Werner Enterprises, Inc.

Good afternoon, and welcome to the Werner Enterprises third 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 call over to Chris Neal, Warner's Senior Vice President of Pricing and Strategic Planning. Please go ahead.

Earlier this afternoon, we issued our earnings release with our third quarter results. The release, along with a slide 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 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 of 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, Chris, and good afternoon. Despite rising macroeconomic headwinds, I am pleased to report that we achieved year-over-year growth in our quarterly adjusted earnings per share for the ninth consecutive quarter. Our large and resilient dedicated fleet performed very well. While we experienced moderating performance in one-way truckload logistics and our driving school network, given more challenging operating conditions, third quarter produced the third highest ever adjusted earnings per share in a quarter in our history. I'd like to sincerely thank our talented Werner team for their meaningful contributions to our performance and also welcome the elite driving and non-driving professionals of the Baylor trucking team to our Werner family. As a reminder, we acquired Baylor on October 1st. Now let's move to slide four. During the quarter, we added 180 trucks in TTS, with most of the increase in dedicated. Just after quarter end, we added 200 high-performing Baylor trucks and professional drivers in our one-way truckload fleet. In light of the softening freight market and including the acquired trucks, we expect our fleet count to be up 100 to 200 trucks in fourth quarter. Peak season freight opportunities in one-way truckload and logistics are more subdued this fourth quarter compared to a record freight market during peak in the fourth quarter a year ago. While inflationary cost pressures continue to be challenging, particularly for labor, equipment maintenance, and insurance, we have begun to see some easing in the competitive driver recruiting and retention markets. In addition, within the consumer staples vertical, shoppers are increasingly trading down for value. By design, nearly three-quarters of our revenues are in necessity-based retail and food and beverage, with our freight weighted to winning customers that ship recurring and repeatable consumer staples. Let's move to slide five for a summary of our financial highlights. For third quarter, revenues increased 18% to $828 million. Adjusted operating income increased 8% to $79.5 million. And adjusted EPS increased 14% to $0.90 per share. Dedicated into the quarter with 5,430 trucks, adding 110 during the quarter and 310 year-over-year. Dedicated continues to experience strong demand from the majority of our long-term customers, and the pipeline of new opportunities remains strong. At quarter end, one-way truckload had 3,150 trucks, plus 70 for the quarter and up 50 year over year. A year ago, a bottleneck supply chain and three rounds of stimulus checks produced peak season shipping that started earlier than normal in August of 2021. In the current freight market, there are far fewer project and surge freight opportunities in one-way truckload and logistics. Warner Logistics achieved lower operating income in third quarter compared to a very strong performance in second quarter, due to fewer premium pop-up freight opportunities, intermodal customer and market challenges, and softening demand and startup costs in final mile. While it remains difficult to obtain new trucks and trailers, our deliveries of new trucks continue to show improvement during third quarter. Finally, much lower freight rates, record cost inflation, and rapidly rising interest rates are quickly eroding small carrier cash flow. Very strong used truck pricing softened in third quarter due to the severe challenges facing small carriers. Our equipment gains in third quarter were comparable to second quarter as we sold more trucks at a lower average gain per truck, and we sold a similar number of trailers. Now, I'd like to turn the call over to John to discuss our financial results in more detail. John?