Werner Enterprises Q4 2025 Werner Enterprises Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Werner Enterprises Inc Earnings Call
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I would now like to turn the conference over to Chris Neil senior vice president of pricing and strategic planning. Please go ahead.
Good afternoon everyone. Earlier today, we issued our earnings release with our fourth quarter. And full year 2025 results, the release and a supplemental presentation are available in the investor section of our website at warner.com.
Today's webcast is being recorded and will be available for replay later today.
Please see the disclosure statement on slide 2 of the presentation, as well as the disclaimers and our earnings release related to forward-looking statements.
Today's remarks contain forward-looking statements that may involve risks uncertainties and other factors that could cause actual results to differ materially.
Chris Neil: Good afternoon, everyone. Earlier today, we issued our earnings release with our Q4 and full year 2025 results. The release and a supplemental presentation are available in the investor section of our website at werner.com. Today's webcast is being recorded and will be available for replay later today. Please see the disclosure statement on slide 2 of the presentation, as well as the disclaimers in our earnings release related to forward-looking statements. Today's remarks contain forward-looking statements that may involve risks, uncertainties, and other factors that could cause actual results to differ materially. The company reports results using non-GAAP measures, which we believe provides additional information for investors to help facilitate the comparison of past and present performance. A reconciliation to the most directly comparable GAAP measures is included in the tables attached to the earnings release and in the appendix of the slide presentation.
Chris Neil: Good afternoon, everyone. Earlier today, we issued our earnings release with our Q4 and full year 2025 results. The release and a supplemental presentation are available in the investor section of our website at werner.com. Today's webcast is being recorded and will be available for replay later today. Please see the disclosure statement on slide 2 of the presentation, as well as the disclaimers in our earnings release related to forward-looking statements. Today's remarks contain forward-looking statements that may involve risks, uncertainties, and other factors that could cause actual results to differ materially. The company reports results using non-GAAP measures, which we believe provides additional information for investors to help facilitate the comparison of past and present performance. A reconciliation to the most directly comparable GAAP measures is included in the tables attached to the earnings release and in the appendix of the slide presentation.
The company reports results using non-gaap measures which we believe provides additional information for investors to help facilitate the comparison of past and present performance.
a Reconciliation to the most directly comparable, gaap measures is included in the tables attached to the earnings release and in the appendix of the slide presentation,
On today's call with me, or Derek, Leathers, chairman, and CEO, and Chris woof, Executive Vice, President, Treasurer, and CFO. I will now turn the call over to Derek
Thank you, Chris and good afternoon, everyone.
We see signs of encouragement for the industry and Warner as we move into 2026.
During this prolonged demand press entered multi-year downturn, we have focused on executing our strategy to position our business for revenue and earnings growth is demand returns.
Chris Neil: On today's call with me are Derek Leathers, Chairman and CEO, and Chris Wikoff, Executive Vice President, Treasurer, and CFO. I will now turn the call over to Derek.
Chris Neil: On today's call with me are Derek Leathers, Chairman and CEO, and Chris Wikoff, Executive Vice President, Treasurer, and CFO. I will now turn the call over to Derek.
We diligently cut costs increased efficiency and continued, our technology investment to enhance visibility across our execution modes streamline and automate our operations and improve customer service in the fourth quarter. We made a decision to strategically restructure our 1-way trucking business to be even more targeted towards specialized expedited cross border, Mexico and engineered business.
Derek Leathers: Thank you, Chris, and good afternoon, everyone. We see signs of encouragement for the industry and Werner as we move into 2026. During this prolonged and unprecedented multi-year downturn, we have focused on executing our strategy to position our business for revenue and earnings growth as demand returns. We diligently cut costs, increased efficiency, and continued our technology investment to enhance visibility across our execution modes, streamline and automate our operations, and improve customer service. In Q4, we made a decision to strategically restructure our One-Way trucking business to be even more targeted towards specialized, expedited, cross-border Mexico, and engineered business. Once fully completed, we expect meaningful earnings improvement in TTS in 2026. Most recently, we used our strong balance sheet to deploy capital to acquire FirstFleet, a large, high-quality, dedicated carrier.
Derek Leathers: Thank you, Chris, and good afternoon, everyone. We see signs of encouragement for the industry and Werner as we move into 2026. During this prolonged and unprecedented multi-year downturn, we have focused on executing our strategy to position our business for revenue and earnings growth as demand returns. We diligently cut costs, increased efficiency, and continued our technology investment to enhance visibility across our execution modes, streamline and automate our operations, and improve customer service. In Q4, we made a decision to strategically restructure our One-Way trucking business to be even more targeted towards specialized, expedited, cross-border Mexico, and engineered business. Once fully completed, we expect meaningful earnings improvement in TTS in 2026. Most recently, we used our strong balance sheet to deploy capital to acquire FirstFleet, a large, high-quality, dedicated carrier.
Once fully completed, we expect meaningful earnings Improvement in TTS in 2026.
And most recently, we use our strong balance sheet to deploy Capital to acquire First Fleet a large high-quality dedicated carrier, this acquisition is immediately accretive and Dove tales with our strategy to lean further into profitable, sustainable growth, and dedicated with large complex shippers, across diverse markets.
With ongoing capacity attrition and the early signs of demand Improvement. The outlook for Warner in 2026, is more positive than it's been for several years.
Turning the slide 5 to discuss Q4 in 2025 highlights.
Discipline pricing led to a smaller Fleet and lower truckload Logistics volumes.
Higher oneway miles per truck, partially offset, those factors resulting in fourth quarter revenues, that were 2% lower year-over-year.
Derek Leathers: This acquisition is immediately accretive and dovetails with our strategy to lean further into profitable, sustainable growth and Dedicated with large, complex shippers across diverse markets. With ongoing capacity attrition and the early signs of demand improvement, the outlook for Werner in 2026 is more positive than it's been for several years. Turning to slide 5 to discuss Q4 and 2025 highlights. Disciplined pricing led to a smaller fleet and lower truckload logistics volumes. Higher one-way miles per truck partially offset those factors, resulting in fourth quarter revenues that were 2% lower year over year. Peak volumes in December in total were flat year over year, consistent with expectations. Peak revenues were up mid-single digits due to higher peak pricing compared to the prior year. In Dedicated, revenues increased by low single digits in the quarter, driven primarily by higher average fleet size.
Derek Leathers: This acquisition is immediately accretive and dovetails with our strategy to lean further into profitable, sustainable growth and Dedicated with large, complex shippers across diverse markets. With ongoing capacity attrition and the early signs of demand improvement, the outlook for Werner in 2026 is more positive than it's been for several years. Turning to slide 5 to discuss Q4 and 2025 highlights. Disciplined pricing led to a smaller fleet and lower truckload logistics volumes. Higher one-way miles per truck partially offset those factors, resulting in fourth quarter revenues that were 2% lower year over year. Peak volumes in December in total were flat year over year, consistent with expectations. Peak revenues were up mid-single digits due to higher peak pricing compared to the prior year. In Dedicated, revenues increased by low single digits in the quarter, driven primarily by higher average fleet size.
In total were flat year-over-year consistent with expectations.
Peak revenues were up mid single digits due to higher Peak pricing compared to the prior year.
In dedicated revenues increased by low single digits in the quarter driven primarily by higher average Fleet size as we enter a new year momentum and dedicated remains positive with a strong pipeline of opportunities and early realization of some rate increases.
Customers remain focused on reliable and flexible Transportation Partners, like Warner, who offer Creative Solutions and high service and scale.
The strength of our dedicated business combined with First Fleet creates a more scalable platform to drive sustainable profitable growth for Warner's future.
I will discuss more about the acquisition momentarily.
1 way continues to be pressured across the industry. We remain committed to specialized services in 1 way, such as expedited cross border Mexico and engineered business.
Derek Leathers: As we enter a new year, momentum in Dedicated remains positive, with a strong pipeline of opportunities and early realization of some rate increases. Customers remain focused on reliable and flexible transportation partners like Werner, who offer creative solutions and high service and scale. The strength of our Dedicated business, combined with FirstFleet, creates a more scalable platform to drive sustainable, profitable growth for Werner's future. I will discuss more about the acquisition momentarily. One-Way continues to be pressured across the industry. We remain committed to specialized services in One-Way, such as expedited, cross-border Mexico, and engineered business. We've taken actions to restructure our One-Way operations and offering that will result in profitability enhancement, which we expect to be noticeable in the second quarter. Our vision for One-Way is a smaller, more productive, and specialized fleet, complemented by asset-light PowerLink carriers.
Derek Leathers: As we enter a new year, momentum in Dedicated remains positive, with a strong pipeline of opportunities and early realization of some rate increases. Customers remain focused on reliable and flexible transportation partners like Werner, who offer creative solutions and high service and scale. The strength of our Dedicated business, combined with FirstFleet, creates a more scalable platform to drive sustainable, profitable growth for Werner's future. I will discuss more about the acquisition momentarily. One-Way continues to be pressured across the industry. We remain committed to specialized services in One-Way, such as expedited, cross-border Mexico, and engineered business. We've taken actions to restructure our One-Way operations and offering that will result in profitability enhancement, which we expect to be noticeable in the second quarter. Our vision for One-Way is a smaller, more productive, and specialized fleet, complemented by asset-light PowerLink carriers.
We've taken actions to restructure our 1-way operations and offering that will result in profitability enhancement which we expect to be noticeable in the second quarter.
Our vision for 1 way is a smaller more productive and specialized Fleet complemented by asset light powerlink carriers,
1-way Trucking is an integral part of our portfolio and provides several competitive. Differentiators.
First, it serves as valuable experience for drivers before being placed in dedicated and other high service fleets.
After graduating, from 1 of our 20 vertical integrated Training Academy drivers are on boarded through a collaborative pairing process to successfully navigate diverse operating environments while maintaining High safety standards.
Derek Leathers: One-Way trucking is an integral part of our portfolio and provides several competitive differentiators. First, it serves as valuable experience for drivers before being placed in Dedicated and other high-service fleets. After graduating from one of our 20 vertically integrated training academies, drivers are onboarded through a collaborative pairing process to successfully navigate diverse operating environments while maintaining high safety standards. Second, it is an entry point to get to know customers, to build relationships, and allow new customers to test Werner's solutions, service, and capabilities on a 1-year or shorter-term basis. And lastly, One-Way provides flexibility and surge capacity for our Dedicated customers, and it allows us to support a wide range of customers during times of increased demand. These restructuring actions are designed to increase miles per truck and shift towards more profitable, specialized rates and lanes.
Derek Leathers: One-Way trucking is an integral part of our portfolio and provides several competitive differentiators. First, it serves as valuable experience for drivers before being placed in Dedicated and other high-service fleets. After graduating from one of our 20 vertically integrated training academies, drivers are onboarded through a collaborative pairing process to successfully navigate diverse operating environments while maintaining high safety standards. Second, it is an entry point to get to know customers, to build relationships, and allow new customers to test Werner's solutions, service, and capabilities on a 1-year or shorter-term basis. And lastly, One-Way provides flexibility and surge capacity for our Dedicated customers, and it allows us to support a wide range of customers during times of increased demand. These restructuring actions are designed to increase miles per truck and shift towards more profitable, specialized rates and lanes.
And lastly, 1 way provides flexibility in Surge capacity for our dedicated customers and it allows us to support a wide range of customers during times of increased demand.
These restructuring actions are designed to increase miles per truck and shift towards more profitable. Specialized Freight and Lanes, combined with our large trailer pool and power link carriers. We believe this positions us to capitalize on improving market conditions and drive greater margin Improvement.
In logistics Intermodal and final mile revenues in profits. Increase your overall year.
Both of these divisions exited 2025 and growth mode and we anticipate momentum continuing in 2026.
Truckload brokerage results, were challenged in the quarter is purchase Transportation costs. Increased escalating rapidly in December and resulting in lower Logistics. Operating income in the fourth quarter.
Derek Leathers: Combined with our large trailer pool and PowerLink carriers, we believe this positions us to capitalize on improving market conditions and drive greater margin improvement. In logistics, Intermodal, and Final Mile, revenues and profits increased year-over-year. Both of these divisions exited 2025 in growth mode, and we anticipate momentum continuing in 2026. Truckload Brokerage results were challenged in the quarter as Purchase Transportation costs increased, escalating rapidly in December and resulting in lower logistics operating income in Q4. While margin compression has continued into Q1 and was further pressured by the recent large storms across much of our operating area, we expect it to moderate as we work through customer pricing agreements and our ongoing efficiency initiatives take hold.
Derek Leathers: Combined with our large trailer pool and PowerLink carriers, we believe this positions us to capitalize on improving market conditions and drive greater margin improvement. In logistics, Intermodal, and Final Mile, revenues and profits increased year-over-year. Both of these divisions exited 2025 in growth mode, and we anticipate momentum continuing in 2026. Truckload Brokerage results were challenged in the quarter as Purchase Transportation costs increased, escalating rapidly in December and resulting in lower logistics operating income in Q4. While margin compression has continued into Q1 and was further pressured by the recent large storms across much of our operating area, we expect it to moderate as we work through customer pricing agreements and our ongoing efficiency initiatives take hold.
While margin compression is continued into q1 and was further pressured by the recent large storms across much of our operating area. We expect it to moderate as we work through, customer pricing agreements and our ongoing efficiency initiatives. Take hold
Moving the slide 6, our plan to generate earnings power and deliver, value creation remains largely, the same entering 2026 and is focused on 3 overing, priorities.
First is driving growth in Core Business, which comprises growing our dedicated Fleet.
Increasing 1-way production and rates and expanding, TTS and Logistics adjusted operating income margin.
All of these are underway average. Dedicated trucks, grew in the quarter, and new fleets are being implemented in the first quarter of 26.
Dedicated revenues for truck per week, have increased 11 of the last 12 years.
Derek Leathers: Moving to Slide 6, our plan to generate earnings power and deliver value creation remains largely the same entering 2026 and is focused on three overarching priorities. First is driving growth in core business, which comprises growing our Dedicated fleet, increasing One-Way production and rates, and expanding TTS and Logistics Adjusted Operating Income Margin. All of these are underway. Average Dedicated trucks grew in the quarter, and new fleets are being implemented in Q1 2026. Dedicated revenues per truck per week have increased 11 of the last 12 years. The addition of FirstFleet grows Dedicated by 50%, and the combined Dedicated portfolio represents over half of our $3.6 billion pro forma revenue. Dedicated provides more consistent revenue streams with long-term customer relationships.
Derek Leathers: Moving to Slide 6, our plan to generate earnings power and deliver value creation remains largely the same entering 2026 and is focused on three overarching priorities. First is driving growth in core business, which comprises growing our Dedicated fleet, increasing One-Way production and rates, and expanding TTS and Logistics Adjusted Operating Income Margin. All of these are underway. Average Dedicated trucks grew in the quarter, and new fleets are being implemented in Q1 2026. Dedicated revenues per truck per week have increased 11 of the last 12 years. The addition of FirstFleet grows Dedicated by 50%, and the combined Dedicated portfolio represents over half of our $3.6 billion pro forma revenue. Dedicated provides more consistent revenue streams with long-term customer relationships.
The addition of First Fleet grows dedicated by 50% and the combined dedicated portfolio represents over half of our 3.6 billion proforma Revenue.
Dedicated provides more consistent revenue streams with long-term customer relationships.
The total addressable market for dedicated is over 30 billion and we expect to capture more market, share as customers. Look for stable financially viable carriers offering High service, expertise and scalable capacity.
We took decisive action, beginning in the fourth quarter to restructure 1-way Trucking to improve earnings.
In logistics. We've seen a continuous reduction in cost to serve through Tech enablement. While in our model is growing at double digits and final mile is seeing the strongest momentum since Inception
Second is driving operational excellence which will be accomplished by maintaining a Resolute. Focus on safety and service. Continuing to advance our technology roadmap,
Derek Leathers: The total addressable market for Dedicated is over $30 billion, and we expect to capture more market share as customers look for stable, financially viable carriers offering high service, expertise, and scalable capacity. We took decisive action beginning in Q4 to restructure One-Way trucking to improve earnings. In logistics, we've seen a continuous reduction in cost to serve through tech enablement, while Intermodal is growing at double digits, and Final Mile is seeing the strongest momentum since inception. Second is driving operational excellence, which will be accomplished by maintaining a resolute focus on safety and service, continuing to advance our technology roadmap, embedding cost discipline throughout the organization, and realizing efficiencies and synergies from acquisitions. Our safety metrics remain near record lows, and our transformational technology journey is progressing and continuing to gain momentum, leading to top-and-bottom-line synergies. We remain focused on cost discipline.
Derek Leathers: The total addressable market for Dedicated is over $30 billion, and we expect to capture more market share as customers look for stable, financially viable carriers offering high service, expertise, and scalable capacity. We took decisive action beginning in Q4 to restructure One-Way trucking to improve earnings. In logistics, we've seen a continuous reduction in cost to serve through tech enablement, while Intermodal is growing at double digits, and Final Mile is seeing the strongest momentum since inception. Second is driving operational excellence, which will be accomplished by maintaining a resolute focus on safety and service, continuing to advance our technology roadmap, embedding cost discipline throughout the organization, and realizing efficiencies and synergies from acquisitions. Our safety metrics remain near record lows, and our transformational technology journey is progressing and continuing to gain momentum, leading to top-and-bottom-line synergies. We remain focused on cost discipline.
Embedding cost discipline throughout the organization and realizing efficiencies, and synergies from acquisitions.
Our safety metrics remain near record lows and our transformational technology journey is progressing and continuing to gain momentum leading to top and bottom line synergies.
We remain focused on cost discipline.
Speaker #3: operational excellence. Which will be accomplished by maintaining a resolute focus on safety and service. Continuing to advance our technology roadmap. Embedding cost discipline throughout the organization and realizing efficiencies and synergies from acquisitions.
We've reduced costs by approximately 150 million over the last 3 years. The majority of which are largely structural and sustainable in the fourth quarter Opex, excluding purchase Transportation fuel restructuring costs, and gains was down, 5% and relative to acquisition integration by mid year 2026, all prior Acquisitions. With the exception of firstly will be fully integrated. We have a clear line of sight on expanding historical. First Fleet margins through measurable cost, Synergy realization. We'll also be working to size Revenue synergies such as increased back. Call surge capacity for firstly customers and cross-selling opportunities as our integration efforts began in earnest.
Derek Leathers: We've reduced costs by approximately $150 million over the last three years, the majority of which are largely structural and sustainable. In Q4, OpEx, excluding purchase transportation, fuel, restructuring costs, and gains, was down 5%. Relative to acquisition integration, by mid-2026, all prior acquisitions, with the exception of FirstFleet, will be fully integrated. We have a clear line of sight on expanding historical FirstFleet margins through measurable cost synergy realization. We'll also be working to size revenue synergies, such as increased backhaul, surge capacity for FirstFleet customers, and cross-selling opportunities as our integration efforts begin in earnest. Our final priority is driving capital efficiency. This includes preserving strong operating cash flow, optimizing working capital, and improving free cash flow conversion while reinvesting in the business. FirstFleet is expected to be cash flow accretive.
Derek Leathers: We've reduced costs by approximately $150 million over the last three years, the majority of which are largely structural and sustainable. In Q4, OpEx, excluding purchase transportation, fuel, restructuring costs, and gains, was down 5%. Relative to acquisition integration, by mid-2026, all prior acquisitions, with the exception of FirstFleet, will be fully integrated. We have a clear line of sight on expanding historical FirstFleet margins through measurable cost synergy realization. We'll also be working to size revenue synergies, such as increased backhaul, surge capacity for FirstFleet customers, and cross-selling opportunities as our integration efforts begin in earnest. Our final priority is driving capital efficiency. This includes preserving strong operating cash flow, optimizing working capital, and improving free cash flow conversion while reinvesting in the business. FirstFleet is expected to be cash flow accretive.
Our final priority is driving Capital efficiency. This includes preserving, strong operating cash flow, optimizing working capital and improving free cash flow conversion while reinvesting in the business.
first lead is expected to be cash, flow accretive
Our Capital allocation will remain balanced to fund growth invest, in technology, return Capital to shareholders and reduce debt and leverage over time.
Our technology Journey carries on as we make progress on building out functionality in our cloud-based Edge TMS.
By the end of 2025, 95% of 1-way loads and 85% of dedicated trips were migrated to the platform.
Logistics volumes were transitioned to Edge previously, and is contributed to lower Opex and cost to serve.
For example, in the fourth quarter truckload Logistics Personnel cost to climb 15% year-over-year.
Derek Leathers: Our capital allocation will remain balanced to fund growth, invest in technology, return capital to shareholders, and reduce debt and leverage over time. Our technology journey carries on as we make progress on building out functionality in our cloud-based EDGE TMS. By the end of 2025, 95% of One-Way loads and 85% of Dedicated trips were migrated to the platform.... logistics volumes were transitioned to EDGE previously and have contributed to lower OpEx and cost to serve. For example, in Q4, truckload logistics personnel costs declined 15% year-over-year. With visibility in the platform to all loads mostly complete, teams are now focusing on building out one-way and dedicated execution functionality. In addition to EDGE, the organization is also progressing with implementing AI throughout the business.
Derek Leathers: Our capital allocation will remain balanced to fund growth, invest in technology, return capital to shareholders, and reduce debt and leverage over time. Our technology journey carries on as we make progress on building out functionality in our cloud-based EDGE TMS. By the end of 2025, 95% of One-Way loads and 85% of Dedicated trips were migrated to the platform.... logistics volumes were transitioned to EDGE previously and have contributed to lower OpEx and cost to serve. For example, in Q4, truckload logistics personnel costs declined 15% year-over-year. With visibility in the platform to all loads mostly complete, teams are now focusing on building out one-way and dedicated execution functionality. In addition to EDGE, the organization is also progressing with implementing AI throughout the business.
With visibility in the platform to all loads, mostly complete teams are now focusing on building out 1 way and dedicated execution functionality.
In addition to Edge, the organization is also progressing with implementing AI throughout the business.
Speaker #3: 95% of one-way loads and 85% of dedicated trips were migrated to the platform. Logistics volumes were transitioned to edge previously, and have contributed to lower OPEX and cost to serve.
With streamlined, driver onboarding increase customer visibility, enhance predictive maintenance and increase speed to bill is just a few examples of an AI enabled Workforce.
Moving the slide 7 to discuss. Firstly the more detail. We are excited to add firstly 1 of the leading Pure Play, dedicated trucking companies to the Warner portfolio, we closed on January 27th and hosted a call on January 28th.
The lady in our announcement last week.
There are several key takeaways worth noting. Again here,
Firstly accelerates our intentional. Portfolio shift to higher margin, more resilient dedicated business.
Derek Leathers: We've streamlined driver onboarding, increased customer visibility, enhanced predictive maintenance, and increased speed to bill, is just a few examples of an AI-enabled workforce. Moving to Slide 7 to discuss FirstFleet in more detail. We are excited to add FirstFleet, one of the leading pure-play dedicated trucking companies, to the Werner portfolio. We closed on 27 January 2026 and hosted a call on 28 January 2026. Please refer to the press release and presentation relating to our announcement last week. There are several key takeaways worth noting again here. FirstFleet accelerates our intentional portfolio shift to higher margin, more resilient, dedicated business. With more than $615 million in trailing twelve-month revenues and 2,400 tractors, FirstFleet expands Werner's scale, network density, and geographic reach. FirstFleet deepens and diversifies our presence in attractive end markets with customers in grocery, bakery, and packaging solutions.
Derek Leathers: We've streamlined driver onboarding, increased customer visibility, enhanced predictive maintenance, and increased speed to bill, is just a few examples of an AI-enabled workforce. Moving to Slide 7 to discuss FirstFleet in more detail. We are excited to add FirstFleet, one of the leading pure-play dedicated trucking companies, to the Werner portfolio. We closed on 27 January 2026 and hosted a call on 28 January 2026. Please refer to the press release and presentation relating to our announcement last week. There are several key takeaways worth noting again here. FirstFleet accelerates our intentional portfolio shift to higher margin, more resilient, dedicated business. With more than $615 million in trailing twelve-month revenues and 2,400 tractors, FirstFleet expands Werner's scale, network density, and geographic reach. FirstFleet deepens and diversifies our presence in attractive end markets with customers in grocery, bakery, and packaging solutions.
