Q2 2021 Werner Enterprises Inc Earnings Call
Good afternoon, and welcome to the Werner Enterprises second quarter 2021.
Conference call all participants will be in a listen only mode.
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Earlier this afternoon the company issued an earnings release for our second quarter 2021.
Earnings and.
Posted a slide presentation these materials.
Those are available at the company's website at Werner Dot Com today's webcast is being recorded and will be available for replay beginning later this evening.
Before we begin please direct your attention to the disclosure statement on slide 2 of the presentation.
As well as the disclaimers and our earnings release related.
The result of forward looking statements.
Today's remarks may contain forward looking statements that may involve risks uncertainties and other factors that could cause actual results to differ materially.
Additionally, the company reports results using non-GAAP measures, which it believes provide additional information for investors to help facilitate the comparison.
And the past and present performance of.
A reconciliation to the most direct comparable GAAP measures is included in the table attached to the earnings release and the appendix of the slide presentation.
I would now like to turn the conference over to Mr. Derek Leathers, Chairman President and CEO. Please go ahead Sir.
Thank you.
Good afternoon, everyone with me today is our CFO, John Steele and I'm pleased to report that Warner delivered record earnings in the second quarter, which was achieved through outstanding execution, and a robust freight market with unprecedented driver and capacity challenges. The Warner team worked tirelessly and creatively to provide our customers with best in class solutions and superior.
<unk> on time performance, we continue to expect strong freight demand through the rest of this year and well into 2022.
Retail inventories require significant replenishing, which will take time and bodes well for retail freight demand going forward.
Strong sales combined with persistent supply challenges resulted and the retail.
Inventory to sales ratio of setting another new 30 year low this quarter at.
At the same time, the driver shortages of severe as I've ever seen traditional industry headwinds remain including aging demographics and recruiting for the trucking life.
Werner is well positioned to thrive in this business environment as a result of our consumer oriented freight.
Driver preferred dedicated fleets industry, leading cross border, Mexico business engineered lanes, and our 1 way truckload segment and our comprehensive capacity solutions within Werner logistics.
In addition, just after quarter and we added 500 trucks and skilled professional drivers to the Warner family by acquiring and 80% of the regional truckload.
Retail of the carriers of the ECM Transport group.
Slide 4 provides an updated snapshot of Warner to include. The addition of the ECM acquisition, which we completed on July 1.
ECM adds 500 trucks in 2000 trailers to our combined 1 way truckload fleet and provides us with the short haul regional fleet presence to serve customers and the mid Atlantic.
<unk>, Ohio, and northeast geographic markets.
<unk> has strong safety and service performance and outstanding leadership team and highly skilled drivers with extremely low driver turnover.
After the acquisition Warner continues to have a consumer centric freight base with over 70% of revenues and retail and food and beverage nearly.
Truckloads of our revenues are with our top 10 customers and almost 80% from our top 50 <unk>.
Warner and ECM have long standing and growing relationships with the successful companies.
Let's move to slide 5 for a summary of our second quarter financial performance for.
For the quarter revenues increased 14% to $650 million adjusted EPS.
We have 40% to 86 per share.
Adjusted operating income increased 37% to $79.1 million, while our TTS adjusted operating margin net of fuel grew 340 basis points to 17, 1%.
We generated margin expansion from higher revenues per total mile continued strong safety performance.
The group effective expense management, despite continued cost inflation and improved gains on sales of trucks and trailers due to much better than anticipated pricing and strong sales execution.
Dedicated freight demand remains strong and second quarter as our largest dedicated customers and discount retail home improvement and beverage continued to generate robust sales.
<unk>, our dedicated team once again executed well and the second quarter.
1 way truckload freight demand was also strong the rapidly growing economy combined with several factors limiting and industry capacity resulted in excellent second quarter freight market conditions, and our 1 way truckload team performed well.
We made further strides and our logistics segment and.
And the quarter stepping up our growth and both revenues and operating income despite.
Despite much higher capacity costs, which impacted our gross margin percentage for our contract business improved pricing and operational efficiency led to better logistics results.
The driver recruiting and retention markets became more challenging in the second quarter.
High quality drivers.
Divers are increasingly harder to find and retain with intense competition from other carriers and industries that are labor constrained to.
To address driver turnover, we implemented additional selective compensation increases.
Our TTS company driver pay per mile increased nearly 11% year over year.
In addition, we continue to deploy innovative strategies to strengthen our.
The driver positioning, which I will discuss in a few minutes.
And second quarter Werner fleet sales capitalized on a significantly improving pricing and market for our premium used trucks and trailers by realizing substantially higher average gains per truck and trailer and achieved equipment gains of $13.5 million fleet.
The fleet sales are a core part of our business for.
And the last 30 years, and our Werner fleet sales team performed well and the quarter as well.
And the first quarter, we made a strategic minority equity investment and 2 simple and autonomous technology company.
2 simple completed its IPO in April and experienced the stock price appreciation through June.
As a result, we recognized.
The $20.2 million unrealized gain on our investment or 'twenty 2 of share, which increased our non operating income and second quarter of 2021.
We reduced our second quarter GAAP EPS for this item and our adjusted EPS reconciliation in future quarters, we will mark to market. This investment based on the change and 2 simple stock price.
We ended the quarter with 7000, and 645 trucks and TTS 5 fewer than last year and 90 fewer sequentially the extremely difficult driver recruiting and prevented us from achieving our goal of organically growing our fleet during the second quarter at.
At quarter, and 66% of our TTS truck fleet was and dedicated and 34.
Percent within 1 way truckload.
Following the ECM acquisition are dedicated and 1 way truckload fleet percentages changed to 62% and 38% respectively.
At this point I'll turn the call over to John to discuss our second quarter financial results in more detail John.
Thank you Derek and good afternoon.
In the beginning on slide 7 and total second quarter revenues increased $81 million, the $650 million or plus 14% our.
Our TTS revenues per truck per week increased 6.7% due to a low double digit percentage improvement in revenue per total mile.
All set by a mid single digit decline and miles per truck.
And a greater mix of shorter length of haul dedicated versus 1 way truckload and few of our team drivers.
And logistics continued to strengthen growing revenues by 29%.
Adjusted operating income grew 37% based on 33% growth and TTS, 25% growth and logistics.
And improved financial performance from our driver training School network.
Adjusted earnings per share were <unk>, 86 up 40% year over year.
