicated Although anticipated, not weak by environment prolonged market. greater we through a are this more

discipline while business to we We challenge losses, size are seeing at reasonable we potential it in in expectations maintaining wins to the and we margin this with second time growth and assist across new and see portfolio. lower is the on Dedicated half, for recognize price but fleet believe backfilling focus our

within year-over-year X% per full to $XXX expected to is guidance range $X.X range first One-Way revenue CapEx quarter remain decreased of to total truck consistent the our first Net X%. range million. within expectations. million is half $XX our and guidance our the million X.X% gains is first of by year of either on in lowered mile being for Equipment year. revenue million the were $XXX end per Truckload and to grew with Dedicated a quarter,

half. into similar second gains expect the We anticipate but second now to the linger values equipment in lower quarter

previously. we top million of result, a of our million and As down equipment to expect in end $XX $XX the $XX $XX range million gains million, now lowering to range from are the

the due out this quarter certain was discrete we throughout rate level onetime While first our in expect the XX.X% to items, year. tax to

age to and quarter year in truck to average of respectively, the Our guidance XX.X% The X.X years, full and X.X XX.X%. was years range X.X of fleet and X is first now compared trailer at end the our XXXX.

now I'll it to back Derek. turn

Derek Leathers

Thank you, Chris.

the focused providing strategy. Despite top upholding our making the safety our challenging They leadership our course backdrop, nearly our by macro highly and team members Werner talented stayed remain superior customers. priority valued and brand Werner of on the service executing team to XX,XXX reputation,

improve to steps investing costs advance taking marketplace in optimizing operations technology, cash the competitive and our actively by in our are We strength and reducing flow.

tested been built we're tough, to have times While last. and cycle

Our earnings historical proactive present demand on that, Werner accelerates the results power actions we let it questions. the themselves in and as have they open capitalize position up generate to demonstrate our for us taken ability future. With as to opportunities

Operator

Time X:XX This Central [Operator Bank. The Amit call Deutsche from with following company's the Mehrotra will comes closing Instructions] Instructions] end at question Daylight [Operator p.m. remarks. first

Amit Mehrotra

Derek, couple questions. of I my guess

of the to months? it and bid obviously still upside keeping utilization One-Way the apple. last XX bite navigating while fleet? trying First I about the the and that talked market. I the on know lot of view you're share shippers take on then one how a Wondering about persistent going kind your thinking that's the to supply to And side, your you've over feels view to been next Wondering supply, and if a foremost, the obviously, student of you're latest in optionality like on season the just big where could are historically, navigating you the and know stubbornly supply is on be

Derek Leathers

Thanks Yes. Thank Amit. for the you, question.

to market to at of we've will as balance. like turn do this in any quarter, it's we into I life we've seen point. and kind kind see encouraging, some referenced get back got some last in some are an tough encouraging. We've and are side, that's to supply got demand work that new there sort this of We spring project did activity of clearly, indicated that predict ourselves QX. you uptick of tell the On still but I signs

continue But do market. of capacity end the to the out come need we the of at day, to

ways customer that can of in we're long closer customer we've I late. conversations of as interactions a time. even and think equilibrium been and to variety load than see a bookings in We through

just it's bit longer than this a to Clearly, extremely so of play going little And anticipated to has take been and longer us out. frustrating. any

it that a to rates invest that we indicated. than there margin really at a point the believe, last you relates bite of take you question, tell As turn our of what sure second that I clearly back will point to focus reinvestable, that knowing is disciplined to yes, prior. staying the to group part around us meaning your always are apple, been fleet. try cycle, end would it's into any out make But as customers there's making a the we're of is especially this the allows and the at can going disciplined closer to in be we

in honor lead the got enter frictional making The desperate at that strong, and havens been find includes that who indicated safe in into, of And plays that sure agreements of includes to we Dedicated we get times, environment fleet. has what true out. cost-focused can to their approach, people that's as we and why that's deserve. to our see assets. to are conversations, things how frankly, are is And that we've feel encouraging competitive shareholders One-Way, as for a but But going though is we that so and stay very disciplined we've pricing to own some our better late. the further both We'll as attrition within possibility pipeline still before some

Amit Mehrotra

difficult so, is pickup in quarter certainly does Yes. get had but the we I weather the a market. mean, progress I it's a hope wanted weakest, obviously, you different -- to your And on the through obviously, and the XQ? I mean, thoughts -- we typically as that. OR then, Chris, OR I the of latest challenges. see Do OR, first

Christopher Wikoff

Yes. Sure, Amit.

improvement So yes, have as we should go we forward.