With more than 615 million in trailing 12-month revenues and 2400 tractors. Firstly it expands Warner scale Network density and Geographic reach.
Speaker #3: Slide seven to discuss First Fleet in more detail. Our safety, for example. We are excited to add First Fleet, one of the leading pure-play dedicated trucking companies, to the Werner portfolio.
Speaker #3: We closed on January 27th and hosted a call on January 28th. Please refer to the press release and presentation relating to our announcement last week.
Firstly deepens and diversifies our presence in attractive and markets with customers and grocery Bakery and packaging Solutions. We expect a media EPS secretion with further benefits from 18 million in annual cost synergies. And lastly firstly is a strong cultural fit with a shared commitment to safety service and innovation.
Speaker #3: There are several key takeaways worth noting again here. First Fleet accelerates our intentional portfolio shift to higher margin, more resilient dedicated business. With more than 615 million in trailing 12-month revenues and 2,400 tractors, First Fleet expands Werner's scale, network density, and geographic reach.
moving to slide 8 showing a revenue snapshot before and after the first lead acquisition,
The combination expands our revenue from approximately 3 billion for Warner on a standalone basis. To approximately 3.6 billion on a combined basis.
Speaker #3: First Fleet deepens and diversifies our presence in attractive end markets with customers in grocery, bakery, and packaging solutions. We expect immediate EPS accretion with further benefit from 18 million in annual cost synergies.
As a percent of our portfolio mix dedicated growth from roughly 43% of total revenues today.
To over half on a combined basis.
Derek Leathers: We expect immediate EPS accretion with further benefit from $18 million in annual cost synergies. Lastly, FirstFleet is a strong cultural fit with a shared commitment to safety, service, and innovation. Moving to slide 8, showing a revenue snapshot before and after the FirstFleet acquisition. The combination expands our revenue from approximately $3 billion for Werner on a standalone basis to approximately $3.6 billion on a combined basis. As a percent of our portfolio mix, Dedicated grows from roughly 43% of total revenues today to over half on a combined basis. FirstFleet services many leading customers in attractive and resilient markets. Among its top 10 customers, the average tenure is 17 years, and 3 of its top 4 customers have been with FirstFleet for over 25 years. On a combined basis, FirstFleet diversifies our portfolio.
Derek Leathers: We expect immediate EPS accretion with further benefit from $18 million in annual cost synergies. Lastly, FirstFleet is a strong cultural fit with a shared commitment to safety, service, and innovation. Moving to slide 8, showing a revenue snapshot before and after the FirstFleet acquisition. The combination expands our revenue from approximately $3 billion for Werner on a standalone basis to approximately $3.6 billion on a combined basis. As a percent of our portfolio mix, Dedicated grows from roughly 43% of total revenues today to over half on a combined basis. FirstFleet services many leading customers in attractive and resilient markets. Among its top 10 customers, the average tenure is 17 years, and 3 of its top 4 customers have been with FirstFleet for over 25 years. On a combined basis, FirstFleet diversifies our portfolio.
Speaker #3: And lastly, First Fleet is a strong cultural fit with a shared commitment to safety, service, and innovation. Moving to slide eight, showing a revenue snapshot before and after the First Fleet acquisition.
Speaker #3: The combination expands our revenue from approximately $3 billion for Werner on a standalone basis to approximately $3.6 billion on a combined basis. As a percent of our portfolio mix dedicated grows from roughly 43% of total revenues today, to over half on a combined basis.
Firstly Services, many leading customers in attractive and resilient markets among its top 10 customers. The average tenure is 17 years and 3 of its top 4. Customers have been with firstly for over 25 years on a combined basis. Firstly diversifies our portfolio, retail remains our largest vertical though. It decreases from 66% to 60% on a combined basis with roughly half concentrated in discounts.
And value. Retail grocery retail, expands adding more resilient non-discretionary volume.
Industrial. Exposure increases from 13 to 19% on a combined basis while food and beverage remains steady at 14%.
Speaker #3: First Fleet services many leading customers in attractive and resilient markets. Among its top 10 customers, the average tenure is 17 years. And three of its top four customers have been with us for years.
As a result, our overall portfolio is increasingly more durable and resilient improving Revenue, stability. Deepening customer diversification and enhancing our ability to produce steady revenue and earnings growth.
Speaker #3: On a combined basis, First Fleet diversifies our portfolio. Retail remains our largest vertical, though it decreases from 66% to 60% on a combined basis with roughly half concentrated in discount and value retail.
Derek Leathers: Retail remains our largest vertical, though it decreases from 66% to 60% on a combined basis, with roughly half concentrated in discount and value retail. Grocery retail expands, adding more resilient, non-discretionary volume. Industrial exposure increases from 13 to 19% on a combined basis, while food and beverage remains steady at 14%. As a result, our overall portfolio is increasingly more durable and resilient, improving revenue stability, deepening customer diversification, and enhancing our ability to produce steady revenue and earnings growth. Before Chris discusses our financial results in more detail, let's move to Slide 9 to summarize our current market outlook. Capacity exits continue, driven in part from ongoing broad enforcement efforts, and recent tightening between supply and demand suggests that that pace is increasing. Consumers remain selective, yet resilient, which bodes well for our mix of retail being more concentrated in discount and value retailers.
Derek Leathers: Retail remains our largest vertical, though it decreases from 66% to 60% on a combined basis, with roughly half concentrated in discount and value retail. Grocery retail expands, adding more resilient, non-discretionary volume. Industrial exposure increases from 13 to 19% on a combined basis, while food and beverage remains steady at 14%. As a result, our overall portfolio is increasingly more durable and resilient, improving revenue stability, deepening customer diversification, and enhancing our ability to produce steady revenue and earnings growth. Before Chris discusses our financial results in more detail, let's move to Slide 9 to summarize our current market outlook. Capacity exits continue, driven in part from ongoing broad enforcement efforts, and recent tightening between supply and demand suggests that that pace is increasing. Consumers remain selective, yet resilient, which bodes well for our mix of retail being more concentrated in discount and value retailers.
Before Chris discusses our financial results in more detail. Let's move to slide 9 to summarize our current market Outlook.
Capacity. Exits, continue driven in part from ongoing broad enforcement efforts and recent tightening between supply and demand suggests that that pace is increasing.
Speaker #3: Grocery retail expands, adding more resilient non-discretionary volume. Industrial exposure increases from 13 to 19% on a combined basis, while food and beverage remains steady at 14%.
Consumers remain selective yet resilient which bodes well, for our mix of retail being more concentrated in discount and value retailers.
Speaker #3: As a result, our overall portfolio is increasingly more durable and resilient. Improving revenue stability, deepening customer diversification, and enhancing our ability to produce steady revenue and earnings growth.
Value retailers are producing good results as middle class families, trade down. And while mixed signals continue to make headlines on the health of the consumer, looking ahead the potential for lower interest rates and larger tax. Refunds are creating cautious optimism.
Speaker #3: Before detail, let's move to slide nine to summarize. Chris discusses our financial results and our current market outlook. Capacity exits continue, driven in part by ongoing broad enforcement efforts, and recent tightening between supply and demand suggests that that pace is. Consumers remain selective yet resilient, which bodes well for our mix of retail being more concentrated in discount and value retailers.
Retailers are operating leaner as the inventory to sales ratio continues at year-over-year decline?
While shifting trade policies may affect future stocking timelines. The consistent replenishment of non-discretionary items provides a critical buffer against Market volatility.
Spot rates perform consistent with seasonal Trends in October and November, then outperformed normal seasonality in December.
Speaker #3: Value retailers are producing good results, as middle-class families trade down. And while mixed signals continue to make headlines on the health of the consumer looking ahead the potential for lower interest rates and larger tax refunds are creating cautious optimism.
Derek Leathers: Value retailers are producing good results as middle-class families trade down. While mixed signals continue to make headlines on the health of the consumer, looking ahead, the potential for lower interest rates and larger tax refunds are creating cautious optimism. Retailers are operating leaner as the inventory-to-sales ratio continues its year-over-year decline. While shifting trade policies may affect future stocking timelines, the consistent replenishment of non-discretionary items provides a critical buffer against market volatility. Spot rates performed consistent with seasonal trends in October and November, then outperformed normal seasonality in December. So far in January, spot rates remain elevated. As the recent winter weather subsides, we expect spot rates to moderate, but we expect an upward trend throughout the year as capacity exits and demand improves. Used truck values are likely to remain above two-year lows, with pressure tilted upwards longer term.
Derek Leathers: Value retailers are producing good results as middle-class families trade down. While mixed signals continue to make headlines on the health of the consumer, looking ahead, the potential for lower interest rates and larger tax refunds are creating cautious optimism. Retailers are operating leaner as the inventory-to-sales ratio continues its year-over-year decline. While shifting trade policies may affect future stocking timelines, the consistent replenishment of non-discretionary items provides a critical buffer against market volatility. Spot rates performed consistent with seasonal trends in October and November, then outperformed normal seasonality in December. So far in January, spot rates remain elevated. As the recent winter weather subsides, we expect spot rates to moderate, but we expect an upward trend throughout the year as capacity exits and demand improves. Used truck values are likely to remain above two-year lows, with pressure tilted upwards longer term.
So far in January spot rates, remain elevated.
Use truck values are likely to remain above 2 year lows, with pressure tilted, upwards longer term.
Speaker #3: are operating leaner as the retailers' inventory-to-sales ratio continues its year-over-year decline. While shifting trade policies may affect future stocking timelines, the consistent replenishment of non-discretionary items provides a critical buffer against market volatility.
However, we're also cognizant of the possibility that accelerated attrition from enforcement could create short-term pressure.
Speaker #3: Spot rates perform consistent with seasonal trends in October and November, then outperformed normal seasonality in December. So far in January, spot rates remain elevated.
Class 8, net truck builds continue to be below replacement levels and not only signal truckload capacity, tightening ahead. But also the more carriers could be looking to refresh their Fleet in in the used equipment Market.
With that, I'll turn it over to Chris to discuss our fourth quarter results in more detail.
Speaker #3: As the recent winter weather subsides, we expect spot rates to moderate. But we expect an upward trend throughout the year as capacity exits and demand improves.
Thank you Derek. We'll continue on site 11.
Speaker #3: Used truck values are likely to remain above two-year lows, with pressure tilted upwards longer term. However, we're also cognizant of the possibility that accelerated attrition from enforcement could create short-term pressure.
Derek Leathers: However, we're also cognizant of the possibility that accelerated attrition from enforcement could create short-term pressure. Class 8 net truck builds continue to be below replacement levels and not only signal truckload capacity tightening ahead, but also that more carriers could be looking to refresh their fleet in the used equipment market. With that, I'll turn it over to Chris to discuss our fourth quarter results in more detail.
Derek Leathers: However, we're also cognizant of the possibility that accelerated attrition from enforcement could create short-term pressure. Class 8 net truck builds continue to be below replacement levels and not only signal truckload capacity tightening ahead, but also that more carriers could be looking to refresh their fleet in the used equipment market. With that, I'll turn it over to Chris to discuss our fourth quarter results in more detail.
All performance comparisons here are year-over-year in West otherwise noted fourth quarter. Revenues totaled 738 million down 2% full year revenues also declined to percent adjusted. Operating income was 11.3 million and adjusted operating margin was 1.5%. Adjusted EPS was 5 cents.
Speaker #3: Class eight net truck builds continue to be below replacement levels, and not only signal truckload capacity tightening ahead, but also that more carriers could be looking to refresh their fleet in the used equipment market.
Consolidate gains on sale of property and Equipment told 2.4 million down from 6.5 million in the prior year period, which included a 5.1 million gain on the sale of Real Estate.
Turning to slide 12.
Speaker #3: With that, I'll turn it over to Chris to discuss our fourth quarter results in more detail.
Speaker #2: Thank you, Derek. We'll continue on slide 11. All performance comparisons here are year-over-year unless otherwise noted. Fourth quarter revenues totaled $738 million, down 2%.
Chris Wikoff: Thank you, Derek. We'll continue on slide 11. All performance comparisons here are year-over-year, unless otherwise noted. Fourth quarter revenues totaled $738 million, down 2%. Full year revenues also declined 2%. Adjusted operating income was $11.3 million, and adjusted operating margin was 1.5%. Adjusted EPS was $0.05. Consolidated gains on sale of property and equipment totaled $2.4 million, down from $6.5 million in the prior year period, which included a $5.1 million gain on the sale of real estate. Turning to Slide 12, truckload transportation services total revenue for the quarter was $513 million, down 3%. Revenues net of fuel surcharges declined 3% year-over-year at $455 million. On a full year basis, revenue excluding fuel decreased 3%.
Christopher Wikoff: Thank you, Derek. We'll continue on slide 11. All performance comparisons here are year-over-year, unless otherwise noted. Fourth quarter revenues totaled $738 million, down 2%. Full year revenues also declined 2%. Adjusted operating income was $11.3 million, and adjusted operating margin was 1.5%. Adjusted EPS was $0.05. Consolidated gains on sale of property and equipment totaled $2.4 million, down from $6.5 million in the prior year period, which included a $5.1 million gain on the sale of real estate. Turning to Slide 12, truckload transportation services total revenue for the quarter was $513 million, down 3%. Revenues net of fuel surcharges declined 3% year-over-year at $455 million. On a full year basis, revenue excluding fuel decreased 3%.
Truckload transportation services, total revenue for the quarter. Was 513. Million down, 3%, revenues, net of fuel. S charges declined. 3% year-over-year at 455 million.
on a full year basis Revenue, excluding fuel decreased 3%
Speaker #2: Full-year revenues also declined 2%. Adjusted operating income was $11.3 million, and adjusted operating margin was $1.5%. Adjusted EPS was $0.05. Consolidated gains on sale of property and equipment totaled $2.4 million, down from $6.5 million in the prior year period, which included a $5.1 million gain on the sale of real estate.
CTS adjusted. Operating income was. 12.7 Million, adjusted operating margin. Net of fuel was 2.8%, a decrease of 30 basis points.
Dedicated Fleet growth, lower Insurance costs compared to last year and higher equipment. Gains were more than offset by margin degradation in our 1-way trucking business.
Let's turn to slide 13 to review, our Fleet metrics.
Speaker #2: Turning to slide 12, truckload transportation services total revenue for the quarter was $513 million, down 3%. Revenues net of fuel surcharges declined 3% year-over-year at $455 million.
Speaker #2: On a full-year basis, revenue excluding fuel decreased 3%. TTS adjusted operating income was $12.7 million. Adjusted operating margin net of fuel was $2.8%, a decrease of 30 basis points.
2.1 percent. The TTS Fleet entered the quarter down 5% and dropped 345 trucks. Sequentially also down 5%, both reflection of the 1-way restructuring, that began before the end of the quarter.
Chris Wikoff: TTS adjusted operating income was $12.7 million. Adjusted operating margin net of fuel was 2.8%, a decrease of 30 basis points. Dedicated fleet growth, lower insurance costs compared to last year, and higher equipment gains were more than offset by margin degradation in our One-Way trucking business. Let's turn to Slide 13 to review our fleet metrics. TTS average trucks were 7,340 during the quarter, down 2.1%. The TTS fleet ended the quarter down 5% and dropped 345 trucks sequentially, also down 5%, both a reflection of the One-Way restructuring that began before the end of the quarter. TTS revenue per truck per week, net of fuel, decreased 0.4%, primarily due to lower miles per truck, partially offset by higher revenue per total mile....
Christopher Wikoff: TTS adjusted operating income was $12.7 million. Adjusted operating margin net of fuel was 2.8%, a decrease of 30 basis points. Dedicated fleet growth, lower insurance costs compared to last year, and higher equipment gains were more than offset by margin degradation in our One-Way trucking business. Let's turn to Slide 13 to review our fleet metrics. TTS average trucks were 7,340 during the quarter, down 2.1%. The TTS fleet ended the quarter down 5% and dropped 345 trucks sequentially, also down 5%, both a reflection of the One-Way restructuring that began before the end of the quarter. TTS revenue per truck per week, net of fuel, decreased 0.4%, primarily due to lower miles per truck, partially offset by higher revenue per total mile....
TTS Revenue per truck per week, net of fuel, decreased 4%, primarily due to lower miles per truck. Partially offset by higher Revenue per total mile
Speaker #2: Dedicated fleet growth, lower insurance costs compared to last year, and higher equipment gains were more than offset by margin business. Let's turn to slide 13 to review our fleet metrics.
within TTS, dedicate a revenue. Net of fuel was 292 million up 1%.
Dedicated represented, 65% of TTS, Trucking Revenue up from 63% a year ago.
Speaker #2: TTS averaged trucks were 7,340 during the quarter, down 2.1%. The TTS fleet ended the quarter down 5% and dropped 345 trucks sequentially also down 5%.
With First Fleet included, dedicated will grow to over 70% of TTS.
Speaker #2: Both a reflection of the one-way restructuring that began before the end of the quarter. TTS revenue per truck per week, net of fuel, decreased 0.4%.
Dedicated average trucks, increase 2.4% year-over-year and 1.8% sequentially to 4,954 trucks. At quarter end. The dedicated fleet was up 10x from where we started the year and represented 68% of the TTS Fleet.
Speaker #2: Primarily due to lower miles per truck partially offset by higher revenue per total mile. Within TTS, dedicated revenue net of fuel was $292 million, up 1%.
Chris Wikoff: Within TTS, dedicated revenue, net of fuel, was $292 million, up 1%. Dedicated represented 65% of TTS trucking revenue, up from 63% a year ago. With FirstFleet included, dedicated will grow to over 70% of TTS. Dedicated average trucks increased 2.4% year-over-year and 1.8% sequentially to 4,954 trucks. At quarter end, the dedicated fleet was up 10 trucks from where we started the year and represented 68% of the TTS fleet. Dedicated revenue per truck per week decreased 1.1% in the quarter, but was slightly positive for the full year. In our One-Way business for the fourth quarter, trucking revenue, net of fuel, was $156 million, a decrease of 8%.
Christopher Wikoff: Within TTS, dedicated revenue, net of fuel, was $292 million, up 1%. Dedicated represented 65% of TTS trucking revenue, up from 63% a year ago. With FirstFleet included, dedicated will grow to over 70% of TTS. Dedicated average trucks increased 2.4% year-over-year and 1.8% sequentially to 4,954 trucks. At quarter end, the dedicated fleet was up 10 trucks from where we started the year and represented 68% of the TTS fleet. Dedicated revenue per truck per week decreased 1.1% in the quarter, but was slightly positive for the full year. In our One-Way business for the fourth quarter, trucking revenue, net of fuel, was $156 million, a decrease of 8%.
dedicated Revenue per truck per week, decreased 1.1% in the quarter but with slightly positive for the full year,
Speaker #2: 65% of TTS trucking revenue, up Dedicated represented from 63% a year ago. With First Fleet included, dedicated will grow to over 70% of TTS.
Speaker #2: averaged trucks increased 2.4% Dedicated year-over-year and 1.8% sequentially, to 4,954 trucks. At quarter-end, the dedicated fleet was up 10 trucks from where we started the year, and represented 68% of the TTS fleet.
And our 1-way business for the fourth quarter, Trucking Revenue, net of fuel was 156 million. A decrease of 8% average, trucks of 2,386 decreased 10% on a year-over-year. In sequential, basis 360 fewer. When a trucks were in the fleet, at the end of the year sequentially, the 1-way fleet fell 230 trucks.
Revenue per truck per week, increased 2.2% due to higher miles per truck.
Speaker #2: truck per week decreased 1.1% Dedicated revenue per in the quarter, but was slightly positive for the full year. In our one-way business, for the fourth quarter, trucking revenue net of fuel was $156 million, a decrease of 8%.
Chris Wikoff: Average trucks of 2,386 decreased 10% on a year-over-year and sequential basis. 360 fewer One-Way trucks were in the fleet at the end of the year. Sequentially, the One-Way fleet fell 230 trucks. Revenue per truck per week increased 2.2% due to higher miles per truck. While One-Way revenue per total mile declined slightly year-over-year in the fourth quarter, the negative variance was a result of mix change. The mix issue is a byproduct of the restructuring started in the fourth quarter, ultimately designed to improve profitability. We are focusing on more specialized One-Way, like expedited and diversifying to verticals such as pharmaceuticals and technology. This mix change will impact One-Way trucking revenue per total mile throughout the year. Miles per truck increased 2.3% in the quarter.
Christopher Wikoff: Average trucks of 2,386 decreased 10% on a year-over-year and sequential basis. 360 fewer One-Way trucks were in the fleet at the end of the year. Sequentially, the One-Way fleet fell 230 trucks. Revenue per truck per week increased 2.2% due to higher miles per truck. While One-Way revenue per total mile declined slightly year-over-year in the fourth quarter, the negative variance was a result of mix change. The mix issue is a byproduct of the restructuring started in the fourth quarter, ultimately designed to improve profitability. We are focusing on more specialized One-Way, like expedited and diversifying to verticals such as pharmaceuticals and technology. This mix change will impact One-Way trucking revenue per total mile throughout the year. Miles per truck increased 2.3% in the quarter.
Speaker #2: trucks of Averaged 2,386 decreased 10% on a year-over-year and sequential basis. 360 fewer one-way trucks were in the fleet at the end of the year, sequentially the one-way fleet fell 230 trucks.
While 1-way Revenue per total Mi declined slightly year-over-year in the fourth quarter, the negative variance was a result of mixed change. The mix issue is a byproduct of the restructuring started in the fourth quarter ultimately designed to improve profitability. We are focusing on more specialized 1-way like expedited and diversifying to verticals such as Pharmaceuticals and Technology. This Mix Change will impact 1-way Trucking Revenue per total Mi throughout the year.
Speaker #2: Revenue per truck per week increased 2.2% due to higher miles per truck. While one-way revenue per total mile declined slightly year-over-year in the fourth quarter, the negative variance was a result of mixed change.
My miles per truck, increase 2.3% in the quarter on a full year basis, after increases of 2.2% in 2023 and 7.6%, in 2024 miles per truck decreased 2.1% for the year.
Speaker #2: The mixed issue is a byproduct of the restructuring started in the fourth profitability. We are focusing on more specialized one-way, like expedited and diversifying to verticals such as pharmaceuticals and technology.
Although empty miles increase 10 basis points. The sequential change from the third quarter to the fourth quarter was 20 basis points, lower than last year, reflecting better balance in peak season.
Speaker #2: This mixed change will impact one-way trucking revenue per total mile throughout the year. Miles per truck increased 2.3% in the quarter. On a full-year basis, after increases of 2.2% in 2023 and 7.6% in 2024, miles per truck decreased 2.1% for the year.
For the year combined 1, way and power link. Total miles declined to less than 2%. In spite of average. 1-way trucks falling 4.5% as 1-way Trucking production improves and the power link Fleet grows. We'll be able to serve customers efficiently with fewer assets.
Chris Wikoff: On a full year basis, after increases of 2.2% in 2023 and 7.6% in 2024, miles per truck decreased 2.1% for the year. Although empty miles increased 10 basis points, the sequential change from Q3 to Q4 was 20 basis points lower than last year, reflecting better balance in peak season. For the year, combined One-Way and PowerLink total miles declined less than 2%, in spite of average One-Way trucks falling 4.5%. As One-Way trucking production improves and the PowerLink fleet grows, we'll be able to serve customers efficiently with fewer assets. To give some further color on the One-Way restructure, we began a strategic restructuring of our One-Way truckload business, a decisive action designed to significantly enhance profitability and fleet utilization by maximizing production and mitigating unprofitable freight.
Christopher Wikoff: On a full year basis, after increases of 2.2% in 2023 and 7.6% in 2024, miles per truck decreased 2.1% for the year. Although empty miles increased 10 basis points, the sequential change from Q3 to Q4 was 20 basis points lower than last year, reflecting better balance in peak season. For the year, combined One-Way and PowerLink total miles declined less than 2%, in spite of average One-Way trucks falling 4.5%. As One-Way trucking production improves and the PowerLink fleet grows, we'll be able to serve customers efficiently with fewer assets. To give some further color on the One-Way restructure, we began a strategic restructuring of our One-Way truckload business, a decisive action designed to significantly enhance profitability and fleet utilization by maximizing production and mitigating unprofitable freight.
To give some further color on the 1-way restructure.
Speaker #2: basis points, the sequential Although empty miles increased 10 change from the third quarter to the fourth quarter last year. Reflecting better balance in peak season.
