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Werner Enterprises Reports Improved Fourth Quarter and Annual 2011 Revenues and Earnings

January, 26, 2012

OMAHA, Neb.--(BUSINESS WIRE)--Jan. 26, 2012-- Werner Enterprises, Inc. (NASDAQ: WERN), one of the nation’s largest transportation and logistics companies, reported improved revenues and earnings for the fourth quarter and year ended December 31, 2011 compared to the same periods of 2010.

Summarized financial results for fourth quarter and year 2011 compared to fourth quarter and year 2010 are as follows (dollars in thousands, except per share data):


   
   
   
     
   
   



4Q11

4Q10

% Change


2011

2010

% Change
Total revenues

$507,937

$463,214

10%


$2,002,850

$1,815,020

10%
Trucking revenues, net of fuel


















surcharge

$329,110

$327,682

0%


$1,310,612

$1,287,068

2%
Value Added Services (“VAS”)


















revenues

$79,674

$59,834

33%


$291,109

$250,983

16%
Operating income

$49,399

$40,627

22%


$173,674

$134,582

29%
Net income

$29,368

$24,115

22%


$102,757

$80,039

28%
Earnings per diluted share

$0.40

$0.33

21%


$1.40

$1.10

28%



















 

Werner Enterprises achieved annual earnings in excess of $100 million for the first time in our history. Fourth quarter 2011 was the eighth consecutive quarter in which Werner achieved year-over-year earnings growth in excess of 20%. We are very appreciative of our customers’ support and sincerely thank all of our associates for their dedication, commitment and hard work in passing this mile marker on the road to improving results. With a comprehensive portfolio of superior service offerings, a newer truck fleet, an outstanding team of associates and a strong financial position, we are excited about the prospects for 2012 and beyond.

Fourth quarter 2011 freight demand (as measured by our daily morning ratio of loads to trucks in our one-way truckload network) was better than fourth quarter 2010 and showed more traditional seasonal trends. Our freight demand progressively improved from September to December, before the normal seasonal decline which began during the second week of December. Our morning loads-to-trucks ratio was balanced for fourth quarter 2011 with a seasonal positive strengthening in November and early December. We continue to believe that favorable truckload demand trends are caused to a greater degree by supply side constraints limiting truckload capacity, as compared to growing demand generated by increased economic activity.

Average revenues per total mile, net of fuel surcharge, increased 4.6% in fourth quarter 2011 compared to fourth quarter 2010. Contractual rate increases, an improved freight mix and better surge pricing were the primary reasons for the rate improvement. Several larger sized seasonal projects in fourth quarter 2011 also aided the increase in our revenue per total mile. 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 truck count at approximately 7,300 trucks. In the last six months, our truck count has operated slightly below this level due to the increasingly challenging driver market. Our primary objectives continue to be expanding our operating margin percentage and improving our returns on assets, equity and invested capital, while staying true to our broad transportation services portfolio.

Capacity in our industry remains constrained by economic, safety and 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. 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-compliant new trucks compared to the lower value of record-old trucks. For example, the average cost of new trucks purchased in 2011 is approximately 30% higher than the average cost of trucks being sold in 2011.

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 3,475 trucks (or 48% of our total fleet).

Diesel fuel prices were 63 cents per gallon higher in fourth quarter 2011 than in fourth quarter 2010 and were 2 cents per gallon lower than in third quarter 2011. For the first 26 days of January 2012, the average diesel fuel price per gallon was 41 cents higher than the average diesel fuel price per gallon in the same period of 2011 and 14 cents higher than in first quarter 2011.

The driver recruiting and retention market became more challenging during fourth quarter 2011. Assuming the domestic economy strengthens in 2012, we anticipate the driver market will become even more challenging in 2012. While historically higher national unemployment rates have aided our driver recruiting and retention efforts, we believe that an improved freight market, extended unemployment benefit payment programs, a reduction in available truck driving school graduates and changing industry safety regulations are tightening driver supply. While we are not immune to fluctuations in the driver market, we continue to believe we are in a better position in the current market than many competitors because over 70% of our driving jobs are in more attractive, shorter-haul 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 assets were $4.8 million in fourth quarter 2011 compared to $2.8 million in fourth quarter 2010 and $6.0 million in third quarter 2011. The market for the sale of used trucks and trailers remains strong. Gains on sales are reflected as a reduction of Other Operating Expenses in our income statement.

