WERNER ENTERPRISES INC Q3 FY2024 earnings call

• Expressed thoughts and prayers for those impacted by Southeast natural disasters. • Mentioned third quarter had challenging backdrop with factors like elevated health insurance claims, higher interest expense, etc., but also positive signs like One-Way utilization improving for sixth consecutive quarter and rate per total mile inflecting positive. • Dedicated fleet size grew sequentially, and strength continued in Mexico cross-border, intermodal and Power Only services. • Logistics business is a key component of strategy, with technology like EDGE TMS platform driving growth, and over 13 consecutive quarters of growth in Logistics. • Cost savings program progressed, with over $100 million saved over two years, and well over 60% of cost savings being structural and sustainable.

Truckload Transportation Services (TTS) total revenue for the third quarter was $523 million, down 9% year-over-year, accounting for 70% of total revenues. Adjusted operating income was $24.5 million, 41% lower vs prior year. Dedicated revenue net of fuel was $285 million, down 7% year-over-year, representing 63% of TTS revenue, with revenue per truck per week increasing 1.7% year-over-year. One-Way Trucking revenue was $165 million, down 6% year-over-year, with year-over-year One-Way revenue per total mile increasing 0.3% in Q3. Logistics revenue was $207 million, 28% of total revenues, down 10% year-over-year and 1% sequentially. Shipments in Truckload Logistics declined 10%, while Intermodal revenues increased 7% year-over-year due to more shipments, and Final Mile revenues decreased.

• Full year fleet guidance adjusted from down 3%-6% to down 6%-8%, operating 7% fewer trucks. • Net CapEx guidance range tightened to $240 million to $250 million, midpoint unchanged at $250 million. • One-Way Truckload revenue per total mile increased 0.3% in Q3, better than prior down 3% to flat guidance, expecting fourth quarter change to be flat to up 3%. • Total gains year-to-date lowered midpoint and tightened range to $7 million to $11 million. • Tax rate guidance raised to 25.5%-26.5% from prior figures. • Average age of truck and trailer fleet at end of third quarter was 2.0 years and 5.2 years respectively.

• Elevated and potentially one-time nature of health insurance claims, with uncertainty on whether they will sustain. • Challenging macro environment impacting overall operating results. • Competitive pressure in the Logistics sector, pressuring margins in the short-term.

Q: Ravi Shanker with Morgan Stanley asked about health insurance claims and if they are one-time issues.

A: Chris Wikoff said the health insurance claims were uniquely elevated during the quarter, potentially a record, and were volatile but outsized in that quarter.

Q: Scott Group with Wolfe Research asked about Dedicated and One-Way fleet and the November 18th deadline.

A: Derek Leathers talked about Dedicated fleet add backs and exits being due to not fitting long-term pricing discipline, and Chris Wikoff discussed Logistics profitability levers including cost cuts and tech.

Q: Brian Ossenbeck with JPMorgan asked about One-Way fleet and Logistics profitability.

A: Derek Leathers explained One-Way fleet adjustments for peak and customer service, and Chris Wikoff talked about Logistics cost savings and tech-driven growth.

Q: Jeff Kauffman with Vertical Research Partners asked about driver market and fleet age.

A: Derek Leathers and Chris Wikoff discussed driver school network investment and fleet age positioning for growth.

Q: Jason Seidl with TD Cowen asked about bid season and cost savings.

A: Derek Leathers talked about bid season rate expectations being early but positive, and Chris Wikoff explained over 60% of cost savings are structural.

Q: Daniel Imbro with Stephens asked about cash flow and CapEx.

A: Chris Wikoff discussed CapEx trends for growth and share buyback strategy.

Q: Eric Morgan with Barclays asked about margin range and Dedicated guidance.

A: Derek Leathers and Chris Wikoff talked about margin range timeline and Dedicated fleet guidance based on add backs and exits.

Q: Chris Wetherbee with Wells Fargo asked about health claims and Dedicated fleet.

A: Derek Leathers explained health claims uncertainty and Dedicated fleet end-of-period counts based on add backs and exits.