We began a strategic restructuring of our. 1-way truckload business. Decisive action designed to significantly enhance profitability and Fleet utilization by maximizing production and mitigating unprofitable Freight.
Speaker #2: For the year, combined one-way and PowerLink total miles declined less than 2%, in spite of average one-way trucks falling 4.5%. As one-way trucking production improves and the PowerLink fleet grows, we'll be able to serve customers efficiently with fewer assets.
Speaker #2: To give some further color on the one-way restructure, we began a strategic restructuring of our one-way truckload business, a decisive action designed to significantly enhance profitability and fleet utilization by maximizing production and mitigating unprofitable freight.
The restructuring resulted in a total charge of 44.2 million in the fourth quarter. It is important to note that a significant portion of this is non-cash totaling 42.7 million, which includes the impairment impairment of 21.7 million of intangible assets and 21 million of Revenue equipment. This non-cash charge reflects the necessary steps to rationalize our assets and business model for future margin expansion.
Logistics results are shown on, slide 14.
Speaker #2: The restructuring resulted in a total charge of $44.2 million in the fourth quarter, is important to note that a significant portion of this is non-cash, totaling $42.7 million, which includes the impairment of $21.7 million of intangible assets, and $21 million of revenue equipment.
Chris Wikoff: The restructuring resulted in a total charge of $44.2 million in the fourth quarter. It is important to note that a significant portion of this is non-cash, totaling $42.7 million, which includes the impairment of $21.7 million of intangible assets and $21 million of revenue equipment. This non-cash charge reflects the necessary steps to rationalize our assets and business model for future margin expansion. Logistics results are shown on Slide 14. In the fourth quarter, logistics revenue was $208 million, representing 28% of total fourth quarter revenues. Revenues decreased 3% year over year and 11% sequentially, as we focused on yield management. Truckload logistics revenues decreased 8%, on 9% lower shipments with gross margin contraction.
Christopher Wikoff: The restructuring resulted in a total charge of $44.2 million in the fourth quarter. It is important to note that a significant portion of this is non-cash, totaling $42.7 million, which includes the impairment of $21.7 million of intangible assets and $21 million of revenue equipment. This non-cash charge reflects the necessary steps to rationalize our assets and business model for future margin expansion. Logistics results are shown on Slide 14. In the fourth quarter, logistics revenue was $208 million, representing 28% of total fourth quarter revenues. Revenues decreased 3% year over year and 11% sequentially, as we focused on yield management. Truckload logistics revenues decreased 8%, on 9% lower shipments with gross margin contraction.
In the fourth quarter Logistics, Revenue was 208 million representing 28% of total, fourth quarter revenues, revenues, decreased 3%, year-over-year and 11% sequentially, as we focused on yield management.
Speaker #2: This non-cash charge reflects the necessary steps to rationalize our assets and business model for future margin expansion. Logistics results are shown on slide 14.
Speaker #2: In the fourth quarter, logistics revenue was $208 million, representing 28% of total fourth quarter revenues. Revenues decreased 3% year-over-year and 11% sequentially as we focused on yield and management.
Truckload Logistics, revenues decreased 8%, a 9%, lower shipments, with gross margin contraction. Traditional brokerage volumes declined. 8% while our power link shipments. Also fell down, 10% due to fewer power link carriers, discipline pricing and load, acceptance resulted in lower volume as purchase. Transportation costs. Increased during the quarter Rising rapidly in December purchase Transportation costs. Moderated slightly in January and have remained relatively High, resulting in ongoing, gross margin pressure.
Inter motor revenues, which make up approximately 16% of the logistics, segment increased 24% almost entirely from higher volume.
Speaker #2: Truckload Logistics revenues decreased 8%. Shipments were 9% lower, with gross margin contraction. Traditional brokerage volumes declined 8%, while our PowerLink shipments also fell, down 10% due to fewer PowerLink carriers.
Chris Wikoff: Traditional brokerage volumes declined 8%, while our PowerLink shipments also fell, down 10% due to fewer PowerLink carriers. Disciplined pricing and load acceptance resulted in lower volume as purchase transportation costs increased during the quarter, rising rapidly in December. Purchase transportation costs moderated slightly in January and have remained relatively high, resulting in ongoing gross margin pressure. Intermodal revenues, which make up approximately 16% of the logistics segment, increased 24%, almost entirely from higher volume. Final mile revenues, which comprise the remaining 12% of the segment, increased 4% year over year. Logistics adjusted operating margin of 0.5% decreased by 60 basis points, driven by lower volumes and gross margin contraction, partially offset with lower operating expenses. Fourth quarter, fourth quarter operating expenses in logistics were the lowest since before our ReTMS acquisition in late 2022, driven in part through technology investments.
Christopher Wikoff: Traditional brokerage volumes declined 8%, while our PowerLink shipments also fell, down 10% due to fewer PowerLink carriers. Disciplined pricing and load acceptance resulted in lower volume as purchase transportation costs increased during the quarter, rising rapidly in December. Purchase transportation costs moderated slightly in January and have remained relatively high, resulting in ongoing gross margin pressure. Intermodal revenues, which make up approximately 16% of the logistics segment, increased 24%, almost entirely from higher volume. Final mile revenues, which comprise the remaining 12% of the segment, increased 4% year over year. Logistics adjusted operating margin of 0.5% decreased by 60 basis points, driven by lower volumes and gross margin contraction, partially offset with lower operating expenses. Fourth quarter, fourth quarter operating expenses in logistics were the lowest since before our ReTMS acquisition in late 2022, driven in part through technology investments.
Speaker #2: Discipline pricing and load acceptance resulted in lower volume as purchase transportation costs increased during the quarter, rising rapidly in December. Purchase transportation costs moderated slightly in January, and have remained relatively high, resulting in ongoing gross margin pressure.
Final mile revenues which comprise the remaining 12% of the segment increased 4% year-over-year Logistics adjusted operating margin of 0.5% decreased by 60 basis points. Driven by lower volumes and gross margin contraction partially offset with lower operating expenses. Fourth quarter, fourth quarter operating expenses and Logistics were the lowest since before our Rhett TMS acquisition and late 2022, permanent part through technology Investments.
Let's review our cash flow and liquidity on slide 15.
Speaker #2: Intermodal revenues, which make up approximately 16% of the logistics segment, increased 24% almost entirely from higher volume. Final mile revenues, which comprise the remaining 12% of the segment, increased 4% year-over-year.
We entered the year with 60 million in cash and cash equivalents operating cash flow was 62 million for the quarter and 182 million for the full year.
Speaker #2: Logistics adjusted operating margin of 0.5% decreased by 60 basis points driven by lower volumes and gross margin contraction. Partially offset with lower operating expenses.
Speaker #2: Fourth quarter operating expenses in logistics were the lowest since before our re-TMS acquisition in late 2022, driven in part through technology investments. Let's review our cash flow and liquidity on slide 15.
Here was 163 million less than 6% of Revenue compared to just under 8% prior year. Net capex for the year was down, 72 million or 31% in part from an exceptionally low capex spend in the force quarter of 2025
For the last 9 months of the year net capex was 7.5% of Revenue.
Free cash flow for the full year. Was 19 million or just under 1% of total revenues.
Chris Wikoff: Let's review our cash flow and liquidity on Slide 15. We ended the year with $60 million in cash and cash equivalents. Operating cash flow was $62 million for the quarter and $182 million for the full year. Fourth quarter CapEx was $69 million, and full year was $163 million, less than 6% of revenue compared to just under 8% prior year. Net CapEx for the year was down $72 million, or 31%, in part from an exceptionally low CapEx spend in the first quarter of 2025. For the last nine months of the year, net CapEx was 7.5% of revenue. Free cash flow for the full year was $19 million, or just under 1% of total revenues.
Christopher Wikoff: Let's review our cash flow and liquidity on Slide 15. We ended the year with $60 million in cash and cash equivalents. Operating cash flow was $62 million for the quarter and $182 million for the full year. Fourth quarter CapEx was $69 million, and full year was $163 million, less than 6% of revenue compared to just under 8% prior year. Net CapEx for the year was down $72 million, or 31%, in part from an exceptionally low CapEx spend in the first quarter of 2025. For the last nine months of the year, net CapEx was 7.5% of revenue. Free cash flow for the full year was $19 million, or just under 1% of total revenues.
Speaker #2: We ended the year with $60 million in cash and cash equivalents. Operating cash flow was $62 million for the quarter and $182 million for the full year.
Total liquidity at quarter, end was 72 million, and including 60 million of cash on hand and 642 million of combined availability under our credit facilities.
Speaker #2: Fourth quarter CapEx was $69 million and full year was $163 million, less than 6% of revenue compared to just under 8% prior year. Net CapEx for the year was down $72 million or 31%, in part from an exceptionally low CapEx spend in the fourth quarter of 2025.
We ended the quarter with 752 million in debt of 27, million sequentially and up 16% from a year earlier. Net debt increased, 83 million or 14% year-over-year. We continue to have strong balance sheet, access to Capital and no near-term maturities on our debt structure.
Speaker #2: For the last nine months of the year, net CapEx was $7.5% of revenue. Free cash flow for the full year was $19 million, or just under 1% of total revenues.
Speaker #2: Total liquidity at quarter-end was $702 million, including $60 million of cash on hand and $642 million of combined availability under our credit facilities. We ended the quarter with $752 million in debt.
Chris Wikoff: Total liquidity at quarter end was $702 million, including $60 million of cash on hand and $642 million of combined availability under our credit facilities. We ended the quarter with $752 million in debt, up $27 million sequentially and up 16% from a year earlier. Net debt increased $83 million, or 14% year-over-year. We continue to have strong balance sheet, access to capital, and no near-term maturities on our debt structure. Let's turn to Slide 16. When it comes to broad capital allocation decisions, we will remain balanced over the long term, strategically investing in the business, returning capital to shareholders, and maintaining appropriate leverage. With the acquisition of FirstFleet, our focus in 2026 will be on integrating the business, gaining momentum on realizing $18 million of targeted synergies, and enhancing value.
Christopher Wikoff: Total liquidity at quarter end was $702 million, including $60 million of cash on hand and $642 million of combined availability under our credit facilities. We ended the quarter with $752 million in debt, up $27 million sequentially and up 16% from a year earlier. Net debt increased $83 million, or 14% year-over-year. We continue to have strong balance sheet, access to capital, and no near-term maturities on our debt structure. Let's turn to Slide 16. When it comes to broad capital allocation decisions, we will remain balanced over the long term, strategically investing in the business, returning capital to shareholders, and maintaining appropriate leverage. With the acquisition of FirstFleet, our focus in 2026 will be on integrating the business, gaining momentum on realizing $18 million of targeted synergies, and enhancing value.
Speaker #2: Up $27 million sequentially and up 16% from a year earlier. Net debt increased $83 million, or 14% year-over-year, we continued to have strong balance sheet, access to capital, and no near-term maturities on our debt structure.
Let's turn to slide 16 when it comes to Broad Capital, allocation decisions. We will remain balanced over the long term strategically investing in the business returning Capital to shareholders and maintaining appropriate leverage with the acquisition of First Fleet. Our focus in 2026 will be on integrating the business to gaining momentum on realizing 18 million of targeted synergies and enhancing value in terms of certain details of the first week transaction and the impact on our total debt. The total purchase price was 282.8 Million. Consisting of 245 million for the operating company and 37.8 million for acquired real estate.
Speaker #2: Let's turn to slide 16. decisions, we will remain balanced over the long term. Strategically investing When it comes to broad capital allocation in the business, returning capital to shareholders, and maintaining appropriate leverage.
Speaker #2: With the acquisition of First Fleet, our focus in 2026 will be on integrating the business, gaining momentum on realizing $18 million of targeted synergies and enhancing value.
Approximately 48 million of the consideration was deferred, including a 35 million earnout that will be measured and if earned it will be paid after March 2027 the transaction was funded with a combination of cash on hand and incremental debt which included additional drawers on a revolver revolving, credit facility and the Assumption of First Fleet Capital, leases at closing.
Speaker #2: In terms of certain details of the First Fleet transaction and the impact, on our total debt. The total purchase price was $282.8 million, consisting of $245 million for the operating company and $37.8 million for acquired real estate.
Chris Wikoff: In terms of certain details of the FirstFleet transaction and the impact on our total debt, the total purchase price was $282.8 million, consisting of $245 million for the operating company and $37.8 million for acquired real estate, approximately $48 million of the consideration was deferred, including a $35 million earn-out that will be measured, and if earned, it will be paid after March 2027. The transaction was funded with a combination of cash on hand and incremental debt, which included additional draws on a revolving credit facility and the assumption of FirstFleet capital leases at closing. As of 31 January 2026, total borrowings under our revolver and accounts receivable securitization facility were $884.6 million, representing an increase of $132.6 million versus 31 December 2025.
Christopher Wikoff: In terms of certain details of the FirstFleet transaction and the impact on our total debt, the total purchase price was $282.8 million, consisting of $245 million for the operating company and $37.8 million for acquired real estate, approximately $48 million of the consideration was deferred, including a $35 million earn-out that will be measured, and if earned, it will be paid after March 2027. The transaction was funded with a combination of cash on hand and incremental debt, which included additional draws on a revolving credit facility and the assumption of FirstFleet capital leases at closing. As of 31 January 2026, total borrowings under our revolver and accounts receivable securitization facility were $884.6 million, representing an increase of $132.6 million versus 31 December 2025.
As of January 31st 2026, total borrowings under our revolver and accounts receivable of securitization facility.
Speaker #2: Approximately $48 million of the consideration was deferred, including a $35 million earnout that will be measured and, if earned, it will be paid after March 2027.
Speaker #2: The transaction was funded with a combination of cash on hand and incremental debt, which included additional draws on a revolver revolving credit facility and the assumption of First Fleet capital leases at closing.
Where 800884.6 million representing an increase of 132.6 million versus December, 31st, 2025 assumed Capital, leases at closing, were estimated at 57 million resulting in a total estimated increase in debt of 189.7 million since year end. 2025 with the First Fleet, we believe we have a compelling set of opportunities to accelerate profitable growth enhance resiliency, through the cycle, and deliver on our mission to keep America moving.
Speaker #2: As of January 31, 2026, total borrowings under our revolver and accounts receivable securitization million. Representing an increase of $132.6 million versus December 31, 2025.
On slide 17, we are introducing our 2026 guidance which includes first week.
Speaker #2: Assumed capital leases at closing were estimated at $57 million. Resulting in a total estimated increase in debt of $189.7 million since year-end 2025. With First Fleet, we believe we have a compelling set of opportunities to accelerate profitable growth, enhance resiliency through the cycle, and deliver on our mission to keep America moving.
Chris Wikoff: Assumed capital leases at closing were estimated at $57 million, resulting in a total estimated increase in debt of $189.7 million since year-end 2025. With FirstFleet, we believe we have a compelling set of opportunities to accelerate profitable growth, enhance resiliency through the cycle, and deliver on our mission to keep America moving. On slide 17, we are introducing our 2026 guidance, which includes FirstFleet. We are changing our fleet guidance metric from end-of-period trucks to average trucks, as fleet size fluctuates quarterly, creating volatility in end-of-period metrics. Including FirstFleet, our average truck fleet guidance for full year is a range of up 23% to 28%. With the one-way trucking fleet decreasing further in Q1, we expect average TTS trucks from the organic Werner fleet to decline early in the year before showing improvement as the year progresses.
Christopher Wikoff: Assumed capital leases at closing were estimated at $57 million, resulting in a total estimated increase in debt of $189.7 million since year-end 2025. With FirstFleet, we believe we have a compelling set of opportunities to accelerate profitable growth, enhance resiliency through the cycle, and deliver on our mission to keep America moving. On slide 17, we are introducing our 2026 guidance, which includes FirstFleet. We are changing our fleet guidance metric from end-of-period trucks to average trucks, as fleet size fluctuates quarterly, creating volatility in end-of-period metrics. Including FirstFleet, our average truck fleet guidance for full year is a range of up 23% to 28%. With the one-way trucking fleet decreasing further in Q1, we expect average TTS trucks from the organic Werner fleet to decline early in the year before showing improvement as the year progresses.
We are changing our Fleet. Guidance metric from end of period trucks to average trucks. As sweet size fluctuates quarterly creating volatility in end of period metrics including First Fleet our average truck Fleet guidance for full year is a range of up 23% to 28%.
With the 1-way trucking Fleet, decreasing further in the first quarter. We expect average TTS trucks from the organic Warner. Fleet to decline early in the year before showing Improvement as the year progresses.
Speaker #2: On slide 17, we are introducing our 2026 guidance, which includes First Fleet. We are changing our fleet guidance metric from end-of-period trucks to average trucks.
Our full year 2026, net capex guidance range, including First Fleet is between 185 million and 225 million. The upper end of the range allows for a pre-b Buy in the second half, given 2027 EPA emission changes.
Speaker #2: As fleet size fluctuates quarterly, creating volatility in end-of-period metrics. Including First Fleet, our average truck fleet guidance for the full year is a range of up 23% to 28%.
Speaker #2: With the one-way trucking fleet decreasing further in the first quarter, we expect average TTS trucks from the organic Warner fleet to decline early in the year before showing improvement as the year progresses.
Dedicated Revenue per truck per week, full year. Guidance range is down. 1% to up 2%. We expect low to mid single digit increases in contractual rates for both our organic dedicated Fleet and the First Fleet business. However, the combined mix result in a more muted change relative to our Warner. Our Warner Standalone metric.
Speaker #2: Our full year 2026 net CapEx guidance range including First Fleet is between $185 million and $225 million. The upper end of the range allows for a pre-buy in the second half, given 2027 EPA emission changes.
Chris Wikoff: Our full year 2026 net CapEx guidance range, including FirstFleet, is between $185 million and $225 million. The upper end of the range allows for a pre-buy in the second half, given 2027 EPA emission changes. Dedicated revenue per truck per week full-year guidance range is down 1% to up 2%. We expect low to mid-single-digit increases in contractual rates for both our organic dedicated fleet and the FirstFleet business. However, the combined mix results in a more muted change relative to our Werner, our Werner standalone metric. One-way truckload revenue per total mile guidance for the first half of the year is flat to up 3%. We are expecting mid-single-digit contract rate increases, but the revenue per total mile is muted due to mix changes from restructuring actions.
Christopher Wikoff: Our full year 2026 net CapEx guidance range, including FirstFleet, is between $185 million and $225 million. The upper end of the range allows for a pre-buy in the second half, given 2027 EPA emission changes. Dedicated revenue per truck per week full-year guidance range is down 1% to up 2%. We expect low to mid-single-digit increases in contractual rates for both our organic dedicated fleet and the FirstFleet business. However, the combined mix results in a more muted change relative to our Werner, our Werner standalone metric. One-way truckload revenue per total mile guidance for the first half of the year is flat to up 3%. We are expecting mid-single-digit contract rate increases, but the revenue per total mile is muted due to mix changes from restructuring actions.
1 way truckload Revenue per total Mi guidance for the first half of the year is flat to up. 3%, we are expecting mid single-digit contract rate increases but the revenue per total Mi is muted due to mixed changes from restructuring actions.
Speaker #2: Dedicated revenue per truck per week full year guidance range is down 1% to up 2%. We expect low to mid-single-digit increases in contractual rates for both our organic dedicated fleet and the First Fleet business.
Speaker #2: However, the combined mix results in a more muted change relative to our Warner standalone metric. One-way truck load revenue per total mile guidance for the first half of the year is flat to up 3%.
Our effective tax rate in the fourth quarter was 20.8%, the effective tax rate for the full year was 20.1% before discrete items. Our 2026 guidance range is between 25 and 1/2 and 26 and 1/2%, the average age of our truck and trailer or Fleet. At the end of the fourth quarter was 2.7 and 5.6 years respectively.
Speaker #2: We are expecting mid-single-digit contract rate increases, but the revenue per total mile is muted due to mixed changes from restructuring actions. Our effective tax rate in the fourth quarter was 20.8%.
Chris Wikoff: Our effective tax rate in the fourth quarter was 20.8%. The effective tax rate for the full year was 20.1% before discrete items. Our 2026 guidance range is between 25.5 and 26.5%. The average age of our truck and trailer fleet at the end of the fourth quarter was 2.7 and 5.6 years, respectively. Regarding other modeling assumptions, with the acquisition of FirstFleet, we expect net interest expense this year will be between $40 and $45 million. We anticipate stable used equipment demand through 2026 and expect resale values to remain generally stable, given OEM production constraints and the evolving regulatory backdrop that will be an incentive towards high-quality used assets.
Christopher Wikoff: Our effective tax rate in the fourth quarter was 20.8%. The effective tax rate for the full year was 20.1% before discrete items. Our 2026 guidance range is between 25.5 and 26.5%. The average age of our truck and trailer fleet at the end of the fourth quarter was 2.7 and 5.6 years, respectively. Regarding other modeling assumptions, with the acquisition of FirstFleet, we expect net interest expense this year will be between $40 and $45 million. We anticipate stable used equipment demand through 2026 and expect resale values to remain generally stable, given OEM production constraints and the evolving regulatory backdrop that will be an incentive towards high-quality used assets.
Speaker #2: The effective tax rate for the full year was 20.1% before discrete items. Our 2026 guidance range is between $25.5 and $26.5%. The average age of our truck and trailer fleet at the end of the fourth quarter was 2.7 and 5.6 years, respectively.
Regarding other modeling assumptions with the acquisition of First Fleet we expect net interest expense this year, will be between 40 and 45 million. We anticipate stable used equipment demand through 2026 and expect resale values to remain. Generally stable, given OEM production, constraints, any evolving regulatory backdrop that will be an incentive towards high-quality used assets, excluding real estate, gains of the sale of used equipment. Is expected to be in a range of 8 to 18 million with that. I'll turn it back to Derek.
Speaker #2: Regarding other modeling assumptions, with the acquisition of First Fleet, we expect net interest expense this year will be between $40 and $45 million. We anticipate stable used equipment demand through 2026 and expect resale values to remain generally stable, given OEM production constraints and the evolving regulatory backdrop that will be an incentive towards high-quality used assets.
Beginning to show tangible progress, we made difficult but necessary decisions to redesign parts of the business. While continuing to invest in areas that position is for long-term growth and strength in our long-term earnings power.
Speaker #2: Excluding real estate, gains of the sale of used equipment is expected to be in a range of 8 to $18 million. With that, I'll turn it back to Derek.
Chris Wikoff: Excluding real estate, gains of the sale of used equipment is expected to be in a range of $8 to 18 million. With that, I'll turn it back to Derek.
Christopher Wikoff: Excluding real estate, gains of the sale of used equipment is expected to be in a range of $8 to 18 million. With that, I'll turn it back to Derek.
Speaker #2: Thank you, Chris. As we reflect on 2025, it's clear that while the environment remains challenging, the actions we've taken over the last several years are beginning to show tangible progress.
Derek Leathers: Thank you, Chris. As we reflect on 2025, it's clear that while the environment remained challenging, the actions we've taken over the last several years are beginning to show tangible progress. We made difficult but necessary decisions to redesign parts of the business while continuing to invest in areas that position us for long-term growth and strengthen our long-term earnings power. What remains constant through uncertainty is Werner's competitive advantage. We are a large-scale, award-winning, reliable partner with a diversified and agile portfolio of solutions designed to meet customers' evolving transportation and logistics needs. Our dedicated business continues to perform well, our logistics platform is gaining momentum, and the addition of FirstFleet meaningfully accelerates our shift toward more resilient, higher-margin revenue streams.
Derek Leathers: Thank you, Chris. As we reflect on 2025, it's clear that while the environment remained challenging, the actions we've taken over the last several years are beginning to show tangible progress. We made difficult but necessary decisions to redesign parts of the business while continuing to invest in areas that position us for long-term growth and strengthen our long-term earnings power. What remains constant through uncertainty is Werner's competitive advantage. We are a large-scale, award-winning, reliable partner with a diversified and agile portfolio of solutions designed to meet customers' evolving transportation and logistics needs. Our dedicated business continues to perform well, our logistics platform is gaining momentum, and the addition of FirstFleet meaningfully accelerates our shift toward more resilient, higher-margin revenue streams.
