Werner Enterprises, Inc. (Nasdaq: WERN), a premier transportation
and logistics provider, today reported third quarter operating
income, net income attributable to Werner and diluted earnings per
share for the quarter ended September 30, 2021.
“Werner once again achieved record third quarter
earnings per share in a strong freight market with unprecedented
supply chain and labor challenges,” said Derek J. Leathers,
Chairman, President and Chief Executive Officer. “We made strategic
investments in driver pay and driver sourcing that enabled us to
organically grow our Werner fleet this quarter in an
ultra-competitive driver market. At the same time, we are
successfully integrating the ECM truckload fleet acquisition we
made at the beginning of the quarter, and ECM is performing very
well.
“While there were some unusual cost and mileage
productivity challenges in the quarter, I am confident that our
strategic actions are positioning Werner for long-term success. We
remain committed to growing revenues, expanding margins, generating
free cash flow and providing superior safety and service to our
customers across our diversified North America truckload and
logistics portfolio.”
Total revenues for the quarter were $702.9
million, an increase of $112.7 million compared to the prior year
quarter, due primarily to Truckload Transportation Services
revenues growth of $69.4 million and Logistics revenues growth of
$40.6 million.
Operating income of $71.3 million increased $9.2
million, or 15%, while operating margin of 10.1% decreased 40 basis
points. On a non-GAAP basis, adjusted operating income of $73.9
million increased $9.6 million, or 15%. Adjusted operating margin
of 10.5% declined 40 basis points from 10.9% for the same quarter
last year.
Operating income increased as a result of
significantly higher revenues per total mile and gains on sales of
trucks and trailers, both due to improved pricing. Our Logistics
segment also achieved significant growth in revenues and expanded
its operating margin. Operating income for our Truckload
Transportation Services segment was flat, as significant pricing
improvement was offset by cost increases for driver pay, driver
sourcing, insurance and claims and health insurance.
Interest expense of $1.3 million increased from
$0.9 million due to higher average borrowings. The effective income
tax rate was 24.6% in both third quarter 2021 and third quarter
2020.
During third quarter 2021, our strategic
minority equity investments in Mastery, a transportation management
systems company, and TuSimple, an autonomous technology company,
had market valuation changes. As a result, we recognized a net gain
on investments in equity securities of $16.1 million, or $0.18 per
share, which resulted in higher non-operating income in third
quarter 2021.
Net income attributable to Werner of $63.8
million increased 38%. On a non-GAAP basis, adjusted net income
attributable to Werner of $53.5 million increased 12%. Diluted
earnings per share (“EPS”) for the quarter of $0.94 increased 41%.
On a non-GAAP basis, adjusted diluted EPS of $0.79 increased
14%.
Key Consolidated Financial
Metrics
|
Three Months EndedSeptember 30, |
|
Nine Months Ended September 30, |
(In thousands, except per
share amounts) |
2021 |
|
2020 |
|
Y/Y Change |
|
2021 |
|
2020 |
|
Y/Y Change |
Total revenues |
$ |
702,891 |
|
|
$ |
590,214 |
|
|
19 |
% |
|
$ |
1,969,151 |
|
|
$ |
1,751,876 |
|
|
12 |
% |
Truckload Transportation
Services revenues |
527,697 |
|
|
458,256 |
|
|
15 |
% |
|
1,481,846 |
|
|
1,368,172 |
|
|
8 |
% |
Werner Logistics revenues |
157,968 |
|
|
117,351 |
|
|
35 |
% |
|
437,494 |
|
|
339,678 |
|
|
29 |
% |
Operating income |
71,324 |
|
|
62,103 |
|
|
15 |
% |
|
210,658 |
|
|
145,987 |
|
|
44 |
% |
Operating margin |
10.1 |
% |
|
10.5 |
% |
|
(40) bps |
|
10.7 |
% |
|
8.3 |
% |
|
240 bps |
Net income attributable to
Werner |
63,761 |
|
|
46,332 |
|
|
38 |
% |
|
182,285 |
|
|
108,522 |
|
|
68 |
% |
Diluted earnings per
share |
0.94 |
|
|
0.67 |
|
|
41 |
% |
|
2.68 |
|
|
1.56 |
|
|
71 |
% |
Adjusted operating income
(1) |
73,850 |
|
|
64,262 |
|
|
15 |
% |
|
215,679 |
|
|
159,235 |
|
|
35 |
% |
Adjusted operating margin
(1) |
10.5 |
% |
|
10.9 |
% |
|
(40) bps |
|
11.0 |
% |
|
9.1 |
% |
|
190 bps |
Adjusted net income
attributable to Werner (1) |
53,474 |
|
|
47,941 |
|
|
12 |
% |
|
158,814 |
|
|
118,392 |
|
|
34 |
% |
Adjusted diluted earnings per
share (1) |
0.79 |
|
|
0.69 |
|
|
14 |
% |
|
2.33 |
|
|
1.70 |
|
|
37 |
% |
(1) See attached Reconciliation of Non-GAAP
Financial Measures - Consolidated.
