EX-99.1 2 wern3q09.txt WERNER ENTERPRISES, INC. 8-K 10/19/09 EXHIBIT 99.1 WERNER ENTERPRISES, INC. 14507 Frontier Road P. O. Box 45308 Omaha, Nebraska 68145 FOR IMMEDIATE RELEASE Contacts: John J. Steele --------------------- Executive Vice President, Treasurer and Chief Financial Officer (402) 894-3036 Robert E. Synowicki, Jr. Executive Vice President and Chief Information Officer (402) 894-3350 WERNER ENTERPRISES REPORTS THIRD QUARTER 2009 REVENUES AND EARNINGS Omaha, Nebraska, October 19, 2009: --------------------------------- Werner Enterprises, Inc. (NASDAQ: WERN), one of the nation's largest transportation and logistics companies, reported revenues and earnings for the third quarter ended September 30, 2009. Revenues decreased 27% to $429.3 million in third quarter 2009 compared to $584.1 million in third quarter 2008. Trucking revenues, excluding fuel surcharges, declined 13% to $319.3 million in third quarter 2009 compared to $367.4 million in third quarter 2008. Value Added Services ("VAS") revenues declined 22% for the reasons explained later in this earnings release and were $57.7 million in third quarter 2009 compared to $73.6 million in third quarter 2008. VAS revenues increased 14% from second quarter 2009 to third quarter 2009. Earnings per diluted share decreased 16% to 26 cents in third quarter 2009 compared to 31 cents in third quarter 2008. Earnings per diluted share increased from 10 cents in first quarter 2009 to 18 cents in second quarter 2009 to 26 cents in third quarter 2009. The freight market continued to be challenging in third quarter 2009, however freight volumes showed some encouraging seasonal improvement as the quarter progressed. Shipper destocking of inventory that occurred earlier this year has slowed and stabilized inventory levels, which had a sequentially positive impact on freight shipments. Also, management believes a portion of the Company's improving freight demand is caused by shippers acknowledging and adjusting to the increasing risk of relying on highly leveraged carriers. Freight shipment trends in fourth quarter 2009 will depend on the strength of consumer demand during the holiday season. Pricing remains extremely competitive, due principally to the high level of customer bid programs that occurred in the first half of 2009. Werner proactively adapted to the softer freight market conditions by reducing its average fleet size by 10% when comparing third quarter 2009 to third quarter 2008. Fewer trucks and 1% lower miles per truck reduced the Company's total miles by 11% over this same period. Having fewer trucks in service also lowered the Company's freight requirements and thereby reduced the Company's need to book less attractive and less profitable freight to keep its trucks and drivers productive. Management believes that excess capacity in the trucking industry continues to be supported by lender leniency that is not ultimately sustainable. Based on current market conditions and as a commitment to its customer base, the Company does not plan to make further reductions to its fleet, unless there is a significant decline in the freight market or a loss of customer business. Werner continues to diversify its business model with the goal of a balanced portfolio of One-Way Truckload (which includes the Regional, medium-to-long-haul Van, and Expedited fleets), Dedicated, and Logistics. Within One-Way Truckload, the Company continues to reduce its medium-to-long-haul Van fleet and grow its Regional fleet. The Company's specialized services division, primarily Dedicated, increased its fleet in a difficult market to over 3,350 trucks. Diesel fuel prices were lower by about $1.60 per gallon in third quarter 2009 compared to third quarter 2008. Diesel fuel prices rose during second quarter 2008 and into July 2008, before declining rapidly during the last five months of 2008. Lower diesel fuel prices in third quarter 2009 helped to reduce the cost of non-billable gallons used for truck idle time, empty miles, and out-of-route miles. In addition, the Company continued to achieve meaningful fuel miles per gallon ("mpg") improvements through its ongoing fuel management programs, which also helped reduce the Company's fuel costs. Due strictly to mpg improvements from these fuel management programs, which began in March 2008, Werner purchased 1.2 million fewer gallons of diesel fuel in third quarter 2009 compared to third quarter 2008. This fuel savings alone reduced the Company's carbon emissions by nearly 13,000 tons. For the first 19 days of October 2009 fuel prices have increased 29 cents per gallon and averaged 81 cents per gallon less than the same period of 2008. During periods of rising fuel prices, a lag occurs between the timing of the fuel cost increases and the delayed recovery of fuel surcharge revenues. As noted in the Company's prior earnings releases, the large decline in diesel fuel prices in the second half of 2008 had a temporary favorable impact on net fuel costs (fuel expense, less fuel surcharge revenues) in third quarter 2008 and fourth quarter 2008. In the latter months of 2008, the Company intensified its efforts to aggressively manage controllable costs and adapt to a smaller fleet. In addition to raising fuel mpg, during the first nine months of 2009 Werner improved its trucking tractor-to-non-driver ratio by 14% and reduced numerous other operating expenses. Superior service to customers, both external and internal, was not compromised. In addition, a broad-based, company-wide safety campaign was implemented in June 2009 with the objective of reducing the frequency and severity of accidents and lowering insurance and claims expense. Initial results from this safety initiative, while in the early stages of development, are encouraging. Werner's wholly owned subsidiary, Fleet Truck Sales, realized lower gains on sales of assets, primarily trucks and trailers, of $0.9 million in third quarter 2009 compared to $2.8 million in third quarter 2008. Buyer demand for used trucks and trailers remains low due to the weak freight market and recessionary economy. As a result, the average gains per truck and trailer sold decreased in third quarter 2009 compared to third quarter 2008. Gains on sales are reflected as a reduction of Other Operating Expenses in the Company's income statement. To provide shippers with additional sources of managed capacity and network analysis, Werner continues to develop its non-asset-based VAS segment. VAS includes Brokerage, Freight Management, Intermodal and Werner Global Logistics.
