Attached files
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 RECORD QUARTERLY
EARNINGS PER SHARE IN SECOND QUARTER 2011
Omaha, Nebraska, July 20, 2011:
------------------------------
Werner Enterprises, Inc. (NASDAQ: WERN) one of the nation's largest
transportation and logistics companies, reported revenues and earnings
for the second quarter ended June 30, 2011.
Summarized financial results for second quarter and year-to-date
2011 compared to the same periods of 2010 are as follows (dollars in
thousands, except per share data):
2Q11 2Q10 % Change YTD11 YTD10 % Change
-------- -------- -------- -------- -------- --------
Total revenues $515,897 $463,469 11% $985,326 $888,544 11%
Trucking revenues, net
of fuel surcharge $333,709 $326,518 2% $650,156 $630,186 3%
Value Added Services
("VAS") revenues $71,227 $65,066 9% $134,800 $126,466 7%
Operating income $46,767 $35,546 32% $74,209 $53,810 38%
Net income $27,518 $20,930 31% $43,811 $31,766 38%
Earnings per diluted
share $0.38 $0.29 31% $0.60 $0.44 37%
Werner produced continued strong earnings growth of 31% in second
quarter 2011 compared to second quarter 2010 despite sluggish freight
demand in the first two months of second quarter 2011 compared to strong
freight demand throughout second quarter 2010. Freight volumes
strengthened in June 2011 from April and May. We continue to believe
that favorable truckload trends are caused to a greater degree by
industry capacity constraints than economic recovery.
Our average revenues per total mile increased 3.1% in second
quarter 2011 compared to second quarter 2010. Contractual rate
increases and a better freight mix were the principal reasons for the
rate improvement. 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 will continue 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 trucks
purchased 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 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 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),
Specialized Services 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 $0.97 per gallon higher in second
quarter 2011 than in second quarter 2010 and were $0.30 higher than in
first quarter 2011. For the first 20 days of July 2011, the average
diesel fuel price per gallon was $1.05 higher than the average diesel
fuel price per gallon in the same period of 2010 and $0.98 higher than
in third quarter 2010. Diesel fuel prices rose rapidly in first quarter
2011 and April 2011 and then began to decline in May 2011. Diesel fuel
prices declined in the second half of second quarter 2010 and remained
relatively constant during third 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 surcharges.
We continued to effectively manage the impact of higher fuel costs
by improving our fuel miles per gallon ("mpg") by controlling truck
idling and implementing fuel 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 (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.
The driver market is increasingly more competitive compared to 2010
and to first quarter 2011. An improving freight market, 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 for the
remainder of 2011. 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 of sales of equipment were $5.6 million in second quarter
2011 compared to $0.5 million in second quarter 2010 and compared to
$4.8 million in first quarter 2011. 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 increasing our purchases of new trucks and new
trailers to replace older equipment that we sell or trade. However, we
are not growing our fleet. Our net capital expenditures for 2011 are
estimated to be $210 to $240 million, compared to net capital
expenditures for 2010 of $119 million. During the six months ended June
30, 2011, we reduced the average age of our company truck fleet from 2.8
years to 2.6 years. 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.
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) 2Q11 2Q10
-------------------- ---------------- ----------------
Revenues $71,227 100.0% $65,066 100.0%
Rent and purchased
transportation expense 60,385 84.8 56,033 86.1
------- -------
Gross margin 10,842 15.2 9,033 13.9
Other operating expenses 7,123 10.0 6,687 10.3
------- -------
Operating income $3,719 5.2 $2,346 3.6
======= =======
The following table shows the change in shipment volume and average
revenue (excluding logistics fee revenue) per shipment for all VAS
shipments.
2Q11 2Q10 Difference % Change
------- ------- ---------- --------
Total VAS shipments 63,671 69,978 (6,307) (9)%
Less: Non-committed
shipments to Truckload
segment 20,247 26,514 (6,267) (24)%
------- ------- ----------
Net VAS shipments 43,424 43,464 (40) (0)%
======= ======= ==========
Average revenue per shipment $1,531 $1,332 $199 15%
======= ======= ==========
Brokerage revenues in second quarter 2011 increased 22% compared to
second quarter 2010 due to a 12% increase in shipment volume and a 9%
increase in the average revenue per shipment. Brokerage gross margin
dollars increased 26% as the gross margin percentage improved 44 basis
points year-over-year, and operating income increased 47%.
