0000793074-11-000020.txt : 20110421 0000793074-11-000020.hdr.sgml : 20110421 20110421160955 ACCESSION NUMBER: 0000793074-11-000020 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20110420 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20110421 DATE AS OF CHANGE: 20110421 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WERNER ENTERPRISES INC CENTRAL INDEX KEY: 0000793074 STANDARD INDUSTRIAL CLASSIFICATION: TRUCKING (NO LOCAL) [4213] IRS NUMBER: 470648386 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14690 FILM NUMBER: 11773569 BUSINESS ADDRESS: STREET 1: 14507 FRONTIER ROAD CITY: OMAHA STATE: NE ZIP: 68138 BUSINESS PHONE: 4028956640 MAIL ADDRESS: STREET 1: P.O. BOX 45308 CITY: OMAHA STATE: NE ZIP: 68145 8-K 1 wern8k042011.txt WERNER ENTERPRISES, INC. FORM 8-K 04/20/11 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 20, 2011 ------------------ WERNER ENTERPRISES, INC. (Exact name of registrant as specified in its charter) NEBRASKA 0-14690 47-0648386 (State or other jurisdiction of (Commission File (IRS Employer incorporation) Number) Identification No.) 14507 FRONTIER ROAD POST OFFICE BOX 45308 OMAHA, NEBRASKA 68145 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (402) 895-6640 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On April 20, 2011, the registrant issued a press release regarding, among other things, its revenues and earnings for the first quarter ended March 31, 2011. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K. In accordance with General Instruction B.2 to the Form 8-K, the information under this Item 2.02 and the press release exhibit to this Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section 18, nor shall such information and exhibit be deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended (the "Securities Act"), unless the registrant expressly states that such information and exhibit are to be considered "filed" under the Exchange Act or incorporates such information and exhibit by specific reference in an Exchange Act or Securities Act filing. The press release furnished as Exhibit 99.1 to this Form 8-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act 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 registrant'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 registrant's Annual Report on Form 10-K for the year ended December 31, 2010. For those reasons, undue reliance should not be placed on any forward-looking statement. The registrant 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. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (d) Exhibits. -------- 99.1 Press release issued by the registrant on April 20, 2011, "Werner Enterprises Reports Growth in First Quarter 2011 Revenues and Earnings". SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. WERNER ENTERPRISES, INC. Date: April 21, 2011 By: /s/ John J. Steele ------------------- ------------------------------ John J. Steele Executive Vice President, Treasurer and Chief Financial Officer Date: April 21, 2011 By: /s/ James L. Johnson ------------------- ------------------------------ James L. Johnson Executive Vice President, Chief Accounting Officer and Corporate Secretary EX-99.1 2 earn1q11.txt WERNER ENTERPRISES, INC. FORM 8-K 04/20/11 Exhibit 99.1 WERNER ENTERPRISES, INC. 14507 Frontier Road P. O. Box 45308 Omaha, Nebraska 68145 FOR IMMEDIATE RELEASE Contact: John J. Steele --------------------- Executive Vice President, Treasurer and Chief Financial Officer (402) 894-3036 WERNER ENTERPRISES REPORTS GROWTH IN FIRST QUARTER 2011 REVENUES AND EARNINGS Omaha, Nebraska, April 20, 2011: ------------------------------- Werner Enterprises, Inc. (NASDAQ:WERN), one of the nation's largest transportation and logistics companies, reported revenues and earnings for the first quarter ended March 31, 2011. Summarized financial results for first quarter 2011 compared to first quarter 2010 are as follows (dollars in thousands, except per share data):
1Q11 1Q10 % Change -------- -------- -------- Total revenues $469,429 $425,075 10% Trucking revenues, net of fuel surcharge $316,447 $303,668 4% Value Added Services ("VAS") revenues $63,573 $61,400 4% Operating income $27,442 $18,264 50% Net income $16,293 $10,836 50% Earnings per diluted share $0.22 $0.15 49%
Despite the recent cost headwinds of three unusually severe winter storms during the first five weeks of first quarter 2011 and rising diesel fuel prices during the latter part of first quarter 2011, Werner Enterprises produced 49% earnings per share growth in first quarter 2011 compared to first quarter 2010. In first quarter 2011, freight trends in our One-Way Truckload business improved significantly beginning the second week of February to levels higher than 2010 and improved further in March. Our Midwest freight demand was particularly strong, followed closely by most of our other domestic geographic areas, except for the West which showed less strength. We are encouraged by recently improving truckload freight trends, which we believe are caused to a greater degree by industry capacity constraints than economic recovery. Our average revenues per total mile increased 4.5% in first quarter 2011 compared to first