Our but here. that TTS to to get in to continued -- program our some time going long-term improve expect take long-term But on to and our cost to focus XX%, continue target there. in do our that's continuing strategy savings XX% from be with we'll we continues program to

Derek Leathers

I the add, the that's would think expand. it is is, highest now each obviously OR to control can't going keep the margin but these to tails team about quarter what And we just Amit, are we control and that improved month We going off to macro, we level. what committed our way execution the trend is We work the to do saw one forward. to inside can walls. of possible

Operator

next Seidl The is Cowen. Jason from TD with question

Jason Seidl

per a from week. the of Noticed quick per truck couple ones productivity gains nice Just me. miles and

that curious, in Just did mix result your shift in any business? big

Derek Leathers

place Jason, that to it that. taking we order very is shift would I us. large to are to intentional. in know think things well leaning In and and we further but a to I that further clearly, our -- that's it's I'll intentional. that mix call lower cost we're to do serve, particular be take shift, The don't

they better length haul operating We've kind productivity, better productivity. own of heavy engineering a on in that itself and but high customers. cross-border. -- can drivers, further -- lanes That where have our service levels both our extract assets we Mexico been to more we so lends for focus know repeatable of repetitive our more also You aggressively that for are really

lot there's it. intentionality a So of about

of and is us been to working that selective. we've helping building Some on be more the tech

now. right is increased go that's nonetheless, that tough the we think we we utilization, producing it's hold Now forward. it we that something can backdrop and do freight as a one like But have to in

customer But shows tougher specifically our it's And started at think good leverage and place supplementing Only an utilize to result see in assets, can our an solution a it then will at rate you per more Power for taking really and that's where back for then mile into really what to those from of upside 'XX. half with produce better we they're as gains where it high-velocity the because cycle. what get And exciting. Comps get in in I the operating network utilizing a ability up really denser, in. to our half comes the back that that's up higher cycle

Jason Seidl

to is That on I I you gives my makes the I or is for you sense. to Chris, guess mentioned what in of follow-up plan more the it's back sell Is if trucks I'll on you pricing is that comments the used both both improvement a, and half for the And the going year. trailers? equipment. improve. think use pricing on guess, in there think that that side, you expectation that guys that just confidence

Christopher Wikoff

go expect the in Yes. We do as through the improvement we some values year.

it's improvement be think as to through. I modest going we go

fleet advantage Where We appropriate, a and network leverage and our what in to are can. national being mindful having maximize we trying of it's sales, operation. equipment

where the But of for that, the maximize really, leaning improve. to it's market we're And timing we exact to So say into but improvement. that for difficult gains possible. to looking do look just

Derek Leathers

only the then put And near does vendors would the that holds as where that And it are up that on start put folks there to it used. begin placing in public going pressure be categories as to with to is be that pressure under data or secondary of view. work our business, would and this internal is into warranty, start carriers that, The really all often about pre-buy, the better of about comes follow-up the same question for out into they selling while the and all or their relates living forecast with, used needing a as new talking on their also think the market, of refresh I to fleet well to we're equipment those plays higher-value the Yes. do that's buyers out that that people that still today. add that thing lend

believe, of issues in their lot getting there's year. a Now coming -- fleet, later at fresher and a starts place folks us regulatory hands trucking this taking we much on getting

Operator

The Shanker with next question Morgan Ravi is Stanley. from

Ravi Shanker

and how are cost the welcome. on all with cost the how just given bringing a lot is wrong down cycle it little cycle post this bit has pull been, the of will pandemic. in do just the But for to lasted actions basically struggles with not the flex? back a structural super tactical it's decided do coming the down companies some aggressive the So well? time But notable be you you reins the most get the resources in long I actions and Or think in deep time because that responding just think transportation side, some of think to as obviously, cost to of maybe more time for cycle

Derek Leathers

Yes, Ravi, I'll take that.

any to is where our with others so that vertically will is advantaged I network. over off, rebound, ability our rebound regardless point school First to the in moment, tell fleet you, given I ability at our think integrated of from

at puts believe And fleet the us we some so we to a that advantage. that elasticity have competitive

also, we decision of stages right as That is we very enter on and that. that where keep this discipline late back pull pricing with therefore, start focus the pulling confidence I'll really so to particular gives think back the And cycle. us

too As it relates I where to cutting far, don't back think we're that's at.

