OMAHA, Neb.--(BUSINESS WIRE)--Apr. 21, 2014--
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, 2014.
Summarized financial results for first quarter 2014 compared to first
quarter 2013 are as follows (dollars in thousands, except per share
data):
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
Total revenues
|
|
$
|
492,022
|
|
|
$
|
492,887
|
|
|
0%
|
|
Trucking revenues, net of fuel surcharge
|
|
311,522
|
|
|
313,400
|
|
|
(1)%
|
|
Value Added Services (“VAS”) revenues
|
|
85,154
|
|
|
82,510
|
|
|
3%
|
|
Operating income
|
|
23,441
|
|
|
28,693
|
|
|
(18)%
|
|
Net income
|
|
14,339
|
|
|
17,511
|
|
|
(18)%
|
|
Earnings per diluted share
|
|
0.20
|
|
|
0.24
|
|
|
(17)%
|
|
|
|
|
|
|
|
|
|
|
|
First quarter 2014 freight demand (as measured by the daily morning
ratio of loads to trucks in our One-Way Truckload network) showed the
strongest first quarter performance in 10 years. A combination of
several factors contributed to the demand strength, including (1) the
early timing of the 2014 Chinese New Year, (2) relatively lean retail
customer inventory levels following the fourth quarter 2013 holiday
season, (3) multiple severe winter storms that created a backlog of
truckload freight shipments and also caused some severely delayed
intermodal freight shipments to shift to truckload, (4) the preamble of
a strong December 2013 freight market and (5) a tightening of truck
capacity due to increasing trucking company failures, an extremely
challenging driver market, expensive new trucks and increasing federal
safety regulations. Excluding the first three non-recurring factors
listed, we are seeing a meaningful improvement in our freight demand,
which we believe is a longer-term shift in market dynamics.
Average revenues per total mile, net of fuel surcharge, rose 3.1% in
first quarter 2014 compared to first quarter 2013. This is due to a
combination of increased rates with some existing customers, new
customer business, surcharges for capacity creation and higher
transactional spot market rates in the One-Way Truckload fleet. We are
in the process of negotiating rate increases with many customers during
the traditionally substantial spring bid season. Market responsiveness
to the collective capacity and service challenges facing the industry
has been very favorable, as our strategic customers want to ensure we
are providing sustainable transportation solutions across all modes.
During first quarter 2014, we continued to increase our emphasis on
minimizing empty miles and maximizing utilization in our One-Way
Truckload fleet. We improved our total company empty mile percentage 106
basis points in first quarter 2014 compared to first quarter 2013.
Average monthly miles per truck declined 1.5% in first quarter 2014
compared to first quarter 2013; however, truck miles were hampered in
first quarter 2014 by several severe winter storms, during which we
chose safety over productivity. We were encouraged by mileage trends as
the current quarter progressed and the weather issues began to subside
in March. Total miles during first quarter 2014 compared to first
quarter 2013 declined 6.6% in January, declined 5.8% in February and
increased 1.5% in March. The Federal Motor Carrier Safety
Administration's revised driver hours of service ("HOS”) rules became
effective July 1, 2013. Among the changes were more restrictive
requirements covering driver use of the 34-hour restart rule and a new
mandatory 30-minute rest period after 8 hours on duty. We believe that
these HOS changes negatively impacted miles per truck by two to three
percent. We continue to work closely with customers and drivers to
minimize the impact of these changes and obtain adequate rate relief. In
addition to the HOS changes, truck mix changes (more Specialized
Services, less One-Way Truckload) also affected truck utilization.
Harsh winter weather in first quarter 2014 also caused higher expenses
in several categories. As we noted in our Form 10-K filing on February
25, 2014, severe snow, ice and cold weather in multiple geographic
regions caused a significant increase in costs in January and February
2014 in the areas of operating supplies and maintenance, insurance and
claims, fuel (due to increased truck idling) and the impact of higher
fixed costs per mile due to lower miles per truck.
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 short-haul Regional, medium-to-long-haul Van and Expedited
fleets), Specialized Services and Logistics (VAS). In first quarter
2014, we averaged 7,004 trucks in service in the Truckload segment and
47 intermodal drayage trucks in the VAS segment. We ended the quarter
with 7,080 trucks in the Truckload segment and 45 intermodal drayage
trucks in the VAS segment. Our Specialized Services unit, primarily
Dedicated, ended the quarter with 3,525 trucks (or 50% of our total
Truckload segment fleet).
Diesel fuel prices were 4 cents per gallon lower in first quarter 2014
than in first quarter 2013 and were 9 cents per gallon higher than in
fourth quarter 2013. For the first 21 days of April 2014, the average
diesel fuel price per gallon was 6 cents higher than the average diesel
fuel price per gallon in the same period of 2013 and 10 cents higher
than in second quarter 2013. 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 fuel costs decline at a
faster pace than the market indexes used to determine fuel surcharges.
