Werner Enterprises, Inc.

Good afternoon and welcome to the Werner Enterprises first quarter 2023 earnings conference call. All participants will be in a listen-only mode. The speakers for today are Derek Leathers, Chairman, President, and CEO, John Steele, retiring CFO, Chris Wyckoff, recently appointed CFO, and Chris Neal, SVP of Pricing and Strategic Planning. 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. Please note, this event is being recorded. I would now like to turn the call over to Chris Neal. Please go ahead.

Earlier today, we issued our earnings release with our first quarter 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 this evening. Please see 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. 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 GAAP measures is included in the tables attached to the earnings release and in the appendix of the slide presentation. Now I would like to turn the conference over to Derek.

Thank you, Chris, and good afternoon. On our fourth quarter earnings call, we shared our expectation that freight conditions in the first half of 2023 would be challenging and competitive. We anticipated first quarter freight would be soft due to seasonality, inventory destocking, and the impact of the Fed's monetary policies to control cost inflation. Freight in January was soft, but better than expected. As February progressed, freight began to moderate, and in March it took a step down, in contrast to the strengthening we typically see during the month. Our primary focus entering first quarter was operational execution. We leaned into the strength of our dedicated fleet, which performed well through superior customer service and fleet efficiency, resulting in solid financial results. As anticipated, one-way truckload and logistics were challenged by overall market conditions with less freight available and increased price competition. This was in contrast to first quarter a year ago when we benefited from an unusually strong freight market with consistent project opportunities. In addition, we face broader industry issues, including higher insurance and claims and supplies and maintenance. Higher driver and non-driver pay in a moderating freight and rate market also pressured first quarter earnings. Over the last several years, we've built a business model design to perform better in both good and less desirable freight markets. Our large and durable dedicated fleet, our diversified one-way truckload business, and our growing and increasingly diversified logistics segment provide us with a more resilient portfolio of complementary services and industry verticals. Over this period, we grew our dedicated one-way business in a very difficult operating environment, which, along with contributions from recent acquisitions, contributed to 9% year-over-year revenue growth. I want to sincerely thank the 14,000-plus talented Warner team members for staying true to our core values and delivering on our unrelenting strategy to safely provide superior service to our customers. Now let's move to slide three. I'm delighted to formally introduce and welcome our new CFO, Chris Wyckoff. After an extensive search process over the last several months, we hired our top candidate. Chris joined Warner two weeks ago and has hit the ground running. Chris is the right CFO for Warner at this exciting time in our history. He is an accomplished and strategic financial leader with over 20 years of corporate finance and business transformation experience with large public and private companies in the technology and telecommunications industries. Chris shares our company values and he brings to Warner a growth mindset and a deep skill set in technology, operational processes, treasury, capital markets, M&A, and investor relations. We expect a smooth CFO transition as our retiring CFO, John Steele, Chris Neal, and our entire leadership team are working closely with Chris in his new role.