What remains constant through uncertainty is Warner's competitive Advantage. We are a large-scale award-winning reliable partner with a diversified and agile portfolio of solutions. Designed to meet customers involving transportation and Logistics needs. Our dedicated business continues to perform well, our Logistics platform is gaining momentum and the addition of firstly meaningfully accelerates our shift toward more resilient higher margin, revenue streams,
Speaker #2: We made difficult but necessary decisions to redesign parts of the business while continuing to invest in areas that position us for long-term growth and strengthen our long-term earnings power.
As we recognize our 70th anniversary with a more durable and diversified portfolio and as market conditions, improve, and demand begins to normalize. We Believe Warner is well, positioned to generate operating leverage and improved earnings performance as demand accelerates.
Speaker #2: What remains constant through uncertainty is Werner's competitive advantage. We are a large-scale, award-winning, reliable partner with a diversified and agile portfolio of solutions, designed to meet customers' evolving transportation and logistics needs.
Most importantly, I want to acknowledge the dedication and commitment of all. The Warner's talented drivers and Associates and I want to welcome our first Fleet family
Speaker #2: Our dedicated business continues to perform well, our logistics platform is gaining momentum, and the addition of First Fleet meaningfully accelerates our shift toward more resilient, higher-margin revenue streams.
None of this progress will be possible without the entire team, their commitment adaptability and focus on safety and service. Continue to differentiate Warner every day.
Speaker #2: As we recognize our 70th anniversary with a more durable and diversified portfolio, and as market conditions improve and demand begins to normalize, we believe Warner is well-positioned to generate operating leverage and improved earnings performance as demand accelerates.
Derek Leathers: As we recognize our 70th anniversary with a more durable and diversified portfolio, and as market conditions improve and demand begins to normalize, we believe Werner is well-positioned to generate operating leverage and improved earnings performance as demand accelerates. Most importantly, I want to acknowledge the dedication and commitment of all of Werner's talented drivers and associates, and I want to welcome our First Fleet family. None of this progress would be possible without the entire team. Their commitment, adaptability, and focus on safety and service continue to differentiate Werner every day. While the job's not finished, we remain confident in our strategy, disciplined in our execution, and focused on controlling what we can as we position the company for sustainable long-term value creation for our customers and shareholders. With that, let's open it up for questions.
Derek Leathers: As we recognize our 70th anniversary with a more durable and diversified portfolio, and as market conditions improve and demand begins to normalize, we believe Werner is well-positioned to generate operating leverage and improved earnings performance as demand accelerates. Most importantly, I want to acknowledge the dedication and commitment of all of Werner's talented drivers and associates, and I want to welcome our First Fleet family. None of this progress would be possible without the entire team. Their commitment, adaptability, and focus on safety and service continue to differentiate Werner every day. While the job's not finished, we remain confident in our strategy, disciplined in our execution, and focused on controlling what we can as we position the company for sustainable long-term value creation for our customers and shareholders. With that, let's open it up for questions.
While the job's not finished. We remain confident in our strategy, disciplined in our execution and focused on controlling what we can. As we position the company for sustainable long-term value creation, for our customers and shareholders with that. Let's open it up for questions.
We will now begin the question and answer session.
Speaker #2: Most importantly, I want to acknowledge the dedication and commitment of all of Warner's talented drivers and associates, and I want to welcome our First Fleet family.
to ask a question, you may press star then 1 on your telephone keypad,
Speaker #2: None of this progress would be possible without the entire team. Their commitment, adaptability, and focus on safety and service continue to differentiate Warner every day.
If you are using a speaker-phone, please pick up your handset before pressing the keys.
To withdraw your question. Please. Press star. Then 2
Speaker #2: While the job's not finished, we remain confident in our strategy, disciplined in our execution, and focused on controlling what we can as we position the company for sustainable, long-term value creation for our customers and shareholders.
To allow for as many callers as possible to ask questions, we ask you to limit your questions to 1 question and 1 follow-up.
This call will end at 5:00 p.m. Central Standard Time following the company's closing remarks.
Speaker #2: With that, let's open it up for questions.
Our first question today is from Risha harna with Deutsche Bank. Please go ahead.
Speaker #3: We will now begin the ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.
Chris Wikoff: We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. To allow for as many callers as possible to ask questions, we ask you to limit your questions to one question and one follow-up. This call will end at 5 PM Central Standard Time, following the company's closing remarks. Our first question today is from Richa Harnain with Deutsche Bank. Please go ahead.
Operator: We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. To allow for as many callers as possible to ask questions, we ask you to limit your questions to one question and one follow-up. This call will end at 5 PM Central Standard Time, following the company's closing remarks. Our first question today is from Richa Harnain with Deutsche Bank. Please go ahead.
Speaker #3: To withdraw your question, please press star, then two. To allow for as many callers as possible to ask questions, we ask you to limit your questions to one question and one follow-up.
Speaker #3: This call will end at 5:00 PM Central Standard Time, following the company's closing remarks. Our first question today is from Risha Harnane with Deutsche Bank.
Hey, thanks so much. So, um, look, it seems like a lot is happening here with the company. Um, you just made this secretive acquisition, you have, you know, more organic dedicated growth, maturing your restructuring of 1 way, Trucking Market also, undergoing repair. Um, so just in light of all these things, I know, Derek you started this conversation by saying, you see a better outlook for Warner than you've seen in a long time. But, you know, as a death settles like, what is like a normalized earnings power that you see here, underlying the business? And how should we expect the Cadence of sort of improvement from 2025 levels to play out in 2026?
Speaker #3: Please go ahead.
Richa Harnain: Hey, thanks, gentlemen. So, look, it seems like a lot is happening here with the company. You just made this accretive acquisition. You have, you know, more organic, dedicated growth maturing, your restructuring of one-way, trucking markets also undergoing repair. So just in light of all these things, I know, Derek, you started this conversation by saying you see a better outlook for Werner than you've seen in a long time. But, you know, as the dust settles, like, what is, like, a normalized earnings power that you see here underlying the business? And how should we expect the cadence of sort of improvement from 2025 levels to play out in 2026?
Richa Harnain: Hey, thanks, gentlemen. So, look, it seems like a lot is happening here with the company. You just made this accretive acquisition. You have, you know, more organic, dedicated growth maturing, your restructuring of one-way, trucking markets also undergoing repair. So just in light of all these things, I know, Derek, you started this conversation by saying you see a better outlook for Werner than you've seen in a long time. But, you know, as the dust settles, like, what is, like, a normalized earnings power that you see here underlying the business? And how should we expect the cadence of sort of improvement from 2025 levels to play out in 2026?
Speaker #4: Hey, thanks, gentlemen. So company. You just made this accretive acquisition. You have more organic dedicated growth maturing. You're restructuring of one way. Trucking market's also undergoing repair.
Speaker #4: So just in light of all of these things, I know Derek, you started this conversation by saying you see a better outlook for Warner than you've seen in a long time.
Speaker #4: But as a desk settles, what is normalized earnings power that you see here underlying the business, and how should we expect the cadence of sort of improvement from 2025 levels to play out in 2026?
Speaker #2: Yeah, Risha, I appreciate the question. You're right. There is a lot going on, a lot of moving parts. We are excited about where we came out of it as we go into an evolving market.
Derek Leathers: ... Yeah, Rachel, I appreciate the question. You're right, there is a lot going on, a lot of moving parts. We are excited about, you know, where we came out of it, as we go into an evolving market. As we think about 2026, we certainly see opportunity for earnings growth. We, I want to be clear about a few things. We're not abandoning One-Way, but we are a leaner, more agile version of ourselves, complemented now with a growing, and more capable set of PowerLink carriers. So we like the flexibility that provides for us. The acquisition of FirstFleet, as you mentioned, something we're very excited about.
Derek Leathers: Yeah, Rachel, I appreciate the question. You're right, there is a lot going on, a lot of moving parts. We are excited about, you know, where we came out of it, as we go into an evolving market. As we think about 2026, we certainly see opportunity for earnings growth. We, I want to be clear about a few things. We're not abandoning One-Way, but we are a leaner, more agile version of ourselves, complemented now with a growing, and more capable set of PowerLink carriers. So we like the flexibility that provides for us. The acquisition of FirstFleet, as you mentioned, something we're very excited about.
Speaker #2: As we think about '26, we certainly see opportunity for earnings growth. I want to be clear about a few things. We're not abandoning one way, but we are a leaner, more agile version of ourselves.
I appreciate the question. Um, you're right there is a lot going on, a lot of moving Parts. Um, we are excited about um, you know, where we came out of it. Uh, as we go into a evolving Market, uh, as we think about 26, we certainly see opportunity for earnings growth. Uh, we I want to be clear about a few things. We we're not abandoning 1 way but we are a leaner more agile, version of ourselves uh complimented. Now uh with a growing uh and more more capable set of power link carriers. Um, so we like the the the flexibility that provides for us. Uh, the acquisition of first lead. As you mentioned something we're very excited about um we do believe it gives us the more durable stable um opportunity for earnings growth as we look out into future years. We've talked about this on prior calls. But you know, over any 10 year period uh dedicated outperforms 1 weigh on average. About 8 out of those 10 years. We recognize that 1 way is at an inflection point, uh, from an overall Marketplace, but we do not believe any
Speaker #2: Complimented now with a growing and more capable set of power link carriers. So we like the flexibility that provides for us. The acquisition of First Fleet, as you mentioned, is something we're very excited about.
Derek Leathers: We do believe it gives us the more durable, stable, opportunity for earnings growth as we look out into future years. We've talked about this on prior calls, but, you know, over any 10-year period, Dedicated outperforms One-Way on average about 8 out of those 10 years. We recognize that One-Way is at an inflection point, from an overall marketplace, but we do not believe any of the moves we've made will prevent our ability to participate in that inflection. And yet, with all of that stated, when you talk about the progression of that playing out, clearly Q1, it started off with some pressure points, largely or mainly the very significant storm that took place across the entire, you know, United States, over a period of several days.
Speaker #2: We do believe it gives us the more opportunity for earnings growth as we look out into future years. We've talked about this on prior calls, but over any 10-year period, dedicated outperforms one way on average about 8 out of those 10 years.
Derek Leathers: We do believe it gives us the more durable, stable, opportunity for earnings growth as we look out into future years. We've talked about this on prior calls, but, you know, over any 10-year period, Dedicated outperforms One-Way on average about 8 out of those 10 years. We recognize that One-Way is at an inflection point, from an overall marketplace, but we do not believe any of the moves we've made will prevent our ability to participate in that inflection. And yet, with all of that stated, when you talk about the progression of that playing out, clearly Q1, it started off with some pressure points, largely or mainly the very significant storm that took place across the entire, you know, United States, over a period of several days.
The moves we've made will prevent our ability to participate in that inflection, um, and and, and yet, with all of that stated, when you talk about the progression of that process of of that playing out. Um, clearly q1, um, it started off with some pressure points largely, or, or mainly the very significant storm that took place the entire um, you know, United States, uh, over a period of several days. Um, and so that is going to be a significant.
Speaker #2: We recognize that one way is at an inflection point from an overall marketplace. But we do not believe any of the moves we've made will prevent our ability to participate in that inflection.
Speaker #2: And yet, with all of that stated, when you talk about the progression of that playing out, clearly Q1 started off with some pressure points, largely or mainly the very significant storm that took place across the entire United States over a period of several days.
Derek Leathers: So that is going to be a significant headwind in the quarter. We know that. The restructuring work that we're done takes a while. That was done in Q4, takes a while to bear fruit, and we're still kind of in the final stages of that as we were in the early stages of Q1. That's why we pointed toward Q2 as kind of where you see a more material inflection in earnings from our perspective, with all of the actions that I've just spoken about. As the year plays out, clearly, we expect to gain momentum, both from marketplace support but also the internal decisions that we've taken to better position the fleet.
Speaker #2: And so, that is going to be a significant headwind in the quarter. We know that. The restructuring work that we've done takes a while—that was done in Q4—takes a while to bear fruit, and we're still kind of in the final stages of that as we were in the early stages of Q1.
Derek Leathers: So that is going to be a significant headwind in the quarter. We know that. The restructuring work that we're done takes a while. That was done in Q4, takes a while to bear fruit, and we're still kind of in the final stages of that as we were in the early stages of Q1. That's why we pointed toward Q2 as kind of where you see a more material inflection in earnings from our perspective, with all of the actions that I've just spoken about. As the year plays out, clearly, we expect to gain momentum, both from marketplace support but also the internal decisions that we've taken to better position the fleet.
We think about the ramp.
No, it does. Thanks so much.
Thank you.
Speaker #2: That's why we pointed toward Q2 as kind of where you see a more material inflection in earnings from our perspective. With all of the actions that I've just spoken about, as the year plays out, clearly we expect to gain momentum both from marketplace support but also the internal decisions that we've taken to better position the fleet.
The next question is from Brian osen Beck with JP Morgan. Please go ahead.
Speaker #2: So we don't give EPS guidance, and I'm not going to try to drill in more specifically than that, but hopefully that gives you some color on how we think about the ramp.
Derek Leathers: So, we don't give EPS guidance, and I'm not going to try to, you know, drill in more specifically than that, but hopefully that gives you some color on how we think about the ramp.
Derek Leathers: So, we don't give EPS guidance, and I'm not going to try to, you know, drill in more specifically than that, but hopefully that gives you some color on how we think about the ramp.
Speaker #4: No, it does. Thanks so much.
Reed Seay: No, it does. Thanks so much.
Richa Harnain: No, it does. Thanks so much.
Speaker #2: Thank
Speaker #2: you. The next question is from Brian
Derek Leathers: Thank you.
Derek Leathers: Thank you.
Operator: The next question is from Brian Ossenbeck with J.P. Morgan. Please go ahead.
Operator: The next question is from Brian Ossenbeck with J.P. Morgan. Please go ahead.
Speaker #3: Osenbeck with JP Morgan. Please go ahead.
Speaker #5: Hey, good afternoon. Thanks for taking the question. Maybe just a little more on the one-way restructuring. When we look at the, I guess, trying to understand the mix a little bit better, because I think contract renewals are up mid-single digits, but the one-way guidance for rate per mile is actually less than that.
Brian Ossenbeck: Hey, good afternoon, and thanks for taking the question. Maybe just a little more on the One-Way restructuring. When we look at the... I guess, trying to understand the mix a little bit better, because I think contract renewal is up mid-single digits, but the One-Way guidance for rate per mile is actually less than that. I know it's mix related, but I thought that would be going the other way if you're going into higher value areas and whatnot. So maybe you can explain that a little bit more. And also, the pre-buy, you know, I think you were one of the first to talk about putting some, maybe some dollars at work potentially for the pre-buy.
Brian Ossenbeck: Hey, good afternoon, and thanks for taking the question. Maybe just a little more on the One-Way restructuring. When we look at the... I guess, trying to understand the mix a little bit better, because I think contract renewal is up mid-single digits, but the One-Way guidance for rate per mile is actually less than that. I know it's mix related, but I thought that would be going the other way if you're going into higher value areas and whatnot. So maybe you can explain that a little bit more. And also, the pre-buy, you know, I think you were one of the first to talk about putting some, maybe some dollars at work potentially for the pre-buy.
Hey, good afternoon. Thanks for taking the question. Um, maybe just a little more on the 1-way restructuring. Uh, when we look at the I guess trying to understand the mix a little bit better because I think contract renewals up mid single digits but the the 1 way, um, guidance for uh, rate per miles is actually less than that. I know it's mixed related but I thought that would be going the other way if, if you're going into higher value, uh, areas and whatnot. So maybe you can explain that a little bit more and also the um prebby. You know, I think you were 1 of the first to talk about putting some, maybe some dollars at work potentially for the pre buy. So maybe you can bring us up to speed in terms of what's happening there. Because of course there's a lot of different moving pieces with that on the regulation but also with tariffs. So if you can walk through those 2, appreciate it. Thanks.
Speaker #5: I know it's mix-related, but I thought that would be going the other way if you're going into higher value. Areas and whatnot. So maybe you can explain that a little bit more.
Speaker #5: And also, the pre-buy—I think you were one of the first to talk about putting maybe some dollars at work, potentially, for the pre-buy.
Yeah, sure. Brian. Uh, thanks for the question. Um, let's start with the right per mile, uh, question. So just I'd like to kind of, uh, reconcile for everyone that, you know, the way contract rate renewals work, uh, we we see about a quarter of those rate, renewals in q1. Um, they don't Implement, um, immediately. There's always a bit of a lag to implementation with a another third of those in Q2 with the same kind of lag, uh, implementation concern. So the guy
Speaker #5: So maybe you can bring us up to speed in terms of what's happening there, because of course, there's a lot of different moving pieces with that on the regulation, but also with tariffs.
Brian Ossenbeck: So maybe you can bring us up to speed in terms of what's happening there, because of course, there's a lot of different moving pieces with that on the regulation, but also with tariffs. So if you can walk through those two, appreciate it. Thanks.
Brian Ossenbeck: So maybe you can bring us up to speed in terms of what's happening there, because of course, there's a lot of different moving pieces with that on the regulation, but also with tariffs. So if you can walk through those two, appreciate it. Thanks.
Speaker #5: So if you can walk through those two, appreciate it.
Speaker #5: Thanks.
Speaker #2: Yeah, sure,
Derek Leathers: Yeah, sure, Brian, thanks for the question. Let's start with the rate per mile question. So just I'd like to kind of reconcile for everyone that, you know, the way contract rate renewals work, we, we see about a quarter of those rate renewals in Q1. They don't implement immediately. There's always a bit of a lag to implementation with another third of those in Q2 with the same kind of lag implementation concern. So the guidance we issued was for the first half of the year. So what you're capturing is the portion of those contract renewals that we're able to affect change on, and then a little bit of recognition of the lag effect before they take place.
Derek Leathers: Yeah, sure, Brian, thanks for the question. Let's start with the rate per mile question. So just I'd like to kind of reconcile for everyone that, you know, the way contract rate renewals work, we, we see about a quarter of those rate renewals in Q1. They don't implement immediately. There's always a bit of a lag to implementation with another third of those in Q2 with the same kind of lag implementation concern. So the guidance we issued was for the first half of the year. So what you're capturing is the portion of those contract renewals that we're able to affect change on, and then a little bit of recognition of the lag effect before they take place.
Speaker #2: Brian. Thanks for the question. Let's start with the rate per mile. Question. So just I'd like to kind of reconcile for everyone that the way contract rate renewals work, we see about a quarter of those rate renewals in Q1.
Speaker #2: They don't implement immediately. There's always a bit of a lag to implementation. With a another third of those in Q2, with the same kind of lag implementation concern.
Speaker #2: So the guidance we issued was for the first half of the year. So what you're capturing is the portion of those contract renewals that we're able to affect change on, and then a little bit of recognition of the lag effect before they take place.
Speaker #2: At the same time, obviously, with a smaller more agile fleet, we're going to be working relative to yield. And so you can get rate through both contract renewals but also through simply freight mix and yield.
Derek Leathers: At the same time, obviously, with a smaller, more agile fleet, we're going to be working relative to yield, and so you can get rate through both contract renewals, but also through simply freight mix and yield. So we'll work to exceed, you know, the, the guidance issued. But at this point, with the visibility we have and at the starting point of the year, where the market was versus as it's continued to show sort of increasing strength, we've got a lot of work to do between now and then. So flat to up 3 is kind of the net effect of not being able to review it all at once.
Derek Leathers: At the same time, obviously, with a smaller, more agile fleet, we're going to be working relative to yield, and so you can get rate through both contract renewals, but also through simply freight mix and yield. So we'll work to exceed, you know, the, the guidance issued. But at this point, with the visibility we have and at the starting point of the year, where the market was versus as it's continued to show sort of increasing strength, we've got a lot of work to do between now and then. So flat to up 3 is kind of the net effect of not being able to review it all at once.
We issued was for the first half of the year. So what's your capturing is the portion of those contract renewals that we're able to affect change on and then a little bit of recognition of the lag effect before they take place at the same time obviously with a smaller more agile. Fleet we're going to be working uh relative to yield and so you can get right through both both through contract renewals but also through simply Freight mix and yield. Um, so we'll work to exceed, you know, the guidance issued. But at this point with the visibility we have and at the starting point, uh, of the Year where the market was versus, as its continued to show sort of increasing strength. Um, we've got a lot of work to do between now and then. So, flat top 3 is kind of the net effect of not being able to review it all at once. Um, but but contract renewals on a, on an Apples to Apples basis. You know, mid single digits is kind of where we're at right now and, and, and where we've seen some early returns. Uh, obviously those are hard fought and we're willing to walk from some businesses. We go through this process.
Speaker #2: So we'll work to exceed the guidance issued, but at this point, with the visibility we have, and at the starting point of the year where the market was versus as it's continued to show sort of increasing strength, we've got a lot of work to do between now and then.
Speaker #2: So flat top three is kind of the net effect of not being able to review it all at once. But contract renewals on an apples-to-apples basis mid-single digits is kind of where we're at right now.
Derek Leathers: But contract renewals on an apples-to-apples basis, you know, mid-single digits is kind of where we're at right now and where we've seen some early returns. Obviously, those are hard fought, and we're willing to walk from some business as we go through this process, and place those trucks, if necessary, into what it's currently in our network, is about a 25% premium, to be in the... Or $0.25 premium, I apologize. $0.25 premium, if those same trucks were placed into the spot market. So, essentially, dialogues with our customers and how the process plays out will determine what that spot mix is, but there's a willingness on our part for that to grow, if necessary. And, oh, relative to the-
Derek Leathers: But contract renewals on an apples-to-apples basis, you know, mid-single digits is kind of where we're at right now and where we've seen some early returns. Obviously, those are hard fought, and we're willing to walk from some business as we go through this process, and place those trucks, if necessary, into what it's currently in our network, is about a 25% premium, to be in the... Or $0.25 premium, I apologize. $0.25 premium, if those same trucks were placed into the spot market. So, essentially, dialogues with our customers and how the process plays out will determine what that spot mix is, but there's a willingness on our part for that to grow, if necessary. And, oh, relative to the-
Um, and place those trucks, uh, as if necessary into what currently, uh, in our network is about a 25% premium, uh, to be in the or 25 cent premium. I apologize. 25 cent premium, uh, if those same trucks were placed into the spot market. So um, essentially dialogues with our customers and how the how the process plays out. We will determine what that spot mix is. Uh but there's there's a willingness on our part for that to grow if necessary.
Speaker #2: And where we've seen some early returns, obviously those are hard-fought, and we're willing to walk from some business as we go through this process.
Speaker #2: And place those trucks if necessary into what currently in our network is about a 25% premium to be in the or 25 cent premium, I apologize, 25 cent premium if those same trucks were placed into the spot market.
Speaker #2: So, essentially, dialogues with our customers and how the process plays out will determine what that spot mix is. But there's a willingness on our part for that to grow if necessary.
Speaker #2: Oh, and relative to the I'm sorry, the second part of your question. Yeah, we just wanted to acknowledge that the range was fairly wide given the midpoint of the range and going with a 40 million or plus kind of total range.
Brian Ossenbeck: Okay.
Derek Leathers: I'm sorry, the second part of your question. Yeah, we just wanted to acknowledge that the range was fairly wide, given the given the midpoint of the range, and going with a $40 million or plus kind of total range, that what we're really signaling there is just flexibility. We've got our order board kind of loaded to do, you know, up to certain levels, where we may, in fact, pull all of those levers as we gain increasing clarity on where the market's at. And as we think about costing going into 2027 potentially being elevated, and probably more importantly, technology being less tested. So it's really just signaling an openness to that.
Brian Ossenbeck: Okay.
Derek Leathers: I'm sorry, the second part of your question. Yeah, we just wanted to acknowledge that the range was fairly wide, given the given the midpoint of the range, and going with a $40 million or plus kind of total range, that what we're really signaling there is just flexibility. We've got our order board kind of loaded to do, you know, up to certain levels, where we may, in fact, pull all of those levers as we gain increasing clarity on where the market's at. And as we think about costing going into 2027 potentially being elevated, and probably more importantly, technology being less tested. So it's really just signaling an openness to that.
Speaker #2: That what we're really signaling there is just flexibility. We've got our order board kind of loaded to do up to certain levels. We may, in fact, pull all of those levers as we gain increasing clarity on where the market's at.