Value Added Services (amounts in 000's) 3Q09 3Q08 --------------------------------------- ---------------- ---------------- Revenues $57,685 100.0% $73,586 100.0% Rent and purchased transportation expense 47,840 82.9 62,838 85.4 -------- -------- Gross margin 9,845 17.1 10,748 14.6 Other operating expense 6,040 10.5 6,429 8.7 -------- -------- Operating income $3,805 6.6 $4,319 5.9 ======== ======== YTD09 YTD08 ---------------- ---------------- Revenues $155,627 100.0% $203,401 100.0% Rent and purchased transportation expense 129,119 83.0 173,358 85.2 -------- -------- Gross margin 26,508 17.0 30,043 14.8 Other operating expenses 18,179 11.7 18,373 9.1 -------- -------- Operating income $8,329 5.3 $11,670 5.7 ======== ========
VAS revenues, gross margins, and operating income declined in third quarter 2009 compared to third quarter 2008 due to three factors: (1) a reduction in the average revenue per shipment of 19% due to lower fuel prices and lower customer rates, (2) shifting significantly more shipments not committed to third-party capacity providers to the Truckload Transportation Services ("Truckload") segment to help cushion the impact of a soft freight market, which resulted in lower revenues and gross margin in the VAS segment and (3) a reduction in the number of industry freight shipments because of the weaker freight market and recessionary economy. The following table shows the change in shipment volume and average revenue (excluding logistics fee revenue) per shipment for all VAS shipments:
3Q09 3Q08 Difference % Change -------- -------- ---------- -------- Total VAS shipments 64,679 60,950 3,729 6% Less: Non-committed shipments to Truckload segment (25,290) (17,655) (7,635) 43% -------- -------- ---------- Net VAS shipments 39,389 43,295 (3,906) -9% ======== ======== ========== Average revenue per shipment $1,325 $1,642 ($317) -19% ======== ======== ==========
Brokerage revenues declined due to the factors described in the paragraph above, however its gross margin percentage improved by 160 basis points. Freight Management revenues declined due to reduced shipments with existing customers. Intermodal revenues and gross margins declined due to an extremely weak and competitive intermodal market in third quarter 2009. Werner Global Logistics achieved meaningful revenue and profit improvement. Comparisons of the operating ratios (net of fuel surcharge revenues) for the Truckload segment and VAS segment for third quarters 2009 and 2008 and year-to-date 2009 and 2008 are shown below.
Operating Ratios 3Q09 3Q08 Difference ---------------- ----- ----- ---------- Truckload Transportation Services 90.5% 91.0% (0.5)% Value Added Services 93.4 94.1 (0.7) YTD09 YTD08 Difference ----- ----- ---------- Truckload Transportation Services 93.8% 93.8% 0.0% Value Added Services 94.7 94.3 0.4
Fluctuating fuel prices and fuel surcharge collections impact the total company operating ratio and the Truckload segment's operating ratio when fuel surcharges are reported on a gross basis as revenues versus netting against fuel expenses. Eliminating fuel surcharge revenues, which are generally a more volatile source of revenue, provides a more consistent basis for comparing the results of operations from period to period. The Truckload segment's operating ratios for third quarter 2009 and third quarter 2008 are 91.8% and 93.4%, respectively, and for year-to-date 2009 and 2008 are 94.5% and 95.3%, respectively, when fuel surcharge revenues are reported as revenues instead of a reduction of operating expenses. The Company's financial position remains strong. The Company ended third quarter 2009 with no debt and $105.8 million of cash. Stockholder's equity was $776.4 million.