Beginning on slide 8 let's review results for our truckload transportation services segment, and second quarter TTS revenues increased 10% on higher.
Our revenue per mile lower miles per truck and 1% fewer average trucks and.
Adjusted operating income was $74.4 million or of 33% increase driven by a 340 basis point expansion and our adjusted operating margin net of fuel.
Our adjusted operating ratio continued to show strong.
The improvement with an 82.9 or.
Turning to the TTS fleet metrics on slide 9 for dedicated we grew trucking revenues net of fuel by 10% the $262 million.
Dedicated average trucks increased 7% and revenues per truck per week increased 2.4%.
Dedicated rates increased above our guidance range of 3% to 5% and miles per truck were lower due to fleet mix changes our dedicated customer pipeline remained strong.
1 way truckload revenues net of fuel decreased 1% to of $166 million average trucks decreased 14%.
Due to trucks and moved into dedicated and the challenging driver market.
Revenues per truck per week increased 14, 8% as a result of higher revenue per total mile which grew 16, 7%. This was partially offset by our miles per truck decrease of 1.7% due to fewer team drivers.
Like.
And we anticipate ongoing inflationary pressure for our main cost specifically fuel driver wages and driver of sourcing we will continue to drive operational excellence initiatives to gain greater efficiency and address cost issues and.
<unk> working with our suppliers and attempting to recover these costs from customers.
The other wherever possible.
Moving to Werner logistics on slide 10, and second quarter logistics revenues of $142 million grew 29% and.
Adjusting for the sale of Warner Global logistics and the prior quarter total logistics revenues grew 52%.
Truckload logistics revenues increase.
<unk>, 49% driven by a 37% increase in revenue per shipment and a 10% increase and shipments.
Power only and project business continued to generate strong revenue growth more than doubling from second quarter of year ago.
Intermodal revenues grew 52% supported by a 17% increase.
Kris and revenue per shipment and a 30% increase and shipments.
Our logistics gross margin percentage decreased 350 basis points year over year due to the much higher cost of truckload capacity for contractual brokerage and intermodal shipments.
The address the increase and cost of truck capacity, we reduced our <unk>.
Kris will truckload logistics shipments from 58% of 48%.
Also intermodal dwell time increase the customer and rail locations during second quarter, which impacted the profitability as we move forward. We expect to see continued performance improvement from Warner logistics through revenue growth.
Tracks from margin expansion.
On slide 11 is a summary of cash flow from operations net capital expenditures and our growing free cash flow over the past 5 years expanded operating margins and less variable net capex resulted in higher free cash flow during the last 4 years, we expect to generate.
Continued meaningful free cash flow going forward for.
For 2021, we continue and expect net capex to be comparable to the last 2 years and a range of $275 million to $300 million.
This guidance range assumes we maintain our new truck and trailer fleet and we continue to invest and Warner edge the innovation arm.
Kindergartner by building out our technology platform of solutions that are more advanced or productive and with enhanced safety and security. Our net capex guidance assumes no significant delays in delivery of new trucks and trailers and the second half.
On slide 12 is the summary of our disciplined strategy for capital allocation.
The first priority is reinvestment and our new fleet with feature rich trucks and trailers with the latest safety driver friendly and fuel efficient capabilities.
Earlier. This month, we opened our second new terminal facility of 2021. This terminal is strategically located and Lehigh Valley, Pennsylvania and replaces.
But 1 of the smaller lease facility.
We are making meaningful and sustainable progress enhancing Warner edge of technology initiative and platform.
And during the quarter, we raised our quarterly dividend by 20%.
And prior quarters, we said, we would consider strategic acquisitions that are additive and accretive.
<unk> just after quarter and we were excited to announce the acquisition of the elite regional truckload carriers of the ECM Transport group.
<unk> operates with industry, leading operating margins and it's accomplished and experienced leadership team remains in place as a standalone business unit, we will leverage our collective strengths.
And generate synergies to serve our existing and new customers and even higher levels.
We are committed to maintaining a strong and flexible financial position, our long term leverage goal as the net debt the annual EBITDA ratio of 1 half to 1 turn and.
We added a $100 million fixed rate loan on June <unk>.
30 at an interest rate of 1.3% to partially fund the ECM acquisition and the following day.
Since the acquisition did not occur until the beginning of the third quarter, our net debt to EBITDA ratio was 0.2 times at quarter end and increase to our pro forma 0.4 times the following day.
On slide 13 is the summary of the benefits of the ECM acquisition.
ECM strategically expands our operations in the mid Atlantic, Ohio, and northeast regions by adding 8 terminals and 18 drop yards to our footprint is shown on the map of.
Our companies share similar cultures based on the highest standards of safety.
And on time service and the combination will boost our fleet size by nearly 7%.
And the integration is going smoothly and the transaction is expected to be accretive to adjusted EPS in year 1.
I'll now turn the final portion of our prepared remarks back to Derek.
Derek.
Thank you John.
Over the past 5 years, we implemented structural and sustainable upgrades to our TTS segment with a modern and safer and more efficient fleet.
The hiring and retention standards for high quality safe professional drivers and delivered on our commitment to best in class of customer service, our trucks and trailers continue to have young average fleet ages of 2 and 4.1 years respectively.
Every 1 of the truck is equipped with the advanced collision mitigation and safety systems industry, leading emissions and fuel mileage technology automated manual transmissions forward facing cameras and and Untether tablet based telematics solution.
The driver of market is very competitive and dynamic and addition to implementing the attractive and competitive driver pay increases we are.
Expanding and leveraging the strategic advantage of our industry, leading driver training School network. This year, we have grown our locations from 13 to 16 and have 3 more planned openings for 2021 and and an additional 3 and 2022. Our goal is to achieve a total of 22 strategic driver training school locations by the end of March 2022.
We also took another strategic action to achieve our fleet growth goal similar to our it software strategy of buying rather than building when it makes sense, our ECM truckload acquisition enabled us to acquire of 500 trucks and over 500 highly skilled and regional drivers who have daily home time.
In addition to attractive driver compensation Warner scribe.
The the truckload employer of choice by providing the modern and truck and trailer fleet with the latest safety equipment and technology, a wide variety of driving positions, including daily and weekly home time opportunities and and industry, leading driver training program.
Despite the type of driver recruiting market, we are maintaining our stringent hiring standards and we remain focused on attracting.
Tracking and retaining the best professional drivers this.
