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| 8-K - 8-K - WERNER ENTERPRISES INC | wern-2016331x8k.htm |
Exhibit 99.1
Werner Enterprises, Inc. | Contact: | John J. Steele |
14507 Frontier Road | Executive Vice President, Treasurer | |
P. O. Box 45308 | and Chief Financial Officer | |
Omaha, NE 68145 | (402) 894-3036 | |
FOR IMMEDIATE RELEASE
WERNER ENTERPRISES REPORTS FIRST QUARTER 2016 REVENUES AND EARNINGS
(In thousands, except per share amounts) | Three Months Ended March 31, | |||||||||
2016 | 2015 | % Change | ||||||||
Total revenues | $ | 482,802 | $ | 495,654 | (3 | )% | ||||
Trucking revenues, net of fuel surcharge | 336,707 | 329,134 | 2 | % | ||||||
Value Added Services (“VAS”) revenues | 96,577 | 90,860 | 6 | % | ||||||
Operating income | 32,487 | 38,185 | (15 | )% | ||||||
Net income | 20,092 | 23,142 | (13 | )% | ||||||
Earnings per diluted share | 0.28 | 0.32 | (13 | )% | ||||||
OMAHA, NEBRASKA, April 20, 2016 - 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, 2016.
Our first quarter 2016 freight demand was softer than the first quarters of 2015 and 2014; however, it was consistent with our average freight demand in the first quarters of 2013 and 2012. Demand showed normal seasonality in first quarter 2016. Freight demand to date in April 2016 has been sluggish and softer than most April periods.
Average revenues per tractor per week, net of fuel surcharge, decreased 2.4% in first quarter 2016 compared to first quarter 2015 due to a 1.5% decrease in average miles per truck combined with a 0.9% decrease in average revenues per total mile, net of fuel surcharge.
The rate market was challenging in first quarter 2016. While truckload capacity is currently available in the market, we believe significantly lower truck orders in recent months combined with the upcoming changes in trucking regulations should begin to tighten the capacity market in the next few quarters. We are continuing to work with our customers to recoup the cost increases associated with more expensive equipment, a shrinking supply of qualified drivers and an increasingly challenging regulatory environment. Recent customer bid activity trends have been mixed, as some customers are aggressively working to take advantage of the favorable shorter term trends to the detriment of carriers. Based on the current rate and freight market, we believe it may be difficult to achieve rate per total mile increases on a year-over-year basis in the next few quarters. Strategic customers understand the collective capacity and service challenges facing our industry and their supply chains. They are supportive of our ongoing initiatives to provide sustainable transportation solutions over the longer term.
Werner Enterprises, Inc. - Release of April 20, 2016
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In first quarter 2016, we averaged 7,352 trucks in service in the Truckload segment and 68 intermodal drayage trucks in the VAS segment. We ended first quarter 2016 with 7,330 trucks in the Truckload segment, a year-over-year improvement of 220 trucks, or 3.1%, compared to the end of first quarter 2015. Our Specialized Services unit, primarily Dedicated, ended first quarter 2016 with 3,760 trucks (or 51% of our total Truckload segment fleet).
By design, we did not grow our truck fleet sequentially from fourth quarter 2015 to first quarter 2016. A less robust seasonal freight period in first quarter 2016 combined with our more stringent driver hiring and retention standards were the primary factors. We are committed to executing our strategic business plan by remaining focused on our “five T” critical success factors: trucks, trailers, talent, technology and terminals. We will continue to aggressively reinvest in these areas to strengthen our service offerings and provide our customers with the capacity and support they need.
Our investment in new trucks and trailers is improving our driver experience, raising operational efficiency and helping us to better manage our maintenance, safety and fuel costs. We are increasing our capital expenditures in 2016 to further lower the average age of our truck fleet and attained an average age of 1.8 years as of March 31, 2016, which compares to an average age of 2.1 years as of March 31, 2015. We remain on track to meet our goal of an average truck age of approximately 1.5 years as of December 31, 2016. Net capital expenditures in first quarter 2016 were $101.6 million compared to $84.9 million in first quarter 2015. We estimate net capital expenditures for 2016 to be in the range of $400 million to $450 million. We remain committed to investing in a best in class fleet for the benefit of our customers, our drivers and the Werner brand.