INCOME STATEMENT DATA (Unaudited) (In thousands, except per share amounts) Quarter % of Quarter % of Ended Operating Ended Operating 9/30/09 Revenues 9/30/08 Revenues -------- --------- -------- --------- Operating revenues $429,273 100.0 $584,057 100.0 -------- --------- -------- --------- Operating expenses: Salaries, wages and benefits 130,885 30.5 150,616 25.8 Fuel 66,001 15.4 145,280 24.9 Supplies and maintenance 34,403 8.0 41,566 7.1 Taxes and licenses 23,665 5.5 26,733 4.6 Insurance and claims 20,016 4.7 28,727 4.9 Depreciation 37,708 8.8 41,653 7.1 Rent and purchased transportation 79,948 18.6 107,948 18.5 Communications and utilities 3,841 0.9 4,769 0.8 Other 1 0.0 (1,257) (0.2) -------- --------- -------- --------- Total operating expenses 396,468 92.4 546,035 93.5 -------- --------- -------- --------- Operating income 32,805 7.6 38,022 6.5 -------- --------- -------- --------- Other expense (income): Interest expense 3 0.0 3 0.0 Interest income (418) (0.1) (1,012) (0.2) Other (100) 0.0 27 0.0 -------- --------- -------- --------- Total other expense (income) (515) (0.1) (982) (0.2) -------- --------- -------- --------- Income before income taxes 33,320 7.7 39,004 6.7 Income taxes 14,328 3.3 16,558 2.9 -------- --------- -------- --------- Net income $18,992 4.4 $22,446 3.8 ======== ========= ======== ========= Diluted shares outstanding 72,110 71,825 ======== ======== Diluted earnings per share $.26 $.31 ======== ======== OPERATING STATISTICS Quarter Ended Quarter Ended 9/30/09 % Change 9/30/08 ------------- -------- ------------- Trucking revenues, net of fuel surcharge (1) $319,291 -13.1% $367,401 Trucking fuel surcharge revenues (1) 49,477 -63.5% 135,525 Non-trucking revenues, including VAS (1) 58,499 -23.1% 76,070 Other operating revenues (1) 2,006 -60.4% 5,061 ------------- ------------- Operating revenues (1) $429,273 -26.5% $584,057 ============= ============= Average monthly miles per tractor 10,184 -1.2% 10,306 Average revenues per total mile (2) $1.440 -2.7% $1.480 Average revenues per loaded mile (2) $1.637 -3.6% $1.699 Average percentage of empty miles 12.01% -6.8% 12.88% Average trip length in miles (loaded) 463 -14.1% 539 Total miles (loaded and empty) (1) 221,675 -10.7% 248,197 Average tractors in service 7,256 -9.6% 8,028 Average revenues per tractor per week (2) $3,385 -3.9% $3,521 Capital expenditures, net (1) $50,004 $14,421 Cash flow from operations (1) $68,956 $69,002 Return on assets (annualized) 6.0% 6.5% Total tractors (at quarter end) Company 6,635 7,335 Owner-operator 690 705 ------------- ------------- Total tractors 7,325 8,040 Total trailers (truck and intermodal, quarter end) 24,310 24,140
(1) Amounts in thousands. (2) Net of fuel surcharge revenues.
INCOME STATEMENT DATA (Unaudited) (In thousands, except per share amounts) Nine Months % of Nine Months % of Ended Operating Ended Operating 9/30/09 Revenues 9/30/08 Revenues ----------- --------- ----------- --------- Operating revenues $1,226,832 100.0 $1,675,025 100.0 ----------- --------- ----------- --------- Operating expenses: Salaries, wages and benefits 393,456 32.1 442,391 26.4 Fuel 174,777 14.2 424,079 25.3 Supplies and maintenance 105,627 8.6 123,336 7.4 Taxes and licenses 72,022 5.9 82,884 4.9 Insurance and claims 64,272 5.2 77,366 4.6 Depreciation 117,016 9.5 125,132 7.5 Rent and purchased transportation 220,276 18.0 307,631 18.4 Communications and utilities 12,232 1.0 14,828 0.9 Other 1,083 0.1 (4,930) (0.3) ----------- --------- ----------- --------- Total operating expenses 1,160,761 94.6 1,592,717 95.1 ----------- --------- ----------- --------- Operating income 66,071 5.4 82,308 4.9 ----------- --------- ----------- --------- Other expense (income): Interest expense 82 0.0 9 0.0 Interest income (1,344) (0.1) (3,049) (0.2) Other (352) 0.0 79 0.0 ----------- --------- ----------- --------- Total other expense (income) (1,614) (0.1) (2,961) (0.2) ----------- --------- ----------- --------- Income before income taxes 67,685 5.5 85,269 5.1 Income taxes 29,105 2.4 36,336 2.2 ----------- --------- ----------- --------- Net income $38,580 3.1 $48,933 2.9 =========== ========= =========== ========= Diluted shares outstanding 72,027 71,575 =========== =========== Diluted earnings per share $.54 $.68 =========== =========== OPERATING STATISTICS YTD 09 % Change YTD 08 ---------- -------- ---------- Trucking revenues, net of fuel surcharge (1) $937,333 -13.6% $1,084,402 Trucking fuel surcharge revenues (1) 122,636 -66.5% 366,223 Non-trucking revenues, including VAS (1) 158,614 -24.4% 209,699 Other operating revenues (1) 8,249 -43.9% 14,701 ---------- ---------- Operating revenues (1) $1,226,832 -26.8% $1,675,025 ========== ========== Average monthly miles per tractor 9,866 -3.2% 10,189 Average revenues per total mile (2) $1.439 -1.8% $1.466 Average revenues per loaded mile (2) $1.650 -2.4% $1.691 Average percentage of empty miles 12.76% -4.1% 13.31% Average trip length in miles (loaded) 463 -14.3% 540 Total miles (loaded and empty) (1) 651,257 -11.9% 739,571 Average tractors in service 7,334 -9.1% 8,065 Average revenues per tractor per week (2) $3,277 -5.0% $3,448 Capital expenditures, net (1) $76,749 $80,391 Cash flow from operations (1) $169,306 $189,212 Return on assets (annualized) 4.1% 4.8% Total tractors (at quarter end) Company 6,635 7,335 Owner-operator 690 705 ---------- ---------- Total tractors 7,325 8,040 Total trailers (truck and intermodal, quarter end) 24,310 24,140
(1) Amounts in thousands. (2) Net of fuel surcharge revenues.