quarter 2010. This increase was the result of customer contractual rate increases, freight mix improvement and unusually strong customer demand for truck capacity in the latter part of first quarter 2011. This resulted in significant customer capacity charges for repositioning trucks from other regions and providing additional trucks above committed levels. We have been very successful in this tightening capacity environment in working jointly with our customers to secure sustainable solutions across all modes. We are committed to maintaining our fleet count at approximately 7,300 trucks. We remain focused on expanding our operating margin to raise our returns on assets, equity and invested capital, while staying true to our expanded portfolio of services for our customers. The gap between the lower market value of an aged industry truck fleet and the higher cost of environmentally-friendly new trucks has never been wider. It is extremely difficult for many carriers to access the required capital to simply replace their existing truck fleets with new trucks. As a result, it is anticipated these capital constraints will restrict industry truck growth and may cause the number of trucks in the industry to decline. As noted in detail in our fourth quarter 2010 earnings release, the most dramatic safety regulatory changes in our company's 55-year history are all occurring over the next three years. The Compliance Safety Accountability program, proposed changes to the hours of service regulations for commercial truck drivers and the proposed required use of electronic on-board recorders on virtually all trucks are all expected to reduce, or have the effect of reducing, industry capacity. We continue to diversify our business model with the goal of a balanced portfolio of revenues comprised of One-Way Truckload (which includes the Regional, medium-to-long-haul Van and Expedited fleets), Dedicated and Logistics (VAS). Our specialized services unit, primarily Dedicated, ended the quarter with 3,600 trucks (49% of our total fleet). Average diesel fuel prices were 78 cents per gallon higher in first quarter 2011 than in first quarter 2010 and were 46 cents per gallon higher than in fourth quarter 2010. For the first 20 days of April 2011, the average diesel fuel price per gallon was $1.00 higher than the average diesel fuel price per gallon in the same period of 2010 and $1.11 higher than in second quarter 2010. Diesel fuel prices have risen significantly since the last week of February 2011 compared to the falling prices in second quarter 2010. When fuel prices rise rapidly, a negative earnings lag occurs because the cost of fuel rises immediately and the market indexes used to determine fuel surcharges increase at a slower pace. In a period of declining fuel prices, we generally experience a temporary favorable earnings effect because the fuel costs decline at a faster pace than the market indexes used to determine fuel surcharge collections. We continue to make meaningful progress improving our fuel miles per gallon ("mpg") by controlling truck idling and implementing fuel mpg enhancing equipment changes to our fleet. We continue to invest in environmentally friendly and fuel-saving equipment solutions such as aerodynamic trucks, idling reduction systems, tire inflation systems and trailer skirts to reduce our fuel gallons purchased and improve our fuel mpg. The driver recruiting and retention market remains competitive. An improved freight market, extended unemployment benefit programs, changing industry safety regulations and reduced financing options for driving school candidates continue to tighten qualified and student driver supply. We expect driver market challenges to increase as the year progresses. We continue to believe our position in the current driver market is better than that of many competitors because over 70% of our driving jobs reside in more attractive, shorter-haul Regional and Dedicated fleet operations that enable us to return these drivers to their homes on a more frequent and consistent basis. Gains on sales of equipment were $4.8 million in first quarter 2011 compared to $1.1 million in first quarter 2010 and $2.8 million in fourth quarter 2010. Our premium used trucks are increasingly more attractive to fleets that want to upgrade their older trucks without incurring the higher cost of new trucks. Gains on sales are reflected as a reduction of Other Operating Expenses in our income statement. In 2011, we are purchasing trucks with 2010-standard engines to replace older trucks that we sell or trade. We remain committed to the ongoing investment required to maintain a best-in-class fleet while focusing on the lowest-cost operating model for our customers. We expect to purchase new trucks and trailers for fleet replacement in 2011, with an estimated net capital expenditure of $150 million to $200 million. This compares to net capital expenditures of $119 million in 2010. We expect these purchases to reduce the average age of our company truck fleet from 2.8 years at the end of 2010 to approximately 2.5 years by the end of 2011. 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 (International).