Oh no. Relative to the, I'm sorry, the second part of your question. Yeah. We just wanted to to acknowledge that the range was fairly wide. Given the B given the, the midpoint of the range, uh, and going with a 40 million or, um, plus kind of, um, total range. That what we're really signaling there is just flexibility. Uh, we've got, we've got our order board kind of loaded to do, uh, you know, up to certain levels where we, we may, in fact pull all of those levers, as we gain increasing Clarity on where the market's at, um, it it it and, and as we think about costing going into 2027 potentially be an elevated. Uh, and probably more importantly technology being, um, less tested. Uh, so it's really just signaling an openness to that. Um, it's too early in the year to to talk about where we'll actually land or how we may or may not execute on that. Uh, right now, the first order of business is just Fleet refreshing, making sure we keep our Fleet kind of where we're at or or b b.
Speaker #2: And as we think about costing going into 2027, potentially being elevated, and probably more importantly, technology being less tested—so it's really just signaling an openness to that.
Derek Leathers: It's too early in the year to talk about where we'll actually land or how we may or may not execute on that. Right now, first order of business is just fleet refreshing, making sure we keep our fleet kind of where we're at or because we feel comfortable with the age. In calls past, we've talked a lot about numbers that were lower than where we're currently at, but I'd remind everybody now, with 70+% of the trucks in Dedicated, that really positions us in a different return to base kind of model, and therefore allows for a different application of equipment. We're never going to let our fleet get old. We always want to run a modern fleet for recruiting reasons.
Speaker #2: It's too early in the year actually land or how we may or may not execute on that. Right now, first order of business is just fleet refreshing, making sure we keep our fleet kind of where we're at because we feel comfortable with the age.
Derek Leathers: It's too early in the year to talk about where we'll actually land or how we may or may not execute on that. Right now, first order of business is just fleet refreshing, making sure we keep our fleet kind of where we're at or because we feel comfortable with the age. In calls past, we've talked a lot about numbers that were lower than where we're currently at, but I'd remind everybody now, with 70+% of the trucks in Dedicated, that really positions us in a different return to base kind of model, and therefore allows for a different application of equipment. We're never going to let our fleet get old. We always want to run a modern fleet for recruiting reasons.
Because we feel comfortable with the age, um, and calls past, we've talked a lot about um, numbers that were lower than where we're currently at. But I'd remind everybody now with 70 plus percent of the trucks, and dedicated that really positions us in a different return to base kind of model and therefore allows for a different application of equipment. Um, we're never going to let our Fleet get old. We always want to run a modern Fleet for recruiting reasons. Um but we do believe our flexibility relative to Fleet agent.
Is greater as we get more and more densely. Um, implanted within dedicated.
All right, thanks. Derek for all that color. Appreciate it.
Thank you.
Speaker #2: In calls past, we've talked a lot about numbers that were lower than where we're currently at, but I'd remind everybody now with 70-plus percent of the trucks in dedicated that really positions us in a different return to base kind of model, and therefore allows for a different application of equipment.
The next question is from Jordan alliger with Goldman Sachs. Please go ahead.
Speaker #2: We're never going to let our fleet get old. We always want to run a modern fleet for recruiting reasons. But we do believe our flexibility relative to fleet age is greater as we get more and more densely implanted within
Derek Leathers: But we do believe our flexibility relative to fleet age is greater as we get more and more densely implanted within Dedicated.
Derek Leathers: But we do believe our flexibility relative to fleet age is greater as we get more and more densely implanted within Dedicated.
The timing of completion. And if there's any, whether it be cost saves that, you'd expect to be attached to it or or margin Improvement related to it or or even, you know, your thoughts on what it could do for yields as you sort of exit sort of these unprofitable businesses. Thanks
Speaker #5: All right. Thanks, Derek, for all that
Brian Ossenbeck: All right. Thanks, Derek, for all that color. Appreciate it.
Brian Ossenbeck: All right. Thanks, Derek, for all that color. Appreciate it.
Speaker #5: color. Appreciate it. dedicated.
Speaker #2: Thank you. The next
Derek Leathers: Thank you.
Derek Leathers: Thank you.
Operator: The next question is from Jordan Alliger with Goldman Sachs. Please go ahead.
Operator: The next question is from Jordan Alliger with Goldman Sachs. Please go ahead.
Speaker #3: question is from Jordan Aliger with Goldman Sachs. Please go
Speaker #3: ahead. Yeah, hi.
Jordan Alliger: Yeah. Hi, just wanted to come back to the restructuring. I, you know, just sort of curious if you could give maybe a little bit more color as to the timing of completion and if there's any, whether it be cost saves that you'd expect to be attached to it or margin improvement related to it, or even, you know, your thoughts on what it could do for yields as you sort of exit these unprofitable businesses. Thanks.
Jordan Alliger: Yeah. Hi, just wanted to come back to the restructuring. I, you know, just sort of curious if you could give maybe a little bit more color as to the timing of completion and if there's any, whether it be cost saves that you'd expect to be attached to it or margin improvement related to it, or even, you know, your thoughts on what it could do for yields as you sort of exit these unprofitable businesses. Thanks.
Speaker #6: I just wanted to come back to the restructuring. I’m curious if you could just give it maybe a little bit more color as to the timing of completion, and if there’s any—whether it be cost saves that you’d expect to improvement related to it, or even your thoughts on what it could do for yields as you sort of exit some of these unprofitable businesses.
Speaker #7: Hey, Jordan.
Chris Wikoff: Hey, Jordan. Yeah, thanks for the question. You know, first, in terms of timing, we started in Q4. It's continuing here through Q1. We expect it to be largely complete by the end of Q1, so you would- we would start to see some of that benefit in, in Q2. Likely noticeable in Q2, but for sure in the second half, you know, that would be, more noticeable and accelerating. So that's kind of the timing on it. From a margin perspective, I won't get too specific with you, but certainly, it's all aimed at profitability improvement, getting back to positive reinvestable margins and doing it with, speed and precision, and less dependence on some of on market factors.
Christopher Wikoff: Hey, Jordan. Yeah, thanks for the question. You know, first, in terms of timing, we started in Q4. It's continuing here through Q1. We expect it to be largely complete by the end of Q1, so you would- we would start to see some of that benefit in, in Q2. Likely noticeable in Q2, but for sure in the second half, you know, that would be, more noticeable and accelerating. So that's kind of the timing on it. From a margin perspective, I won't get too specific with you, but certainly, it's all aimed at profitability improvement, getting back to positive reinvestable margins and doing it with, speed and precision, and less dependence on some of on market factors.
Speaker #7: Yeah, thanks. Thanks for the question. First, in terms of timing, we started in the fourth quarter. It's continuing here through the first quarter. We expect it to be largely complete by the end of the first quarter.
Speaker #7: So, we would start to see some of that benefit in Q2. Likely noticeable in Q2, but for sure in the second half. That would be more noticeable and accelerating.
Hey, Jordan. Yeah, thanks for the question. Um, you know, first in terms of timing, we started in the fourth quarter, it's continuing here through the first quarter. Uh, we expect it to be largely complete by the end of the first quarter. So you would, we would start to see some of that benefit in in Q2, uh, likely noticeable in Q2 but for sure in the second half, um, you know, that would be, uh, more noticeable and, and accelerating. So, that's kind of the timing on it. Um, from a margin perspective, I won't get too specific with you, but certainly, it's all aimed at profitability Improvement. Um, getting back to positive reinvestment margins and doing it with a speed and and precision. Um, and less, uh, dependence on some of the market factors. So, you know, that's what it's a to achieve. Um, uh, getting back to positive reinvestment. Margins being the key there. So, uh, probably not as specific as as you would like, but we have high confidence in, uh, the impact that will result later in the year and our
Our ability to get that done by the end of the quarter.
Speaker #7: So that's kind of the timing on it. From a margin perspective, I won't get too specific with you, but certainly it's all aimed at profitability improvement, getting back to positive reinvestable margins and doing it with a speed and precision.
Speaker #7: And less dependence on some market factors. So that's what it's aimed to achieve. Getting back to positive reinvestable margins being the key there. So probably not as specific as you would like, but we have high confidence in the impact that will result later in the year and our ability to get that done by the end of the quarter.
Chris Wikoff: So, you know, that's what it's aimed to achieve, getting back to positive reinvestable margins being the key there. So, probably not as specific as you would like, but we have high confidence in the impact that will result later in the year and our ability to get that done by the end of the quarter.
Christopher Wikoff: So, you know, that's what it's aimed to achieve, getting back to positive reinvestable margins being the key there. So, probably not as specific as you would like, but we have high confidence in the impact that will result later in the year and our ability to get that done by the end of the quarter.
Speaker #2: Yeah, and relative to the cost side, obviously one of the primary objectives of this is to continue the forward march on sweating the assets better.
Derek Leathers: Yeah, and relative to the cost side, obviously, one of the primary objectives of this is to continue the forward march on sweating the assets better, increasing productivity over time. So despite the fleet being smaller, the focus on network fits, density, creates certain efficiencies, whether it's lower deadhead or higher miles per truck, all of which also lend themselves to better service outcomes and the ability for us to then extract the value that that service represents. So there's a lot in the soup, but it's been something that was considered very carefully. And we're excited about, you know, kind of what we're seeing from early returns, but for it to flow through and show through to the bottom line, as Chris indicated, you know, we view that inflection point being in Q2.
Derek Leathers: Yeah, and relative to the cost side, obviously, one of the primary objectives of this is to continue the forward march on sweating the assets better, increasing productivity over time. So despite the fleet being smaller, the focus on network fits, density, creates certain efficiencies, whether it's lower deadhead or higher miles per truck, all of which also lend themselves to better service outcomes and the ability for us to then extract the value that that service represents. So there's a lot in the soup, but it's been something that was considered very carefully. And we're excited about, you know, kind of what we're seeing from early returns, but for it to flow through and show through to the bottom line, as Chris indicated, you know, we view that inflection point being in Q2.
Speaker #2: Increasing productivity over time. So despite the fleet being smaller, the focus on network fits, density, creates certain efficiencies, whether it's lower deadhead or higher miles per truck, all of which also lend themselves to better service outcomes and the ability for us to then extract the value that that service represents.
Yeah, relative to the cost side. Obviously 1 of the primary objectives of this is to continue the forward. March on sweating, the assets better increasing productivity over time. So despite the fleet being smaller, uh, the focus on, uh, Network fits density creates certain efficiencies, whether it's lower dead head or higher miles per truck, uh, all of which also lend themselves to better service outcomes and the ability for us to then uh, extract the value that that service represents. So there there's a lot in the soup but uh, it's been something, uh, that was considered very carefully. Um, and we're excited about, you know, kind of what we're seeing from early returns. But for it to flow through and and show through to the bottom line as Chris indicated. You know, we we view that inflection point being in Q2,
Thank you.
The next question is from Tom wits with UBS. Please go ahead.
Speaker #2: So there's a lot in the soup, but it's been something that was considered very carefully and we're excited about kind of what we're seeing from early returns, but for it to flow through and show through to the bottom line as Chris indicated, we view that inflection point being in
Oh yeah, good afternoon and uh, I missed some of the beginning of the call so I apologize if you if you kind of touched on this but how how do you think about the the kind of impact of First Fleet in terms of profitability? And whether that's something that you know it gets the synergies from that kind of ramp and and you get more from that through the year. Um I mean I I think it kind of sounded like that would
Speaker #2: Q2. Thank
Speaker #6: you. The next question is from Tom
Jordan Alliger: Thank you.
Jordan Alliger: Thank you.
Be relatively low profitability coming in or or maybe the, I don't know, just how we think about that accretion and and the margin on that and how that might change through uh 2026.
Operator: The next question is from Thomas Wadewitz with UBS. Please go ahead.
Operator: The next question is from Thomas Wadewitz with UBS. Please go ahead.
Speaker #3: Wattowitz with UBS. Please go ahead.
Speaker #8: Oh, yeah, good afternoon. And I missed some of the beginning of the call, so I apologize if you kind of touched on this. But how do you think about the kind of impact of First Fleet in terms of profitability, and whether that's something that, it gets the synergies from that kind of ramp and you get more from that through the year?
Thomas Wadewitz: Yeah, good afternoon, and I missed some of the beginning of the call, so I apologize if you, if you kind of touched on this. But how do you think about the kind of impact of FirstFleet in terms of profitability and whether that's something that, you know, it gets the synergies from that kind of ramp and you get more from that through the year? I mean, I think it kind of sounded like that would be relatively low profitability coming in, or maybe the... I don't know, just how we think about that accretion and the margin on that, and how that might change through 2026.
Thomas Wadewitz: Yeah, good afternoon, and I missed some of the beginning of the call, so I apologize if you, if you kind of touched on this. But how do you think about the kind of impact of FirstFleet in terms of profitability and whether that's something that, you know, it gets the synergies from that kind of ramp and you get more from that through the year? I mean, I think it kind of sounded like that would be relatively low profitability coming in, or maybe the... I don't know, just how we think about that accretion and the margin on that, and how that might change through 2026.
Speaker #8: I mean, I think it kind of sounded like that would be relatively low profitability coming in or maybe the I don't know. Just how we think about that accretion and the margin on that and how that might change through 2026.
Speaker #2: Yeah, Tom, thanks for the question. Yeah, on a standalone basis, First Fleet's margins are lower than when they're dedicated. But at the same time, we've talked about $18 million of identified cost synergies. We think about a third of those can be realized within the calendar year 2026.
Derek Leathers: Yeah, Tom, thanks for the question. Yeah, on a standalone basis, FirstFleet's margins are lower than Werner Dedicated's. But at the same time, we've talked about $18 million of identified cost synergies. We think about 1/3 of those can be realized within the calendar year 2026, but by the end of the year, we'll be on kind of a 2/3 of those run rate. That alone, when fully realized, represents about 300 basis points of margin improvement, so that's something that's pretty exciting, and that's the sort of tangible cost savings that are more measurable, really, when you're still in the due diligence phase and you're not quite yet in the business. As we get into the business, obviously, over time, we'll continue to update, but there are revenue synergies.
Derek Leathers: Yeah, Tom, thanks for the question. Yeah, on a standalone basis, FirstFleet's margins are lower than Werner Dedicated's. But at the same time, we've talked about $18 million of identified cost synergies. We think about 1/3 of those can be realized within the calendar year 2026, but by the end of the year, we'll be on kind of a 2/3 of those run rate. That alone, when fully realized, represents about 300 basis points of margin improvement, so that's something that's pretty exciting, and that's the sort of tangible cost savings that are more measurable, really, when you're still in the due diligence phase and you're not quite yet in the business. As we get into the business, obviously, over time, we'll continue to update, but there are revenue synergies.
Speaker #2: But by the end of the year, we'll be on kind of a two-thirds of those run rate. That alone, when fully realized, represents about 300 basis points of margin improvement.
Yeah. Tom thanks for the question. Um, yeah. On the Standalone basis. First fleets margins are lower than 1 or dedicated, um, but at the same time we've we've talked about 18 million of identified cost synergies. We think about a third of those can be realized within the calendar year 2026, but by the end of the year, we'll be on kind of a 2/3 of those run rate. Um, that alone when fully realized represents about 300 basis points of margin improvements. So that's something that's pretty exciting. And that's the, the sort of tangible um, cost savings that are more measurable. Um, really when you're still in the due diligence phase and you're not quite yet in the business, as we get into the business. Obviously, over time, we'll continue to update. Um, but there are Revenue synergies. There's some efficiencies that we know will gain. Um, our networks are extremely complimentary to 1 another and we do um feel that we have a line of sight to firstly margins converging with Warner's traditional dedicated margins you know over the next call it 18 to 24 months there's going to be some
Speaker #2: So that's something that's pretty exciting. And that's the sort of tangible cost savings that are more measurable really when you're still in the due diligence phase and you're not quite yet in the business.
Speaker #2: As we get into the business, obviously, over time we'll continue to update. But there are revenue synergies. There are some efficiencies that we know we'll gain. Our networks are extremely complementary to one another.
Derek Leathers: There are some efficiencies that we know we'll gain. Our networks are extremely complementary to one another, and we do feel that we have a line of sight to FirstFleet's margins converging with Werner's traditional dedicated margins, you know, over the next, call it 18 to 24 months. There's going to be some work to do, but in the short term, it's not a broken asset. It's certainly got opportunity for margin expansion. It's got long-term customer relationships and deeply embedded sort of customer structures and infrastructure built around those existing customers. So lots to like, lots to gain from it, and we're excited about what it represents.
Derek Leathers: There are some efficiencies that we know we'll gain. Our networks are extremely complementary to one another, and we do feel that we have a line of sight to FirstFleet's margins converging with Werner's traditional dedicated margins, you know, over the next, call it 18 to 24 months. There's going to be some work to do, but in the short term, it's not a broken asset. It's certainly got opportunity for margin expansion. It's got long-term customer relationships and deeply embedded sort of customer structures and infrastructure built around those existing customers. So lots to like, lots to gain from it, and we're excited about what it represents.
Work to do, uh, but in the but in the short term, it's not a, it's not a broken asset. It's uh, certainly got opportunity for margin expansion. It's got long-term long-term customer relationships and deeply embedded, um, sort of customer structures, and and infrastructure built around those those those, uh, existing customers. So lot to like, um, lots, lots to gain from it. Um, and we're excited about what it represents.
Speaker #2: And we do feel that we have a line of sight to First Fleet's margins converging with Werner's traditional Dedicated margins over the next, call it, 18 to 24 months.
Speaker #2: There's going to be some work to do, but in the short term, it's not a broken asset. It's certainly got opportunity for margin expansion, it's got long-term customer relationships, and deeply embedded, sort of customer structures and infrastructure built around those existing customers.
I guess in, thank you for that. And, and in terms of broader, kind of just how we think about TTS margin playing out, is it really a function of kind of how well pricing develops or, uh, I mean, you have a lot, a lot that's dedicated, right? So that takes longer to kind of see it. See an impact from the market. But is that, you know, is it kind of as simple as that, if you get stronger pricing and better Freight through the year, then that's the key lever for margin for TTS
Speaker #2: So lot to like. Lots to gain from it. And we're excited about what it
Speaker #2: Represents. I guess thank you for that.
Thomas Wadewitz: I guess, and thank you for that. In terms of broader, kind of just how we think about TTS margin playing out, is it really a function of kind of how well pricing develops? Or, I mean, you have a lot that's dedicated, right? So that takes longer to kind of see an impact from the market. But is that, you know, is it kind of as simple as that, if you get stronger pricing and better freight through the year, then that's the key lever for margin for TTS?
Thomas Wadewitz: I guess, and thank you for that. In terms of broader, kind of just how we think about TTS margin playing out, is it really a function of kind of how well pricing develops? Or, I mean, you have a lot that's dedicated, right? So that takes longer to kind of see an impact from the market. But is that, you know, is it kind of as simple as that, if you get stronger pricing and better freight through the year, then that's the key lever for margin for TTS?
Speaker #8: And in terms of broader, kind of just how we think about TTS margin playing out, is it really a function of— or, I mean, you have a lot that's dedicated, right?
Speaker #8: So that takes longer to kind of see an impact from the market. But is that—is it kind of as simple as that? If you get stronger pricing and better freight through the year, then that's the key lever for margin for—
Speaker #8: TTS? Yeah, I mean, a couple of ways I'd think about that.
Derek Leathers: ... Yeah, I mean, a couple ways I'd think about that. I mean, it is, it is, accretive to earnings, out of the gate. It is an improvement on the blended TC-- TTS margins that you see today, because as we've stated several times, our dedicated operates significantly better, than our one-way, network does. And it's-- so it's improving sort of the net of, of TTS. That's pre-synergies, and then as we apply synergies, we can improve further from there. So there's no- not, not really a short-term pain for long-term gain play here. This, this comes into the building, on a positive. We can improve it from there, and our lower, our lower, but more nimble exposure in one way, we believe positions us very well, through this bid season, to be disciplined.
Derek Leathers: Yeah, I mean, a couple ways I'd think about that. I mean, it is, it is, accretive to earnings, out of the gate. It is an improvement on the blended TC-- TTS margins that you see today, because as we've stated several times, our dedicated operates significantly better, than our one-way, network does. And it's-- so it's improving sort of the net of, of TTS. That's pre-synergies, and then as we apply synergies, we can improve further from there. So there's no- not, not really a short-term pain for long-term gain play here. This, this comes into the building, on a positive. We can improve it from there, and our lower, our lower, but more nimble exposure in one way, we believe positions us very well, through this bid season, to be disciplined.
Speaker #2: I mean, it is a creative Darning's out of the gate. It is an improvement on the blended TTS margins that you see today. Because as we've stated several times, our dedicated operates significantly better than our one-way network does.
Blended T TTS margins that you see today uh because as we've stated several times our dedicated operates significantly better um than our 1-way um network does. And it's so it's improving sort of the net of of TTS that's present. And then as we apply synergies, we can improve further from there. So there's no, not not really a short-term pain for long-term gain play here. Uh, this, this comes into the building, um, on a positive, we can improve it from there, um, and lower or lower but more Nimble. Exposure. In 1 Way, We Believe positions us very well, uh, through this bid season, uh, to be disciplined. Um, and we will and we we're committed to doing exactly that, um, as well as uh, the the the uh,
Speaker #2: And it's so it's improving sort of the net of TTS that's pre-synergies. And then as we apply synergies, we can improve further from there.
Speaker #2: So there's no not really a short-term pain for long-term gain play here. This comes into the building. On a positive, we can improve it from there.
Speaker #2: And our lower but more nimble exposure in one way well through this bid season to be disciplined. And we're committed to doing as optionality if you will of our power link carrier increase production which we've shown an ability to do.
Derek Leathers: And we're committed to doing exactly that, as well as the optionality, if you will, of our PowerLink carrier network, to continue to run a lot of those miles. As we increase production, which we've shown an ability to do, it's not like there's a linear relationship to the fleet size shrinking and the amount of freight we can haul. It's just going to be a much more focused approach towards some of those expedited solutions we've spoken of, like Mexico cross-border, some of the work we're doing within the expedited space, overall engineered solutions, and some of the verticals we've spoken of in the past, where we're growing our exposure to sort of harder to do, higher value or otherwise, one-way freight that it does operate at a premium.
Derek Leathers: And we're committed to doing exactly that, as well as the optionality, if you will, of our PowerLink carrier network, to continue to run a lot of those miles. As we increase production, which we've shown an ability to do, it's not like there's a linear relationship to the fleet size shrinking and the amount of freight we can haul. It's just going to be a much more focused approach towards some of those expedited solutions we've spoken of, like Mexico cross-border, some of the work we're doing within the expedited space, overall engineered solutions, and some of the verticals we've spoken of in the past, where we're growing our exposure to sort of harder to do, higher value or otherwise, one-way freight that it does operate at a premium.
Optionality, if you will, of our power link, um, carrier Network to continue to run a lot of those miles, as we increase production, which we've shown a, an ability to do. Um, it's not like there's a linear relationship to the fleet size. Shrinking in the amount of freight we can all. It's just going to be a much more focused approach towards some of those expedited Solutions. We've spoken of like Mexico cross border. Um, some of the work we're doing, um, with uh, in the expedited space, overall, engineered Solutions. And some of the verticals we've spoken of in the past, uh, where we're growing our exposure, to sort of harder to do higher value or otherwise, uh, 1-way Freight, uh, that it does operate at a premium.
Speaker #2: It's not like there's a linear relationship to the fleet size shrinking and the amount of freight we can haul. It's just going to be a much more focused approach towards some of those expedited solutions we've spoken of like Mexico Cross Border some of the work we're doing with in the expedited space overall engineered solutions and some of the verticals we've spoken of in the past where we're growing our exposure to sort of harder to do higher value or otherwise one-way freight that it does operate at a
Speaker #2: Premium. And Tom, maybe just to go back, just to make
Chris Wikoff: And Tom, maybe just to go back to, just to make sure, that we're clear on the, the synergies and the opportunity to expand margin for FirstFleet. You know, those synergies are largely cost synergies. So to Derek's point, you know, there's very little that's market dependent, that's a, any change in assumption on, a rate and renewals on those contracts. Certainly, the, the market could be helpful in that regard, but that's not what's built into the $18 million of synergies. And it's not too different from our past practice, and discipline around cost and identifying synergies. Just as a reminder, we've identified and realized $150 million of cost savings for the Werner business over the last 3 years, largely structural and sustainable, and without sacrificing safety, service, and growth.