This year, we opened 2 new flagship terminals and Lake City, Florida, and Lehigh Valley, Pennsylvania, Our strength and terminal network is an integral part of our ability to attract and retain the best drivers and minimize fleet downtime for maintenance issues on.
On the technology front, we continue to execute.
<unk> and our cloud first cloud now strategy by developing innovative products and combining them with third party SaaS solutions to work and ways that provide competitive advantages.
For example, Warner rolled out new technology to streamline our connectivity with existing and new preferred maintenance vendors. This allows us to optimize cost of our over the road maintenance program as well as decreased.
Acute and and it's downtime to keep our trucks and drivers rolling.
With this new technology, we accomplished of 67% reduction and call time and of 52% reduction and driver dwell time for each maintenance event well.
We also rolled out a new simplified equipment warranty recovery process that is projected to realize an additional 25% to 30% savings.
Struck me the dollars by the end of this year.
Werner Logistics recently launched our carriers edge digital freight platform.
This provides our carriers with the self service portal that enables them to view and book loads of real time.
For our drivers we launched our drive Warner Pro Mobile App, which offers enhanced features to improve our drivers' lives on the.
The road.
We continue to modernize and update our core it systems with SaaS applications..1 of the exciting second quarter milestone is that we are 100% migrated to a cloud based DDI solution.
That easily connects and provides more accurate and timely information to our shippers and carriers.
We are committed to the modernization of our financial and accounting systems with the selection.
And warrant Workday, finance, which dovetails with our existing workday HR and platform.
And we were also thrilled the rollout mastermind, our new transportation management software platform with mastery.
We began testing with our logistics teams and this is the first of many incremental rollouts.
This is the first step on our 4 year strategy.
<unk> of truckload and logistics systems on 1 combined SaaS platform with the same but enhanced secret sauce features and applications that make Warner successful, we will continue to provide status updates as we progress and.
And last year, we had of sustainability is a key element of our strategy.
On slide 16, I am excited to announce that we published.
Our inaugural corporate social responsibility report this week with the significant amount of new information and specific EES and GE goals.
Some important actions, we've taken that I would like to highlight because they demonstrate our commitment to becoming and an ESG leader and our industry are in.
In November we formally and publicly launched our HD program, including <unk>.
Adding sustainability is the strategic pillar.
And as we embed sustainability organization wide into our business decisions.
And March we hired and associated Vice President of sustainability and in January we created a new position and appointed and associate Vice President of diversity inclusion and learning.
We are now of signatory of the UN global.
Impact and of aligned with specific sustainability development goals that most support Warner values, our strategy and aspirations the <unk>.
Specific stg's are good health and wellbeing.
Decent work and economic growth reduced any qualities and climate action. This.
And this week, we published our inaugural CSR report, which was a milestone.
<unk>, we outlined back in November you can find the report on our website at <unk> Dot com.
We adopted the sustainability accounting standards board or SaaS B disclosure framework.
We have formally branded our sustainability program as Warner Blue and we will be working to develop a more comprehensive strategy and will communicate our progress.
And I'm proud.
And out of our team for all the hard work that went into our progress over the past 8 months and achieving these important ESG journey milestones, it's a great foundation on which to build and we will keep building from here.
Next on slide 17 are the new ESG goals and milestones that we announced earlier this week for environmental and we will disclose scope, 1 and scope 2 greenhouse.
Stone emissions by 2025.
We will double our intermodal usage by 2030, and we will reaffirm our aggressive goal to achieve the 55% reduction and greenhouse gas emissions by 2035.
For social we are creating and advancement and retention plan to increase and elevate women and diverse talent and our management team pipeline.
We.
Gas and hooting and and employee volunteer hours program by 2022, and we will add greater impact to the communities. We serve by doubling the volunteer hours of our successful Warner Bluebird day program by 2025.
We are also doubling training hours devoted to human trafficking awareness.
For governance by next year, we will establish the <unk>.
On the ESG Committee for our board of directors.
Also we will establish the task force of leaders Associates and board members to further of the goals of our Warner Blue ESG strategy, while we are still and the early stages of the positive impact we will have I'm inspired by the excitement and engagement of our associates and drivers and like everything we do at Werner.
Sandal and we are committed to leading by example.
Moving to slide 18, and a review of our 2021 guidance framework, how we're progressing against that guidance and updates to our outlook during the second quarter, our truck fleet declined 1% and were down 2% year to date due to the extremely challenging driver recruiting market.
We believe this challenge will persist.
And taking this dynamic into account we are updating our expectations for the Warner fleet for the remainder of the year. We now expect truckload growth for the full year to be and a range of 1% to 4%, including the ECM fleet.
Pricing and the used truck and trailer sales market was stronger than expected and second quarter, resulting in higher equipment gains of $13.5 million.
Our third quarter, we expect continued strong pricing with fewer units sold resulting in expected gains and the range of 9% to $13 million.
Net capital expenditures were 103 million for the first half of 2021, we continue to expect full year net capex and the range of $275 million of $300 million, which will maintain our truck.
Fleet ages subject to the timing of OEM neutral and trailer deliveries.
Dedicated revenue per truck per week increased 2.4% and second quarter due to higher rates, partially offset by lower miles per truck dedicated.
<unk> dedicated rates and <unk> 21 versus <unk> 20 were above our guidance range. However miles per truck were lower due.
And trailer views and fleet mix, we continue to expect annual growth of revenue per truck per week, and the 3% to 5% range, but more likely at the bottom end of the range.
1 way truckload revenue per total mile for the second quarter increased 16, 7%, which was above our guidance range of 13% to 16% as a result of strong execution with our core customers.
The change of the second half we are now expecting 1 way truckload revenue per total mile to increased 16% and 19% due to higher contract rates and including the favorable impact of the ECM acquisition.
Going forward, we will report ECM within our 1 way truckload results and metrics.
And the first 4 weeks of July freight demand trends and our 1 way truckload unit of <unk>.
Remained strong so far we are about 80% through our annual contract bid season negotiations and 1 way truckload.
The contract rate increases year to date are tracking and the low double digit percentage range more recently contract rate increases of further strength into the mid to high double digit percentage range.
Dedicated contract rates are also tracking favorable.
We are reaffirming of our effective tax rate assumption of $24.5 to 25, 5% and average age of our truck fleet of 2 years consistent with what we guided to and the beginning of the year.
1 of remains well positioned with the superior team and an active talent pipeline that will continue to yield strong and sustainable results.