The driver recruiting market remained challenging during first quarter 2016. Several ongoing difficult market factors persist including a declining number of, and increased competition for, driver training school graduates, a gradually declining national unemployment rate, aging truck driver demographics and increased truck safety regulations. During fourth quarter 2015, we announced strategic and targeted driver and owner-operator per mile increases in our Van 48-state business units totaling slightly more than $10 million on an annualized basis to nearly 20% of our drivers/owner-operators. We are beginning to realize the cost benefits of improved retention, mileage productivity, and lower safety costs which we believe will ultimately more than offset these pay increases. Our driver turnover rate achieved a 17 year low in first quarter 2016.
Gains on sales of assets were $3.4 million in first quarter 2016. This compares to gains on sales of assets of $5.5 million in first quarter 2015. In first quarter 2016, we sold more trucks and more trailers than in first quarter 2015. We realized significantly lower average gains per truck and higher average gains per trailer in first quarter 2016 compared to first quarter 2015. During December 2015, a buyer backed out of a signed purchase commitment for several hundred used trucks which ultimately resulted in a sizable reduction in our equipment gains in the first quarter 2016. We are evaluating our available options to resolve this matter with the buyer for this canceled order. Gains on sales of assets are reflected as a reduction of Other Operating Expenses in our income statement.
Diesel fuel prices were 68 cents per gallon lower in first quarter 2016 than in first quarter 2015 and were 33 cents per gallon lower than in fourth quarter 2015. For the first 20 days of April 2016, the average diesel fuel price per gallon was 54 cents lower than the average diesel fuel price per gallon in the same period of 2015 and 66 cents lower than in second quarter 2015. The components of the Company’s total fuel cost consist of and are recorded in our income statement as follows: (i) Fuel (fuel expense for company trucks excluding federal and state fuel taxes); (ii) Taxes and Licenses (federal and state fuel taxes); and (iii) Rent and Purchased Transportation (fuel component of our independent contractor costs, including the base cost of fuel and additional fuel surcharge reimbursement for costs exceeding the fuel base).
To provide shippers with additional sources of managed capacity and network analysis, we continue to develop our non-asset-based VAS segment. VAS includes Brokerage, Freight Management, Intermodal and Werner Global Logistics (International).
Werner Enterprises, Inc. - Release of April 20, 2016
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Three Months Ended March 31, | |||||||||||
2016 | 2015 | ||||||||||
Value Added Services (amounts in thousands) | $ | % | $ | % | |||||||
Operating revenues | $ | 96,577 | 100.0 | $ | 90,860 | 100.0 | |||||
Rent and purchased transportation expense | 79,384 | 82.2 | 77,873 | 85.7 | |||||||
Gross margin | 17,193 | 17.8 | 12,987 | 14.3 | |||||||
Other operating expenses | 12,158 | 12.6 | 10,538 | 11.6 | |||||||
Operating income | $ | 5,035 | 5.2 | $ | 2,449 | 2.7 | |||||
In first quarter 2016, VAS revenues increased $5.7 million or 6%, and operating income dollars increased $2.6 million or 106%, compared to first quarter 2015. The VAS gross margin percentage in first quarter 2016 of 17.8% improved 351 basis points year over year compared to the gross margin percentage of 14.3% in first quarter 2015. The VAS operating income percentage in first quarter 2016 of 5.2% improved 252 basis points from first quarter 2015 of 2.7%.
Comparisons of the operating ratios for the Truckload segment (net of fuel surcharge revenues of $30.7 million and $56.4 million in first quarters 2016 and 2015, respectively) and the VAS segment are shown below.
Three Months Ended March 31, | ||||||||
Operating Ratios | 2016 | 2015 | Difference | |||||
Truckload Transportation Services | 90.5 | % | 89.3 | % | 1.2 | % | ||
Value Added Services | 94.8 | % | 97.3 | % | (2.5 | )% | ||
Fluctuating fuel prices and fuel surcharge revenues 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 2016 and first quarter 2015 are 91.3% and 90.8% respectively, when fuel surcharge revenues are reported as revenues instead of a reduction of operating expenses.
