Werner Enterprises, Inc. (NASDAQ:WERN) Q4 2022 Earnings Call Transcript

Brian Ossenbeck: Good afternoon. Thanks for taking my question guys. Maybe just two quick follow-ups on Dedicated. Looking at the revenue per truck per week and I said it’s off a tough comp from last year, but 0% to 3% seems like it’s going to be tough to exceed, inflation this year when you talk about driver pay as part of that. So maybe you can elaborate that a little bit. Is there ability to go back, it seems like you might be having some conversations to possibly move that up. Is this something we should look at more in a multiyear period, one strongly offset by a bit weaker one. Maybe you can offer some thoughts around that.

Derek Leathers : Yes, Brian. So, the multiyear approach is certainly one lens that I think does matter. When you’re coming off of some of the comps over the last couple of years and we were able to shore up driver pay and other things at a rate that a, the market would support, but b, we felt it was appropriate for our drivers. It is certainly — that line item will moderate as we look into 2023. The other reality of dedicated agreements that we have in place is the driver pay is always set aside as a stand-alone item. So, if we see pressure there, we feel as though the market has tightened sometime during the course of the year relative to driver availability, there’s always the opportunity in Dedicated to go back and have that conversation.

It’s not as easy as just asking and getting it, of course, but that it will be a data-driven analytical discussion. 0% to 3% growth has a lot to do also with a year ago. There was a lot of project-type work or incremental trucks on many of these Dedicated accounts. So, you’ve got a base contract and then you have incremental trucks that are playing a role. This year, you’ve got a base contract and you might have some incremental shrinkage in that same fleet just based on their shipping volumes. And so, you got to put all that into the mix. The comps are probably one of the toughest things about that 0% to 3%, not looking as impressive as you might have hoped for. The last thing I’ll point out is Dedicated revenue per truck per week has grown eight out of the last nine years.

And I think that really covers multiple different swings in the market. then it really kind of gives you a better insight to just how stable that business can be. If and only if you executing. So, we always start and end with that concept, we’ve got to be absolutely best-in-class on our execution, and we are. And so, when we look back at 2022, over the course of the entire year for all of those trucks operating in Dedicated, and you look across the entire fleet, that fleet operated north of 99% on time throughout the entirety of the year. And that’s something that I think I want to thank all of our folks once again for making possible.