We continue to buy new trucks to replace older trucks we sell or trade. We continue to invest in environmentally friendly equipment solutions such as more aerodynamic truck features, idle reduction systems, tire inflation systems and trailer skirts. Over the last three years, Werner Enterprises has reduced its annual carbon footprint by over 140,000 tons. Our net capital expenditures in 2011 were $232.2 million. We expect our net capital expenditures in 2012 to be in a range of $160 million to $210 million. During 2011, we reduced the average age of our company truck fleet from 2.8 years at December 31, 2010 to 2.4 years at December 31, 2011. We expect to further reduce our company truck fleet age to approximately 2.1 years by December 31, 2012. We remain committed to the ongoing investment required to maintain a best-in-class fleet while focusing on the lowest operating cost model for our customers.

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).


   
   
   
   
Value Added Services

4Q11

4Q10

2011

2010

(amounts in 000’s)



$     %

$     %

$     %

$     %
Revenues

$ 79,674     100.0

$ 59,834     100.0

$ 291,109     100.0

$ 250,983     100.0
Rent and purchased transportation



























expense

  65,829

82.6

  50,553

84.5

  244,194

83.9

  213,567

85.1
Gross margin


13,845

17.4


9,281

15.5


46,915

16.1


37,416

14.9
Other operating expenses

  8,012

10.1

  6,519

10.9

  29,879

10.2

  26,411

10.5
Operating income

$ 5,833

7.3

$ 2,762

4.6

$ 17,036

5.9

$ 11,005

4.4




























 

The following table shows the change in shipment volume and average revenue (excluding logistics fee revenue) per shipment for all VAS shipments.


   
   
   

   
   
   
   

   













%











%



4Q11

4Q10

Difference


Change

2011

2010

Difference


Change

Total VAS shipments



 

67,666



 

60,884



 

6,782




11%



 

254,926



 

261,396



 

(6,470)




(2)%

Less: Non-committed































shipments to Truckload































segment

  20,337

  20,499

  (162)


(1)%

  78,842

  93,760

  (14,918)


(16)%
































 
Net VAS shipments

  47,329

  40,385

  6,944


17%

 

176,084



 

167,636



 

8,448




5%



























 
Average revenue per































shipment

$1,554

$1,376

$178


13%

$1,536

$1,346

$190


14%
































 

In fourth quarter 2011, VAS revenues increased 33%, gross margin dollars increased 49% and operating income dollars increased 111% compared to fourth quarter 2010.

Brokerage revenues in fourth quarter 2011 increased 19% compared to fourth quarter 2010 due to a 9% increase in shipment volume and a 10% increase in average revenue per shipment. Brokerage gross margin dollars and gross margin percentage increased both year-over-year and sequentially. Intermodal revenues increased 75%, and Intermodal operating income increased by an even higher percentage, comparing fourth quarter 2011 to fourth quarter 2010. Werner Global Logistics revenues increased 52% and operating results improved significantly in fourth quarter 2011 compared to fourth quarter 2010.

Comparisons of the operating ratios (net of fuel surcharge revenues) for the Truckload segment and VAS segment for fourth quarters and full years 2011 and 2010 are shown below.


   
     
   
     
     
   

Operating Ratios


4Q11

4Q10

Difference

2011

2010

Difference

Truckload Transportation Services



87.1%  



88.4%  


(1.3)%



88.1%  



90.6%  


(2.5)%
Value Added Services

92.7




95.4



(2.7)%



94.1




95.6



(1.5)%































 

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 quarter 2011 and fourth quarter 2010 are 89.9% and 90.4%, respectively, and for 2011 and 2010 are 90.7% and 92.1%, respectively, when fuel surcharge revenues are reported as revenues instead of a reduction of operating expenses.

