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| Werner Enterprises Reports Fourth Quarter and Annual 2008 Revenues and Earnings |
Revenues decreased 7% to
For the full year, revenues increased 5% to
The overall freight market became increasingly challenging as each month
progressed from mid-September to
In the truckload segment, Werner again reduced the size of its Van
medium-to-long-haul fleet (the "Van" fleet) in fourth quarter 2008 by
500 trucks, partially offset by an increase in trucks in its Regional
and Expedited fleets. This helped reduce Werner's exposure to the longer
haul market, which remains the most difficult of the truckload markets.
In
The ongoing diversification of the Company's service offerings from the
Van fleet to Dedicated, Regional, Expedited, and Despite the extremely challenging market conditions, Werner again delivered impressive productivity improvements within its asset fleets. During fourth quarter, average monthly miles per tractor increased by 71 miles, or 0.7%. At the same time, Werner lowered its average percentage of empty miles slightly by 8 basis points. The entire Werner team of driver and non-driver professionals contributed to these positive results in a much more difficult market compared to fourth quarter a year ago. The severe tightening of the credit and financial markets may create significant challenges for highly leveraged carriers that have financing issues or refinancing needs. Unless freight and financial market conditions improve quickly, Werner believes there is a higher probability of increased carrier failures in 2009. Werner believes its financial strength places it in a unique position to capitalize on the opportunities ahead.
Diesel fuel prices declined rapidly during fourth quarter 2008. When
compared to the same month in 2007, diesel fuel costs were
Over the past several years, Werner and the truckload industry did not
recover all of the cost of rising fuel prices through fuel surcharge
programs. Each year in the prior four years, rising fuel costs (net of
fuel surcharge collections) had a negative impact on the Company's
operating income when compared to the previous year. The total negative
impact on the Company's operating income due to fuel expense, net of
fuel surcharge collections, during 2004 to 2007 was When fuel prices rise rapidly, there is a negative earnings lag effect that occurs because the cost of fuel rises immediately and the market indexes used to determine fuel surcharges increase at a slower pace. As a result, during these rising fuel price periods, the negative impact of fuel on the Company's financial results is more significant. The fuel price trend in fourth quarter 2008 was unusual, as fuel prices declined every week during fourth quarter 2008. In a period of declining fuel prices, the Company generally experiences a temporary favorable earnings lag effect, since fuel costs decline at a faster pace than the market indexes used to determine fuel surcharge collections. This occurred during fourth quarter 2008, enabling the Company to temporarily have lower net fuel expense, that helped to offset uncompensated fuel costs such as truck idling, empty miles, and out-of-route miles. If fuel prices remain stable or increase going forward, the Company does not expect the temporary favorable trend to continue.
During fourth quarter 2008, the Company continued to improve its fuel
miles per gallon ("mpg") by continuing its numerous initiatives to
improve fuel efficiency. These initiatives include reducing truck idle
time, lowering non-billable miles, increasing the percentage of
aerodynamic, more fuel-efficient trucks in the company truck fleet and
installing auxiliary power units ("APUs") in company trucks. As of
Werner is again proud to report that through the efforts of its employees, it is making meaningful positive progress by lowering diesel fuel consumption through its proactive initiatives to improve fuel mpg. Due strictly to these mpg improvements, Werner purchased 1.9 million fewer gallons of diesel fuel in fourth quarter 2008 than in fourth quarter 2007. This equates to a reduction of approximately 21,000 tons of carbon dioxide emissions. Werner intends to continue these and other environmentally conscious initiatives, including its active participation as a U.S. Environmental Protection Agency SmartWay Transport Partner. To provide shippers with additional sources of managed capacity and network analysis, as well as a more global footprint, the Company continues to successfully grow its non-asset based VAS segment. VAS includes Brokerage, Freight Management, Intermodal and Werner Global Logistics. VAS revenue growth declined to 6% in fourth quarter 2008 compared to fourth quarter 2007, primarily due to two factors. VAS provided 7,300 more non-committed loads to the trucking fleets in fourth quarter 2008 than in fourth quarter 2007 to help cushion the impact of a soft freight market. In addition, the average rate per brokerage load decreased by 4% in fourth quarter 2008 compared to fourth quarter 2007, primarily due to lower fuel prices. Excluding the impact of these two factors, VAS revenues would have grown 20% in fourth quarter 2008 compared to fourth quarter 2007.