Diesel fuel prices declined in second quarter 2013 from first quarter
2013 which caused a two cent per company mile reduction in net fuel
costs in second quarter 2013 compared to first quarter 2013. 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).
Capacity in our industry remains constrained by economic and safety
regulatory factors. Following the 2008 recession, class 8 truck builds
have been low, resulting in an industry average truck age that remains
historically high at 6.5 years. It is very difficult for many smaller
and medium size private carriers to replace their older, lower-value
trucks with much higher cost, EPA-compliant new trucks, which
significantly reduces the risk of trucks being added to the market. We
reduced the average age of our much younger truck fleet by half a year
during 2011 and 2012, with net capital expenditures totaling $457
million during that two-year period. The significantly higher cost of
new trucks and resulting higher depreciation expense and related diesel
exhaust fluid costs is not being recovered through a single year
customer rate review cycle. We continue to invest in equipment solutions
including more aerodynamic truck features, idle reduction systems, tire
inflation systems and trailer skirts to improve the mile per gallon
efficiency of our fleet. Net capital expenditures in first quarter 2014
were $16 million. We estimate net capital expenditures for the year 2014
to be in the range of $150 to $200 million. The average age of our truck
fleet as of March 31, 2014, was 2.5 years, and our goal for year end
2014 is an average truck age in the range of 2.3 years to 2.5 years. 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 and retention market remained extremely
challenging during first quarter 2014. Significant difficult factors
included a declining number of, and increased competition for, driver
training school graduates, a gradually declining national unemployment
rate, and increased job competition from the strengthening housing
construction and hydraulic fracturing markets. We expect the driver
market to become more problematic as the year progresses.
Gains on sales of assets were $4.6 million in first quarter 2014. This
compares to gains on sales of assets of $3.5 million in first quarter
2013 and $3.7 million in fourth quarter 2013, which included a $0.7
million gain from the sale of real estate. In first quarter 2014, we
realized lower average gains per truck and sold more trucks and trailers
compared to first quarter 2013. Gains on sales of assets are reflected
as a reduction of Other Operating Expenses in our income statement.
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).
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2014
|
|
2013
|
Value Added Services (amounts in thousands)
|
|
$
|
|
%
|
|
$
|
|
%
|
Operating revenues
|
|
$
|
85,154
|
|
|
100.0
|
|
|
$
|
82,510
|
|
|
100.0
|
Rent and purchased transportation expense
|
|
72,554
|
|
|
85.2
|
|
|
69,197
|
|
|
83.9
|
Gross margin
|
|
12,600
|
|
|
14.8
|
|
|
13,313
|
|
|
16.1
|
Other operating expenses
|
|
10,745
|
|
|
12.6
|
|
|
9,700
|
|
|
11.7
|
Operating income
|
|
$
|
1,855
|
|
|
2.2
|
|
|
$
|
3,613
|
|
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In first quarter 2014, VAS revenues increased $2.6 million or 3%, and
operating income dollars decreased $1.8 million or 49%, compared to
first quarter 2013. The increase in VAS revenues was due primarily to an
increase in the number of Brokerage shipments. Operating income was
impacted by a lower gross margin percentage for contractual business due
to higher third party carrier costs as capacity tightened during first
quarter 2014 compared to first quarter 2013.
Comparisons of the operating ratios for the Truckload segment (net of
fuel surcharge revenues of $87.0 million and $91.6 million in first
quarters 2014 and 2013, respectively) and the VAS segment are shown
below.
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
Operating Ratios
|
|
2014
|
|
2013
|
|
Difference
|
Truckload Transportation Services
|
|
93.4%
|
|
92.6%
|
|
0.8%
|
Value Added Services
|
|
97.8%
|
|
95.6%
|
|
2.2%
|
|
|
|
|
|
|
|
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 2014 and first
quarter 2013 are 94.8% and 94.2%, 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, 2014, we had
$40.0 million of debt outstanding and $775.0 million of stockholders'
equity. During first quarter 2014, the Company purchased 500,000 shares
of its common stock for a total cost of $12.9 million.
