Werner Enterprises(WERN) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q2 2022, revenues increased by 29% to $836 million, while adjusted operating income declined by 2$77.6 million, and adjusted EPS increased by 1% to $0.87 per share [15][20][25] - The increase in insurance and claims expense was significant, rising over$20 million year-over-year, impacting adjusted EPS negatively by $0.19 per share [9][15] Business Line Data and Key Metrics Changes - The Dedicated segment ended the quarter with 5,320 trucks, achieving 6% truck growth year-over-year, while One-Way Truckload had 3,080 trucks, including a 14% increase in average trucks due to the ECM acquisition [16][17] - Dedicated revenues, net of fuel, increased by 14%, and revenue per truck per week increased by 9.1% [23][34] - One-Way Truckload revenues, net of fuel, increased by 13%, but revenue per truck per week declined nearly 1% due to a decrease in miles per truck [24] Market Data and Key Metrics Changes - The consumer-oriented freight base performed well, with nearly three-quarters of freight revenues coming from retail and food and beverage sectors [13][31] - The freight market for One-Way Truckload moderated from strong to seasonally normal levels, while Dedicated freight demand remained strong and steady [57][59] Company Strategy and Development Direction - The company introduced the Werner DRIVE strategy, focusing on durable financial positioning, exceptional service, and innovation to enhance customer value [42][46] - The strategy emphasizes a balanced revenue portfolio and a commitment to high-quality customers, particularly in consumer staples [30][41] Management Comments on Operating Environment and Future Outlook - Management noted that the current market is returning to a more normalized setting after a period of hyperinflation in metrics like spot market pricing [74] - Concerns about the economy and truckload freight market have increased, with expectations of moderating demand for discretionary goods [61][63] Other Important Information - The company is facing challenges in receiving new trucks and trailers due to supply chain issues, impacting fleet refreshment [19][38] - The CFO announced retirement after 33 years, with a search for a successor underway [64][66] Q&A Session Summary Question: Discussion on Dedicated revenue outlook - Management highlighted a strong pipeline for Dedicated, with significant interest from customers, allowing for selective growth despite economic conditions [72] Question: Market cycle perspective - Management expressed confidence that the supply side is more constrained than in previous cycles, which may prevent a significant decline in the overall environment [76] Question: Capacity in Dedicated market - Management noted that Dedicated is a unique market with high service requirements, and the pipeline remains strong, indicating resilience in demand [84] Question: Impact of AB5 legislation - Management indicated that while Werner is minimally impacted, the legislation could disrupt the industry and negatively affect overall capacity [100] Question: ESG initiatives and new ventures - Management emphasized a commitment to lowering carbon emissions and exploring new technologies, including electric and hydrogen fuel options [107]