I kind that. a and seas, going ship Werner. makes but at live by game. -- eliminating without sense. frankly, for this be in We're trimming tougher future not is But not damage incremental come strategic And savings to This cost to do preparing those can is of to today. the initiatives to we're the tougher we're cycle long-term several without. this prudently doing cost it in to long We're going where we're we that, simply think we're it ones for more. And and

now Dedicated it Final transactional for in the larger and as well our to participate really place, One-Way division, upside Logistics Mile. a takes I'm both Power much well brokerage, about excited Only able be turn as and operating Intermodal leverage as as via ability to as both

from support in better it I we the comes, with. than to the way even set, table in ability think, cycle. But up and to the So last Clearly, is the macro. that feel respond position as comfortable some a need our support is we was

Ravi Shanker

think Understood. maybe as industry years? to And what you significantly of, in that just pull Or coming a the up That's something is -- we are down kind the because margins? really of on coming mentioned you that meaningful the I guys think reining tactically rest had in with that's ways again, going follow-up, to helpful. a be would insurance about costs

Christopher Wikoff

Yes. This is Chris. on that. Thanks for the question

last claim bit we of frequency of issue back elevated So of second and those costs some the year, in half our issue, were we continued seeing this and certainly to again, a per trends of a view half more overall, reflect lower record first metrics. a not insurance last setting the necessarily as trend of that the But was quarter not safety so our in much still year. doesn't cost representative

we We in XX-year accidents first year XX-year then rating. we our other communicated the low. per low a first for quarters, last in hit quarter, had And to a that DOT comparison preventable million

in the the premium positive safety we we increase perspective, metrics. a we year, of half -- had year. So second continue see Last to low very single-digit from a

through sustainably focus low per record impactful. This cost line. on claim we really that very and will have positive a come So that's And insurance of that to is the more that in safety continue anticipate as not we issue. expense safety a more and

Operator

Group Wolfe Scott Research. with question is from Next

Scott Group

being So Derek, discussion sure Knight The a highs, any budged. call higher guidance you think asking you obviously, guidance around lower lows. I'm you an starting I'm then listened I'm Knight. guys. margins, the for just opinion on fleet barely for -- given And there? so that thoughts just asking to and margins how I'm point about the And last week for in that the mid-cycle curious down mid-cycle the not bunch. CapEx came

Derek Leathers

previous longer were thank highs in Well, think Scott. lows see anything as that, time and perhaps for appreciate cycle. is the cycle been than Clearly, COVID it. endured. a have we've do this you the lower higher a out, than Look, we'll plays any I up lifetime, I once

the cycle, really that return market environmental lingered is to for go place introspection. tell. unique We we per to we've been overlay into relates will to the back longer. I going talking believe there's suspect engineering as the not to to it significantly as a comparing with taught of that's unique, to timing time way to the focus headwinds, time prior delayed cycle, certainly also that range look made position suspect, that be of as percentage the on than different is there putting around, why as at and out. I to to then We and the TTS. And to In acquisition also before. move the in somewhat that plays as margin long-term the the to now regulatory carriers produce be although that's relentlessly pain in miles cycles, truck lower getting portfolio in but very our significant lessons only may forward more interim, directly much TTS is this size up of our capacity it's people whole our about. as to we've we affirmatively that logistics of a of the and the us next not been that And have we this a fleet that strategy for ReedTMS, job this just as will amount guidance significant it come plays execution with of be nicely. have nearshoring it's that with combined have our our one portfolio, freshen when kind COVID, we're increased for capital this That's Mexico relative long-term significant ourselves reluctance outlays reiterated allow done greater with back position in to be good cause of lot there, I but through going forth margins, and some of return without next within guidance early portfolio, ever has in

ready that's And still to we it on trying happens. when and for term. a longer-term like how longer we're build why it the turn of take and this view we're out portfolio bullish So prepared get what looks

Scott Group

-- to guidance. ahead. Okay. go a just then relative I the And -- did you the on had if yes, thought CapEx fleet you

Derek Leathers

apologize. I Yes.

the of part CapEx the On equation.