During first quarter 2014, the Company was pleased to once again be
recognized by Forbes magazine on the 2014 list of America’s Most
Trustworthy Companies. This award recognizes companies that consistently
display accounting transparency and integrity, have a low occurrence of
high risk events, and have appropriate board supervision and corporate
accounting and management practices.
|
|
INCOME STATEMENT
|
|
|
(Unaudited)
|
|
|
(In thousands, except per share amounts)
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2014
|
|
2013
|
|
|
$
|
|
%
|
|
$
|
|
%
|
Operating revenues
|
|
$
|
492,022
|
|
|
100.0
|
|
|
$
|
492,887
|
|
|
100.0
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Salaries, wages and benefits
|
|
134,713
|
|
|
27.4
|
|
|
133,105
|
|
|
27.0
|
|
Fuel
|
|
91,075
|
|
|
18.5
|
|
|
96,793
|
|
|
19.6
|
|
Supplies and maintenance
|
|
45,854
|
|
|
9.3
|
|
|
43,128
|
|
|
8.8
|
|
Taxes and licenses
|
|
20,832
|
|
|
4.2
|
|
|
21,624
|
|
|
4.4
|
|
Insurance and claims
|
|
20,206
|
|
|
4.1
|
|
|
19,801
|
|
|
4.0
|
|
Depreciation
|
|
43,123
|
|
|
8.8
|
|
|
42,331
|
|
|
8.6
|
|
Rent and purchased transportation
|
|
111,646
|
|
|
22.7
|
|
|
106,318
|
|
|
21.6
|
|
Communications and utilities
|
|
3,499
|
|
|
0.7
|
|
|
3,142
|
|
|
0.6
|
|
Other
|
|
(2,367)
|
|
|
(0.5)
|
|
|
(2,048)
|
|
|
(0.4)
|
|
Total operating expenses
|
|
468,581
|
|
|
95.2
|
|
|
464,194
|
|
|
94.2
|
|
Operating income
|
|
23,441
|
|
|
4.8
|
|
|
28,693
|
|
|
5.8
|
|
Other expense (income):
|
|
|
Interest expense
|
|
94
|
|
|
—
|
|
|
144
|
|
|
—
|
|
Interest income
|
|
(655)
|
|
|
(0.1)
|
|
|
(505)
|
|
|
(0.1)
|
|
Other
|
|
4
|
|
|
—
|
|
|
(10)
|
|
|
—
|
|
Total other expense (income)
|
|
(557)
|
|
|
(0.1)
|
|
|
(371)
|
|
|
(0.1)
|
|
Income before income taxes
|
|
23,998
|
|
|
4.9
|
|
|
29,064
|
|
|
5.9
|
|
Income taxes
|
|
9,659
|
|
|
2.0
|
|
|
11,553
|
|
|
2.3
|
|
Net income
|
|
$
|
14,339
|
|
|
2.9
|
|
|
$
|
17,511
|
|
|
3.6
|
|
|
|
|
|
|
|
|
|
|
Diluted shares outstanding
|
|
73,169
|
|
|
|
|
73,782
|
|
|
|
Diluted earnings per share
|
|
$
|
0.20
|
|
|
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT INFORMATION
|
|
|
|
(Unaudited)
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2014
|
|
2013
|
|
Revenues
|
|
|
|
|
|
Truckload Transportation Services
|
|
$
|
403,185
|
|
|
$
|
408,900
|
|
|
Value Added Services
|
|
85,154
|
|
|
82,510
|
|
|
Other
|
|
3,989
|
|
|
2,044
|
|
|
Corporate
|
|
558
|
|
|
650
|
|
|
Subtotal
|
|
492,886
|
|
|
494,104
|
|
|
Inter-segment eliminations (1)
|
|
(864)
|
|
|
(1,217)
|
|
|
Total
|
|
$
|
492,022
|
|
|
$
|
492,887
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
|
Truckload Transportation Services
|
|
$
|
20,780
|
|
|
$
|
23,615
|
|
|
Value Added Services
|
|
1,855
|
|
|
3,613
|
|
|
Other
|
|
484
|
|
|
905
|
|
|
Corporate
|
|
322
|
|
|
560
|
|
|
Total
|
|
$
|
23,441
|
|
|
$
|
28,693
|
|
|
|
|
|
(1) Inter-segment eliminations represent transactions between
reporting segments that are eliminated in consolidation.