Sequentially, the Brokerage gross margin percentage declined to 12.8% in
second quarter 2011 from 13.7% in first quarter 2011. Intermodal
revenues increased 37% while intermodal gross margins and operating
income increased at a higher percentage rate, comparing second quarter
2011 to second quarter 2010. Werner Global Logistics (WGL) revenues
declined 8% while operating results improved in second quarter 2011
compared to second quarter 2010. WGL revenues increased 22%
sequentially while gross margins and operating income also improved
sequentially over first quarter 2011. Several international projects
ended during the latter part of second quarter 2010 which caused the
year over year revenue decline. 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 only slightly and operating income dollars
increased slightly.
Comparisons of the operating ratios (net of fuel surcharge
revenues) for the Truckload segment and VAS segment for second quarters
2011 and 2010 and year-to-date 2011 and 2010 are shown below.
Operating Ratios 2Q11 2Q10 Difference
---------------- ----- ----- ----------
Truckload Transportation Services 86.7% 90.2% (3.5)%
Value Added Services 94.8 96.4 (1.6)
YTD11 YTD10 Difference
----- ----- ----------
Truckload Transportation Services 89.5% 92.6% (3.1)%
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
second quarter 2011 and second quarter 2010 are 89.8% and 91.9%,
respectively, and for year-to-date 2011 and 2010 are 91.8% and 93.8%,
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 $23.5 million of cash.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Quarter % of Quarter % of
Ended Operating Ended Operating
6/30/11 Revenues 6/30/10 Revenues
-------- --------- -------- ---------
Operating revenues $515,897 100.0 $463,469 100.0
-------- --------- -------- ---------
Operating expenses:
Salaries, wages and benefits 135,265 26.2 134,303 29.0
Fuel 110,502 21.4 78,452 16.9
Supplies and maintenance 43,085 8.4 39,012 8.4
Taxes and licenses 23,414 4.5 23,560 5.1
Insurance and claims 16,531 3.2 18,869 4.1
Depreciation 39,246 7.6 37,471 8.1
Rent and purchased transportation 98,605 19.1 91,881 19.8
Communications and utilities 3,843 0.8 3,494 0.7
Other (1,361) (0.3) 881 0.2
-------- --------- -------- ---------
Total operating expenses 469,130 90.9 427,923 92.3
-------- --------- -------- ---------
Operating income 46,767 9.1 35,546 7.7
-------- --------- -------- ---------
Other expense (income):
Interest expense 10 0.0 3 0.0
Interest income (345) (0.1) (355) (0.0)
Other 263 0.1 (33) (0.0)
-------- --------- -------- ---------
Total other expense(income) (72) (0.0) (385) (0.0)
-------- --------- -------- ---------
Income before income taxes 46,839 9.1 35,931 7.7
Income taxes 19,321 3.8 15,001 3.2
-------- --------- -------- ---------
Net income $27,518 5.3 $20,930 4.5
======== ========= ======== =========
Diluted shares outstanding 73,239 72,767
======== ========
Diluted earnings per share $0.38 $0.29
======== ========
OPERATING STATISTICS
Quarter Ended Quarter Ended
6/30/11 % Change 6/30/10
------------- -------- -------------
Trucking revenues, net of fuel surcharge (1) $333,709 2.2% $326,518
Trucking fuel surcharge revenues (1) 103,187 55.8% 66,245
Non-trucking revenues, including VAS (1) 74,240 11.1% 66,842
Other operating revenues (1) 4,761 23.2% 3,864
------------- -------------
Operating revenues (1) $515,897 11.3% $463,469
============= =============
Average monthly miles per tractor 10,059 -1.6% 10,222
Average revenues per total mile (2) $1.516 3.1% $1.470
Average revenues per loaded mile (2) $1.719 3.6% $1.660
Average percentage of empty miles 11.80% 3.1% 11.45%
Average trip length in miles (loaded) 441 -2.4% 452
Total miles (loaded and empty) (1) 220,142 -0.9% 222,139
Average tractors in service 7,295 0.7% 7,244
Average revenues per tractor per week (2) $3,519 1.5% $3,467
Capital expenditures, net (1) $85,886 $41,441
Cash flow from operations (1) $63,230 $46,454
Return on assets (annualized) 9.1% 6.9%
Total tractors (at quarter end)
Company 6,675 6,515
Independent contractor 625 695
------------- -------------
Total tractors 7,300 7,210
Total trailers (truck and intermodal,
quarter end) 23,320 23,900
(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Six Months % of Six Months % of
Ended Operating Ended Operating