Christopher Wikoff: And Tom, maybe just to go back to, just to make sure, that we're clear on the, the synergies and the opportunity to expand margin for FirstFleet. You know, those synergies are largely cost synergies. So to Derek's point, you know, there's very little that's market dependent, that's a, any change in assumption on, a rate and renewals on those contracts. Certainly, the, the market could be helpful in that regard, but that's not what's built into the $18 million of synergies. And it's not too different from our past practice, and discipline around cost and identifying synergies. Just as a reminder, we've identified and realized $150 million of cost savings for the Werner business over the last 3 years, largely structural and sustainable, and without sacrificing safety, service, and growth.
Speaker #1: sure that we're clear on the synergies and the opportunity to expand margin for first fleet. Those synergies are largely cost synergies. So to Derek's point, there's very little that's market dependent that's a any change in assumption on a rate and renewals on those contracts.
And Tom, maybe just to go back to just to make sure uh, that we're clear on the the synergies and the opportunity to expand margin for First Fleet. You know, those synergies are largely cost synergies. Um, so to Derek's point, you know, there's very little that's Market dependent. That's a, uh, any change in Assumption on, uh, a rate and renewals on those contracts. Certainly the the market could be helpful in that regard, but that's not what's built in to the 18th synergies, and it's not too different from our past practice. Um, and discipline around cost, and identifying synergies, uh, just as a reminder, we've identified and realized 150 million of cost savings for the Warner business. Over the last 3 years. Largely structural and sustainable and without sacrificing safety, service and growth. So that same approach is what we're applying to to First Fleet. Um, obviously as we get closer to the business and and more time working alongside the business, then we'll have an opportunity.
Speaker #1: Certainly, the market could be helpful in that regard, but that's not what's built in to the 18 million of synergies. And it's not too different from our past practice.
To refine that further and look for Revenue synergies, but um, we have a high degree of of confidence and, uh, our ability to, to realize those synergies. And it's familiar to us in terms of how it's built and how we would go after it.
Speaker #1: And discipline around cost and identifying synergies. Just as a reminder, we've identified and realized $150 million of cost savings for the Werner business over the last three years, largely structural and sustainable.
Okay, great. Thank you.
Speaker #1: And without sacrificing safety service and growth. So that same approach is what we're applying to first fleet. Obviously, as we get closer to the business and more time working alongside the business, then we'll have an opportunity to refine that further and look for revenue synergies.
Chris Wikoff: So that same approach is what we're applying to FirstFleet. Obviously, as we get closer to the business and more time working alongside the business, then we'll have an opportunity to refine that further and look for revenue synergies. But we have a high degree of confidence and our ability to realize those synergies, and it's familiar to us in terms of how it's built and how we would go after it.
Christopher Wikoff: So that same approach is what we're applying to FirstFleet. Obviously, as we get closer to the business and more time working alongside the business, then we'll have an opportunity to refine that further and look for revenue synergies. But we have a high degree of confidence and our ability to realize those synergies, and it's familiar to us in terms of how it's built and how we would go after it.
Speaker #1: But we have a high degree of confidence and our ability to realize those synergies. And it's familiar to us in terms of how it's built and how we would go after
Thank you. So the next question is from Jason Seidel with TD Cowen please go ahead. Uh thanks operator. Uh gentlemen afternoon, you mentioned um a lot about the retail side because obviously that's where the bulk of your exposure is for your end markets. Uh but Industrials with the acquisition is becoming a greater part of what Warner does. Maybe you can give us a little update where you see the industrial markets in 26 as there seems to be, at least thus far A little bit of a mixed bag from some of the transports that are reported
Speaker #1: it. Okay, great.
Scott Group: Okay, great. Thank you.
Thomas Wadewitz: Okay, great. Thank you.
Speaker #8: Thank you.
Speaker #2: Thank you,
Derek Leathers: Thank you, Tom.
Christopher Wikoff: Thank you, Tom.
Speaker #2: Tom. The next question is from Jason
Operator: The next question is from Jason Seidl with TD Cowen. Please go ahead.
Operator: The next question is from Jason Seidl with TD Cowen. Please go ahead.
Speaker #3: Seidel with TD Cowan. Please go
Speaker #3: ahead. Thanks, Operator.
Jason Seidl: Thanks, operator. Gentlemen, afternoon. You mentioned a lot about the retail side, because obviously, that's where the bulk of your exposure is for your end markets. But industrials, with the acquisition, is becoming a greater part of what Werner does. Maybe you can give us a little update where you see the industrial markets in 2026, as there seems to be, at least thus far, a little bit of a mixed bag from some of the transports that are reported.
Jason Seidl: Thanks, operator. Gentlemen, afternoon. You mentioned a lot about the retail side, because obviously, that's where the bulk of your exposure is for your end markets. But industrials, with the acquisition, is becoming a greater part of what Werner does. Maybe you can give us a little update where you see the industrial markets in 2026, as there seems to be, at least thus far, a little bit of a mixed bag from some of the transports that are reported.
Speaker #4: Gentlemen, afternoon. You mentioned a lot about the retail side because obviously that's where the bulk of your exposure is for your end markets. But industrials with the acquisition is becoming a greater part of what Warner does.
Speaker #4: Maybe you can give us a little update where you see the industrial markets in '26 as there seems to be at least thus far a little bit of a mixed bag from some of the transports that are reported.
Speaker #2: Yeah, clearly, I mean, I think mixed bags from transports reporting is a rear-facing measurement as we look forward and we think about what's happened recently with some of the data coming out relative to ISM index and where that stands.
Derek Leathers: Yeah, clearly, I mean, I think mixed bags, you know, from transports reporting is a rear-facing measurement. As we look forward and we think about what's happened recently with some of the data coming out relative to the ISM Index and where that stands, some of the optimism, I think, out there relative to, you know, overall economic conditions being better than feared, arguably, you know, better than hoped. And then the consumer and the resiliency there, I know that's more of a retail answer, but nonetheless, there's some optimism out there across the board in our view.
Derek Leathers: Yeah, clearly, I mean, I think mixed bags, you know, from transports reporting is a rear-facing measurement. As we look forward and we think about what's happened recently with some of the data coming out relative to the ISM Index and where that stands, some of the optimism, I think, out there relative to, you know, overall economic conditions being better than feared, arguably, you know, better than hoped. And then the consumer and the resiliency there, I know that's more of a retail answer, but nonetheless, there's some optimism out there across the board in our view.
Yeah, clearly. I mean I think mixed bags, you know from transports reporting. This is a rear-facing measurement. Um, as we look forward and we think about what's happened recently with uh some of the data coming out relative to the ism index and and where that stands some of the optimism. I think out there, um, relative to the, you know, overall economic conditions, being better than feared. Um arguably, you know better than hoped. Um, and then the consumer and the resiliency there, I know that's more of a retail answer. But, but nonetheless, um, there there's some optimism out there across the board, uh, in our view understand too, that ironically in some of our manufacturing and Industrial large chunk of. That is really some of this uh, packaging and other things that that we're involved with that feeds into directly into kind of retail channels, more more more focused on e-commerce, which is a growing
Speaker #2: Some of the optimism, I think, out there relative to overall economic conditions being better than feared. Arguably, better than hoped. And then the consumer and the resiliency there, I know that's more of a retail answer, but nonetheless, there's some optimism out there across the board.
Uh vertical uh or growing portion of the the economy and although there's some consolidation in that Marketplace um as long as you're with the consolidator and that is who you're sort of core uh, customer exposures with uh we feel like we're in pretty good place.
Speaker #2: In our view, understand too that ironically, in some of our manufacturing and industrial large chunk of that is really some of this packaging and other things that we're involved with that feeds into directly into kind of retail channels more focused on e-commerce, which is a growing vertical or growing portion of the economy.
Derek Leathers: Understand, too, that ironically, in some of our manufacturing and industrial, a large chunk of that is really some of this, packaging and other things that we're involved with that feeds into, directly into kind of retail channels, more, more, more focused on e-commerce, which is a growing vertical, or growing portion of the economy. Although there's some consolidation in that marketplace, as long as you're with the consolidator, and that is who your sort of core customer exposure is with, we feel like we're in pretty good place.
Derek Leathers: Understand, too, that ironically, in some of our manufacturing and industrial, a large chunk of that is really some of this, packaging and other things that we're involved with that feeds into, directly into kind of retail channels, more, more, more focused on e-commerce, which is a growing vertical, or growing portion of the economy. Although there's some consolidation in that marketplace, as long as you're with the consolidator, and that is who your sort of core customer exposure is with, we feel like we're in pretty good place.
Historically when the ism um starts to go into um expansion mode, how long do you actually start seeing some Demand on your end?
Speaker #2: And although there's some consolidation in that marketplace, as long as you're with the consolidator and that is who your sort of core customer exposure is with, we feel like we're in pretty good shape.
Speaker #2: place. Historically, when the
Jason Seidl: Historically, when the ISM starts to go into expansion mode, how long do you actually start seeing some demand on your end?
Jason Seidl: Historically, when the ISM starts to go into expansion mode, how long do you actually start seeing some demand on your end?
Speaker #4: ISM starts to go into expansion mode. How long until you actually start seeing some demand on your end?
Speaker #2: Yeah, look, our exposure in that space, I mean, you can ask questions about retail all day long and we're probably be a little more versed to be frank.
Derek Leathers: Yeah, look, our exposure in that space, I mean, you can ask questions about retail all day long, and we're, we're probably be a little more versed, to be frank. ISM is difficult because of the... as I mentioned, the components in which our vertical is what's composed within that portion of our portfolio, really is feeder stock in many respects, to retail or in consumer kind of products. The exception to that, obviously, is Mexico, and so a chunk of what we do in that is into and out of Mexico.
Derek Leathers: Yeah, look, our exposure in that space, I mean, you can ask questions about retail all day long, and we're, we're probably be a little more versed, to be frank. ISM is difficult because of the... as I mentioned, the components in which our vertical is what's composed within that portion of our portfolio, really is feeder stock in many respects, to retail or in consumer kind of products. The exception to that, obviously, is Mexico, and so a chunk of what we do in that is into and out of Mexico.
Speaker #2: ISM is difficult because of the, as I mentioned, the components in which our vertical is what's composed within that portion of our portfolio really is feeder stock in many respects to retail or in consumer kind of products.
Speaker #2: The exception to that, obviously, is Mexico. And so a chunk of what we do in that is into and out of Mexico. And from both what we're hearing, seeing, and experiencing on our own fleet, that portion of it is doing very well because of all of the noise we've just been through relative to tariffs and other changing of supply chains the direct foreign investment taking place in Mexico to expand plant and equipment.
Our vertical is what's composed within that portion of our portfolio. Um, really is feeder stock in many respects, uh, 2 retail or in consumer kind of uh, products. Um, the exception of that obviously, is Mexico. And so a chunk of what we do and that is is into and out of Mexico and from, um, both what we're hearing seeing and experiencing on our own Fleet, uh, that portion of it is doing very well because of all of the noise. We've just been through relative to tariffs and other changing of Supply chains. The the the direct foreign investment taking place in Mexico to a span, expand plant and Equipment um with some of the major manufacturers down there and that portion of our portfolio um, is heavily tied to that. Um and and we're very optimistic about what the the future of that Mexico. Cross border franchise looks like well good to hear it. I appreciate the color.
Thank you.
The next question is from Scott group with wolf research. Please go ahead.
Derek Leathers: And from both what we're hearing, seeing, and experiencing on our own fleet, that portion of it is doing very well because of all of the noise we've just been through relative to tariffs and other changing of supply chains, the direct foreign investment taking place in Mexico to expand plant and equipment with some of the major manufacturers down there. That portion of our portfolio is heavily tied to that, and we're very optimistic about what the future of that Mexico cross-border franchise looks like.
Derek Leathers: And from both what we're hearing, seeing, and experiencing on our own fleet, that portion of it is doing very well because of all of the noise we've just been through relative to tariffs and other changing of supply chains, the direct foreign investment taking place in Mexico to expand plant and equipment with some of the major manufacturers down there. That portion of our portfolio is heavily tied to that, and we're very optimistic about what the future of that Mexico cross-border franchise looks like.
Speaker #2: With some of the major manufacturers down there, and that portion of our portfolio is heavily tied to that. And we're very optimistic about what the future of that Mexico cross-border franchise looks like.
Speaker #2: With some of the major manufacturers down there, and that portion of our portfolio is heavily tied to that. And we're very optimistic about what the future of that Mexico cross-border franchise looks like.
Hey thanks. Good afternoon. So Derek just following up on 1 of the earlier. Questions about like if there's a lot of moving Parts um in the model right now, I know you talked about some weather and q1 but is there any way to just help us? Think about, you know I don't know from a margin or from a operating income standpoint how to how to think about at least, just the starting point for the year in q1. I, I know, I mean, q1 last year was pretty tough. I assume we'll have some degree of or, hopefully, we'll have some degree of margin Improvement.
Jason Seidl: Well, good to hear it. I appreciate the color.
Jason Seidl: Well, good to hear it. I appreciate the color.
Speaker #4: Good to hear it. I appreciate the
Speaker #4: color. Thank
Derek Leathers: Thank you.
Derek Leathers: Thank you.
Speaker #3: The next question is from you. Scott Group with Wolf Research. Please go ahead.
Operator: The next question is from Scott Group with Wolfe Research. Please go ahead.
Operator: The next question is from Scott Group with Wolfe Research. Please go ahead.
Earnings growth, but about to q1 last year, but sort of any color that you can help us with. Um,
Speaker #5: Hey, thanks. Good afternoon. So, Derek, just following up on one of the earlier questions about—there’s a lot of moving parts in the model right now.
Scott Group: Hey, thanks. Good afternoon. So Derek, just following up on one of the earlier questions about, like, there's a lot of moving parts in the model right now. I know you talked about some weather in Q1, but is there any way to just help us think about, you know, I don't know, from a margin or from a operating income standpoint, how to, how to think about at least just the starting point for the year in, in Q1? And I know... I mean, Q1 last year was pretty tough. I assume we'll have some degree of, or hopefully we'll have some degree of margin improvement, earnings growth, but relative to Q1 last year, but sort of any color that you can help us with.
Scott Group: Hey, thanks. Good afternoon. So Derek, just following up on one of the earlier questions about, like, there's a lot of moving parts in the model right now. I know you talked about some weather in Q1, but is there any way to just help us think about, you know, I don't know, from a margin or from a operating income standpoint, how to, how to think about at least just the starting point for the year in, in Q1? And I know... I mean, Q1 last year was pretty tough. I assume we'll have some degree of, or hopefully we'll have some degree of margin improvement, earnings growth, but relative to Q1 last year, but sort of any color that you can help us with.
Hey, hey Scott. This is Chris. I'll start on that 1 and then Derek can add to it. Um,
Speaker #5: I know you talked about some weather in Q1, but is there any way to just help us think about, I don't know, from a margin or from an operating income standpoint, how to think about at least just the starting point for the year in Q1?
Speaker #5: I know Q1 last year was pretty tough. I assume we'll have some degree of, or hopefully we'll have some degree of margin improvement earnings growth, but to Q1 last year, but sort of any color that you can help us
Speaker #5: Hey, Scott, this is Chris.
Chris Wikoff: Hey, hey, Scott, this is Chris. I'll start on that one, and then Derek can add to it. You're not wrong in terms of, you know, first quarter of 2025 was challenging. There are, you know, some headwinds and challenging challenges this quarter that we're certainly dealing with in terms of Winter Storm Fern, the broad impact that it had throughout the Southeast, where we are more heavily concentrated. In fact, a few weekends back at really the peak and the brunt of that storm, about 50% or half of our tractor fleet was parked over the weekend, so that was rather unprecedented for us. So, you know, that's a significant storm. We had a storm in the first quarter of last year.
Christopher Wikoff: Hey, hey, Scott, this is Chris. I'll start on that one, and then Derek can add to it. You're not wrong in terms of, you know, first quarter of 2025 was challenging. There are, you know, some headwinds and challenging challenges this quarter that we're certainly dealing with in terms of Winter Storm Fern, the broad impact that it had throughout the Southeast, where we are more heavily concentrated. In fact, a few weekends back at really the peak and the brunt of that storm, about 50% or half of our tractor fleet was parked over the weekend, so that was rather unprecedented for us. So, you know, that's a significant storm. We had a storm in the first quarter of last year.
Speaker #1: I'll start on that one, and then Derek can add to it. You're not wrong—in terms of last first quarter of 2025, it was challenging.
You're not wrong in terms of. Um, you know, last, uh, first quarter of 2025 was challenging is there are, you know, some headwinds and challenging, um, challenges this quarter that we're dealing with in terms of, uh, winter storm Fern, um, the the broad impact that it had throughout the southeast where we are more heavily concentrated. In fact, a few weekends back at really the peak and and um the brunt of that storm um about 50% or or half of our tractor fleet was parked over the weekend so that was rather unprecedented for us.
Speaker #1: There are some headwinds and challenging challenges this quarter that we're certainly dealing with in terms of winter storm Fern, the broad impact that it had throughout the Southeast where we are more heavily concentrated.
Speaker #1: In fact, a few weekends back at really the peak and the brunt of that storm, about 50% or half of our tractor fleet was parked over the weekend.
Speaker #1: So, that was rather unprecedented for us. So, that's a significant storm. We had a storm in the first quarter of last year. We sized that as being about a $0.04 drag on EPS. I would say this is a worse storm.
So, you know, that's a significant storm. We had a storm in the first quarter. Last year, we sized that of being about 4 cents, drag on EPS. Um, I would say this is a worth, a worst storm. Um, we do have some pop-up Demand with the aftermath of that storm, uh, but hard to say, um, how long that will be ongoing. And then in addition to that, we obviously have the, the 1-way restructuring. That's ongoing. That's, that's not to say that it makes the quarter worse, but it certainly doesn't make it better and it's a significant operational whip. So it's a, it's a further distraction. Um, and then the margin the logistics margin squeeze, um, more capacity driven but significant increase in the buy side rate pressure now
Chris Wikoff: We sized that of being about 4 cents drag on EPS. I would say this is a worst storm. We do have some pop-up demand with the aftermath of that storm, but hard to say how long that will be ongoing. And then in addition to that, we obviously have the, the one-way restructuring that's ongoing. That's, that's not to say that it makes the quarter worse, but it certainly doesn't make it better, and it's a significant operational lift, so it's a, it's a further distraction. And then the margin, the logistics margin squeeze, more capacity-driven, but significant increase in the buy-side rate pressure, not atypical for brokers, but it's something that we have to manage through for the quarter. You know, those are challenges.
Christopher Wikoff: We sized that of being about 4 cents drag on EPS. I would say this is a worst storm. We do have some pop-up demand with the aftermath of that storm, but hard to say how long that will be ongoing. And then in addition to that, we obviously have the, the one-way restructuring that's ongoing. That's, that's not to say that it makes the quarter worse, but it certainly doesn't make it better, and it's a significant operational lift, so it's a, it's a further distraction. And then the margin, the logistics margin squeeze, more capacity-driven, but significant increase in the buy-side rate pressure, not atypical for brokers, but it's something that we have to manage through for the quarter. You know, those are challenges.
Speaker #1: We do have some pop-up demand with the aftermath of that storm, but hard to say how long that will be ongoing. And then in addition to that, we obviously have the one-way restructuring that's ongoing.
Speaker #1: That's not to say that it makes the quarter worse, but it certainly doesn't make it better. And it's a significant operational lift, so it's a further distraction.
Not atypical for Brokers, but it's something that we have to manage through, uh, for the quarter. So, you know, those are challenges. Um, I would say that, uh, we would view them as being, you know, largely temporary. You know, all of those, uh, will pass including on the logistics margin, squeeze our ability to eventually pivot, uh, and adjust customer contracts, and be able to adjust that sell side rate.
Speaker #1: And then the margin—the logistics margin squeeze. More capacity-driven, but significant increase in the buy-side rate pressure. Not atypical for brokers, but it's something that we have to manage through for the quarter.
Speaker #1: So those are challenges. I would say that we would view them as being largely temporary. All of those will pass, including on the logistics margin squeeze, our ability to eventually pivot and adjust customer contracts.
Chris Wikoff: I would say that we would view them as being, you know, largely temporary. You know, all of those will pass, including on the logistics margin squeeze, our ability to eventually pivot and adjust customer contracts and be able to adjust that sell side rate. So I know you'd like more information on, you know, profitability and whatnot. Maybe just to level set, as you know, last year, the Q1 was a negative $0.12 of Adjusted EPS. The winter storm being worse, but we also have a number of positive momentum that helps us. The momentum and growth in Dedicated, some early rate increases, momentum that we're seeing in Intermodal and Final Mile.
Christopher Wikoff: I would say that we would view them as being, you know, largely temporary. You know, all of those will pass, including on the logistics margin squeeze, our ability to eventually pivot and adjust customer contracts and be able to adjust that sell side rate. So I know you'd like more information on, you know, profitability and whatnot. Maybe just to level set, as you know, last year, the Q1 was a negative $0.12 of Adjusted EPS. The winter storm being worse, but we also have a number of positive momentum that helps us. The momentum and growth in Dedicated, some early rate increases, momentum that we're seeing in Intermodal and Final Mile.
CPS um, the the winter storm being worse but we also have a number of of uh positive momentum. Uh, that helps us the momentum and growth and dedicated some early rate increases, uh, momentum that we're seeing in Intermodal and final mile. Um,
Speaker #1: And be able to adjust that sell-side rate. So I know you'd like more information on profitability and whatnot. Maybe just to level set, as you know, last year, the first quarter was a negative 12 cents of adjusted EPS.
And obviously, the, the momentum that we will see, at least for 2/3 of the quarter with First Fleet, which we expect to, uh, uh, add to revenue growth and be a creative from from an operating income perspective.
Speaker #1: The winter storm being worse, but we also have a number of positive momentum that helps us. The momentum and growth in Dedicated, some early rate increases, momentum that we're seeing in Intermodal and Final Mile.
The next question is from Bruce Chan with stifel please go ahead.
Chris Wikoff: And obviously, the momentum that we will see, at least for two-thirds of the quarter with FirstFleet, which we expect to add to revenue growth and be accretive from an operating income perspective.
Speaker #1: And obviously, the momentum that we will see, at least for two-thirds of the quarter with First Fleet, which we expect to add to revenue growth and be accretive from an operating income standpoint.
Christopher Wikoff: And obviously, the momentum that we will see, at least for two-thirds of the quarter with FirstFleet, which we expect to add to revenue growth and be accretive from an operating income perspective.
Speaker #1: perspective. That's
Scott Group: That's helpful color. Appreciate it, guys. Thank you.
Scott Group: That's helpful color. Appreciate it, guys. Thank you.
Speaker #3: The next question is from Bruce Chan with Stifel. Please go ahead.
Operator: The next question is from Bruce Chan with Stifel. Please go ahead.
Operator: The next question is from Bruce Chan with Stifel. Please go ahead.
Speaker #3: ahead. Hi, good afternoon, gentlemen.
Andrew Cox: Hi, good afternoon, gentlemen. This is Andrew Cox on for Bruce. We wanted to, you know, get a question about current market dynamics. We're having, you know, a difficult time trying to parse through whether or not this supply-led thesis is enough to, you know, keep the rate momentum up through year-end. You know, if we look back through January, rates pretty quickly fell off after the peak season and have since risen due to, you know, Winter Storm Fern. We're just trying to understand, you know, either whether it's based on historical precedents or, you know, some other anecdotes you guys want to, want to provide, but whether or not this supply-led thesis is enough on its own to, to carry rates throughout the year. We, we can't seem to think of a, of a previous cycle that was kickstarted by supply alone.
Andrew Cox: Hi, good afternoon, gentlemen. This is Andrew Cox on for Bruce. We wanted to, you know, get a question about current market dynamics. We're having, you know, a difficult time trying to parse through whether or not this supply-led thesis is enough to, you know, keep the rate momentum up through year-end. You know, if we look back through January, rates pretty quickly fell off after the peak season and have since risen due to, you know, Winter Storm Fern. We're just trying to understand, you know, either whether it's based on historical precedents or, you know, some other anecdotes you guys want to, want to provide, but whether or not this supply-led thesis is enough on its own to, to carry rates throughout the year. We, we can't seem to think of a, of a previous cycle that was kickstarted by supply alone.