|
|
|
|
|
|
OPERATING STATISTICS BY SEGMENT
|
|
|
(Unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
Truckload Transportation Services segment
|
|
|
|
|
|
|
Average percentage of empty miles
|
|
11.97%
|
|
|
13.03%
|
|
|
(8.1)%
|
|
Average trip length in miles (loaded)
|
|
466
|
|
|
465
|
|
|
0.2%
|
|
Average tractors in service
|
|
7,004
|
|
|
7,157
|
|
|
(2.1)%
|
|
Average revenues per tractor per week (1)
|
|
$
|
3,422
|
|
|
$
|
3,368
|
|
|
1.6%
|
|
Total trailers (at quarter end)
|
|
21,650
|
|
|
22,100
|
|
|
|
Total tractors (at quarter end)
|
|
|
|
|
|
|
Company
|
|
6,380
|
|
|
6,425
|
|
|
|
Independent contractor
|
|
700
|
|
|
665
|
|
|
|
Total tractors
|
|
7,080
|
|
|
7,090
|
|
|
|
|
|
|
|
|
|
|
Value Added Services segment
|
|
|
|
|
|
|
Total VAS shipments
|
|
62,292
|
|
|
64,366
|
|
|
(3.2)%
|
|
Less: Non-committed shipments to truckload segment
|
|
16,497
|
|
|
19,946
|
|
|
(17.3)%
|
|
Net VAS shipments
|
|
45,795
|
|
|
44,420
|
|
|
3.1%
|
|
Average revenue per shipment
|
|
$
|
1,717
|
|
|
$
|
1,677
|
|
|
2.4%
|
|
|
|
|
|
|
|
|
Average tractors in service
|
|
47
|
|
|
40
|
|
|
|
Total trailers (at quarter end)
|
|
1,930
|
|
|
1,580
|
|
|
|
Total tractors (at quarter end)
|
|
45
|
|
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net of fuel surcharge revenues.
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION
|
|
|
(Unaudited)
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2014
|
|
|
2013
|
Capital expenditures, net
|
|
$
|
16,046
|
|
|
$
|
21,306
|
|
Cash flow from operations
|
|
59,209
|
|
|
76,606
|
|
Return on assets (annualized)
|
|
4.2%
|
|
|
5.3%
|
|
Return on equity (annualized)
|
|
7.4%
|
|
|
9.7%
|
|
|
|
|
|
|
|
|
|
CONDENSED BALANCE SHEET
|
|
|
(In thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2014
|
|
2013
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
56,468
|
|
|
$
|
23,678
|
|
Accounts receivable, trade, less allowance of $10,032 and $9,939,
respectively
|
|
244,294
|
|
|
|
231,647
|
|
Other receivables
|
|
11,680
|
|
|
|
10,769
|
|
Inventories and supplies
|
|
14,519
|
|
|
|
15,743
|
|
Prepaid taxes, licenses and permits
|
|
11,017
|
|
|
|
15,064
|
|
Current deferred income taxes
|
|
25,852
|
|
|
|
25,315
|
|
Other current assets
|
|
34,850
|
|
|
|
27,445
|
|
Total current assets
|
|
398,680
|
|
|
|
349,661
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
1,705,581
|
|
|
|
1,727,737
|
|
Less – accumulated depreciation
|
|
758,892
|
|
|
|
750,219
|
|
Property and equipment, net
|
|
946,689
|
|
|
|
977,518
|
|
|
|
|
|
|
|
|
Other non-current assets
|
|
27,240
|
|
|
|
26,918
|
|
Total assets
|
|
$
|
1,372,609
|
|
|
$
|
1,354,097
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
70,187
|
|
|
$
|
66,678
|
|
Insurance and claims accruals
|
|
64,764
|
|
|
|
59,811
|
|
Accrued payroll
|
|
25,385
|
|
|
|
22,785
|
|
Other current liabilities
|
|
30,162
|
|
|
|
18,457
|
|
Total current liabilities
|
|
190,498
|
|
|
|
167,731
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion
|
|
40,000
|
|
|
|
40,000
|
|
Other long-term liabilities
|
|
14,948
|
|
|
|
14,710
|
|
Insurance and claims accruals, net of current portion
|
|
130,700
|
|
|
|
131,900
|
|
Deferred income taxes
|
|
221,440
|
|
|
|
227,237
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
Common stock, $.01 par value, 200,000,000 shares authorized;
80,533,536
|
|
|
|
|
|
|
shares issued; 72,389,330 and 72,713,920 shares outstanding,
respectively
|
|
805
|
|
|
|
805
|
|
Paid-in capital
|
|
99,973
|
|
|
|
98,534
|
|
Retained earnings
|
|
841,561
|
|
|
|
830,842
|
|
Accumulated other comprehensive loss
|
|
(4,621)
|
|
|
|
(4,631)
|
|
Treasury stock, at cost; 8,144,206 and 7,819,616 shares, respectively
|
|
(162,695)
|
|
|
|
(153,031)
|
|
Total stockholders’ equity
|
|
775,023
|
|
|
|
772,519
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,372,609
|
|
|
$
|
1,354,097
|
|
|
|
|
|
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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,
2013.
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.
Source: Werner Enterprises, Inc.
Werner Enterprises, Inc.
John J. Steele, 402-894-3036
Executive
Vice President, Treasurer and
Chief Financial Officer