Value Added Services (amounts in 000's) 1Q11 1Q10 -------------------- --------------- --------------- Revenues $63,573 100.0% $61,400 100.0% Rent and purchased transportation expense 53,332 83.9 51,949 84.6 ------- ------- Gross margin 10,241 16.1 9,451 15.4 Other operating expenses 6,831 10.7 6,367 10.4 ------- ------- Operating income $3,410 5.4 $3,084 5.0 ======= =======
The following table shows the change in shipment volume and average revenue (excluding logistics fee revenue) per shipment for all VAS shipments.
1Q11 1Q10 Difference % Change ------ ------ ---------- -------- Total VAS shipments 58,246 66,825 (8,579) (13)% Less: Non-committed shipments to Truckload segment 18,405 26,311 (7,906) (30)% ------ ------ ---------- Net VAS shipments 39,841 40,514 (673) (2)% ====== ====== ========== Average revenue per shipment $1,500 $1,309 $191 15% ====== ====== ==========
In first quarter 2011, VAS revenues increased 4%, gross margin dollars increased 8% and operating income dollars increased 11% compared to first quarter 2010. Brokerage revenues in first quarter 2011 increased 22% compared to first quarter 2010 due primarily to increased shipment volume. Brokerage gross margin dollars increased at the same rate as the gross margin percentage remained constant year-over-year, and operating income increased at a higher percentage rate. Sequentially, the Brokerage gross margin percentage improved to 13.7% in first quarter 2011 from 13.1% in fourth quarter 2010. Intermodal revenues increased 26% while intermodal gross margins and operating income increased at a higher percentage rate, comparing first quarter 2011 to first quarter 2010. Werner Global Logistics revenues declined 39% and operating results also declined in first quarter 2011 compared to first quarter 2010, but improved sequentially over fourth quarter 2010. The first quarter 2010 to first quarter 2011 decline is attributed to a decrease in the number of shipments related to several international projects that ended during the latter part of second quarter 2010. Comparisons of the operating ratios (net of fuel surcharge revenues) for the Truckload segment and VAS segment for first quarters 2011 and 2010 are shown below.
Operating Ratios 1Q11 1Q10 Difference ---------------- ----- ----- ---------- Truckload Transportation Services 92.4% 95.2% (2.8)% Value Added Services 94.6 95.0 (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 first quarter 2011 and first quarter 2010 are 94.0% and 96.0%, respectively, when fuel surcharge revenues are reported as revenues instead of a reduction of operating expenses. Our financial position remains strong. We ended the quarter with no debt and $47.6 million of cash.