Our financial position remains strong. As of March 31, 2016, we had $75.0 million of debt outstanding and $950.0 million of stockholders’ equity.
Werner Enterprises, Inc. - Release of April 20, 2016
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INCOME STATEMENT | |||||||||||||
(Unaudited) | |||||||||||||
(In thousands, except per share amounts) | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2016 | 2015 | ||||||||||||
$ | % | $ | % | ||||||||||
Operating revenues | $ | 482,802 | 100.0 | $ | 495,654 | 100.0 | |||||||
Operating expenses: | |||||||||||||
Salaries, wages and benefits | 156,737 | 32.5 | 151,465 | 30.6 | |||||||||
Fuel | 32,060 | 6.6 | 52,760 | 10.6 | |||||||||
Supplies and maintenance | 47,115 | 9.8 | 47,657 | 9.6 | |||||||||
Taxes and licenses | 20,987 | 4.4 | 21,080 | 4.3 | |||||||||
Insurance and claims | 18,347 | 3.8 | 22,047 | 4.4 | |||||||||
Depreciation | 50,164 | 10.4 | 45,720 | 9.2 | |||||||||
Rent and purchased transportation | 117,976 | 24.4 | 113,748 | 23.0 | |||||||||
Communications and utilities | 3,909 | 0.8 | 3,678 | 0.7 | |||||||||
Other | 3,020 | 0.6 | (686 | ) | (0.1 | ) | |||||||
Total operating expenses | 450,315 | 93.3 | 457,469 | 92.3 | |||||||||
Operating income | 32,487 | 6.7 | 38,185 | 7.7 | |||||||||
Other expense (income): | |||||||||||||
Interest expense | 494 | 0.1 | 475 | 0.1 | |||||||||
Interest income | (990 | ) | (0.2 | ) | (631 | ) | (0.1 | ) | |||||
Other | 45 | — | 90 | — | |||||||||
Total other expense (income) | (451 | ) | (0.1 | ) | (66 | ) | — | ||||||
Income before income taxes | 32,938 | 6.8 | 38,251 | 7.7 | |||||||||
Income taxes | 12,846 | 2.6 | 15,109 | 3.0 | |||||||||
Net income | $ | 20,092 | 4.2 | $ | 23,142 | 4.7 | |||||||
Diluted shares outstanding | 72,353 | 72,542 | |||||||||||
Diluted earnings per share | $ | 0.28 | $ | 0.32 | |||||||||
SEGMENT INFORMATION | |||||||||
(Unaudited) | |||||||||
(In thousands) | |||||||||
Three Months Ended March 31, | |||||||||
2016 | 2015 | ||||||||
Revenues | |||||||||
Truckload Transportation Services | $ | 372,917 | $ | 390,563 | |||||
Value Added Services | 96,577 | 90,860 | |||||||
Other | 13,178 | 13,985 | |||||||
Corporate | 373 | 521 | |||||||
Subtotal | 483,045 | 495,929 | |||||||
Inter-segment eliminations (1) | (243 | ) | (275 | ) | |||||
Total | $ | 482,802 | $ | 495,654 | |||||
Operating Income | |||||||||
Truckload Transportation Services | $ | 32,359 | $ | 35,842 | |||||
Value Added Services | 5,035 | 2,449 | |||||||
Other | (1,934 | ) | (445 | ) | |||||
Corporate | (2,973 | ) | 339 | ||||||
Total | $ | 32,487 | $ | 38,185 | |||||
(1) Inter-segment eliminations represent transactions between reporting segments that are eliminated in consolidation.
Werner Enterprises, Inc. - Release of April 20, 2016
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OPERATING STATISTICS BY SEGMENT | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended March 31, | |||||||||||
2016 | 2015 | % Change | |||||||||
Truckload Transportation Services segment | |||||||||||
Average percentage of empty miles | 13.27 | % | 12.15 | % | 9.2 | % | |||||
Average trip length in miles (loaded) | 472 | 482 | (2.1 | )% | |||||||
Average tractors in service | 7,352 | 7,013 | 4.8 | % | |||||||
Average revenues per tractor per week (1) | $ | 3,523 | $ | 3,610 | (2.4 | )% | |||||
Total trailers (at quarter end) | 22,335 | 22,000 | |||||||||
Total tractors (at quarter end) | |||||||||||
Company | 6,430 | 6,460 | |||||||||
Independent contractor | 900 | 650 | |||||||||
Total tractors | 7,330 | 7,110 | |||||||||
Value Added Services segment | |||||||||||
Average tractors in service | 68 | 50 | |||||||||
Total trailers (at quarter end) | 1,605 | 1,805 | |||||||||
Total tractors (at quarter end) | 68 | 50 | |||||||||
(1) Net of fuel surcharge revenues.