But we continue to believe the runway for freight demand looks very good for 2021 and well into 2022 at this time I'd like to turn the call over to the operator to begin our Q&A.
Thank you and we will now begin the question and answer session.
To ask a question and you May Press Star then 1 of the telephone keypad.
Do.
I think the speaker phone please pickup your handset before pressing the keys.
And as well with many callers as possible to ask questions. We ask the callers limit their questions to 1 question and 1 follow up.
This call will end of 5 P. M Central standard time, following the company for closing remarks.
Our first question today will come from.
I'm, Ken <unk> with Bank of America. Please go ahead.
Hey, Derek Thanks for the.
The detailed overview.
And good afternoon.
I guess from looking at demand and I'll ask follow up on that last comment of continuing I guess, what signs and you look for I mean in terms of that acceleration of Accenture.
And simulation.
Rail carloads of of kind of flattened out it looks like Amazon and some from weak sales data and I'm just trying to gather of what we look for to see that peak it looks like youre going to Capex and it can really accelerate and the second half I guess and is that more just timing of those of my 2 questions. So just 1 on the what you look for.
In terms of that continued strength and then and then the capex and your confidence on being able to get those trucks and from the second half.
Yes.
And thanks for joining us today.
Great question.
So a few things right. So on the on the demand side I guess I'll start with the conversations we're having with actual customers about their actual expectation.
And relative to the next 6 months. So it's both the combination of macro data that everybody can see and then its private data that based on conversations we're having with our retailers in particular, where we have of heavy retail base with successful retailers that are sort of having outsized results in.
Inside of the overall macro economy the economy itself.
Patients are doing well.
And with the 6.5% GDP growth that was maybe below what some of the expected. It's still significant growth you've been couple that with your inventories of the sales ratios that are now at a new 30 year low. So theres certainly some replenishment that has to take place and then the last thing I think that might just get overlooked.
The Si play and of all of this and on the supply side, you've got a lot of those that of publicly reported so far you've got a net fleet decline of 7%.
Versus of Warner net decline of 1%. So we're holding the line better on our fleet.
And that's something we're proud of.
Ever being negative, but on a relative basis certainly.
And it's sort of winning the battle, but my point being there isn't capacity and flooding and and are coming into the market OEM production schedules have been.
Negatively impacted and continue to be as we look forward and I think it's the combination of supply and demand that mix is bullish on the back half as it relates to Capex, yes. Some of it is just timing, it's as simple as that.
When things are received and versus maybe when we originally expected to get them. We have seen some delays both on truck and trailer the truck side has done better than the trailer side.
Clearly and.
And we know as we think through the back half of it based on what we now expect that we will end up somewhere in that range. It's also impacted by our state.
Our remarks, and the prepared section of round.
And the intent to sell less equipment and the back half 2 reasons. There 1 is to provide of hedge for what may continue to be supply chain disruptions and the receipt of our equipment.
But also it's based on.
And our belief that with the additional schools that are come.
Going online with the demand profile of our customer base that if the opportunities there to grow that fleet of little bit and during peak and better support what is going to be of very supply constrained market and we're going to do so.
And our next question will come from Scott Group.
Group with Wolfe Research. Please go ahead.
Hey, thanks.
Good afternoon.
Maybe can you give us and some thoughts on just how to think about the margin progression and from the back half of the year of where we're at such a.
Great starting level can we sort.
But the normal seasonality or is that get.
Tougher and any thoughts or perspective there.
I mean, I think the seasonality question Scott is tougher than really any period I can recall because what happened. The moment, we say that it may not be normal seasonality people read into that and react to that and.
Ways.
And that are not intended.
And the seasonality is affected by the starting point, which I. Appreciate you pointing that out I mean, we've never really had a second quarter. It looked an awful lot like peak to begin with so as you go forward.
You won't have normal seasonality simply based on starting and such an oversold environment, but our job and.
The key our expectation is to continue to get creative around capacity.
Creation through brokerage.
Intermodal.
The ECM acquisition itself as well as doing a better job of increasing our team count and.
And our seated tractor count and the back half if we can get more throughput.
And what are the existing infrastructure then it gives us opportunity to further expand margins were about 80% through the contract rates, we talked about that earlier, but theres still 20% yet to go and some of that 80% of it was only implemented in July so it's not and the Q2 numbers, but its now being implemented and we will start to see the results of it. So we think there is top.
Top line opportunity and the back half bottom line opportunity and the back half both but the normal sequential incremental gains that you might see and prior years will be tougher to come by not because people won't be as strong not because we won't have as robust of the project opportunity, but more because of the strength of the second quarter.
Right.
Throughput and <unk>.
And then just from a when we think about our model the.
<unk> I think helps the the.
Per mile can you just help us think about the implications of what that means for utilization.
And the back and I can I can jump in Scott how are you doing.
Hey, John.
Let me.
And the ECM acquisition, it's about 16% of our 1 way truckload fleet and Thats, where it will be reported going forward. So.
Because of the length of haul is substantially lower than our existing 1 way fleet, there and like the halls and the mid 2 hundreds.
As a result, the miles per truck will be.
Sir the deadhead percentage will be higher and the revenue per truck per week is pretty comparable to what we.
Ah realizing and our 1 way fleet and then the rate per mile. It will be of help. So there is a few percentage points of help.
And that the ECM fleet will give to.
The lower <unk>.
Percentage increase and 1 way truckload rate per mile.
And our next question will come from Jack Atkins with Stephens. Please go ahead.
Good evening, Thank you for taking my questions.
I guess it all day.
Derek all of you want to take the answer this.
And this is more for John.
I'd be curious if you guys could maybe help us think through the impact that the lower than expected tractor count this year.
And because of the driver recruiting challenges the impact of that is having on your efficiency.
Within the TTS segment I'm, just thinking forward the next year.
And hopefully we're in a.
And we're in a position to see some acceleration on the on the fleet next year and and is that perhaps the tailwind.
And our margins as we go into 2022 any thoughts on that would be very helpful.
Yes, it's difficult to predict all the way out and the 22 at this point with so many unknowns, but clear.
Clearly.
John but we have a a portion of our costs that are fixed and their nature. We've actually added some fixed cost and absorbed those cost despite putting up and $82.9 net of fuel and TTS and the form of new terminals and other investments, we're making we would like to see more throughput through all of that fixed cost infrastructure and truck count is certainly.
<unk>, a great way to get their.
