EX-99 2 earn3q11.txt WERNER ENTERPRISES, INC. EXHIBIT 99.1 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 IMPROVED EARNINGS PER SHARE IN THIRD QUARTER 2011 Omaha, Nebraska, October 18, 2011: --------------------------------- Werner Enterprises, Inc. (NASDAQ: WERN) one of the nation's largest transportation and logistics companies, reported improved revenues and earnings for the third quarter ended September 30, 2011 compared to the third quarter ended September 30, 2010. Summarized financial results for third quarter and year-to-date 2011 compared to the same periods of 2010 are as follows (dollars in thousands, except per share data):
3Q11 3Q10 % Change YTD11 YTD10 % Change -------- -------- -------- ---------- ---------- -------- Total revenues $509,587 $463,262 10% $1,494,913 $1,351,806 11% Trucking revenues, net of fuel surcharge $331,346 $329,200 1% $981,502 $959,386 2% Value Added Services ("VAS") revenues $76,635 $64,683 18% $211,435 $191,149 11% Operating income $50,066 $40,145 25% $124,275 $93,955 32% Net income $29,578 $24,158 22% $73,389 $55,924 31% Earnings per diluted share $0.40 $0.33 22% $1.00 $0.77 30%
Werner again produced strong earnings growth of 22% in third quarter 2011 compared to third quarter 2010. This was the Company's seventh consecutive quarter of year-over-year earnings growth in excess of 20%. We would like to take this opportunity to sincerely thank all of our associates for this outstanding achievement. Freight demand began the quarter in July 2011 with the typical seasonal decline from June, with less strength the latter part of July during the uncertainty of the U.S. debt negotiations in Congress. Freight demand in early August returned to levels comparable to the same period in 2010 and weakened modestly in mid-August following heightened concerns about the economy. In the latter part of August and throughout September, we experienced seasonal strengthening in demand. In the aggregate for third quarter 2011, our daily morning ratio of loads to trucks in our one-way truckload network was nearly balanced. We continue to believe that generally favorable truckload freight trends are caused to a greater degree by supply side constraints limiting truckload capacity, as opposed to demand generated by economic activity. Our average revenues per total mile increased 3% in third quarter 2011 compared to third quarter 2010. Contractual rate increases and a better freight mix were the principal reasons for the rate improvement. There was some softness in spot market pricing during third quarter 2011, but spot market pricing improved during September. We continue to be successful in this tightening capacity environment by working jointly with our customers to secure sustainable transportation solutions across all modes. We remain committed to maintaining our fleet size at approximately 7,300 trucks. We are continuing to strengthen and redesign our truckload freight network to optimize and maximize increasing freight opportunities without adding trucks. As a result, we are focused on expanding our operating margin percentage to raise our returns on assets, equity and invested capital, while staying true to our broad transportation services portfolio for our customers. Capacity in our industry remains constrained by both economic and safety regulatory factors. From 2007 to 2010, the number of new class 8 trucks built was well below historical replacement levels for our industry. This led to the oldest average industry truck age in 40 years by the end of 2010. Carriers were compelled to upgrade their aging truck fleets which led to increased replacement purchases of new and later-model used trucks in 2011. However, we do not believe that industry fleet growth is occurring, as some carriers are already struggling to finance the replacement truck upgrade due to the large pricing gap between the significantly increased costs of EPA-complaint new trucks compared to the low value of record-old trucks. The most significant safety regulatory changes in our 55-year history are occurring over the next few years. The federal 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 expected to reduce, or have the effect of reducing, industry capacity. We continue to diversify our business model with the goal of achieving a balanced portfolio of revenues comprised of One-Way Truckload (which includes the Regional, medium-to-long-haul Van and Expedited fleets), Specialized Services and Logistics (VAS). Our Specialized Services unit, primarily Dedicated, ended the quarter with 3,500 trucks (48% of our total fleet). Average diesel fuel prices were $0.91 per gallon higher in third quarter 2011 than in third quarter 2010 and were $0.11 lower than in second quarter 2011. For the first 18 days of October 2011, the average diesel fuel price per gallon was $0.62 higher than the average diesel fuel price per gallon in the same period of 2010 and $0.55 