BALANCE SHEET DATA (In thousands, except share amounts) 9/30/09 12/31/08 ---------- ---------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $105,750 $48,624 Accounts receivable, trade, less allowance of $9,438 and $9,555, respectively 180,390 185,936 Other receivables 11,514 18,739 Inventories and supplies 12,486 10,644 Prepaid taxes, licenses and permits 6,544 16,493 Current deferred income taxes 33,343 30,789 Other current assets 18,730 20,659 ---------- ---------- Total current assets 368,757 331,884 ---------- ---------- Property and equipment 1,579,769 1,613,102 Less - accumulated depreciation 687,993 686,463 ---------- ---------- Property and equipment, net 891,776 926,639 ---------- ---------- Other non-current assets 16,167 16,795 ---------- ---------- $1,276,700 $1,275,318 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $48,122 $46,684 Current portion of long-term debt - 30,000 Insurance and claims accruals 76,297 79,830 Accrued payroll 27,838 25,850 Other current liabilities 22,603 19,006 ---------- ---------- Total current liabilities 174,860 201,370 ---------- ---------- Other long-term liabilities 8,199 7,406 Insurance and claims accruals, net of current portion 120,500 120,500 Deferred income taxes 196,739 200,512 Stockholders' equity: Common stock, $.01 par value, 200,000,000 shares authorized; 80,533,536 shares issued; 71,755,881 and 71,576,267 shares outstanding, respectively 805 805 Paid-in capital 92,897 93,343 Retained earnings 854,345 826,511 Accumulated other comprehensive loss (7,149) (7,146) Treasury stock, at cost; 8,777,655 and 8,957,269 shares, respectively (164,496) (167,983) ---------- ---------- Total stockholders' equity 776,402 745,530 ---------- ---------- $1,276,700 $1,275,318 ========== ==========
Werner Enterprises, Inc. was founded in 1956 and is a premier transportation and logistics company, with coverage throughout North America, Asia, Europe, South America, Africa and Australia. Werner maintains its global headquarters in Omaha, Nebraska and maintains offices in the United States, Canada, Mexico, China and Australia. Werner is among the five largest truckload carriers in the United States, with a diversified portfolio of transportation services that includes dedicated, medium-to-long-haul, regional and local van capacity, expedited, temperature-controlled and flatbed services. Werner's Value Added Services portfolio includes freight management, truck brokerage, intermodal, load/mode and network optimization and freight forwarding. Werner, through its subsidiary companies, is a licensed U.S. NVOCC, U.S. Customs Broker, Class A Freight Forwarder in China, licensed China NVOCC, TSA-approved Indirect Air Carrier, and IATA Accredited Cargo Agent. Werner Enterprises, Inc.'s common stock trades on The NASDAQ Global Select MarketSM under the symbol "WERN". For further information about Werner, visit the Company's website at www.werner.com. Note: This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward- looking statements are based on information presently available to the Company's management and are current only as of the date made. Actual results could also differ materially from those anticipated as a result of a number of factors, including, but not limited to, those discussed in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009. For those reasons, undue reliance should not be placed on any such forward-looking statement. The Company assumes no duty or obligation to update or revise any forward-looking statement, although it may do so from time to time as management believes is warranted or as may be required by applicable securities law. Any such updates or revisions may be made by filing reports with the U.S. Securities and Exchange Commission, through the issuance of press releases or by other methods of public disclosure.