But on the flip side of that and the addition of the schools the expiration of the additional unemployment benefits.
And the hopeful exploration.
Certainly at the time of some of the cautious feelings around being out over the road. During Covid is vaccinated as vaccine rates go up.
And should give us an opportunity to at a minimum stop the the.
The the attrition and ideally.
Have some incremental adds as we look and the back half the.
The caveat to all of that is the.
And the production impact of what's happening at the OEM level, so at the macro level.
Starting in Q1 this year than I thought 285000, and builds was about where they would be.
And at that time, most experts had the number and the $3.25, or even higher and some cases I think we won't get the 285 when the dust settles on the year.
Year, I really don't and.
And so it's difficult to fight for trucks fight for drivers.
And fight to overcome some of the Covid.
Has it and see that still exist out there.
And so it's just too early to say that about 22, but in terms of Where's our mind share right now and the building.
Yes, that's the that's the.
The type of mindset that we have we want to look to kind of do more for our customers grow a little bit and the back half and feasible.
But with all of those stated obstacles I've talked about and then work to enhance margins through both yield.
Exercises that will be ongoing and I believe through 'twenty, 2 that we're going to need to continue to do as well as some of the cost.
Cost take outs that.
We continue to chip away and every day.
Okay that makes sense and I guess from for my follow up question. Derek I mean, you know obviously a lot of investments going into the logistics business.
And I think a lot of the the opportunity there is on the call when we think about the.
Payoff from those investments, particularly around.
Around your partnership with mastery and and Werner edge of how.
Are you thinking strategically about about the logistics business and as up as our revenue and profit driver over the next several years of what what portion of your revenue do you think that could represent if we were to look out call. It 3 to 5 years from now.
Yes, so the macro.
Couple of Jack I would say that we were simple.
Certainly looking to be more aggressive with our growth and our logistics group.
At the same time, we want to make sure theyre properly tooled with the right systems, right infrastructure and right processes to be able to handle the growth while enhancing margins.
You've seen some and this recent quarter kind of the impact of our.
Macro line now start really moving the needle on revenue.
I'm actually more interested and more excited about the fact that we are seeing volumes go in the right direction and increased volume is taking place with it.
And that's with a lot of effort that has to be taken away from the day to day to work on the strategic relative to the implementation of a new team.
The ability to mass.
It's really companywide, but logistics is kind of of the tip of the spear of where we're implementing.
And so as those things you'll get through that not hold to couple of things happen and the expense rate or the investment rate that we're having to make on the on the front and with little or no productivity gains until you start getting the rollout phases starts to kind of ease a little.
And then the second thing is as we get more comfortable with our ability to utilizing those tools as well as our internally developed kind of secret sauce, if you will.
We think we can grow that further so if I look out 3 to 5 years I, certainly expect logistics to be a larger percentage of the total I'm not yet ready to predict.
Exactly how big that would be.
But all expectations all expectations internally are to more aggressively grow that as we look forward.
And our next question will come from Ravi Shanker with Morgan Stanley. Please go ahead.
Great, Thanks, Dan and I'll forget of line.
And Derek can you give us some color on the dedicated side of the business in terms of what the pipeline looks like what customer interest is like and then clearly.
And at least a couple of quarters ago, there was a lot of momentum and and customers trying to shift their dedicated the guarantee capacity are you.
We're still seeing that kind of what's the organic kind of truck caller and going to look like and the next couple of quarters.
Yes sure of Ravi. Thank you for the question.
So first of all if I'm going to start with the some extremely excited about what dedicated was able to accomplish in the quarter.
If you think about the 2.4% revenue.
And our per week number that's muted to say the least rate I mean, thats, not where we want to see a number like that and yet with it being the predominance of our fleet with only 2.4% revenue per truck per week gains we were able to still post of TTS SLR of 82, 9 I think I'd point that out because it once again.
Revenue per tubes that even in strong markets dedicated can perform very well and not act like the anchor of that so many people were fearful of as I look forward the pipeline and dedicated is as strong today as it's been on any of the prior multiple quarters of calls.
As a matter of fact, those those bids already landed that we're looking to source and.
Looking to find drivers and fill open seats is actually greater as of.
This moment and it was on the prior 2 calls the obstacle is that although those jobs are better and are more easy to filled and a 1 way truckload job. They are still very very difficult to fill nonetheless, so the battlefront is clearly on the driver and.
And plus continue to gain.
The traction with how we how we treat our drivers how we pay our drivers and then the tools, we give them to equip the themselves to do their jobs effectively and we're seeing momentum. So that's the good news.
I know I've said, it before but I'll say it again, the additional schools coming online and we're very excited about because we've already seen.
And we marked from those schools, we opened earlier in the year. So we think that gives us some lift.
We grew 300 trucks, plus and dedicated year over year and the quarter, that's something to be excited about because of the market that is tough it's hard to grow at all so that shows the ability to landfill and and then operate profitably those.
New those new fleets as they start up so there's a lot to like there and.
And we're going to continue to lean into it as we go into 'twenty 2.
Great and just sort of follow up on the ECM acquisition.
And you look at the recent history of the.
M&A in most cases.
And the you see and exited the sort of drivers either voluntary or involuntary.
From the acquired asset.
Clearly you kind of part of the reason you made this acquisition is to get those 500 globally on board or are you pretty confident you can you can regain them.
Yes. This is of Great question, and I would tell you something I am probably most.
Happy with thus far as it relates to the ECM.
Acquisition is that the due diligence and the work and and frankly, the very cautious nature of Warner and terms of getting something across the finish line and then deciding that this was the right..1 has been proven true thus far the driver morale of the driver retention.
<unk> has been very strong same on the customer front in fact, I would say at the moment, we feel like we have some momentum with ECM and the conversations we're having are about growth not retention.
Or not attrition at all.
And we think and the back half because of the high desirability of the types of jobs they have homed.
Tightly stable PE.
Regional repeatable work that we actually have an opportunity with this acquisition to grow that 1 way truckload group, but a lot of that growth may end up residing within the ECM based on the early returns and conversations we've been having with their leadership and.
<unk>.
Directly.
And so far so good and if anything a little better than good so we're pretty excited.
And our next question will come from John <unk> with Evercore. Please go ahead.
Thank you.
Derek just to follow up on the vertical.
And John mentioned.
Some of the trucks from 1 way were shipped at the dedicated because of the digital star.
When you're talking about moving that decision just given the strength and 1 way today. If you take a long term view that you want to service the customer and get them on board for a long term and give us some of the.