higher than in fourth quarter 2010. We continued to effectively manage the impact of higher fuel costs by improving our fuel miles per gallon ("mpg") by 4.9% in third quarter 2011 compared to third quarter 2010. We are controlling truck idling; optimizing the speed, weight and specifications of our equipment; and implementing fuel enhancing equipment changes to our fleet. We continue to invest in environmentally friendly and fuel-saving equipment solutions such as new trucks with EPA 2010 compliant engines, more aerodynamic truck features, idle reduction systems, tire inflation systems and trailer skirts (including the development of and EPA approval for our own designed "Arrow Shield" trailer skirt) to reduce our fuel gallons purchased and improve our mpg. However, savings from the mpg improvement is partially offset by the additional cost of diesel exhaust fluid and higher depreciation expense. Although our fuel management programs require significant investment and research and development, we remain committed to moving forward with these programs to lower our carbon footprint, improve our operational efficiency and deliver best-in-class performance for our customers. The driver market is increasingly competitive. An improving freight market, changing industry safety regulations and reduced tuition financing options for driving school candidates continue to tighten qualified and student driver supply. We continue to believe our position in the driver market is better than that of many competitors because over 70% of our driving jobs are in more attractive 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 $6.0 million in third quarter 2011 compared to $1.4 million in third quarter 2010 and compared to $5.6 million in second quarter 2011. Our premium used trucks are 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 increased our purchases of new trucks and new trailers to replace older equipment that we sell or trade. However, we have not grown our fleet. Our net capital expenditures for the first nine months of 2011 were $154 million. Net capital expenditures for the full year 2011 are estimated to be $210 to $240 million, compared to net capital expenditures for 2010 of $119 million. During the nine months ended September 30, 2011, we reduced the average age of our company truck fleet from 2.8 years to 2.5 years. We remain committed to the ongoing investment required to maintain a superior fleet while focusing on the lowest-cost operating model for our customers. To provide shippers with additional sources of managed capacity and network analysis, we continue to develop the non-asset-based VAS segment. VAS includes Brokerage, Freight Management, Intermodal and Werner Global Logistics (International).
Value Added Services (amounts in 000's) 3Q11 3Q10 -------------------- ---------------- ---------------- Revenues $76,635 100.0% $64,683 100.0% Rent and purchased transportation expense 64,648 84.4 55,032 85.1 ------- ------- Gross margin 11,987 15.6 9,651 14.9 Other operating expenses 7,913 10.3 6,838 10.6 ------- ------- Operating income $4,074 5.3 $2,813 4.3 ======= =======
The following table shows the change in shipment volume and average revenue (excluding logistics fee revenue) per shipment for all VAS shipments.
3Q11 3Q10 Difference % Change ------- ------- ---------- -------- Total VAS shipments 65,343 63,709 1,634 3% Less: Non-committed shipments to Truckload segment 19,853 20,436 (583) (3)% ------- ------- ---------- Net VAS shipments 45,490 43,273 2,217 5% ======= ======= ========== Average revenue per shipment $1,556 $1,372 $184 13% ======= ======= ==========
Brokerage revenues in third quarter 2011 increased 16% compared to third quarter 2010 due to a 10% increase in shipment volume and a 5% increase in the average revenue per shipment. Brokerage gross margin dollars increased 14%, the gross margin percentage declined by 20 basis points and Brokerage operating income dollars increased 9% year-over- year. Intermodal revenues and gross margins increased 66% while Intermodal operating income increased at a higher percentage rate, comparing third quarter 2011 to third quarter 2010. Werner Global Logistics ("WGL") revenues increased 21% while gross margins and operating income increased at a higher percentage rate in third quarter 2011 compared to third quarter 2010. WGL revenues increased 59% sequentially while gross margins and operating income also improved sequentially over second quarter 2011. Freight Management revenues and the number of shipments declined significantly due to a reduction in customer project business with a specific customer, however the gross margin dollars declined slightly and operating income dollars decreased slightly. Comparisons of the operating ratios (net of fuel surcharge revenues) for the Truckload segment and VAS segment for third quarters 2011 and 2010 and year-to-date 2011 and 2010 are shown below.