half is, first one, for talked back fleet carefulness We seeing some the year. part whole of could look you're what the think is what I guidance opportunity. half, on and ranges whereas The for thoughtfulness the like. there CapEx our the about

pipeline have and strong about be do talked encouraging, so we Dedicated to so And want to we be that do able that. to the of the we a year. reality back prepared half for the That to look continues

about year saw a what think thoughtful CapEx reduced really you trying how we that. to from be about ago. It's And dramatically just a it's

we have. make equipment to And is the But we fleet year to By at to don't Power to fleet, not a want grows on want opportunity way, trailing that comfort we That the level fix want year first and to with so a go to has Only we I it's statement the my half range, the it. or sure the range. grow point, that's guidance. this full have starve continue

Christopher Wikoff

elevate sorry, net that's Historically, And to XX% $XXX on did been $XXX to that We to range only revenue. million $XX as XX% so That's in for CapEx. just QX, -- of Scott, of I that just a million lower will a also the year. expand guide through for percentage going revenue, was CapEx. net million not as the for we was the dollars, lower go year. It that's

Scott Group

brokerage to make and maybe have me the know giving come we're thing the again? is shrink saying carriers? the businesses, do that you then, don't that strikes out a to and help maybe market. And to know. And and capacity accelerate reduction longer Okay. Power but think the this sort And cycle brokerage of but volume I this small offering, for just small this -- much versus the going are for crazy it's bigger cycle that asset-based maybe it the I prior of this maybe much Derek, offerings feeding Power bigger same you -- Only taking just Only this get sense could cycles, it carriers. could a just volumes is offering, to that crazy, these again, And everyone capacity is all others carriers thought, you shrink stop

Derek Leathers

don't crazy a I Scott, thought. think Yes, it's

positions distributing issue think that create. And stop would that, do other we'd that lies Like to actually to not right? I asset it the have brokers play in just the of actually I out. and the advantage it freight execution, take assume that's would magically also don't how the somehow don't that have would think that vacuum

feed fill They would they that think I carriers. would those vacuum.

Werner that most one, will, doing and able approach a think competitive sure really properly for best and took to includes where a asset a our term. a Logistics, from got small carrier least lanes our effectively can this a kind And and here if they're bear mixed market of assets, believe what performance perspective, light, operate is And that portfolio, we to assets designed effectively. It's are at may product to exactly more us have making space compete long so on the which sure more large it and to is be to which both do portion while, you our then we've at we how approach. asset Truckload of non-asset I bring a different going optimal execute for so the we're instead, if to non-asset than make do

do experience. trailing that and non-asset reason broker so believe we've valuable in it's equipment the the a Power the from customer is experience maker a Only got place. difference and Power I Finally, in in is Only there already completely different

own hauling a overall. And And in a I experience growth, that of growth with outpaced Power interaction, portfolio inside think are we're to Werner it customer Only of wins with portion seamless seeing outside the seamless that's gets also division Logistics market. remainder capability. in outpaced going tracing a which our Power is assets. and tracking The Only. The a that and on We

some of do believe did saw XX-or-plus the you pricing type to point and are. growth these and into culling off so front rates. the, in because keep and double-digit just Logistics. some in bottom I front of quarters aggressive center we that's untenable especially going at believe, we market as in we the discipline go us that And where We're the forward, on -- QX, of yielding We simply being

Operator

with question next JPMorgan. Brian is The Ossenbeck from

Brian Ossenbeck

Maybe just wanted that conversation to up follow on there.

or growth the think production you In ones maybe fleet that of fleets, also mid-sized a fleets, doing? Is the bit Werner here. large something of on And terms there's that side. for larger are therefore, other a else belt XX% you utilization see tightening

you what other we've for more the but while side, speculated And able so they're some keeping do think be from maybe least on on would really carriers think just that? that at the these accelerate going smaller keep patient move to in do what of is you capacity to front? on market. And from we that under this a now, finally if do then would have here, Or

Derek Leathers

utilization the with Starting Brian. Thanks, Yes. question.