Noteworthy Developments
- On July 1, 2021, Werner acquired an
80% equity ownership interest in ECM Transport Group (“ECM”) for a
purchase price of $141.3 million after net working capital
changes. The purchase price allocation to assets and
liabilities is preliminary and may be adjusted. ECM consists of ECM
Transport and Motor Carrier Service, which are elite regional
truckload carriers that together operate nearly 500 trucks and
2,000 trailers in the Mid-Atlantic, Ohio and Northeast regions of
the U.S. During third quarter, ECM had strong financial
performance, and integration is proceeding on schedule. ECM’s
financial results are reported in the One-Way Truckload business
unit within the Truckload Transportation Services segment.
- Werner issued its inaugural
Corporate Social Responsibility report on July 27, 2021 which is
accessible from the Company’s website at werner.com.
Truckload Transportation Services (TTS)
Segment
- Revenues of $527.7 million
increased $69.4 million
- Operating income of $62.9 million
decreased $0.2 million; non-GAAP adjusted operating income of $65.4
million increased $0.1 million
- Operating margin of 11.9% decreased
190 basis points from 13.8%; non-GAAP adjusted operating margin of
12.4% decreased 180 basis points from 14.2%
- Non-GAAP adjusted operating margin,
net of fuel, of 14.0% decreased 150 basis points from 15.5%
- Average segment trucks in service
totaled 8,161, an increase of 546 trucks year over year, or
7.2%
- Dedicated unit trucks at quarter
end totaled 5,120 or 62% of the total TTS segment fleet, compared
to 4,715 trucks, or 61%, a year ago
- 3.2% increase in TTS average
revenues per truck per week
In our Dedicated and One-Way Truckload fleets,
freight demand was strong during third quarter 2021. Freight demand
has continued to be strong so far in fourth quarter 2021.
Total miles decreased 8.2 million miles in third
quarter 2021, caused by fleet mix changes, trucks down due to
equipment parts shortages, more drivers unavailable to work due to
COVID quarantine protocols and other factors, partially offset by
7.2% higher average trucks in service. TTS company truck miles
decreased by approximately 2.3 million miles, and independent
contractor miles decreased by approximately 5.9 million miles.
Comparisons of key financial metrics for the TTS
segment, including operating ratios (actual and net of fuel
surcharge revenues), are shown in the table that follows.
Key Truckload Transportation Services
Segment Financial Metrics
|
Three Months EndedSeptember 30, |
|
Nine Months Ended September 30, |
(In thousands) |
2021 |
|
2020 |
|
Y/Y Change |
|
2021 |
|
2020 |
|
Y/Y Change |
Trucking revenues, net of fuel surcharge |
$ |
461,380 |
|
|
$ |
417,335 |
|
|
11 |
% |
|
$ |
1,300,555 |
|
|
$ |
1,233,267 |
|
|
5 |
% |
Trucking fuel surcharge
revenues |
60,765 |
|
|
36,799 |
|
|
65 |
% |
|
165,663 |
|
|
122,048 |
|
|
36 |
% |
Non-trucking and other
revenues |
5,552 |
|
|
4,122 |
|
|
35 |
% |
|
15,628 |
|
|
12,857 |
|
|
22 |
% |
Total revenues |
$ |
527,697 |
|
|
$ |
458,256 |
|
|
15 |
% |
|
$ |
1,481,846 |
|
|
$ |
1,368,172 |
|
|
8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
62,856 |
|
|
63,080 |
|
|
0 |
% |
|
193,592 |
|
|
143,394 |
|
|
35 |
% |
Operating margin |
11.9 |
% |
|
13.8 |
% |
|
(190) bps |
|
13.1 |
% |
|
10.5 |
% |
|
260 bps |
Operating ratio |
88.1 |
% |
|
86.2 |
% |
|
190 bps |
|
86.9 |
% |
|
89.5 |
% |
|
(260) bps |
Adjusted operating income
(1) |
65,382 |
|
|
65,239 |
|
|
0 |
% |
|
198,634 |
|
|
156,642 |
|
|
27 |
% |
Adjusted operating margin
(1) |
12.4 |
% |
|
14.2 |
% |
|
(180) bps |
|
13.4 |
% |
|
11.4 |
% |
|
200 bps |
Adjusted operating margin, net
of fuel surcharge (1) |
14.0 |
% |
|
15.5 |
% |
|
(150) bps |
|
15.1 |
% |
|
12.6 |
% |
|
250 bps |
Adjusted operating ratio
(1) |
87.6 |
% |
|
85.8 |
% |
|
180 bps |
|
86.6 |
% |
|
88.6 |
% |
|
(200) bps |
Adjusted operating ratio, net
of fuel surcharge (1) |
86.0 |
% |
|
84.5 |
% |
|
150 bps |
|
84.9 |
% |
|
87.4 |
% |
|
(250) bps |
(1) See attached Reconciliation of Non-GAAP
Financial Measures - Truckload Transportation Services (TTS)
Segment.
