Werner Enterprises, Inc.

Good afternoon and welcome to the Werner Enterprises second quarter 2022 earnings conference call. All participants will be in 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 telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. 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 our second quarter results. The release, along with the slide 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 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 we believe provides additional information for investors to help facilitate the comparison of past and present performance. A reconciliation to the most directly comparable gap measures is included in the tables attached to the earnings release and in the appendix of the slide presentation. Now I will turn the conference over to Derek Leathers, our Chairman, President, and CEO. Thank you, John, and good afternoon.

During second quarter, I am pleased to report that for the eighth consecutive quarter, we achieved record quarterly adjusted EPS. We had strong performance from both dedicated and logistics and effectively steered our way through a moderating freight market and one-way truckload. These record earnings were achieved despite unusually high insurance and claims expense in the quarter that increased over $20 million year-over-year, or 24 cents per share. The majority of the increase related to recent unexpected and unfortunate legal developments for two prior year accidents that have been settled. Over the prior eight quarters, our insurance and claims expense averaged $25 million per quarter. This quarter came in at $41 million, or $16 million more than the prior eight-quarter average. Our truck safety record continues to improve, and year-to-date DOT reportable accidents per million miles are the lowest of the last five years, except for the first year of COVID when there were significantly fewer motor vehicles on the road. I would like to take this opportunity to sincerely thank the entire Warner team for continuing to deliver on our promises. with superior safety and service to our customers. Now let's move to slide four. During second quarter, we added 175 trucks in our truckload transportation services segment, ending the quarter with 8,400. Consistent with our plans, most of these additions were undedicated. Our fleet mix at quarter end remained 63% dedicated and 37% one-way truckload. Overall, our consumer-oriented freight base is performing well. Nearly three-quarters of our freight revenues are in retail and food and beverage, and we have a heavier weighting with customers who ship recurring and repeatable consumer staple products. We expect freight volumes related to shipments of consumer staples to remain strong. Three of our top five customers are discount retailers who thrive in economic markets when consumers place a high priority on value. Our two other top five customers are industry-leading home improvement and beverage companies. Let's move to slide five for a summary of our financial performance. For second quarter, revenues increased 29% to $836 million. Adjusted operating income declined 2% to $77.6 million. And adjusted EPS increased 1% to $0.87 per share. If you normalize our second quarter insurance and claims expense of $41 million to our last eight-quarter average of $25 million, adjusted EPS in second quarter was negatively impacted by $0.19 a share. Dedicated, our largest business unit, ended the quarter with 5,320 trucks and achieved 6% truck growth year-over-year. Dedicated continues to experience strong demand from the majority of its long-term customers. New dedicated business opportunities continue to remain strong as shippers search for capacity solutions, high service, and better visibility to transportation costs in a volatile freight environment. The driver market has shown some signs of easing, but remains very competitive in a tight labor market. At quarter end, one-way truckload had 3,080 trucks, including the addition of 475 trucks year-over-year, which is primarily due to the July 2021 ECM acquisition. Within OneWay, we specialize in Mexico cross-border, short-haul regional, team-expedited, and engineered fleets. From April to June, OneWay freight volumes moderated from strong to seasonally normal. Warner Logistics continued to expand its three business units of truckload logistics, intermodal, and final model, with another strong quarter of revenue, margin, and operating income growth. Continuing an ongoing trend, it remains difficult to receive the new trucks and trailers that we want to be able to refresh our fleet. We have frequent discussions with ROEMs to coordinate our new truck deliveries based on the very difficult challenges they are dealing with for semiconductor chips, component parts, labor, and other issues. The extremely strong pricing in the used truck market began to ease toward the end of the quarter. Our equipment gains in second quarter were $7.2 million higher year over year and flat compared to first quarter. Now, I'd like to turn the call over to John to discuss our financial results in more detail. John?