Werner Enterprises, Inc.

Good afternoon and welcome to the Werner Enterprises fourth quarter and full year 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. I would now like to turn the conference over to John Steele, Werner's CFO. Please go ahead.

Earlier this afternoon, we issued our earnings release with fourth quarter and full year 2021 results. The release along with the slide presentation are available at the company's website at werner.com. Today's webcast is being recorded and will be available for replay beginning later this evening. Before we begin, please direct your attention to the disclosure statement on slide two 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. Additionally, the company reports results using non-GAAP measures, which it believes provide 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. I'd now like to turn the conference over to Derek Leathers, Chairman, President, and CEO. Please go ahead, Derek.

Thank you and good afternoon, everyone. 2021 marked another year of strong performance and financial results. We adapted to new and changing developments throughout the year in a market with robust demand and limited supply. I'm extremely proud of our entire Warner team for their resourcefulness, determination, persistence, and creativity. We safely delivered superior service and solutions to Warner customers. I'm also pleased to report that Warner delivered record fourth quarter earnings, our sixth consecutive record-setting quarter. And once again, we achieved record annual earnings. During 2021, the domestic freight economy strengthened. Increased consumer spending led to depleted inventories. COVID issues persisted, supply chains became stressed, and labor challenges escalated. This led to a very competitive driver market and increased cost pressure in driver recruiting, development, and retention. New truck and trailer production slowed. Truck load capacity became constrained, and used truck and trailer pricing increased to record levels. Despite the significant driver headwinds, our strategic investment in sourcing, pay, and driver amenities enabled us to expand our driver base and grow our TTS fleet. During fourth quarter, we added 120 trucks, and for the year, we added 510. To proactively address the challenging driver market, we're actively leveraging the strength of our industry-leading driver training school network. During fourth quarter, we added two strategically located schools, for a total of six added this past year. At year end, we had 19 school locations, and during this quarter, three more schools will be added. During 2021, our driver hires increased by 17%. Warner is uniquely positioned to achieve strong financial results going forward. We will benefit from our attractive freight base with winning customers and the stability and consistent performance of our driver-preferred dedicated fleets to perform well in all freight markets. Warner also possesses several other attractive businesses, including our industry-leading cross-border Mexico franchise, engineered freight lanes and one-way truckload, our recent acquisitions of ECM Truckload and Ned's Final Mile, and our comprehensive and growing capacity solutions in Warner Logistics. Moving to slide four, here's an updated snapshot of Warner. Our TTS truck fleet grew 7% during the past year to a total of 8,340 trucks, ending with a fleet mix of 63% dedicated and 37% one-way truckload. Warner continues to maintain a consumer-centric freight network with over three-quarters of our annual revenues in retail and food and beverage. Nearly half our revenues are with our top 10 customers, and nearly 80% come from our top 50. Warner has longstanding and growing relationships with customers that are winning in their industry. Let's move to slide five for a summary of our fourth quarter and 2021 financial performance. For the quarter, revenues increased 23% to $765 million. Adjusted EPS grew 27% to $1.13 million. Adjusted operating income rose 22% to $101 million, while our TTS adjusted operating margin, net of fuel, remained a strong 18.2%. For the year, revenues rose 15% to $2.7 billion. Adjusted EPS increased 33% to $3.45. And we expanded our full-year TTS adjusted operating margin by 190 basis points to 15.9%. Dedicated freight demand remained robust in fourth quarter as our winning customers continued to generate strong sales and discount retail, home improvement, and food and beverage. In fourth quarter, dedicated average trucks grew 7% year-over-year and increased 3% sequentially from third quarter. Bid activity with new and existing customers remained strong. Dedicated average trucks in fourth quarter grew by 353 trucks year-over-year, and we expect similar fleet growth in 2022. One-way truckload freight demand also remained strong in fourth quarter. We expect our one-way truckload fleet to grow slightly this year. In fourth quarter, Warner Logistics produced another strong quarter of accelerating growth in revenues and operating income. In a capacity challenge peak season, Logistics provided enhanced capacity solutions for our brokerage, intermodal, and final mile customers. Logistics actively managed several peak projects for key customers throughout the quarter. During this year, we expect Warner Logistics to achieve continued revenue and operating income growth. We received fewer new trucks and trailers than planned in fourth quarter due to OEM new truck and trailer production delays. We expect this trend will continue for the industry during at least the first half of this year. Consistent with our fourth quarter guidance, we sold one-third fewer trucks and one-half fewer trailers. Used truck and trailer pricing strengthened again to new record levels, resulting in higher gains on sales than anticipated. At the same time, reduced new truck availability is increasing the percentage of our trucks not covered by chassis warranties which is increasing our truck maintenance expenses. In late November, we closed on the acquisition of Ned's Logistics, a leading and growing final mile provider that delivers home furniture and appliances to residential and commercial customers in the Northeast and Midwest. We are pleased to retain the experienced Ned's leadership team and their associates. We've combined our final mile business and Werner Logistics with Ned's as Werner Final Mile. To date, integration activities are going very well, and we are confident that Werner Final Mile will generate over 100 million of revenues this year. and be accretive to our earnings. I would like to take this opportunity to welcome the elite team of NED's final mile professionals to Warner. Now, I'd like to turn the call over to John to discuss our fourth quarter and full year financial results in more detail. John?