Speaker #6: This is Andrew Cox on for Bruce. We wanted to get a question about current market dynamics. We're having a difficult time trying to parse through whether or not this supply-led thesis is enough to keep the rate momentum up through year-end.
Hi, good afternoon gentlemen. This is Andrew Cox on for Bruce. We wanted to, you know, get a question about the current market dynamics, we're having, you know a difficult time trying to parse through whether or not this Supply lead thesis is enough to, you know, keep the rate momentum up through year end. You know, if we look back through January rates, pretty quickly fell off after the peak season and have since risen due to, you know, winter storm Fern. We're just trying to understand, you know, whether whether it's based on historical precedents or, you know, some other anecdotes you guys want to want to provide, but whether or not this Supply that thesis is enough on its own to to carry rates throughout the year. We, we can't seem to think of a, of a previous cycle, that was kickstarted by Supply alone. They were always, uh, coinciding with some sort of demand impact.
So I just wanted to get your thoughts on on whether Supply is enough and and outlook for demand beyond that. Thank you.
Speaker #6: If we look back through January, rates pretty quickly fell off after the peak season, and have since risen due to Winter Storm Fern. We're just trying to understand whether it's based on historical precedents or some other anecdotes you guys want to provide, but whether or not this supply-led thesis is enough on its own to carry rates throughout the year.
Speaker #6: We can't seem to think of a previous cycle that was kickstarted by supply alone. They were always coinciding with some sort of demand impact.
Andrew Cox: They were always coinciding with some sort of demand impact. So, just wanted to get your thoughts on whether supply is enough, and outlook for demand beyond that. Thank you.
Andrew Cox: They were always coinciding with some sort of demand impact. So, just wanted to get your thoughts on whether supply is enough, and outlook for demand beyond that. Thank you.
Speaker #6: So just wanted to get your thoughts on whether supply is enough and outlook for demand beyond that. Thank you.
Speaker #2: Yeah, thanks, Andrew. So, a couple of things. One, I do believe thinking about the supply side of the equation as the kickstart is the right way to think about it.
Derek Leathers: Yeah, thanks, Andrew. So a couple things. One, I do believe thinking about the supply side of the equation as the kickstart is the right way to think about it. I don't think any of us are proposing that the entirety of the turn will be supply and supply only, although enforcement efforts at this point, not only have remained sustainable, they've actually continued to tick up and increase further. I think that momentum will continue throughout the quarter. I think it's admirable that it's not just one truck at a time at the scale enforcement type level like it began, and now it's more scalable enforcement, and it's also further upstream. There's enforcement actions going on at the driver training level. There's enforcement actions going on at the electronic logging level.
Derek Leathers: Yeah, thanks, Andrew. So a couple things. One, I do believe thinking about the supply side of the equation as the kickstart is the right way to think about it. I don't think any of us are proposing that the entirety of the turn will be supply and supply only, although enforcement efforts at this point, not only have remained sustainable, they've actually continued to tick up and increase further. I think that momentum will continue throughout the quarter. I think it's admirable that it's not just one truck at a time at the scale enforcement type level like it began, and now it's more scalable enforcement, and it's also further upstream. There's enforcement actions going on at the driver training level. There's enforcement actions going on at the electronic logging level.
Speaker #2: I don't think any of us are proposing that the entirety of the turn will be supply and supply only. Although enforcement efforts at this point not only have remained sustainable, they've actually continued to tick up and increase further.
Yeah, thanks Andrew. Um, so a couple things 1. Um, I do believe thinking about the supply side of the equation as the Kickstart is the right way to to think about it. Um, I don't think any of us are, um, proposing that the entirety of the term will be supply, and supply only although enforcement efforts at this point, not only have remained sustainable. They've actually continued to tick up and, and increase further. I think that momentum will continue throughout the quarter. Um, I think I I think it's admirable that it's not just uh 1 truck at a time at the scale enforcement type level, like it began. And now it's more scalable enforcement and it's also up further Upstream. Uh there's enforcement actions going on at the driver training level, there's enforcement actions going on at the electronic logging level. Um all of these things have a cumulative effect. We know it's real because we we can see it in our own network. We can see it in rejection rates Nationwide and we can see it both pre and post storms. So
Speaker #2: I think that momentum will continue throughout the quarter. I think it's admirable that it's not just one truck at a time at the scale enforcement-type level like it began, and now it's more scalable enforcement, and it's also further upstream.
yes, they fell off from December to January, that is normal. That that would that would happen year in and year out the fall was not as severe as we would have maybe typically seen. Um, and then the ramp was into the, and Into the Storm and post storm has been far more significant than we've seen in recent years, uh, whether that be other storms or other
Speaker #2: There are enforcement actions going on at the driver training level. There are enforcement actions going on at the electronic logging level. All of these things have a cumulative effect.
Derek Leathers: All of these things have a cumulative effect. We know it's real because we can see it in our own network, we can see it in rejection rates nationwide, and we can see it both pre- and post-storm. So yes, they fell off from December to January. That is normal, that would happen year in and year out. The fall was not as severe as we would have maybe typically seen, and then the ramp was into the, and into the storm and post-storm has been far more significant than we've seen in recent years, whether that be other storms or other external factors. And so all of that would say to me that clearly some of the noise today is storm-related, and we need to recognize that.
Derek Leathers: All of these things have a cumulative effect. We know it's real because we can see it in our own network, we can see it in rejection rates nationwide, and we can see it both pre- and post-storm. So yes, they fell off from December to January. That is normal, that would happen year in and year out. The fall was not as severe as we would have maybe typically seen, and then the ramp was into the, and into the storm and post-storm has been far more significant than we've seen in recent years, whether that be other storms or other external factors. And so all of that would say to me that clearly some of the noise today is storm-related, and we need to recognize that.
Speaker #2: We know it's real, because we can see it in our own network, we can see it in rejection rates nationwide, and we can see it both pre and post-storm.
Speaker #2: So yes, they fell off from December to January. That is normal. That would happen year in and year out. The fall was not as severe as we would have maybe typically seen.
Speaker #2: And then the ramp was into the storm and post-storm has been far more significant than we've seen in recent years, whether that be other storms or other external factors.
Speaker #2: And so all of that would say to me that, clearly, some of the noise today is storm-related, and we need to recognize that. But when you see rejection rates, as recently as today, crest 14%, that's relatively unprecedented territory.
Derek Leathers: But when you see rejection rates, as recently as today, crest 14%, that's relatively unprecedented territory. We're starting to not, you know, to be in the world of COVID-like rejection rates, at a number like that. Part of it's storm-related, so maybe you take 2 to 3% off, 4% even for that, and you're still sitting at double the average rejection rate of what we've seen for multiple years in a row... So it feels real, it feels like it's finally here.
Derek Leathers: But when you see rejection rates, as recently as today, crest 14%, that's relatively unprecedented territory. We're starting to not, you know, to be in the world of COVID-like rejection rates, at a number like that. Part of it's storm-related, so maybe you take 2 to 3% off, 4% even for that, and you're still sitting at double the average rejection rate of what we've seen for multiple years in a row... So it feels real, it feels like it's finally here.
Speaker #2: We're starting to be in the world of COVID-like rejection rates, at a number like that. Part of it's storm-related. So maybe you take 2% to 3% off, 4% even for that, and you're still sitting at double the average rejection rate of what we've seen for multiple years in a row.
Um, external factors. And so, all of that, would say to me, that clearly some of the noise today is storm related. And we need to recognize that. But when you see rejection rates, uh, as recently as today Crest 14%, um, that's relatively unprecedented territory. Um, we're starting to not, you know, to be in the in the world of of Co like rejection rates uh, at a number like that, uh, part of its form related. So maybe you take 2 to 3% off 4%, even for that and you're still sitting at Double the average rejection rate of what we've seen for multiple years in a row. So, it feels real, it feels like it's finally here. Um, and I think, when, when you couple the supply constraints, as the Kickstart to use your words with the demand, inflection of 1 of the largest tax, rebates Seasons that we've had in many, many years, um, and potentially, with a new fed share, um, some increased relief, uh, through
Speaker #2: So it feels real. It feels like it's finally here. And I think when you couple the supply constraints as the kickstart—to use your words—with the demand inflection of one of the largest tax rebate seasons that we've had in many, many years, and potentially, with a new Fed chair, some increased relief through interest rates for the average consumer that plays out at some point during the year, there's a lot to like about the setup.
Derek Leathers: And I think when you couple the supply constraints as the kickstart, to use your words, with the demand inflection of one of the largest tax rebate seasons that we've had in many, many years, and potentially with a new Fed chair, some increased relief, through interest rates, for the average consumer, that plays out at some point during the year, there's a lot to like about the setup. In the meantime, one of the reasons we embarked on this One-Way restructure is we're not going to wait and just sit around and expect the market to solve the problem alone.
Derek Leathers: And I think when you couple the supply constraints as the kickstart, to use your words, with the demand inflection of one of the largest tax rebate seasons that we've had in many, many years, and potentially with a new Fed chair, some increased relief, through interest rates, for the average consumer, that plays out at some point during the year, there's a lot to like about the setup. In the meantime, one of the reasons we embarked on this One-Way restructure is we're not going to wait and just sit around and expect the market to solve the problem alone.
Interest rates, uh, for the average consumer, um, that plays out at some point. During the year, there's a lot to to like about the setup. Um, in the meantime, uh, 1 of the reasons we embarked on this 1 way, we structure is we're not going to wait and just sit around and expect the market to solve. The problem alone, we want to take proactive steps and proactive actions to create an environment within 1 way to be poised and ready um uh to make those moves uh to be a leaner version of itself.
Speaker #2: In the meantime, one of the reasons we embarked on this one-way restructure is we're not going to wait and just sit around and expect the market to solve the problem alone.
Speaker #2: We want to take proactive steps and proactive actions to create an environment within one way to be poised and ready to make those moves.
Derek Leathers: We want to take proactive steps and proactive actions to create an environment within One Way, to be poised and ready, to make those moves, to be a leaner version of itself, a more selective version of itself, and then complement it with the work we do with our Powerlink solutions. And so, that's our plan. That's what we're going to go execute on, and that's where our focus is going to be as we go forward. But I do understand the trepidation, or the concern. It's hard to parse when you've got a big storm coming off of a normal January downdraft that's now showing itself as an abnormally strong February, but I think there's more to it than just the storm.
Derek Leathers: We want to take proactive steps and proactive actions to create an environment within One Way, to be poised and ready, to make those moves, to be a leaner version of itself, a more selective version of itself, and then complement it with the work we do with our Powerlink solutions. And so, that's our plan. That's what we're going to go execute on, and that's where our focus is going to be as we go forward. But I do understand the trepidation, or the concern. It's hard to parse when you've got a big storm coming off of a normal January downdraft that's now showing itself as an abnormally strong February, but I think there's more to it than just the storm.
Showing itself as an abnormally strong February, um, but I think there's more to it than just the storm.
Thank you for the time, Derek.
Speaker #2: To be a leaner version of itself, a more selective version of itself. And then complement it with the work we do with our PowerLink solutions.
Thank you.
The next question is from Reed C with Stevens. Please go ahead.
Speaker #2: And so that's our plan. That's what we're going to go execute on, and that's where our focus is going to be as we go forward.
Speaker #2: But I do understand the trepidation, or the concern. It's hard to parse when you've got a big storm coming off of a normal January downdraft that's now showing itself as an abnormally strong February, but I think there's more to it than just the storm.
Speaker #6: Thank you for the time,
Ravi Shanker: Thank you for the time, Derek.
Andrew Cox: Thank you for the time, Derek.
Speaker #6: Derek. Thank
Speaker #2: you. The next question is from Reed
Derek Leathers: Thank you.
Derek Leathers: Thank you.
Operator: The next question is from Reed Seay with Stephens. Please go ahead.
Operator: The next question is from Reed Seay with Stephens. Please go ahead.
Speaker #3: C with Stevens. Please go ahead.
Speaker #7: Hey, guys. Thanks for taking my question. I wanted to ask one, back on First Fleet real quick. When you have done these acquisitions in the past, you gain a lot of new customers, maybe some customers you do know.
Reed Seay: Hey, guys. Thanks for taking my question. I wanted to ask one back on FirstFleet real quick. When you have done these acquisitions in the past, you gain a lot of new customers, maybe some customers you do know. What does customer retention look like whenever companies like this change hands? Do you have some level of turnover initially, whenever there is an acquisition? And then I also want to follow up on a question that was asked earlier on the negative mix within One-Way. You did note that it was a negative mix shift from the fleets that the units you restructured to the ones you'll be keeping. So what would be the force that is driving that down from the mid-single digits to maybe your low single digits?
Reed Seay: Hey, guys. Thanks for taking my question. I wanted to ask one back on FirstFleet real quick. When you have done these acquisitions in the past, you gain a lot of new customers, maybe some customers you do know. What does customer retention look like whenever companies like this change hands? Do you have some level of turnover initially, whenever there is an acquisition? And then I also want to follow up on a question that was asked earlier on the negative mix within One-Way. You did note that it was a negative mix shift from the fleets that the units you restructured to the ones you'll be keeping. So what would be the force that is driving that down from the mid-single digits to maybe your low single digits?
Speaker #7: What does customer retention look like whenever companies like this change hands? Do you have some level of turnover initially whenever there is an acquisition?
Hey guys, thanks for taking my question. Um, I I want to ask 1 back on First Fleet real quick, when you have done these Acquisitions in the past, you gain a lot of new customers. Maybe some customers you do now. Um, what does customer retention look like whenever uh companies like this change? Hands? Do you have um, some level of turnover? Uh, initially whenever whenever there is an acquisition, um, and then I also want to follow up on a question that was asked earlier on the negative mix within 1 way, um, you you did note that it was a negative mixed shift from the, uh, fleets that the, the units, you restructure to the ones you'll be keeping. So what, what would be the the force that is driving that down from the mid single digits, to maybe your low single digits? Because I, I think what we had talked about is you would be targeting more Niche, uh, differentiated uh, Freight which we would think would come with a higher Revenue per total mile. So, I
I think that's kind of where our confusion is. So if you could just clarify that, that, that would be great.
Speaker #7: And then I also want to follow up on a question that was asked earlier on the negative mix within One-Way. You did note that it was a negative mix shift from the fleets—that the units you restructured to the ones you'll be keeping.
Okay sure. Um I'm going to give that a whirl. That's a lot there. Um, if I don't answer it, feel free to follow up. Um
Speaker #7: So what would be the force that is driving that down from the mid-single digits to maybe your low single digits? Because I think what we had talked about is you would be targeting more niche differentiated freight, which we would think would come with a higher revenue per total mile.
starting with customer retention every acquisition is different and every acquisition has a different level of of incumbent loyalty and incumbent um
Reed Seay: Because I think what we had talked about is you would be targeting more niche, differentiated, freight, which we would think would come with a higher revenue per total mile. So I think that's kind of where our confusion is. So if you could just clarify that, that would be great.
Reed Seay: Because I think what we had talked about is you would be targeting more niche, differentiated, freight, which we would think would come with a higher revenue per total mile. So I think that's kind of where our confusion is. So if you could just clarify that, that would be great.
Speaker #7: So I think that's kind of where our confusion is. So if you could just clarify that, that would be great.
Speaker #2: Okay, sure. I'm going to give that a whirl. That's a lot there. If I don't answer it, feel free to follow up. Starting with customer retention, every acquisition is different.
Derek Leathers: Okay, sure. I'm going to give that a whirl. That's a lot there. If I don't answer it, feel free to follow up. Starting with customer retention, every acquisition is different, and every acquisition has a different level of incumbent loyalty and incumbent relationships with their existing customers. FirstFleet has a long-standing, deep relationship with the core of its book of business. We also know the majority of those customers prior to the acquisition, and have previous exposure to them. So all of that gives us even more confidence. The fact it's dedicated, which is very difficult to displace and replicate, makes it even more encouraging. So every acquisition is different. This one, I would say, from a customer perspective, feels better than most, as it relates to our ability to retain it.
Derek Leathers: Okay, sure. I'm going to give that a whirl. That's a lot there. If I don't answer it, feel free to follow up. Starting with customer retention, every acquisition is different, and every acquisition has a different level of incumbent loyalty and incumbent relationships with their existing customers. FirstFleet has a long-standing, deep relationship with the core of its book of business. We also know the majority of those customers prior to the acquisition, and have previous exposure to them. So all of that gives us even more confidence. The fact it's dedicated, which is very difficult to displace and replicate, makes it even more encouraging. So every acquisition is different. This one, I would say, from a customer perspective, feels better than most, as it relates to our ability to retain it.
Speaker #2: acquisition has different level of And every incumbent loyalty and incumbent relationships with their existing customers. First fleet has a long-standing deep relationship with the core of its book of business.
Speaker #2: We also know the majority of those customers prior to the acquisition. And have previous exposure to them. So all of that gives us even more confidence.
Speaker #2: The fact it’s dedicated, which is very difficult to displace and replicate, makes it even more encouraging. So, every acquisition is different. This one, I would say, from a customer perspective, feels better than most.
Speaker #2: to our ability to retain it, there As it relates are high-quality carriers with very tenured drivers. With very high service levels. We're only going to enhance those abilities by bringing lower-cost trucks, trailers, tires, fuel, and other items to the table.
Derek Leathers: They're a high quality carrier with very tenured drivers, with very high service levels. We're only going to enhance those abilities by bringing lower cost trucks, trailers, tires, fuel, and other items to the table, and be able to provide them now with additional portfolio options that they did not have as a standalone company. So said differently, if you're the customer, there's nothing not to like about that. So we're pretty confident in the customer retention. We're going to work aggressively on the drivers, associates, and others to make sure and retain the core of that. And the executive team at FirstFleet is largely intact and staying on board, and those meetings have been ongoing. So hopefully, that answers kind of the first part of it.
Derek Leathers: They're a high quality carrier with very tenured drivers, with very high service levels. We're only going to enhance those abilities by bringing lower cost trucks, trailers, tires, fuel, and other items to the table, and be able to provide them now with additional portfolio options that they did not have as a standalone company. So said differently, if you're the customer, there's nothing not to like about that. So we're pretty confident in the customer retention. We're going to work aggressively on the drivers, associates, and others to make sure and retain the core of that. And the executive team at FirstFleet is largely intact and staying on board, and those meetings have been ongoing. So hopefully, that answers kind of the first part of it.
If you're the customer, there's nothing not to like about that. So we're pretty confident in the customer retention, we're going to work aggressively on the drivers Associates and others to make sure and retain the core of that, and the executive team at First Fleet is largely intact and staying on board. Uh, and those meetings have been ongoing, so hopefully, that answers kind of the, the first part of it. Um,
the, the
Speaker #2: And be able to provide them now with additional portfolio options that they did not have as a standalone company. There's so said differently, if you're the customer, there's nothing not to like about that.
Speaker #2: So we're pretty confident in the We're going to work aggressively on the drivers, associates, and others to make sure and retain the core of that.
Speaker #2: And the executive team at First Fleet is largely intact and staying on board. And those meetings have been ongoing. So hopefully, that answers kind of the first part of it.
Derek Leathers: The question about One Way trucking rate per total mile, let me attempt to be a little more clear here. As part of it, you're right, we're going to be more targeted. We're going to be more selective. We're going to lean into aspects of our network that we think we have particular strength. One common theme across those aspects is a longer length of haul, and we have a longer length of haul. When I talk about mix, I just have to remind folks that your rate per mile, because that's what we report in One Way, is lower with the longer length of haul. We're coming out of this restructuring with a significantly larger portion of the fleet operating in sort of a team environment.
Speaker #2: The question about one-way trucking rate per total mile—let me attempt to be a little more clear here. As part of it, you're right.
Derek Leathers: The question about One Way trucking rate per total mile, let me attempt to be a little more clear here. As part of it, you're right, we're going to be more targeted. We're going to be more selective. We're going to lean into aspects of our network that we think we have particular strength. One common theme across those aspects is a longer length of haul, and we have a longer length of haul. When I talk about mix, I just have to remind folks that your rate per mile, because that's what we report in One Way, is lower with the longer length of haul. We're coming out of this restructuring with a significantly larger portion of the fleet operating in sort of a team environment.
Speaker #2: We're going to be more targeted. We're going to be more selective. We're going to lean into aspects of our network that we think we have particular strength in.
Speaker #2: One common theme across those aspects is a longer length of haul. And we have a longer length of haul when I talk about mix.
Uh question about well, 1 way Trucking rate per total mile? Um Let me let me attempt to be a little more clear here as part of it, you're right, we're going to be more targeted. We're going to be more selective. We're going to lean into aspects of our Network that we think we have particular strengths 1. Common theme across those aspects is a longer length of the hall and we have a longer length of haul. When I talk about mix, I just have to remind folks that your rate per per mile. Because that's what we report in 1 way, is lower with the longer length of haul. We're coming out of this restructuring with a significantly larger portion of the fleet operating in sort of a team environment. Uh, we're coming out of it with a significantly larger focus on higher value, high high, high service expectation, uh, longer leave the hall Transit and as Mexico grows that always will come with a longer length of haul footprint. So those kind of work against what you're doing on the contract side and net. You out a a number with that guide of 0, to 3%,
Speaker #2: I just have to remind folks that your rate per mile, because that's what we report in one way, is lower with the longer length of haul.
Speaker #2: We're coming out of this restructuring with a significantly larger portion of the fleet operating in sort of a team environment. We're coming out of it with a significantly larger focus on higher-value, high-service expectation, longer length of haul transit.
That may not look as meaningful and that's why we tried to apply the additional color of saying on a like to like basis, contract renewal approach. That's where the mid single digit kind of activity is taking place.
Got it. That's very helpful. Thank you.
Derek Leathers: We're coming out of it with a significantly larger focus on higher value, high, high, high service expectation, longer length of haul transit. And as Mexico grows, that always will come with a longer length of haul footprint. So those kind of work against what you're doing on the contract side and net you out a number with that guide of 0 to 3% that may not look as meaningful, and that's why we tried to apply the additional color of saying on a like-to-like basis, contract renewal approach, that's where the mid-single digit kind of activity is taking place.
Derek Leathers: We're coming out of it with a significantly larger focus on higher value, high, high, high service expectation, longer length of haul transit. And as Mexico grows, that always will come with a longer length of haul footprint. So those kind of work against what you're doing on the contract side and net you out a number with that guide of 0 to 3% that may not look as meaningful, and that's why we tried to apply the additional color of saying on a like-to-like basis, contract renewal approach, that's where the mid-single digit kind of activity is taking place.
Thank you.
The next question is from Ravi Shanker with Morgan Stanley. Please go ahead.
Speaker #2: And as Mexico grows, that always will come with a longer length-of-haul footprint. So, those kind of work against what you're doing on the contract side.
Speaker #2: And net you out a number with that guide of 0% to 3% that may not look as meaningful. And that's why we tried to apply the additional color of saying, on a like-to-like basis, contract renewal approach.
Uh, great. Thanks a lot for anyone. Uh so Derek, uh just to confirm you've been the biggest uh Bowl on the supply side for the last year. Now just wanted to confirm that you're not turning more bearish on the cycle with this deal nationalization and also did you consider doing this? Maybe a year from now or 18 months from now and you're potentially passed the peak? Thanks.
Speaker #2: That's where the mid-single-digit kind of activity is taking place.
Speaker #3: Got it. That's very helpful. Thank you.
Reed Seay: Got it. That's very helpful. Thank you.
Reed Seay: Got it. That's very helpful. Thank you.
Speaker #2: Thank you.
Derek Leathers: Thank you.
Derek Leathers: Thank you.
Speaker #3: The next question is from Ravi Shanker with Morgan Stanley. Please go ahead.
Operator: The next question is from Ravi Shanker with Morgan Stanley. Please go ahead.
Operator: The next question is from Ravi Shanker with Morgan Stanley. Please go ahead.
Speaker #3: ahead.
Ravi Shanker: Great. Thanks, everyone. So Derek, just to confirm, you've been the biggest bull on the supply side for the last year now. Just wanted to confirm that you're not turning more bearish on the cycle with this deal rationalization. And also, did you consider doing this maybe a year from now or 18 months from now when you're potentially past the peak? Thanks.