Our financial position remains strong. We ended 2011 with no debt, $12.4 million of cash, and stockholders’ equity of $725.1 million, after paying a $36.4 million special dividend to shareholders in December 2011.


   

   

   

   

















 



INCOME STATEMENT DATA



(Unaudited)



(In thousands, except per share amounts)
















 



Quarter


% of


Quarter


% of



Ended


Operating


Ended


Operating



12/31/11


Revenues


12/31/10


Revenues

 

















Operating revenues

$507,937


100.0


$463,214


100.0
















 
Operating expenses:















Salaries, wages and benefits

136,253


26.8


130,684


28.2
Fuel

100,695


19.8


85,199


18.4
Supplies and maintenance

40,778


8.0


38,525


8.3
Taxes and licenses

22,545


4.5


23,804


5.1
Insurance and claims

17,329


3.4


18,286


4.0
Depreciation

39,473


7.8


39,394


8.5
Rent and purchased transportation

100,289


19.8


84,287


18.2
Communications and utilities

3,569


0.7


3,867


0.8
Other

(2,393)


(0.5)


(1,459)


(0.3)
Total operating expenses

458,538


90.3


422,587


91.2
Operating income

49,399


9.7


40,627


8.8
















 
Other expense (income):















Interest expense

42


0.0


30


0.0
Interest income

(421)


(0.1)


(412)


(0.1)
Other

(210)


(0.0)


(38)


(0.0)
Total other expense (income)

(589)


(0.1)


(420)


(0.1)
















 
Income before income taxes

49,988


9.8


41,047


8.9
Income taxes

20,620


4.0


16,932


3.7
Net income

$29,368


5.8


$24,115


5.2
















 
Diluted shares outstanding

73,289






72,989




Diluted earnings per share

$0.40






$0.33












 



OPERATING STATISTICS







Quarter Ended






Quarter Ended







12/31/11


% Change


12/31/10




Trucking revenues, net of fuel surcharge (1)

$329,110


0.4%


$327,682




Trucking fuel surcharge revenues (1)

92,598


31.9%


70,189




Non-trucking revenues, including VAS (1)

82,047


32.3%


62,005




Other operating revenues (1)

4,182


25.3%


3,338




Operating revenues (1)

$507,937


9.7%


$463,214




















 
Average monthly miles per tractor

9,713


-2.6%


9,970




Average revenues per total mile (2)

$1.570


4.6%


$1.501




Average revenues per loaded mile (2)

$1.781


5.4%


$1.690




Average percentage of empty miles

11.83%


5.7%


11.19%




Average trip length in miles (loaded)

435


-1.6%


442




Total miles (loaded and empty) (1)

209,612


-4.0%


218,309




Average tractors in service

7,194


-1.4%


7,299




Average revenues per tractor per week (2)

$3,519


1.9%


$3,453




Capital expenditures, net (1)

$78,598






$35,936




Cash flow from operations (1)

$64,141






$73,236




Return on assets (annualized)

9.1%






7.8%




Total tractors (at quarter end)















Company

6,600






6,595




Independent contractor

600






680




Total tractors

7,200






7,275




















 
Total trailers (truck and intermodal, quarter end)

23,045






23,850




















 

(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



12/31/11


Revenues


12/31/10


Revenues

 

















Operating revenues

$2,002,850


100.0


$1,815,020


100.0
















 
Operating expenses:















Salaries, wages and benefits

536,509


26.8


527,576


29.1
Fuel

412,905


20.6


313,518


17.3
Supplies and maintenance

169,386


8.5


155,943


8.6
Taxes and licenses

92,917


4.6


94,018


5.2
Insurance and claims

67,523


3.4


69,991


3.8
Depreciation

158,634


7.9


152,242


8.4
Rent and purchased transportation

387,472


19.3


352,648


19.4
Communications and utilities

15,181


0.8


15,123


0.8
Other

(11,351)


(0.6)


(621)


0.0
Total operating expenses

1,829,176


91.3


1,680,438


92.6
Operating income

173,674


8.7


134,582


7.4
















 
Other expense (income):