Value Added Services (amounts in 4Q08 4Q07
thousands)
Revenues $ 61,861 100.0 % $ 58,190 100.0 %
Rent and purchased transportation 52,140 84.3 49,467 85.0
expense
Gross margin 9,721 15.7 8,723 15.0
Other operating expenses 6,821 11.0 5,883 10.1
Operating income $ 2,900 4.7 $ 2,840 4.9
2008 2007
Revenues $ 265,262 100.0 % $ 258,433 100.0 %
Rent and purchased transportation 225,498 85.0 224,667 86.9
expense
Gross margin 39,764 15.0 33,766 13.1
Other operating expenses 25,194 9.5 21,348 8.3
Operating income $ 14,570 5.5 $ 12,418 4.8
VAS generated a 6% increase in revenues, 11% gross margin growth and 2% operating income growth in fourth quarter 2008 compared to fourth quarter 2007. Brokerage continued to produce strong results with 7% revenue growth and a decline in its gross margin percentage. The tightening of truckload capacity due to increased carrier failures and the decline in fuel prices has made it more challenging for Brokerage to obtain qualified third party carriers at a comparable margin to prior quarters. Intermodal revenues grew 20%. Werner Global Logistics continues to grow revenues both on a year over year basis and sequentially.
VAS had a 3% increase in reported revenues (as explained below) in 2008
compared to 2007. Beginning in third quarter 2007, Werner and a large
VAS customer negotiated a structural change to the customer's continuing
arrangement that resulted in a reduction in VAS revenues and VAS rent
and purchased transportation expense of Comparisons of the operating ratios (net of fuel surcharge revenues) for the Truckload segment and VAS operating ratios for the fourth quarters and full years 2008 and 2007 are shown below.
Operating Ratios 4Q08 4Q07 Difference
Truckload Transportation Services 92.3 % 91.9 % 0.4 %
Value Added Services 95.3 95.1 0.2
2008 2007 Difference
Truckload Transportation Services 93.4 % 91.9 % 1.5 %
Value Added Services 94.5 95.2 (0.7 )
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 fourth quarters 2008 and 2007 are 93.7% and 93.5%, respectively, and for the full year 2008 and 2007 are 95.0% and 93.2%, respectively, when fuel surcharge revenues are reported as revenues instead of a reduction of operating expenses. The driver recruiting and retention market has improved from a year ago. The weakness in the construction and automotive industries and a rising national unemployment rate continue to positively affect the Company's driver availability and selectivity. In addition, the Company's strong mileage utilization and financial strength are attractive to drivers when compared to many other carriers.
The Company's wholly owned subsidiary, Fleet Truck Sales, is one of the
largest equipment sales remarketing companies in the U.S., in business
since 1992. Gains on sales of assets, primarily trucks and trailers,
decreased to
The Company's financial position remains strong. During the recent
turbulence in the financial and credit markets, Werner believes that the
Company's financial strength separates it from carriers that are highly
leveraged. The Company ended the quarter with
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Quarter % of Quarter % of
Ended Operating Ended Operating
12/31/08 Revenues 12/31/07 Revenues
Operating revenues $ 490,574 100.0 $ 525,728 100.0
Operating expenses:
Salaries, wages and 143,644 29.3 147,192 28.0
benefits
Fuel 84,515 17.2 117,548 22.4
Supplies and 40,188 8.2 39,477 7.5
maintenance
Taxes and licenses 26,559 5.4 28,894 5.5
Insurance and claims 26,983 5.5 23,641 4.5
Depreciation 42,303 8.6 41,721 7.9
Rent and purchased 90,256 18.4 90,909 17.3
transportation
Communications and 4,751 1.0 4,846 0.9
utilities
Other 748 0.2 (2,301 ) (0.4 )
Total operating 459,947 93.8 491,927 93.6
expenses
Operating income 30,627 6.2 33,801 6.4
Other expense
(income):
Interest expense 74 0.0 57 0.0
Interest income (923 ) (0.2 ) (1,000 ) (0.2 )
Other (277 ) (0.1 ) 75 0.0
Total other expense (1,126 ) (0.3 ) (868 ) (0.2 )
(income)
Income before income 31,753 6.5 34,669 6.6
taxes
Income taxes 13,106 2.7 19,084 3.6
Net income $ 18,647 3.8 $ 15,585 3.0
Diluted shares 71,836 71,988
outstanding
Diluted earnings per $ .26 $ .22
share
OPERATING STATISTICS
Quarter Ended Quarter Ended
12/31/08 % Change 12/31/07
Trucking revenues,
net of fuel $ 346,158 -6.4 % $ 369,943
surcharge (1)
Trucking fuel
surcharge revenues 76,391 -15.8 % 90,717
(1)
Non-trucking
revenues, including 64,197 6.1 % 60,528
VAS (1)
Other operating 3,828 -15.7 % 4,540
revenues (1)
Operating revenues $ 490,574 -6.7 % $ 525,728
(1)
Average monthly 10,089 0.7 % 10,018
miles per tractor
Average revenues per $ 1.444 -2.2 % $ 1.476
total mile (2)
Average revenues per $ 1.669 -2.2 % $ 1.707
loaded mile (2)
Average percentage 13.45 % -0.6 % 13.53 %
of empty miles
Average trip length 530 -3.6 % 550
in miles (loaded)
Total miles (loaded 239,640 -4.4 % 250,637
and empty) (1)
Average tractors in 7,917 -5.1 % 8,339
service
Average revenues per $ 3,363 -1.4 % $ 3,412
tractor per week (2)
Capital
expenditures, net $ 34,587 ($1,210 )
(1)
Cash flow from $ 69,918 $ 40,799
operations (1)
Return on assets 5.4 % 4.6 %
(annualized)
Total tractors (at
quarter end)
Company 7,000 7,470
Owner-operator 700 780
Total tractors 7,700 8,250
Total trailers
(truck and 24,940 24,855
intermodal, quarter
end)
(1) Amounts in thousands. (2) Net of fuel surcharge revenues.