Operating Ratios 3Q11 3Q10 Difference ---------------- ----- ----- ---------- Truckload Transportation Services 86.3% 88.8% (2.5)% Value Added Services 94.7 95.7 (1.0) YTD11 YTD10 Difference ----- ----- ---------- Truckload Transportation Services 88.4% 91.3% (2.9)% Value Added Services 94.7 95.7 (1.0)
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 2011 and third quarter 2010 are 89.3% and 90.6%, respectively, and for year-to-date 2011 and 2010 are 91.0% and 92.7%, 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 $56.9 million of cash.
INCOME STATEMENT DATA (Unaudited) (In thousands, except per share amounts) Quarter % of Quarter % of Ended Operating Ended Operating 9/30/11 Revenues 9/30/10 Revenues -------- --------- -------- --------- Operating revenues $509,587 100.0 $463,262 100.0 -------- --------- -------- --------- Operating expenses: Salaries, wages and benefits 132,128 25.9 134,255 29.0 Fuel 103,777 20.4 75,986 16.4 Supplies and maintenance 44,334 8.7 40,730 8.8 Taxes and licenses 23,932 4.7 23,197 5.0 Insurance and claims 15,603 3.1 15,998 3.4 Depreciation 40,197 7.9 37,092 8.0 Rent and purchased transportation 100,081 19.6 91,795 19.8 Communications and utilities 3,846 0.8 4,013 0.9 Other (4,377) (0.9) 51 0.0 -------- --------- -------- --------- Total operating expenses 459,521 90.2 423,117 91.3 -------- --------- -------- --------- Operating income 50,066 9.8 40,145 8.7 -------- --------- -------- --------- Other expense (income): Interest expense 5 0.0 5 0.0 Interest income (337) (0.1) (432) (0.1) Other 52 0.0 (84) (0.0) -------- --------- -------- --------- Total other expense (income) (280) (0.1) (511) (0.1) -------- --------- -------- --------- Income before income taxes 50,346 9.9 40,656 8.8 Income taxes 20,768 4.1 16,498 3.6 -------- --------- -------- --------- Net income $29,578 5.8 $24,158 5.2 ======== ========= ======== ========= Diluted shares outstanding 73,231 72,922 ======== ======== Diluted earnings per share $0.40 $0.33 ======== ======== OPERATING STATISTICS Quarter Ended Quarter Ended 9/30/11 % Change 9/30/10 ------------- -------- ------------- Trucking revenues, net of fuel surcharge (1) $331,346 0.7% $329,200 Trucking fuel surcharge revenues (1) 94,326 49.1% 63,271 Non-trucking revenues,including VAS (1) 79,320 17.3% 67,593 Other operating revenues (1) 4,595 43.7% 3,198 ------------- ------------- Operating revenues (1) $509,587 10.0% $463,262 ============= ============= Average monthly miles per tractor 9,881 -2.0% 10,085 Average revenues per total mile (2) $1.543 2.9% $1.500 Average revenues per loaded mile (2) $1.752 3.7% $1.690 Average percentage of empty miles 11.94% 5.8% 11.29% Average trip length in miles (loaded) 439 1.6% 432 Total miles (loaded and empty) (1) 214,792 -2.2% 219,527 Average tractors in service 7,246 -0.1% 7,256 Average revenues per tractor per week (2) $3,518 0.8% $3,490 Capital expenditures, net (1) $47,660 $30,782 Cash flow from operations (1) $83,309 $43,831 Return on assets (annualized) 9.5% 7.8% Total tractors (at quarter end) Company 6,630 6,660 Independent contractor 620 690 ------------- ------------- Total tractors 7,250 7,350 Total trailers (truck and intermodal, quarter end) 22,925 24,060
(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 9/30/11 Revenues 9/30/10 Revenues ----------- --------- ----------- --------- Operating revenues $1,494,913 100.0 $1,351,806 100.0 ----------- --------- ----------- --------- Operating expenses: Salaries, wages and benefits 400,256 26.8 396,892 29.4 Fuel 312,210 20.9 228,319 16.9 Supplies and maintenance 128,608 8.6 117,418 8.7 Taxes and licenses 70,372 4.7 70,214 5.2 Insurance and claims 50,194 3.3 51,705 3.8 Depreciation 119,161 8.0 112,848 8.3 Rent and purchased transportation 287,183 19.2 268,361 19.9 Communications and utilities 11,612 0.8 11,256 0.8 Other (8,958) (0.6) 838 0.1 ----------- --------- ----------- --------- Total operating expenses 1,370,638 91.7 1,257,851 93.1 ----------- --------- ----------- --------- Operating income 124,275 8.3 93,955 6.9 ----------- --------- ----------- --------- Other expense (income): Interest expense 43 0.0 17 0.0 Interest income (1,027) (0.1) (1,124) (0.1) Other 341 0.0 (128) (0.0) ----------- --------- ----------- --------- Total other expense (income) (643) (0.1) (1,235) (0.1) ----------- --------- ----------- --------- Income before income taxes 124,918 8.4 95,190 7.0 Income taxes 51,529 3.5 39,266 2.9 ----------- --------- ----------- --------- Net income $73,389 4.9 $55,924 4.1 =========== ========= =========== ========= Diluted shares outstanding 73,203 72,747 =========== =========== Diluted earnings per share $1.00 $0.77 =========== =========== OPERATING STATISTICS YTD 11 % Change YTD 10 ---------- -------- ---------- Trucking revenues, net of fuel surcharge (1) $981,502 2.3% $959,386 Trucking fuel surcharge revenues (1) 280,786 52.1% 184,575 Non-trucking revenues,including VAS (1) 219,725 11.2% 197,623 Other operating revenues (1) 12,900 26.2% 10,222 ---------- ---------- Operating revenues (1) $1,494,913 10.6% $1,351,806 ========== ========== Average monthly miles per tractor 9,882 -1.4% 10,026 Average revenues per total mile (2) $1.520 3.5% $1.469 Average revenues per loaded mile (2) $1.721 3.7% $1.660 Average percentage of empty miles 11.67% 1.4% 11.51% Average trip length in miles (loaded) 444 -0.4% 446 Total miles (loaded and empty) (1) 645,568 -1.1% 652,981 Average tractors in service 7,259 0.3% 7,237 Average revenues per tractor per week (2) $3,467 2.0% $3,399 Capital expenditures, net (1) $153,600 $83,097 Cash flow from operations (1) $200,339 $155,247 Return on assets (annualized) 8.1% 6.1% Total tractors (at quarter end) Company 6,630 6,660 Independent contractor 620 690 ---------- ---------- Total tractors 7,250 7,350 Total trailers (truck and intermodal, 22,925 24,060 quarter end)
(1) Amounts in thousands. (2) Net of fuel surcharge revenues.
BALANCE SHEET DATA (In thousands, except share amounts) 9/30/11 12/31/10 ----------- ---------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $56,885 $13,966 Accounts receivable, trade, less allowance of $10,500 and $9,484, respectively 213,505 190,264 Other receivables 7,679 10,431 Inventories and supplies 28,399 16,868 Prepaid taxes, licenses and permits 3,718 14,934 Current deferred income taxes 29,237 27,829 Other current assets 27,319 23,407 ----------- ---------- Total current assets 366,742 297,699 ----------- ---------- Property and equipment 1,581,120 1,549,637 Less - accumulated depreciation 693,694 708,582 ----------- ---------- Property and equipment, net 887,426 841,055 ----------- ---------- Other non-current assets 15,108 12,798 ----------- ---------- $1,269,276 $1,151,552 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $67,831 $57,708 Insurance and claims accruals 64,702 71,857 Accrued payroll 24,597 18,838 Other current liabilities 19,119 20,037 ----------- ---------- Total current liabilities 176,249 168,440 ----------- ---------- Other long-term liabilities 10,707 10,380 Insurance and claims accruals, net of current portion 120,250 113,250 Deferred income taxes 226,764 190,507 Stockholders' equity: Common stock, $.01 par value, 200,000,000 shares authorized; 80,533,536 shares issued; 72,829,701 and 72,644,998 shares outstanding, respectively 805 805 Paid-in capital 93,680 91,872 Retained earnings 790,685 728,216 Accumulated other comprehensive loss (4,660) (3,420) Treasury stock, at cost; 7,703,835 and 7,888,538 shares, respectively (145,204) (148,498) ----------- ---------- Total stockholders equity' 735,306 668,975 ----------- ---------- $1,269,276 $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.