Interest expense

85


0.0


47


0.0
Interest income

(1,448)


(0.0)


(1,536)


(0.1)
Other

131


(0.0)


(166)


(0.0)
Total other expense (income)

(1,232)


(0.0)


(1,655)


(0.1)
















 
Income before income taxes

174,906


8.7


136,237


7.5
Income taxes

72,149


3.6


56,198


3.1
Net income

$102,757


5.1


$80,039


4.4
















 
Diluted shares outstanding

73,225






72,807




Diluted earnings per share

$1.40






$1.10












 



OPERATING STATISTICS







Year Ended






Year Ended







12/31/11


% Change


12/31/10




Trucking revenues, net of fuel surcharge (1)

$1,310,612


1.8%


$1,287,068




Trucking fuel surcharge revenues (1)

373,384


46.6%


254,764




Non-trucking revenues, including VAS (1)

301,772


16.2%


259,628




Other operating revenues (1)

17,082


26.0%


13,560




Operating revenues (1)

$2,002,850


10.3%


$1,815,020




















 
Average monthly miles per tractor

9,840


-1.7%


10,012




Average revenues per total mile (2)

$1.533


3.8%


$1.477




Average revenues per loaded mile (2)

$1.736


4.1%


$1.668




Average percentage of empty miles

11.71%


2.4%


11.43%




Average trip length in miles (loaded)

442


-0.7%


445




Total miles (loaded and empty) (1)

855,180


-1.8%


871,290




Average tractors in service

7,242


-0.1%


7,252




Average revenues per tractor per week (2)

$3,480


2.0%


$3,413




Capital expenditures, net (1)

$232,198






$119,033




Cash flow from operations (1)

$264,480






$228,483




Return on assets (annualized)

8.3%






6.6%




Total tractors (at quarter end)















Company

6,600






6,595




Independent contractor

600






680




Total tractors

7,200






7,275




















 
Total trailers (truck and intermodal, quarter end)

23,045






23,850




















 

(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.


   



 

 



BALANCE SHEET DATA




(In thousands, except share amounts)





   




12/31/11


12/31/10








 
ASSETS















 
Current assets:







Cash and cash equivalents

$12,412


$13,966
Accounts receivable, trade, less allowance







of $10,154 and $9,484, respectively

218,712


190,264
Other receivables

9,213


10,431
Inventories and supplies

30,212


16,868
Prepaid taxes, licenses and permits

15,094


14,934
Current deferred income taxes

25,805


27,829
Other current assets

29,883


23,407
Total current assets

341,331


297,699








 
Property and equipment

1,625,008


1,549,637
Less – accumulated depreciation

682,872


708,582
Property and equipment, net

942,136


841,055








 
Other non-current assets

18,949


12,798








 



$1,302,416


$1,151,552








 
LIABILITIES AND STOCKHOLDERS’ EQUITY















 
Current liabilities:







Checks issued in excess of cash balances

$6,671


$0
Accounts payable

93,486


57,708
Insurance and claims accruals

62,681


71,857
Accrued payroll

19,483


18,838
Other current liabilities

16,504


20,037
Total current liabilities

198,825


168,440








 
Other long-term liabilities

14,194


10,380








 
Insurance and claims accruals, net of current portion

121,250


113,250








 
Deferred income taxes

243,000


190,507








 
Stockholders’ equity:







Common stock, $.01 par value, 200,000,000 shares







authorized; 80,533,536 shares issued; 72,847,576







and 72,644,998 shares outstanding, respectively

805


805
Paid-in capital

94,396


91,872
Retained earnings

779,994


728,216
Accumulated other comprehensive loss

(5,170)


(3,420)
Treasury stock, at cost; 7,685,960 and 7,888,538







shares, respectively

(144,878)


(148,498)
Total stockholders’ equity

725,147


668,975



$1,302,416


$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.

Source: Werner Enterprises, Inc.

Werner Enterprises, Inc.
John J. Steele, 402-894-3036
Executive Vice President, Treasurer and
Chief Financial Officer

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