that's fleets shown improvement anybody year-over-year, have other utilization my double I Although to knowledge. haven't digits, seen hit

something with team they're that. at work that it's to We're extremely proud putting levels think I in we're and of our executing the do that laser-focused on. I'm

bear very to focus do a I I earlier, tech we're sort that some think simple the as and tools coming stated as well really just deploying on it's early the what of as, of that customers that we innings of -- new some a on technology of with then that Only still make providing and to the or doing to and high the we've remainder do our Power to well happen. based assets via some a at solution that deployed level

come getting easy hard sweat number But of. XX% it's a that the think of to with especially by. we we're not is the It's try to extremely like in. achieve, creative I with freight we're are proud more one market So further. that can us all how assets But again, the to

predict. it's As it to relates attrition the to question, tough

ongoing seeing are attrition. We

and and of you side cliff. that the people wrong going will believe to shortly. on We're continuing bankruptcies size find our I maintain customers don't -- guess, push discipline fortunately, And weeks, are for be the themselves impactful, look to will others over firm going it, continue ground but there recent willing rates that at stay to have on but how more starting the ledger now continue that take notable, up see, to or of are to You're I unfortunately, sign in all on are to to tenable place. fleets seem are that more that depending to too it's

do got be What instead is day. all around about We've on So meantime, got patient. to best-in-class redouble to can't we out. it's our sit In to have the play execution. efforts worrying we it

Brian Ossenbeck

more have you the All term, that? short that probably can expectation seeing the And visibility some how is to that demand so into I in in just that you of the you What drive demand -- of the just about recover that in And still for, TTS Derek. for right. sticking Is talk far, Is the have if visibility? side, ultimately, market April the seasonality? an terms what then helping in to quarter you're maybe second here? guess, there. spot compares

Derek Leathers

Yes.

in general, A So in in level, it's Cities. of April bit and a I'll keep but of Tale QX, and fairly this high Two

do have profile. of are It's pricing a still that that believe do QX. reinvestable continue the the a some Dedicated in At referenced We're sign to I've and time, implementations some that net our so. One-Way play have has discipline appeared contract to to remained the attrition new those, shrinkage seen The pretty some -- we that That's spring that and new of not see in is early, we will early, pipeline several already shortsighted and margin for as able times. And We for activity dedicated would -- we increased but simply or QX you'll fleet opportunity opportunities encouraging. of on pricing. we've up out or right we have now know same that seen in fleet that books. kept project limited not activity, are contrast early. that by be not some we believe those strong

and to forward. January terms that and And March I we continue bookings that taking just a are network And overall yet. go about how we then of seem so encouraging. the to we're in But February indications to the think and to as bank for as talked demand about that just profitability on prebookings from I'm indicators path build all not

how we'll out, early encouraging. plays so to it are see signs And have but

Operator

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

Ken Hoexter

a Dedicated So help the more. on bit just maybe little Derek,

the were there to talked direct You some is the understand, of stores? one, about but maybe of loss because that to increasing Or competition. are stores, your want I shrink plans just not I of know dollar closing there opportunity the is back that talking bringing or just stores? fleet. some cross-border with there out know about And that some I now shift planned in expansion absolute an of that to some

shift a in a bit So a little fleet? Dedicated that Maybe permanent maybe is more that talk that market? about

Derek Leathers

up Yes, our this. discount in of one start Every within Ken. I'll retailers I truck is year-over-year mean with Dedicated. count

So going announcements I carnage just big especially the and some want there's different on of Dedicated, idea if rest to put this -- stores within to on dollar different this that types. hyper focus

and are in We our board the that dollar across discount segment, up includes retail the beyond stores.

and we us on have certainly So our competitive competitive value. differentiates that one one feel like price general right is one great in believe now. It's we product we advantage has that is it's from very still a that's appreciated that competitors. Dedicated that

rate because to that levels full that is would discipline if market and going we're looks but the times we referenced current against. remiss of in don't to low multiple going the we just be historically accept I've least to is encouraging pricing So win pipeline at be at that continue that it execute

hope to just in tough because initial signing harder Dedicated for you where so that lines cases predict but becomes that term, decades. up most a It's anywhere it probably last is now. in And in those cross than not relationship right to Dedicated, talking multiyear about what you're be,

it with right thoughtfulness. And right the so do to to We we going want in. get want it

there last set been about of know and you all than more Dedicated. bidding certain it provided little RFP is competitors based in fleet incumbency some whereas And with to be because we've that actually is, I'll on work, your that's an what same going is what sounds once on that actual bid to talked a amenable mention And then biggest skill profile a enter. disadvantages thing often the you that one were the is, work attrition the

and Dedicated have what may exposure of we've and got the that up that entrants And understanding into we're new a pricing. they're of full lot in for, so signing or may not seeing

to to on is push building and value price, the long-term I'm and walk afoot, And as we're takes going built no that to that and what away place. job staying the company to looks pain sure the make table our sure about when is still making like there So excited is last. it we're shareholder that's and and fact turn focused plays a away this is know from which short it. we're there the term, keep out fighting through this in But refuting