6/30/11 Revenues 6/30/10 Revenues
---------- --------- ---------- ---------
Operating revenues $985,326 100.0 $888,544 100.0
---------- --------- ---------- ---------
Operating expenses:
Salaries, wages and benefits 268,128 27.2 262,637 29.6
Fuel 208,433 21.2 152,333 17.1
Supplies and maintenance 84,274 8.6 76,688 8.6
Taxes and licenses 46,440 4.7 47,017 5.3
Insurance and claims 34,591 3.5 35,707 4.0
Depreciation 78,964 8.0 75,756 8.5
Rent and purchased transportation 187,102 19.0 176,566 19.9
Communications and utilities 7,766 0.8 7,243 0.8
Other (4,581) (0.5) 787 0.1
---------- --------- ---------- ---------
Total operating expenses 911,117 92.5 834,734 93.9
---------- --------- ---------- ---------
Operating income 74,209 7.5 53,810 6.1
---------- --------- ---------- ---------
Other expense (income):
Interest expense 38 0.0 12 0.0
Interest income (690) (0.0) (692) (0.0)
Other 289 0.0 (44) (0.0)
---------- --------- ---------- ---------
Total other expense (income) (363) (0.0) (724) (0.0)
---------- --------- ---------- ---------
Income before income taxes 74,572 7.5 54,534 6.1
Income taxes 30,761 3.1 22,768 2.5
---------- --------- ---------- ---------
Net income $43,811 4.4 $31,766 3.6
========== ========= ========== =========
Diluted shares outstanding 73,190 72,658
========== ==========
Diluted earnings per share $0.60 $0.44
========== ==========
OPERATING STATISTICS
YTD 11 % Change YTD 10
-------- -------- --------
Trucking revenues, net of fuel surcharge (1) $650,156 3.2% $630,186
Trucking fuel surcharge revenues (1) 186,460 53.7% 121,304
Non-trucking revenues, including VAS (1) 140,405 8.0% 130,030
Other operating revenues (1) 8,305 18.2% 7,024
-------- --------
Operating revenues (1) $985,326 10.9% $888,544
======== ========
Average monthly miles per tractor 9,882 -1.1% 9,996
Average revenues per total mile (2) $1.509 3.8% $1.454
Average revenues per loaded mile (2) $1.706 3.7% $1.645
Average percentage of empty miles 11.54% -0.7% 11.62%
Average trip length in miles (loaded) 446 -1.8% 454
Total miles (loaded and empty) (1) 430,776 -0.6% 433,454
Average tractors in service 7,265 0.5% 7,227
Average revenues per tractor per week (2) $3,442 2.7% $3,353
Capital expenditures, net (1) $105,940 $52,315
Cash flow from operations (1) $117,030 $111,416
Return on assets (annualized) 7.4% 5.3%
Total tractors (at quarter end)
Company 6,675 6,515
Independent contractor 625 695
-------- --------
Total tractors 7,300 7,210
Total trailers (truck and intermodal, 23,320 23,900
quarter end)
(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
BALANCE SHEET DATA
(In thousands, except share amounts)
6/30/11 12/31/10
----------- ----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $23,483 $13,966
Accounts receivable, trade, less allowance of
$10,156 and $9,484, respectively 213,250 190,264
Other receivables 10,585 10,431
Inventories and supplies 24,973 16,868
Prepaid taxes, licenses and permits 7,298 14,934
Current deferred income taxes 29,084 27,829
Other current assets 26,204 23,407
----------- ----------
Total current assets 334,877 297,699
----------- ----------
Property and equipment 1,577,067 1,549,637
Less - accumulated depreciation 701,289 708,582
----------- ----------
Property and equipment, net 875,778 841,055
----------- ----------
Other non-current assets 12,480 12,798
----------- ----------
$1,223,135 $1,151,552
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $66,046 $57,708
Insurance and claims accruals 65,609 71,857
Accrued payroll 21,084 18,838
Other current liabilities 17,203 20,037
----------- ----------
Total current liabilities 169,942 168,440
----------- ----------
Other long-term liabilities 10,907 10,380
Insurance and claims accruals, net of current portion 117,750 113,250
Deferred income taxes 214,302 190,507
Stockholders' equity:
Common stock, $.01 par value, 200,000,000 shares
authorized; 80,533,536 shares issued; 72,805,115
and 72,644,998 shares outstanding, respectively 805 805
Paid-in capital 93,029 91,872
Retained earnings 764,748 728,216
Accumulated other comprehensive loss (2,696) (3,420)
Treasury stock, at cost; 7,728,421 and 7,888,538
shares, respectively (145,652) (148,498)
----------- ----------
Total stockholders' equity 710,234 668,975
----------- ----------
$1,223,135 $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.