1 of the <unk>, so to speak and.
How do you think about that and the back half of the year I know you sound more optimistic.
And therefore on seating trucks.
But it's still pretty decent and tradeoff between long term and short term.
Yeah, well I guess of couple of things John I mean first off and our network. The tradeoff isn't what some might expect I mean, both of those divisions operate very well.
Well and we have the model that has been able.
About the loose results and dedicated that replicate 1 way more closely than evidently and many others.
And so we're going to continue to focus on operating that dedicated fleet as efficiently as we can as to how we make the decision obviously theres going to be based with a little bit more longer term view, but the bigger deciding factor is the defensive nature of it. The fact that we think those.
Dedicated returns can stabilize through the cycle and.
At a premier level, if you compare it to other truckload players out there, it's pretty exciting stuff, if I can give that driver and that level of stability.
Give the investor community of the same level of stability and do so over a multi year cycle versus just 1 year bid to bid.
And then the last piece is back to the driver frankly, even if I wanted to keep of truck and 1 way and that drivers preferences clearly to be and dedicated I'm not going to risk, losing that driver when I have and opening and dedicated that fits that drivers needs and and.
Provides the return profile that our investors would expect so.
That's the case, we're going to do what we can to build the bubble around each and every driver and this fleet because thats how important the hour right now.
Got it that makes sense and.
Glad you brought up the defense of part of it is why now is the big focus of yours and you brought it up on housing and still have upside even in the upmarket and maybe some people don't think that way.
And if the ECM showing up in 1 way.
However, just given the length of haul it sounds like it's more defensive business as well. So as you think about still being levered at 4 times pro forma.
And then the other acquisitions you'd look to make and the future do you look to get out of the traditional long haul truckload market and get into other businesses.
I know you not be as defensive per se is dedicated but a little stickier a little less cyclical like what do you see M S.
And in short the answer would be yes, I mean, we're not going to run from long haul and we have drivers and our fleet and customers and our fleet that are important to us of better profitable that makes sense and that long haul business.
But we are always looking across to every 1 of our businesses for more sustainable defensible repeatable work and so those of the things that we want to go after we think the ECM business. If you look at their contracts their customer relationships were talking multi multi year and in many cases actually multiple decade type relationships.
And it has proved to be very sticky because what they do is very difficult. If you look at our 1 way business, we do a tremendous amount of engineered lands within or outside of our 1 way business. We do a tremendous amount of cross border, Mexico, which is also more complex more difficult and more defensible and then we have a decent component of.
Benighted that works for very high expectation customers on business that is not for the fame of heart. The business, we have the least interest and as that stuff. That's in the furthest and of the Commoditized spectrum and so yes. There are times when that business is highly fruitful and we know that and understand that.
But it comes at a price when the market turns and so even with this quarter's results that we just talked through.
And I'm, probably most proud of the fact that that type of ore result was put forth with only about 10% of exposure to the spot market and that's in the side of our 1 way network, which means our total spot exposure of all.
All miles is well under 5% and so it's not it's not a we didn't get there that way and we're not going to get penalized that way when the spot market turns because quite frankly, we have very limited exposure in that space.
And our next question will come from Amit.
So true with Deutsche Bank. Please go ahead.
Thanks, Operator, Hi, Derek Hi, John.
The 80.290, our performance and trucking was obviously very impressive.
And you kind of answered this Derek and the last question I was hoping you can deconstruct that for US what is the level that 1.
Performing at and and versus dedicated and the dedicated business. You know we've heard some from some of some other trucking companies has been.
Fact of the bed is the cost inflation has come on faster than the contract re pricings wondering if you guys saw that at all and you know if there's opportunity for a step up and profitability and dedicated is.
And some of those contracts and revisit it in light of some of the cost inflation.
Yeah, Hi, Amit this is John and.
No. We don't report of dedicated and 1 way margins separately, so I'm going to give you of general answer as opposed to a specific 1, but our margins and both dedicated and 1 way.
The way it wrong that enable us to achieve that 82 point now 9 or and we didn't see of deterioration.
And margins and dedicated as a result of.
The driver pay market, we have good.
Our relationships with our customers and win the the driver challenges.
As big and a certain geography for a specific customer we're able to go out and get rate increases too.
Compensate us for the need of driver pay before it happens are as it happens so that has not been a problem for us the 1 way margins obviously improved.
And we're just last year because of the strength of the the freight market and the dedicated has been solid both years and the only thing I would add to that answers that is when you think about our dedicated I don't want you to have the impression that as our costs go up we simply tell our customers to pay us more and they just do it it's a cash.
Combination of that they certainly need to support us because.
<unk> from the Suez defensible and our performance warrants it but we also look aggressively at Inc.
Increased creativity to eliminate empty miles and better backhaul fill percentages of each of those dedicated fleets work with those customers to better optimize woodford and they need to ship, when where and what mode and so all of these things come into play and.
And how you retain that business at 96% or north of that in many cases as it does come up for renewal so.
Collaborative effort, but the outcome.
And from a profit profile perspective for US is 1 that serves us well and very strong markets like this 1 and.
And we think serves us even better and it.
And when and if this market turns and although we don't see a turn and in the foreseeable future Hmm. Okay. That's helpful. And then just from my follow up.
You know I fully understand the dynamic of of 1 way truckload counts coming down and I think pushing that across the industry, but the magnitude of of of the.
The decline was pretty soon.
I think you'd have to go back to 2016 to see this type of sequential decline in average tractor counts and I was wondering John you usually been pretty helpful and trying to understand the forward outlook for that I know ECM will add 500 trucks and the back half of the year, but if we were to just put that to the side for a second have we seen the worst of the organic.
The decline in truckload count maybe they continue to go down but at a lower level and the third quarter, what's the right expectation there well if you take out of U C M from our guidance as.
As we said at the end of June were.
On the upper end of the range were flat and at the bottom end of the range we're down about.
Organic trucks. So it really depends on does the driver market get more difficult from here or not and we're taking steps with the addition of the new driving school locations to counter that and to give us a better recruiting numbers for drivers.
Drivers entering the fleet.
But.
But.
There's risks of other factors and the marketplace like the infrastructure Bill for example that comes to bear and that starts to change the market conditions that may make it harder to get drivers than the and easier to get drivers. It's it's the most difficult market I've seen for drivers and my career.
200 of men.