Christopher Wikoff

particularly there's win customer replace X, market some that yes, with a feel -- and in about of But And be can bit have good fleet on a large in add growing is this we just near-term the we Dedicated material verticals, Dedicated large positioned losses backfilling fleets. time, more of a a X it. to would they be market. addressable on our, more private still a can size customer-by-customer do I we Ken, retention. take these average, new market. high X, tighter fleets beyond There's can well basis, to

for a less this in long of fleet relates X/X to referring positioning then the than supply chain the and approach we've the like. to, competitive than really So yield more and are been making we're to parameters little these that term. And losses managing bit long that customers and isolated them that is sure we environment margin X/X really with related reinvestable a changing into to their little And getting and term. are that's pricing bit dynamics

So strong continued numerous us draw pipeline price from. We've there very to remains opportunities. for to a

be continue on be but competitive, it's we'll and So focus discipline pricing term. long in to aggressive and the the mix for

Ken Hoexter

I a that carriers you that some maybe particularly on competitive noted I talk aggressive and was of of or Does X%. I kind little down X% just bit in that in And that that we're -- message follow-on or, seems there to or revenue for get you looking that -- could out ton are with there rate? if if And or call appreciate first more down Or kind brokerage was understand there a X% wanted quarter is set brokerage, to of sticking either mean want just that. kept guess, you we're getting mentioned stabilization I the out sequential hey, industry -- want guys would leader and down it. rate that a bid we season a just I you was anything Is like the to? guess, who maybe then just there. improvement to on mile if midpoint pricing? industry per or it your

Derek Leathers

Well, a couple of things.

do get strategy. going not I'm when apple, which more out point one call themselves a those into non-asset. behavior customers, First, the is with aligning industry cycle, any even this thing find than to It's deep logical looking on at to bite take the think thing at cycle. another to you I just you leaders their do are a or in assets

a win more and we see most customer be we're And to base. bit aggressive well. broker matter can we're the that And it's starting aligned us. whether that bid of a quarter even have right you're not. are to that with some getting And might with than finding noise as we ability ago harder knowing matter we to or so cases, rates And perhaps results. But now see our And certain problematic, have cases, white it's those right potentially X assets upon underpinning little that's they are. by are now, in a is created the in more

the a a and we good we we're quarter. go cycle strategy the sure to QX and -- longer-term to a there, what results. the playbook to, know committed just drawn plays stay those feel to again, a back job as what despite about make through It's execute than and through Our view. longer-term It's works doing and

stick this to move have as the out, and right we're our to success. So for we'll going forward. knitting plays And I think formula

Christopher Wikoff

down on X% the last Truckload being rate Yes. X%. half your guidance question down And per Ken, to first you're of mile. rate just believe part to on the year-over-year there up and mile the referring to per I follow One-Way of

correct. You're

through referenced on you down year-over-year think being quarter a basis. the I first X%

to within also the including So trending low are about and although season. more end, the we're range, increasing are flat, some point, mixed some bid to that but that this lower recently, been single-digit reductions results There's XX% some that through renewals. some still

we discipline bid part in have but there. go heavy a of season here, we'll more the continue that to we range pricing bit can do So to what and in to the stay maintain the

Operator

from is next with The UBS. question Wadewitz Tom

Michael Triano

Triano on Mike It's for Tom.

year-over-year what with out So a one your was operating but reason the the in trucking is to largest extent flow flow cash is resiliency there. you've best-run Werner companies the up tough obviously, you that a the X% of cash down But this market? free representative had environment, exit is CapEx. been broader trucking the stubborn and a to capacity market? do think of why has And so step

Christopher Wikoff

the cash first just of and Well, terms part our your in on of trend. maybe flow question

cash of still factors those fleet. in the cash all flow to reinvesting a operating to was about in feel appropriately CapEx margins free and mindful managing of of a that lower environment, being our have in of year, Over the been for that revenue. this were We flow percent has the basis We conversion. the past outcome good X% CapEx. the higher free that cash revenue going years, given level just fleet, flow invest couple the free In gearing plan and the X% still towards a on year, more building

think a this going on forward. free that cash even be conversion So in environment, we perspective going is positive to continue that, flow to

