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 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.