And our next question will come from Bert <unk> with Stifel. Please go ahead.
Hey, good afternoon, and thank you for the time.
Derek I appreciate I appreciate your supply comments, John as well.
Of those views changed at all over the last 90 days.
<unk> it was like the truck deliveries of clearly slipping a little bit of the right.
That's probably going to be transitory drivers however are.
Aren't getting any easier to find and you highlighted.
That may be more structural in nature of do you agree with that just curious the you know how youre thinking about this and sort of how it changed.
Siemens earlier and the year.
Yeah, I would say on the supply side, the the only change over the course of the years and it's become more pessimistic in terms of what's going to happen with supply as the year has progressed I think the driver market has become worse as the year has played out now we may see some relief as I mentioned earlier.
Maybe it's the exploration of some of the additional unemployment benefits. Although we think that is going to be more impactful for our customers at the loading dock levels and jobs of that nature.
And we really hope it'll be impactful there because we have seen increased delays and customer locations because of the lack of staffing that exist and so that's the problem.
From the trend of the trauma truck OEM front, yes, transitory is probably a good word for it but I don't think people realize how long that transitory period might last I think we're going to be and the disrupted stay through the end of the year and frankly all eyes at this point of all of my opinion at this point would point toward further disruption as we get into.
But early parts of next year, it's far beyond the chip shortage, it's far more robust of a list of issues and that and I think it's going to be of tough hole to dig out of.
And so we don't see a lot of.
Good news on the horizon on the capacity front.
And again I think the thing that we're proud of here.
And is on a relative basis being negative 1 versus negative 7 of the public group and and if you look at <unk>. Most recent data they have large carrier.
The fleet shrinkage of north of 6% and small carrier fleet shrinkage now approaching 4% and you almost never see through prior cycles, both large and small.
And to the shrink at the same time and right now, we're seeing that and that's very unique and Theres no real and insight.
And that I can see.
Yeah, I appreciate that maybe sort of and a similar vein you mentioned infrastructure.
And that looks like it could be becoming a little more tangible.
How do you from an operator perspective, how do you plan per that it seems like the effect would be more supply side for you just on the job competition side, probably less so on the demand side just based on your exposure, but curious to know maybe how you guys are thinking about that if that becomes the realizations and thank you.
Yeah, I think in terms of waiting.
You're right that it's more of the supply side issue than a demand side, but there is demand effect even for us because.
Trucks have wheels, and they move to where the market is and so it doesn't mean, our trucks do but it means other trucks that have the flexibility or maybe are more transitory and the type of work like they live will flow to those infrastructure projects.
<unk>, which further constrains capacity or said differently further increases net demand to us. So we think there is the demand impact, but certainly on the supply side. Both on net drivers available drivers, leaving the industry to pursue construction jobs and then just drivers being tied up actually haul and freight but tied up now with new freight that was not.
And we know we were not previously competing with from an overall demand perspective so.
I do think the infrastructure is gaining some momentum I suspect something will take place.
Sometime this year, but as we all know that's a multiyear rollout the last piece of all of it that we spend time thinking about both and driver training, but also just.
And projections and and thinking about our business as it will increase congestion and which is already increasing from cars returning to the road, but when you start doing massive infrastructure projects and we all know what that looks like and the 1 thing it doesn't look like as efficient and.
And so there will be some slowdowns and network velocity that we've got a plan for and price for.
As we think about 2022.
And our next question will come from Jordan <unk> with Goldman Sachs.
Go ahead.
Yeah, Hi, just a quick question I'm curious with the tightness in supply chains and drivers and trucks from it.
Dedicated perspective, and you're actually seeing.
And.
And customers come to you of potential customers of desire for larger contracts are more fleet outsourced.
Yeah, So Jordan I think the.
Both of the.
The frequency by which we are seeing dedicated bid opportunities.
The number I should say of dedicate.
And opportunities is increasing because of the capacity constrained market we're in.
And as well as in some cases of the size of those opportunities when things within and the pipeline you might be looking at 5 and 10 truck opportunities.
Right now, we look at everything and if it fits right and it fits the need and it forms an important piece and.
But we're trying to build every day then it may work its way through the pipeline and.
The implementation.
But the propensity for these larger dedicated fleets is certainly greater right now and our biggest.
Filter if you will that we run the same store is relative to the profile, we want stuff that is defensible difficult to do that.
We think as true dedicated it's not.
It's not a designated tight fleet of our 1 way replacement fleet, but it has worked characteristics that can only really be accomplished and long term dedicated service levels. That's the stuff, we want to pursue and really try to avoid just capacity fleets.
When we can because those are those of those.
<unk> opportunities blow up on you and the cycle turns and suddenly that defensive position doesn't look so defensive after all so we have a very critical eye of as we look through those opportunities and trying to sift through those that we can see those that we can serve and those that we can sustain through the cycle.
Okay, great. Thank you.
Thank you and it.
Our next question will come from Chris Wetherbee with Citi.
Go ahead.
Yeah.
Yeah, Hey, thanks, good afternoon and great job.
Maybe I could just ask quickly on the dedicated mix issue obviously the impacted the average revenue per tractor because we just did.
Could you just give us a.
All of a bit more detail on what was driving that and and maybe I think you said sort of maybe the towards the lower end of the range is the right way to think about the full year outlook there.
Yeah. So we just wanted to make it clear that what's driving it is fleet mix more than any other factor and so as we bring on new dedicated fleets or we grow.
So with the existing dedicated fleets, depending on where that incremental truck count ends up.
It can have a negative effect on revenue per truck per week that may not be negative at all to our overall profitability because it could be of low mileage fleet.
Simply doesn't produce the same amount of revenue, but nor does it have nearly the same cost structure and so it just.
Just so happened it and the second quarter, both incremental growth of existing fleets as well as a couple of fleets that were C. The Atlanta.
Landed and implemented just just had impacts that were greater than we originally projected on that revenue per truck per week metric. It may not be the perfect metric.
Going forward we are.
We have and discussions about that we think it is still.
Cost of metric to use for now to try to give you guys. Some sort of visibility to how the business is running but there are anomalies from quarter to quarter based on fleet mix that can play into it and certainly the second quarter was 1 of those quarters.
That's super helpful. And then just the.
The follow up on the driver pay side I think you.
You mentioned in the neighborhood of 10% wage increase and because we think and from the back half of the year.
And you need to see more of those continue to sort of hold the line on the organic growth.