INCOME STATEMENT DATA (Unaudited) (In thousands, except per share amounts) Quarter % of Quarter % of Ended Operating Ended Operating 3/31/11 Revenues 3/31/10 Revenues ----------- ----------- ----------- ----------- Operating revenues $469,429 100.0 $425,075 100.0 ----------- ----------- ----------- ----------- Operating expenses: Salaries, wages and benefits 132,863 28.3 128,334 30.2 Fuel 97,931 20.9 73,881 17.4 Supplies and maintenance 41,189 8.8 37,676 8.9 Taxes and licenses 23,026 4.9 23,457 5.5 Insurance and claims 18,060 3.8 16,838 3.9 Depreciation 39,718 8.5 38,285 9.0 Rent and purchased transportation 88,497 18.9 84,685 19.9 Communications and utilities 3,923 0.8 3,749 0.9 Other (3,220) (0.7) (94) (0.0) ----------- ----------- ----------- ----------- Total operating expenses 441,987 94.2 406,811 95.7 ----------- ----------- ----------- ----------- Operating income 27,442 5.8 18,264 4.3 ----------- ----------- ----------- ----------- Other expense (income): Interest expense 28 0.0 9 0.0 Interest income (345) (0.1) (337) (0.1) Other 26 0.0 (11) (0.0) ----------- ----------- ----------- ----------- Total other expense (income) (291) (0.1) (339) (0.1) ----------- ----------- ----------- ----------- Income before income taxes 27,733 5.9 18,603 4.4 Income taxes 11,440 2.4 7,767 1.9 ----------- ----------- ----------- ----------- Net income $16,293 3.5 $10,836 2.5 =========== =========== =========== =========== Diluted shares outstanding 73,138 72,545 =========== =========== Diluted earnings per share $.22 $.15 =========== =========== OPERATING STATISTICS Quarter Ended Quarter Ended 3/31/11 % Change 3/31/10 ------------- -------- ------------- Trucking revenues, net of fuel surcharge (1) $316,447 4.2% $303,668 Trucking fuel surcharge revenues (1) 83,273 51.2% 55,059 Non-trucking revenues, including VAS (1) 66,165 4.7% 63,188 Other operating revenues (1) 3,544 12.2% 3,160 ------------- ------------- Operating revenues (1) $469,429 10.4% $425,075 ============= ============= Average monthly miles per tractor 9,705 -0.7% 9,769 Average revenues per total mile (2) $1.502 4.5% $1.437 Average revenues per loaded mile (2) $1.693 3.9% $1.629 Average percentage of empty miles 11.26% -4.6% 11.80% Average trip length in miles (loaded) 450 -1.3% 456 Total miles (loaded and empty) (1) 210,634 -0.3% 211,315 Average tractors in service 7,235 0.3% 7,211 Average revenues per tractor per week (2) $3,364 3.9% $3,239 Capital expenditures, net (1) $20,054 $10,874 Cash flow from operations (1) $53,800 $64,962 Return on assets (annualized) 5.6% 3.7% Total tractors (at quarter end) Company 6,645 6,575 Independent contractor 655 675 ------------- ------------- Total tractors 7,300 7,250 Total trailers (truck and intermodal, quarter end) 23,530 23,730
(1) Amounts in thousands. (2) Net of fuel surcharge revenues.
BALANCE SHEET DATA (In thousands, except share amounts) 3/31/11 12/31/10 ------------- ------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $47,599 $13,966 Accounts receivable, trade, less allowance of $9,907 and $9,484, respectively 210,565 190,264 Other receivables 10,130 10,431 Inventories and supplies 21,201 16,868 Prepaid taxes, licenses and permits 11,095 14,934 Current deferred income taxes 28,456 27,829 Other current assets 21,842 23,407 ------------- ------------- Total current assets 350,888 297,699 ------------- ------------- Property and equipment 1,538,017 1,549,637 Less - accumulated depreciation 710,609 708,582 ------------- ------------- Property and equipment, net 827,408 841,055 ------------- ------------- Other non-current assets 12,151 12,798 ------------- ------------- $1,190,447 $1,151,552 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $64,519 $57,708 Insurance and claims accruals 73,443 71,857 Accrued payroll 20,349 18,838 Other current liabilities 19,346 20,037 ------------- ------------- Total current liabilities 177,657 168,440 ------------- ------------- Other long-term liabilities 10,694 10,380 Insurance and claims accruals, net of current portion 115,250 113,250 Deferred income taxes 201,841 190,507 Stockholders' equity: Common stock, $.01 par value, 200,000,000 shares authorized; 80,533,536 shares issued; 72,768,665 and 72,644,998 shares outstanding, respectively 805 805 Paid-in capital 92,516 91,872 Retained earnings 740,870 728,216 Accumulated other comprehensive loss (2,872) (3,420) Treasury stock, at cost; 7,764,871 and 7,888,538 shares, respectively (146,314) (148,498) ------------- ------------- Total stockholders' equity 685,005 668,975 ------------- ------------- $1,190,447 $1,151,552 ============= =============
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; expedited; temperature-controlled; and flatbed services. Werner's Value Added Services portfolio includes freight management, truck brokerage, intermodal, and international services. International services are provided through Werner's domestic and global subsidiary companies and include ocean, air and ground transportation; freight forwarding; and customs brokerage. 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. 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, 2010. For those reasons, undue reliance should not be placed on any 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.