Speaker #8: Great. Thanks for
Ravi Shanker: Great. Thanks, everyone. So Derek, just to confirm, you've been the biggest bull on the supply side for the last year now. Just wanted to confirm that you're not turning more bearish on the cycle with this deal rationalization. And also, did you consider doing this maybe a year from now or 18 months from now when you're potentially past the peak? Thanks.
Speaker #8: Everyone, so Derek, just to confirm, you've been the biggest bull on the supply side for the last year now. Just wanted to confirm that you're not turning more bearish on the cycle with this deal rationalization.
Speaker #8: And also, did you consider doing this maybe now, potentially past the peak? Thanks.
Speaker #2: Yeah, thank you, Ravi. You're right. I've been consistent in my messaging on the supply side being more real. The enforcement took a lot longer than I would have liked.
Derek Leathers: ... Yeah, thank you, Robbie. You're right, I've been consistent in my messaging on the supply side being more real. The enforcement took a lot longer than I would have liked, and the scaling of that enforcement has taken even longer still. I think it's gaining momentum, and I think it's very real. As it relates to one way, why now? Which I think is a fair and great question. It really came down to the reality of accelerating the return to the margins that we believe are appropriate for our shareholders.
Derek Leathers: ... Yeah, thank you, Robbie. You're right, I've been consistent in my messaging on the supply side being more real. The enforcement took a lot longer than I would have liked, and the scaling of that enforcement has taken even longer still. I think it's gaining momentum, and I think it's very real. As it relates to one way, why now? Which I think is a fair and great question. It really came down to the reality of accelerating the return to the margins that we believe are appropriate for our shareholders.
Yeah, thank you Robbie. Um, you're right. I've been uh consistent in my messaging on the supply side being more real. The enforcement took a lot longer than I would have liked and the scaling of that enforcement has taken even longer still. I think it's gaining momentum and I think it's very real um, as it relates to 1 way why. Now, um, which I think is a fair and great question, it really came down to the reality of accelerating the return to the margins, that we believe are appropriate for our shareholders. It, it really comes down to the confidence. We have in our power link Solutions, sort of that that variable capacity model to be able to still serve. A lot of that Freight work with our customers, embrace our large scale, trailer pool and and
Speaker #2: And the scaling of that enforcement has taken momentum, and I think it's very real. As it relates to one-way, why now? Which I think is a fair and great question.
Speaker #2: It really came down to the reality of accelerating the return to the margins that we believe are appropriate for our shareholders. It really comes down to the confidence we have in our PowerLink solution, sort of that variable capacity model to be able to still serve a lot of that freight, work with our customers, embrace our assets that allow for them at the warehouse level.
Derek Leathers: It really comes down to the confidence we have in our PowerLink solution, sort of that variable capacity model, to be able to still serve a lot of that freight, work with our customers, and embrace our large scale trailer pool and assets that allow for them to have maximum productivity at the warehouse level. We think we can do all of the above with a leaner version of One-Way. It's not a turn away or abandonment of One-Way in any respect. In fact, we just think it's the better application of scarce resources and scarce capital to continue to put it in long-term, dedicated relationships and support One-Way with those customers that want, deserve, and have and are willing to compensate for that support. That's kind of how we got here.
Derek Leathers: It really comes down to the confidence we have in our PowerLink solution, sort of that variable capacity model, to be able to still serve a lot of that freight, work with our customers, and embrace our large scale trailer pool and assets that allow for them to have maximum productivity at the warehouse level. We think we can do all of the above with a leaner version of One-Way. It's not a turn away or abandonment of One-Way in any respect. In fact, we just think it's the better application of scarce resources and scarce capital to continue to put it in long-term, dedicated relationships and support One-Way with those customers that want, deserve, and have and are willing to compensate for that support. That's kind of how we got here.
Speaker #2: And we think we can do all of the above with a leaner version of one-way. It's not a turn away or abandonment of one-way in any respect.
Speaker #2: In fact, we just think it's the better application of scarce resources and scarce capital to continue to put it in long-term dedicated relationships and support—one-way—with those customers that want, deserve, have, and are willing to compensate for that support.
Assets that allow for them to have maximum productivity at the warehouse level and we think we can do all of the above with a leaner version of 1 way. It's not a turnaway or abandonment of 1 way in any respect. Um, in fact, we just think it's the better application of scarce resources and scarce Capital to continue to put it in long-term, dedicated relationships and support. 1 way with those customers that want deserve and have have and are willing to compensate for that support. Um, and so that, that's kind of how we got here. Um, it's it's, it was, uh, if anything, you, you mentioned would should, we have waited a year longer, you know, perhaps we should have done it a year sooner, um, if anything, but, um, a better now than than not, not accomplishing it. So, I'm excited about the outcome. I'm excited where we sit and uh, look forward to being able to demonstrate it, as we get through the other side of this.
Very good. Thank you.
Thank you, Robbie.
The final question today is from Ken hexter with Bank of America. Please go ahead.
Speaker #2: And so that's kind of how we got here. It was, if anything—you mentioned, should we have waited a year longer? Perhaps we should have done it a year sooner.
Derek Leathers: It was, if anything, you mentioned: should we have waited a year longer? You know, perhaps we should have done it a year sooner, if anything, but better now than not accomplishing it. So I'm excited about the outcome. I'm excited where we sit, and look forward to being able to demonstrate it as we get through the other side of this.
Derek Leathers: It was, if anything, you mentioned: should we have waited a year longer? You know, perhaps we should have done it a year sooner, if anything, but better now than not accomplishing it. So I'm excited about the outcome. I'm excited where we sit, and look forward to being able to demonstrate it as we get through the other side of this.
Speaker #2: If anything, better now than not accomplishing it. So I'm excited about the outcome. I'm excited where we sit, and look forward to being able to demonstrate it as we get through the other side of this.
Hey, Greg, good afternoon. Uh, thanks for getting me in. Uh, just checking. Uh, Chris, the, the 35 million dollar earnout was, was that, um, disclosed on the call last week, is that new news? I, I just don't think I caught that just on a technical on that and then the guiding dedicated Fleet to 23/28 percent C. Can you differentiate that? Does that mean the core are? You still looking at anything dropping on the core and, and
Terms of Fleet size in order to get that growth rate. Just want to understand that mix there.
Speaker #8: Very good. Thank
Ravi Shanker: Very good. Thank you.
Ravi Shanker: Very good. Thank you.
Speaker #2: Thank you, Ravi. you.
Derek Leathers: Thank you, Robbie.
Derek Leathers: Thank you, Robbie.
Speaker #3: The
Operator: The final question today is from Ken Hoexter with Bank of America. Please go ahead.
Operator: The final question today is from Ken Hoexter with Bank of America. Please go ahead.
Speaker #3: Final question today is from Ken Hexter with Bank of America. Please go ahead.
Speaker #3: ahead. Hey, great.
Ken Hoexter: Hey, Greg, good afternoon. Thanks for getting me in. Just checking, Chris, the $35 million earn-out, was that disclosed on the call last week? Is that new news? I just don't think I caught that, just on a technical on that. And then the guiding dedicated fleet to 23 to 28%. Can you differentiate that? Does that mean the core, are you still looking at anything dropping on the core in terms of fleet size in order to get that growth rate? Just want to understand that mix there.
Kenneth Hoexter: Hey, Greg, good afternoon. Thanks for getting me in. Just checking, Chris, the $35 million earn-out, was that disclosed on the call last week? Is that new news? I just don't think I caught that, just on a technical on that. And then the guiding dedicated fleet to 23 to 28%. Can you differentiate that? Does that mean the core, are you still looking at anything dropping on the core in terms of fleet size in order to get that growth rate? Just want to understand that mix there.
Speaker #9: Good afternoon. Thanks for getting me in. Just checking, Chris, the $35 million earn-out—was that disclosed on the call last week? Is that new news?
Speaker #9: I just don't think I caught that, just on a technical on that. And to 23, 28%. Can you differentiate that? Does that mean the core—are you still looking at anything dropping on the core in terms of fleet size in order to get that growth rate?
I know the the dedicated Fleet size.
Speaker #9: Just want to understand that mix.
Speaker #9: there. Yeah,
Chris Wikoff: Yeah, first on the earn-out, Ken, that at a minimum, was in the 8-K that we posted. That may have had slightly more information versus maybe some of the comments that we gave during the call shortly after closing. So that was at a minimum. I think we also mentioned it as part of the call on the 28th.
Christopher Wikoff: Yeah, first on the earn-out, Ken, that at a minimum, was in the 8-K that we posted. That may have had slightly more information versus maybe some of the comments that we gave during the call shortly after closing. So that was at a minimum. I think we also mentioned it as part of the call on the 28th.
Speaker #10: First, on the earn-out, Ken, that at a minimum was in the 8-K that we posted. That may have had slightly more information versus maybe some of the comments that we gave during the call shortly after closing.
Yeah. The uh the guy from 23 to 28%. Yeah. Just is there. I would have thought. Maybe the mix would have been a little bit higher than that. I just want to understand. Is there a signal there? That core is declining like what you're doing with 1 way at all or is, you know, a little bit or is it is that just a simple add-on?
No, just keep in mind there that as a result of the 1-way restructuring. Um,
Speaker #10: So that was at a minimum. I think we also mentioned it as part of the call on the—
Ken Hoexter: Perfect. And then the, the dedicated fleet size?
Kenneth Hoexter: Perfect. And then the, the dedicated fleet size?
Which will continue through this first quarter and that's an average, by the way. Um, so there would continue to be a reduction in the 1-way fleet and in our organic business.
Speaker #9: dedicated fleet size?
Chris Wikoff: Yeah, the guide from 23 to 28%?
Speaker #10: Yeah, the guide from 23% to 28%?
Christopher Wikoff: Yeah, the guide from 23 to 28%?
Speaker #9: Yeah, just—is there, I would have thought maybe the mix would have been a little bit higher than that. I just want to understand, is there a signal there that core is declining, like what you're doing with one-way at all, or is it a little bit, or is—
Ken Hoexter: Yeah. Just, is there... I would have thought maybe the mix would have been a little bit higher than that. I just want to understand, is there a signal there that core is declining, like what you're doing with One-Way at all, or is, you know, a little bit, or is it, is that just a simple add-on?
Kenneth Hoexter: Yeah. Just, is there... I would have thought maybe the mix would have been a little bit higher than that. I just want to understand, is there a signal there that core is declining, like what you're doing with One-Way at all, or is, you know, a little bit, or is it, is that just a simple add-on?
That would be a function of that overall average TTS uh Fleet size that includes uh First Fleet.
okay, the last thing I would add
Speaker #9: Add-on? No, just keep in mind.
Chris Wikoff: No, just keep in mind there that as a result of the One-Way restructuring, which will continue through this Q1, and that's an average, by the way. So there would continue to be a reduction in the One-Way fleet and in our organic business. That would be a function of that overall average TTS fleet size that includes FirstFleet.
Christopher Wikoff: No, just keep in mind there that as a result of the One-Way restructuring, which will continue through this Q1, and that's an average, by the way. So there would continue to be a reduction in the One-Way fleet and in our organic business. That would be a function of that overall average TTS fleet size that includes FirstFleet.
Speaker #10: There, that as a result of the one-way restructuring, which will continue through this first quarter—and that's an average, by the way—there would continue to be a reduction in the one-way fleet.
Speaker #10: And in our organic business, that would be a function of that overall average TTS fleet size that includes First Fleet.
Speaker #9: Okay.
Ken Hoexter: Okay.
Kenneth Hoexter: Okay.
Derek Leathers: The last thing I would ask—yeah, I would just add, too, Ken, part of the whole density play, when you lay over two very dense, dedicated networks over top of one another, it allows for, and this is part of the work we are now embarking on, is increased efficiencies with how you utilize assets. And so you can get more done with less assets, when you're doing asset sharing and, and the ability to kind of work across very dense portions of that network. So back to sweating the assets I've talked about earlier, relative to One-Way, that's not unique to One-Way.
Derek Leathers: The last thing I would ask—yeah, I would just add, too, Ken, part of the whole density play, when you lay over two very dense, dedicated networks over top of one another, it allows for, and this is part of the work we are now embarking on, is increased efficiencies with how you utilize assets. And so you can get more done with less assets, when you're doing asset sharing and, and the ability to kind of work across very dense portions of that network. So back to sweating the assets I've talked about earlier, relative to One-Way, that's not unique to One-Way.
Speaker #2: The last thing I would
Speaker #2: Yeah, I would just add too, Ken, part of the whole density play—when you lay over two very dense dedicated networks over top of one another, it allows for, and this is part of the work we are now embarking on, increased efficiencies with how you utilize assets.
And and so this is just where we believe um, is a is a guide for for, for modeling sake on what that Fleet would look like as we as we get through to the end of the year.
Speaker #2: And so you can get more done with less assets, when you're doing asset sharing and the ability to kind of work across very dense portions of that network.
Speaker #2: So, back to sweating the assets I’ve talked about earlier relative to One-Way—that’s not unique to One-Way. We want to make sure we do that across the portfolio.
Derek Leathers: We want to make sure we do that across the portfolio, and so this is just where we believe is a guide for modeling sake, on what that fleet would look like as we get through to the end of the year.
Derek Leathers: We want to make sure we do that across the portfolio, and so this is just where we believe is a guide for modeling sake, on what that fleet would look like as we get through to the end of the year.
Speaker #2: And so this is just where we believe is a guide, for modeling's sake, on what that fleet would look like as we get to the end of the year.
Just to wrap up if I can on on the cutting that to factor Robbie's question on the, the 1 way, what happens to the, the trucks now, right? So, if we're all kind of looking at a market that could be inflecting are the Trucks gone, once you you write them off, you're selling them, you're, you're dumping them somewhere else into the market or is their opportunity. I don't know if, if the market really is inflecting rapidly. Can you can you shift them back into play? Can you shift them to Dedicated, giving your acquiring into the market? I just want to understand literally what happens to those trucks in the market.
Ken Hoexter: And Derek, just to wrap up, if I can, on the cutting, so back to Robbie's question on the One-Way. What happens to the trucks now, right? So if we're all kind of looking at a market that could be inflecting, are the trucks gone once you write them off, you're selling them, you're dumping them somewhere else into the market, or is there opportunity? I don't know. If the market really is inflecting rapidly, can you shift them back into play? Can you shift them to Dedicated, given you're acquiring into the market? I just want to understand literally what happens to those trucks in the market.
Speaker #9: And Derek, just to wrap up, if I can, on the cutting back to Ravi's question on the one-way—what happens to the trucks now, right?
Kenneth Hoexter: And Derek, just to wrap up, if I can, on the cutting, so back to Robbie's question on the One-Way. What happens to the trucks now, right? So if we're all kind of looking at a market that could be inflecting, are the trucks gone once you write them off, you're selling them, you're dumping them somewhere else into the market, or is there opportunity? I don't know. If the market really is inflecting rapidly, can you shift them back into play? Can you shift them to Dedicated, given you're acquiring into the market? I just want to understand literally what happens to those trucks in the market.
Speaker #9: So if we're all kind of looking at a market that could be inflecting, are the trucks gone once you write them off? You're selling them, you're dumping them somewhere else into the market?
Speaker #9: Or is there opportunity? I don't know if the market really is inflecting rapidly. Can you shift them back into play? Can you shift them to dedicated, given you're acquiring into the market?
Speaker #9: I just want to understand, literally, what happens to those trucks in the—
Yeah, a little bit of all of the above. I mean, some of them that we've we had dedicated to startups in, in the fourth quarter. Um, we were able to shift and move assets, uh, that direction as appropriate, um, we will in fact, you know, be selling some assets off. And, and that's part of the overall restructuring as well. We've moved assets to other regions and other applications where appropriate within 1 way, that was a significant part of the cost incurred as part of this restructuring. When you have to move trailer, pools and assets, uh, it's significant distances to get them repositioned uh to to be able to um, you know.
Speaker #9: market.
Speaker #2: Yeah, a little bit of all of them.
Derek Leathers: Yeah, a little bit of all of the above. I mean, some of them, we had dedicated startups in Q4. We were able to shift and move assets that direction as appropriate. We will in fact, you know, be selling some assets off, and that's part of the overall restructuring as well. We've moved assets to other regions and other applications where appropriate within One-Way. That was a significant part of the cost incurred as part of this restructuring. When you have to move trailer pools and assets in significant distances to get them repositioned to be able to, you know, capitalize, if you will, on this market that's changing and where it's changing faster. So there's a little bit of all of the above.
Derek Leathers: Yeah, a little bit of all of the above. I mean, some of them, we had dedicated startups in Q4. We were able to shift and move assets that direction as appropriate. We will in fact, you know, be selling some assets off, and that's part of the overall restructuring as well. We've moved assets to other regions and other applications where appropriate within One-Way. That was a significant part of the cost incurred as part of this restructuring. When you have to move trailer pools and assets in significant distances to get them repositioned to be able to, you know, capitalize, if you will, on this market that's changing and where it's changing faster. So there's a little bit of all of the above.
Speaker #2: Above. I mean, some of them, we had dedicated startups in the fourth quarter. We were able to shift and move assets that direction as appropriate.
Speaker #2: We will, in fact, be selling some assets off, and that's part of the overall restructuring as well. We've moved assets to other regions and other applications.
Speaker #2: Where appropriate within one-way, that was a significant part of the cost incurred as part of this restructuring, when you have to move trailer pools and assets significant distances to get them repositioned.
Speaker #2: To be able to capitalize, if you will, on this market that's changing and where it's changing faster, so there's a little bit of all of the above.
Speaker #2: And just to be clear, even on the remainders that we talk about, when we say that one-way restructuring is continuing through Q1, we will be nimble as we go through that.
Derek Leathers: Just to be clear, even on the remainders that we talk about when we say the One-Way restructuring is continuing through Q1, we will be nimble as we go through that. Meaning, we're going to leave optionality open as we're moving forward. We're going to continue to test waters and understand every day post-storm, what's happening out there relative to the tightness, and, probably more importantly than the storm, continue to monitor and acknowledge the outcomes of the ongoing enforcement enhancement. And if that continues to play out, this thing, you know, could get pretty interesting pretty quickly. Lastly, I would just tell you, like we have said for many years, we are out working, and we're going to be working with dedicated customers relative to rates and renewals.
Derek Leathers: Just to be clear, even on the remainders that we talk about when we say the One-Way restructuring is continuing through Q1, we will be nimble as we go through that. Meaning, we're going to leave optionality open as we're moving forward. We're going to continue to test waters and understand every day post-storm, what's happening out there relative to the tightness, and, probably more importantly than the storm, continue to monitor and acknowledge the outcomes of the ongoing enforcement enhancement. And if that continues to play out, this thing, you know, could get pretty interesting pretty quickly. Lastly, I would just tell you, like we have said for many years, we are out working, and we're going to be working with dedicated customers relative to rates and renewals.
Speaker #2: Meaning we're going to leave optionality open as we're moving forward. We're going to continue to test the waters and understand every day post-storm what's happening out there relative to the tightness.
Capitalized, if you will on this, on this Market that's changing and where it's changing faster. Um, so there's a little bit of all of the above and just to be clear, even on the remainders that we talk about, when we say the 1-way restructuring is continuing through q1, we will be nimble. Uh, as we go through that, meaning, we're going to leave. Optionality open as we're moving forward. We're going to continue to test Waters and understand, um, every day post storm, what's happening out there relative to the tightness and and probably more importantly than the storm continued to Monitor and acknowledge the outcomes of the ongoing enforcement enhancement. And if that continues to play out, um, this thing, you know, could get pretty interesting, pretty quickly, and remain. Lastly, I would just tell you, um, like we have said, for many years, we, we are out working and, and we're going to be working with dedicated customers relative to, to rates and renewals and the ability to flow them back to 1 way in in an event that
Speaker #2: And probably more importantly than the storm, continue to monitor and acknowledge the outcomes of the ongoing enforcement enhancement. And if that continues to play out, this thing could get pretty interesting pretty quickly.
We're unable to gain um agreements uh is another level of flexibility, or another level we can pull especially in a 1-way market. That is that if we were to find ourselves in 1, that's improving, even more rapidly than we believe.
Got it. Thanks for the time, Derek. Appreciate it.
Thank you, Ken.
Speaker #2: And lastly, I would just tell you, like we have said for many years, we are out working and we're going to be working with dedicated customers relative to rates and renewals, and the ability to flow them back to one-way in an event that we're unable to gain agreements is another level of flexibility, or another lever we can pull. If we were to find ourselves in one that's improving even more rapidly than we—
This concludes our question and answer session. I'll now turn the call back over to Mr. Derek Leathers who will provide closing comments, please? Go ahead sir.
Derek Leathers: And the ability to flow them back to One-Way in an event that we're unable to gain agreements is another level of flexibility or another lever we can pull, especially in a One-Way market that is, if we were to find ourselves in one, that's improving even more rapidly than we believe.
Derek Leathers: And the ability to flow them back to One-Way in an event that we're unable to gain agreements is another level of flexibility or another lever we can pull, especially in a One-Way market that is, if we were to find ourselves in one, that's improving even more rapidly than we believe.
Yeah, thank you. Um, look as we continue to navigate this Dynamic environment, we're going to keep focusing where it matters most on delivering Superior value to our customers and positioning Warner. For the long term success, we took significant steps in Q4 towards becoming a leaner more agile, organization. And 1 way, we recently added to significant scale and capabilities to our dedicated portfolio via the acquisition of First Fleet.
Speaker #2: believe. Got it.
Ravi Shanker: Got it. Thanks for the time, Derek. Appreciate it.
Kenneth Hoexter: Got it. Thanks for the time, Derek. Appreciate it.
Speaker #9: Thanks for the time, Derek.
Speaker #9: Appreciate it.
Speaker #2: Thank you,
Derek Leathers: Thank you, Ken.
Derek Leathers: Thank you, Ken.
Speaker #2: Ken. This concludes our question
Operator: This concludes our question-and-answer session. I'll now turn the call back over to Mr. Derek Leathers, who will provide closing comments. Please go ahead, sir.
Operator: This concludes our question-and-answer session. I'll now turn the call back over to Mr. Derek Leathers, who will provide closing comments. Please go ahead, sir.
Speaker #1: And answer session. I'll now turn the call back over to Mr. Derek Leathers, who will provide closing comments. Please go ahead, sir.
Speaker #2: Yeah, thank you. Look, as we continue to navigate this dynamic environment, we're going to keep focusing where it matters most—on delivering superior value to our customers and positioning Werner for the long-term success.
Derek Leathers: Yeah, thank you. Look, as we continue to navigate this dynamic environment, we're going to keep focusing where it matters most, on delivering superior value to our customers and positioning Werner for the long-term success. We took significant steps in Q4 towards becoming a leaner, more agile organization in One-Way. We recently added a significant scale and capabilities to our dedicated portfolio via the acquisition of FirstFleet. We remain confident in the progress towards our long-term strategic objectives, as well as the strength of our portfolio to solve our customers' complex transportation and logistics needs. Our scale, reach, expertise, and diverse range of services position us well in this evolving market. I want to thank you all for spending your time with us today, and thank you for your continued interest in Werner.
Derek Leathers: Yeah, thank you. Look, as we continue to navigate this dynamic environment, we're going to keep focusing where it matters most, on delivering superior value to our customers and positioning Werner for the long-term success. We took significant steps in Q4 towards becoming a leaner, more agile organization in One-Way. We recently added a significant scale and capabilities to our dedicated portfolio via the acquisition of FirstFleet. We remain confident in the progress towards our long-term strategic objectives, as well as the strength of our portfolio to solve our customers' complex transportation and logistics needs. Our scale, reach, expertise, and diverse range of services position us well in this evolving market. I want to thank you all for spending your time with us today, and thank you for your continued interest in Werner.
Evolving Market. I want to thank you all for spending your time with us today, and thank you for your continued interest in Warner.
This is now conclude.
for attending today's presentation, you may now disconnect
Speaker #2: We took significant steps in Q4 towards becoming a leaner, more agile organization in one way. We recently added significant scale and capabilities to our Dedicated portfolio via the acquisition of First Fleet.
Speaker #2: We remain confident in the progress towards our long-term strategic objectives, as well as the strength of our portfolio to solve our customers' complex transportation and logistics needs.
Speaker #2: Our scale, reach, expertise, and diverse range of services position us well in this evolving market. I want to thank you all for spending your time with us today, and thank you for your continued interest in Werner Enterprises.
Speaker #2: Warner. The conference is now concluded.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