Yes, so were about 11% I think year over year of TTS driver wages were up that's accelerated from the first quarter, 2 and the second quarter as we look at the back half of the year, we still.
The <unk> targeted.
The strategic driver pay raises that are going into effect, both in dedicated and and 1 way.
And we're somewhat insulated and that and the dedicated side. Those are funded increases that are worked out collaboratively with the customer.
And that's going to be our approach as we continue to battle through the back half on the 1 way side.
And there'll be and we'll be very cognizant of where we're at from a rate per mile perspective, and what's going on with our overall yield efforts as well as what does our peak agreements and up landing as as.
As we think about rolling out targeted pay increases some could be very very fleet specific some could be seasonal specific.
Specific IEP.
The kind of run bonuses and things of that nature. So we'll be very thoughtful and the back half, but certainly there will be some more pressure on the wage line that we currently believe based on all information we have as well as bids that we know landed and July will be offset.
Through rate increase.
Kris and overall yield initiatives.
And our next question will come from Jeff Kauffman with vertical research partners. Please go ahead.
Thank you very much and thank you for squeezing me in.
Yes.
And the culture question and follow up.
Yes.
And claims expense looks fantastic and I know it fell a little bit of nominal it's a year ago.
And then purchase transportation surprise me, if I back out the PC related the logistics it looked like for the trucking business purchase transportation was down about 5% and that kind of stood out from me relative to other truckers.
How did you manage both of those so well and the quarter.
Yes, so on the insurance line.
The simplest of answers would be we had a very strong.
First half of the year, we've been working aggressively on.
And revamped training programs, we've been using and.
Janine and evolving and our use of simulation and training, our onboarding and procedures. The way, we think about our driver of leaders interacting with our placement of drivers as they come into the fleet and it's paying dividends and we've seen a significant reduction and major accidents technology also plays a part and that all of this tech that I know were redundant.
And learn and our prepared remarks quarter after quarter I realize but its because were trying to message things that we think are very important and that 1 is 1 that's very important and so those are some of the dividends and thats paid now I want to be clear as we go forward insurance renewals still look ugly the market is still a very very tough market to deal with.
And with we're going through that process as we speak right now there will be headwinds as it relates to the cost of insurance as we go forward that obviously, we have to work to make sure of our offset through actual performance of the portion of that risk that we hold in house.
So that's going to be and ongoing evolution.
And on to purchase Trans thing, that's an owner operator issue. That's all of that is we know that.
The market for drivers and stuff. It's also tough for owner operators, we probably have a more cautious view and some of our competitors on the owner operator model overall, we want to stand by those that we have we want to provide opportunities.
<unk> for company drivers to be able to make that conversion and become.
Our fleet owner.
So desire, but we're not actively out there trying to increase our exposure and that owner operator environment, given the current regulatory and.
And the environment that we live in and the current administration.
We believe that's going to be of tougher.
Or.
Part of the the capacity framework as we go forward over the next several years and so it's not 1 we're looking to grow and therefore that PT line will probably decrease further as we go forward, yeah, and so Jeff our owner operator count went from 485, a year ago to $3.40, So Eric's right. The reason for the decline.
And the TTS side of rent purchase transportation is the reduction and owner operator costs due to fewer owner operators.
Okay. So it's gone up.
And pretty much in line with the industry outside of the owner operator ship.
And then just the follow up.
It was really 1 plus 1 and this quarter a lot.
Other truckers out there, we're reporting pretty healthy margin improvements and the OTR businesses, but most folks running of dedicated operation had a decline and the reported or and I guess I was just reading into your commentary of Backhouse OTR just had.
And a terrific quarter and dedicated kind of really hung in there did.
Did you Buck that trend I mean, if we looked at the dedicated business on and how our basis was did it not go down was it up on a year on year basis, I've, just been surprised how most folks run and dedicated fleets of.
Have struggled with drivers and PT costs this quarter.
And again.
Lot of the disclosed the breakout and I know youre, not specifically asking for that but I will say that and a general terms, yes, we bucked that trend I mean, our dedicated group performed well this quarter it was not a drag.
This quarter and I think it's a combination of the the.
Top quality execution.
The top quality customers that we work with and the very difficult to do business that we're in.
Easily replaceable. So it gives you the opportunity to have a lot more rational discussions and with your customers and we need we have to be good about asking for what we need to continue to provide that service and I think we did that.
This.
This quarter so.
And I don't know if that fully answered your question, but yes, I read the same comments and I've heard some of the same calls and and our results and the quarter.
Certainly seem to differ from many of our competitors and that particular aspect.
And this will conclude the.
The question and answer session I would like to turn the conference back over to Mr. Derek Leathers for any closing remarks.
Yeah. Thank you so I just want to thank everybody for being on the call again this quarter. We appreciate it and we appreciate you tuning in and I want to thank the Werner associates for all they did to make the quarter possible.
We're very proud of what we build views of very strong quarter.
And and extremely challenging labor market as of <unk>.
<unk> said several times, we're very proud of our ability to hold the line on our fleet in that market and I think it proves the kind of differentiation we've been speaking of dead.
Dedicated performed well and it will continue to perform well through the cycle and so that's something that we look forward to being able to put on display when and if the cycle turn takes place.
And although we think that as well into 'twenty, 2 if not further out than that.
Based on current supply constraints and the current the current demand indicators that we follow we're happy with the ECM acquisition, we're probably more happy with how that integration has been going at this point, it's still and the early innings, we have a lot to prove.
Work hard to make sure we do that.
Also want to mention this week, we had our 2000 million mile driver accident free drivers. So the 2 thousands of birth and person at Werner enterprises to achieve 1 million miles accident free and we're looking forward and some celebrations around that fact as the week progresses lastly, we're committed to generating.
But with free cash flow through the cycle, we've been talking about it for some time, we remain committed to that I think more importantly, we're committed to utilizing that free cash flow to return value to our shareholders, but doing so and the same capital allocation discipline that we've been demonstrating that until now investing back in our fleet growing our business organically.
Generating looking for the appropriate time and place for M&A. When we think something special exists that can add and could be.
That can be additive and accretive.
And we will continue to look to do that going forward and our commitment to ESG has never been stronger we're going to continue this journey and that's what it is it's a journey not a short trip, but we're going to work hard.
Hard at it and I think youre going to continue to see results that can make the investment community proud of the work going on here at Werner enterprises. So thanks again, thanks for joining us.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines of at this time.
Okay.
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