SUPPLEMENTAL INFORMATION | ||||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Capital expenditures, net | $ | 101,603 | $ | 84,865 | ||||
Cash flow from operations | 91,319 | 120,986 | ||||||
Return on assets (annualized) (1) | 5.1 | % | 6.3 | % | ||||
Return on equity (annualized) | 8.5 | % | 11.0 | % | ||||
(1) Pursuant to the Company’s early adoption of Accounting Standards Update 2015-17 (see explanatory note on the Condensed Balance Sheet), return on assets for all periods presented reflects the impact of reclassifying the current deferred tax asset into the non-current deferred tax liability.
Werner Enterprises, Inc. - Release of April 20, 2016
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CONDENSED BALANCE SHEET | |||||||
(In thousands, except share amounts) | |||||||
March 31, 2016 | December 31, 2015 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 20,410 | $ | 31,833 | |||
Accounts receivable, trade, less allowance of $8,797 and $10,298, respectively | 235,763 | 251,023 | |||||
Other receivables | 17,769 | 17,241 | |||||
Inventories and supplies | 15,670 | 16,415 | |||||
Prepaid taxes, licenses and permits | 11,953 | 15,657 | |||||
Income taxes receivable | 14,709 | 20,052 | |||||
Other current assets | 27,504 | 27,281 | |||||
Total current assets | 343,778 | 379,502 | |||||
Property and equipment | 1,951,258 | 1,908,600 | |||||
Less – accumulated depreciation | 750,068 | 754,130 | |||||
Property and equipment, net | 1,201,190 | 1,154,470 | |||||
Other non-current assets | 64,597 | 51,675 | |||||
Total assets | $ | 1,609,565 | $ | 1,585,647 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 78,069 | $ | 70,643 | |||
Insurance and claims accruals | 65,387 | 64,106 | |||||
Accrued payroll | 25,292 | 25,233 | |||||
Other current liabilities | 21,892 | 23,720 | |||||
Total current liabilities | 190,640 | 183,702 | |||||
Long-term debt, net of current portion | 75,000 | 75,000 | |||||
Other long-term liabilities | 20,823 | 19,832 | |||||
Insurance and claims accruals, net of current portion | 120,945 | 125,195 | |||||
Deferred income taxes (1) | 252,187 | 246,264 | |||||
Stockholders’ equity: | |||||||
Common stock, $.01 par value, 200,000,000 shares authorized; 80,533,536 | |||||||
shares issued; 72,043,671 and 71,998,750 shares outstanding, respectively | 805 | 805 | |||||
Paid-in capital | 101,217 | 102,734 | |||||
Retained earnings | 1,038,736 | 1,022,966 | |||||
Accumulated other comprehensive loss | (13,742 | ) | (13,063 | ) | |||
Treasury stock, at cost; 8,489,865 and 8,534,786 shares, respectively | (177,046 | ) | (177,788 | ) | |||
Total stockholders’ equity | 949,970 | 935,654 | |||||
Total liabilities and stockholders’ equity | $ | 1,609,565 | $ | 1,585,647 | |||
(1) In November 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-17, which requires presentation of deferred tax assets and liabilities as non-current in the balance sheet beginning January 1, 2017. The Company early-adopted the guidance in 2016 and retrospectively adjusted the December 31, 2015 presentation by reclassifying a $28.0 million current deferred tax asset into the non-current liability “Deferred income taxes”.
Werner Enterprises, Inc. - Release of April 20, 2016
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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 van, temperature-controlled and flatbed; medium-to-long-haul, regional and local van; and expedited 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, 2015.
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.