INCOME STATEMENT DATA
(In thousands, except per share amounts)
Year % of Year % of
Ended Operating Ended Operating
12/31/08 Revenues 12/31/07 Revenues
Operating revenues $ 2,165,599 100.0 $ 2,071,187 100.0
Operating expenses:
Salaries, wages and 586,035 27.1 598,837 28.9
benefits
Fuel 508,594 23.5 408,410 19.7
Supplies and maintenance 163,524 7.6 159,843 7.7
Taxes and licenses 109,443 5.0 117,170 5.7
Insurance and claims 104,349 4.8 93,769 4.5
Depreciation 167,435 7.7 166,994 8.1
Rent and purchased 397,887 18.4 387,564 18.7
transportation
Communications and 19,579 0.9 20,098 1.0
utilities
Other (4,182 ) (0.2 ) (18,015 ) (0.9 )
Total operating expenses 2,052,664 94.8 1,934,670 93.4
Operating income 112,935 5.2 136,517 6.6
Other expense (income):
Interest expense 83 0.0 2,977 0.2
Interest income (3,972 ) (0.2 ) (3,989 ) (0.2 )
Other (198 ) 0.0 247 0.0
Total other expense (4,087 ) (0.2 ) (765 ) 0.0
(income)
Income before income 117,022 5.4 137,282 6.6
taxes
Income taxes 49,442 2.3 61,925 3.0
Net income $ 67,580 3.1 $ 75,357 3.6
Diluted shares 71,658 74,114
outstanding
Diluted earnings per $ .94 $ 1.02
share
OPERATING STATISTICS
Year Ended Year Ended
12/31/08 % Change 12/31/07
Trucking revenues, net $ 1,430,560 -3.5 % $ 1,483,164
of fuel surcharge (1)
Trucking fuel surcharge 442,614 46.7 % 301,789
revenues (1)
Non-trucking revenues, 273,896 2.1 % 268,388
including VAS (1)
Other operating revenues 18,529 3.8 % 17,846
(1)
Operating revenues (1) $ 2,165,599 4.6 % $ 2,071,187
Average monthly miles 10,165 2.8 % 9,888
per tractor
Average revenues per $ 1.461 -0.2 % $ 1.464
total mile (2)
Average revenues per $ 1.686 -0.4 % $ 1.692
loaded mile (2)
Average percentage of 13.35 % -1.0 % 13.48 %
empty miles
Average trip length in 538 -3.6 % 558
miles (loaded)
Total miles (loaded and 979,211 -3.3 % 1,012,964
empty) (1)
Average tractors in 8,028 -6.0 % 8,537
service
Average revenues per $ 3,427 2.6 % $ 3,341
tractor per week (2)
Capital expenditures, $ 114,978 $ 26,068
net (1)
Cash flow from $ 259,130 $ 227,985
operations (1)
Return on assets 5.0 % 5.4 %
(annualized)
Total tractors (at
quarter end)
Company 7,000 7,470
Owner-operator 700 780
Total tractors 7,700 8,250
Total trailers (truck
and intermodal, quarter 24,940 24,855
end)
(1) Amounts in thousands. (2) Net of fuel surcharge revenues.
BALANCE SHEET DATA
(In thousands, except share amounts)
12/31/08 12/31/07
ASSETS
Current assets:
Cash and cash equivalents $ 48,624 $ 25,090
Accounts receivable, trade, less
allowance 185,936 213,496
of
Note: This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Such forward-looking statements
are based on information currently available to the Company's management
and are current only as of the date made. For that reason, undue
reliance should not be placed on any such forward-looking statement.
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
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