Derek Leathers

And the jump of part second I'll in. that,

this. not As cash midsized about capitalized probably fleets, it well out. sure towards putting trucker much thinks to are lot until that, your I a so do relates free I'm small large ran think, to diligence it able certainly are others to runs of flow

to even kill trucker. of a and point. ability that a of make to if that's even waves burnt or particular end not And and is, that will or that them -- running but largely I equipment. There's at flushed the cash reinvest in I time refresh the difference hurdles re-up are life, takes reinvestment were they regulatory operating about of think difficult. a completely come burnt piece to at no to out that years, And off, the out COVID equipment it with there they things more this they're had other think off long they coming

for But life nonetheless, to not flow Werner burn it's just of believe I it's they're to managing a So going happen. are. long kind remaining But continue free exit. to no, that do way think happening, taken the it's them cash time through asset I on and Enterprises people the like ultimately

Operator

last is Bascome the And today question Majors from with Susquehanna.

Bascome Majors

do expectations don't short I I want in get to seasonality be commentary helpful term but to the some here, of earlier and the set together it you call. think would too bring level said

out do that kind reasonable the is of uncertainty there? that about? takes feels that look I XQ to from the typically they with puts the XQ, income if kind the to, at So you've relationship talked outliers, that Or XX%. and too operating grow and XX% earnings, normal of call range and anywhere given already you it historical out strip just to Is the early it,

Derek Leathers

your color, appreciate business question. in EPS I Bascome, just the but to give some terms of We guidance, guess, don't I outlook. give

remain As the across ongoing driving we No expect excess rate would capacity, look is this to attrition to competitive. to pressure keep demand which portfolio. of midterm, real whole signs more the The that rate is forward, steady. going going environment. environment we obviously kind be of in meaningful It's

heavy although, a some in bid losses, of draw quarter that of the from. part be strong the fleet to we losses pipeline of Dedicated of go season. second have the opportunities we'll again, We And can into more kind the backfilling there's

might favorability we moderate That equipment to really to truck some for continue market go on year, on said year-over-year that year-over-year be more favorable track week used seeing to last year. important. difference We per revenue expect earlier, bit going to that but through cost that I operational per production and And as safety continue and some expect and advance a of continue year-over-year The would changes, to looking we continue side. TTS into will the get is the into the to the as those structural to continue to per I progress think we're And We'll throughout a to our basis. we numbers which improve low a there. that on and growing of One-Way growing. show those. lean second trend savings, million quarter are are our more the of continue We'll $XX excellence half in lean the year. We'll modestly improvement on

be and the low on elevated more off in well adjustments quarter at quarter aren't to market a positioned of the the we and first was controllables, navigate were this macro. some unique some in tax continue. quarter, then market we a serve It insurance control we're the call We weather, the reliably it, health to and to safely, to going execute compounding market. -- on our focus QX one-offs coming better can the typically necessarily really ready expected and $X.XX for is tighter be customers scale including, to that, long-term income So factors that can't costs If strategy. in discrete controlling continuing do peak, $X.XX the adverse our there terms and and of

as there. better controlling specific can just for to lot up to continue not expect being I'm and you comes. going be focused would it what would a probably we we're we improvement, set but as market and So like, when some on a being

Bascome Majors

expect peg hard sequential historic bogey like that sort So improvement any versus to at do really it's sounds you of it just point? this

Derek Leathers

We do.

Operator

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

Derek Leathers

Thank you, Gary.

to open our very our the our to commitment through other impacted choosing associates daily. will to eyes to get for serving across I the current want each navigate to thank to I us everyone nearly Werner dedication, reiterate our want Omaha we Werner supporting with for as recent environment. we operate opportunity Midwest, their tornadoes loyalty their we I by continue wide will and this. support support and and and the customers want for valued thank XX,XXX giving also And and customers business. the challenging

while and investing for We what expenses and improvements, controlling our can we operational savings future. strategically driving managing are driving

for Our our balance to strong continue and our going going eventual for to all us flow is meantime, customers. remain to being joining position our cash puts serve a our the to and sheet on for to remain the market to approach. you going turn. In portfolio We're us today and with is going thank call. diverse we're great healthy, and in disciplined our safety committed I'm we're

Operator

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

You may disconnect. now

Werner Enterprises (WERN) 30 Apr 242024 Q1 Earnings call transcript