Werner Logistics Segment
- Revenues of $158.0 million
increased $40.6 million, or 35%
- Operating income of $7.7 million
increased $8.5 million
- Operating margin of 4.8% increased
550 bps
Logistics revenues of $158.0 million increased
35%. Logistics revenues increased 50%, if you exclude Werner Global
Logistics (WGL) revenues from third quarter 2020. Werner sold WGL
in first quarter 2021.
Truckload Logistics revenues (73% of total
Logistics revenues) increased 63%, driven by a 33% increase in
revenues per shipment and a 23% increase in shipments.
Intermodal revenues (25% of Logistics revenues)
increased 19%, supported by a 25% increase in revenues per shipment
while shipments declined 5%.
Logistics produced outstanding operating income
improvement of $8.5 million in a strong freight market.
Key Werner Logistics Segment Financial
Metrics
|
Three Months EndedSeptember 30, |
|
Nine Months Ended September 30, |
(In thousands) |
2021 |
|
2020 |
|
Y/Y Change |
|
2021 |
|
2020 |
|
Y/Y Change |
Total revenues |
$ |
157,968 |
|
|
$ |
117,351 |
|
|
35 |
% |
|
$ |
437,494 |
|
|
$ |
339,678 |
|
|
29 |
% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Rent and purchased transportation expense |
134,972 |
|
|
104,626 |
|
|
29 |
% |
|
379,887 |
|
|
293,400 |
|
|
29 |
% |
Other operating expenses |
15,346 |
|
|
13,577 |
|
|
13 |
% |
|
41,456 |
|
|
42,906 |
|
|
(3 |
%) |
Total operating expenses |
150,318 |
|
|
118,203 |
|
|
27 |
% |
|
421,343 |
|
|
336,306 |
|
|
25 |
% |
Operating income (loss) |
$ |
7,650 |
|
|
$ |
(852 |
) |
|
998 |
% |
|
$ |
16,151 |
|
|
$ |
3,372 |
|
|
379 |
% |
Operating margin |
4.8 |
% |
|
(0.7 |
%) |
|
550 bps |
|
3.7 |
% |
|
1.0 |
% |
|
270 bps |
Cash Flow and Capital
Allocation
Cash flow from operations in third quarter 2021
was $63.9 million compared to $59.1 million in third quarter 2020,
an increase of 8%.
Net capital expenditures in third quarter 2021
were $59.8 million compared to $79.7 million in third quarter 2020,
a decrease of 25%. We plan to continue to invest in new trucks and
trailers and our terminals to improve our driver experience,
optimize operational efficiency and more effectively manage our
maintenance, safety and fuel costs. The average ages of our truck
and trailer fleets remain low by industry standards and were 2.1
years and 4.4 years, respectively, as of September 30, 2021.
Gains on sales of equipment in third quarter
2021 were $15.3 million, or $0.17 per share, compared to $3.9
million, or $0.04 per share, in third quarter 2020. Year over year,
we sold fewer trucks and trailers and realized substantially higher
average gains per truck and trailer due to the significantly
improved pricing market for our used equipment. As a reminder,
gains on sales of assets are reflected as a reduction of Other
Operating Expenses in our income statement.
During the quarter, we repurchased 1,049,120
shares of common stock for a total cost of $47.8 million, or an
average price of $45.52 per share. As of September 30, 2021, we had
1.6 million shares remaining under our share repurchase
authorization.
As of September 30, 2021, we had $45 million of
cash and over $1.3 billion of stockholders’ equity. Total debt
outstanding increased $50 million during the quarter to $350
million at September 30, 2021. After considering letters of credit
issued, we had available liquidity consisting of cash and available
borrowing capacity as of September 30, 2021 of $199 million.
2021 Guidance Metrics and
AssumptionsThe following table summarizes our updated 2021
guidance and assumptions:
2021 Guidance |
Prior(as of 7/29/21) |
Actual(as of 9/30/21) |
New(as of 10/28/21) |
Commentary |
TTS truck growth from BoY to EoY |
1% to 4%(annual) |
5%(YTD21) |
3% to 5%(annual) |
Flat to slightly lower fleet expected in 4Q21 |
Gains on sales of equipment |
$9M to $13M(3Q21) |
$15.3M (3Q21) |
$10M to $12M(4Q21) |
Expect lower unit sales due to lower new truck and trailer
deliveries |
Net capital expenditures |
$275M to $300M(annual) |
$162.7M(YTD21) |
$250M to $275M(annual) |
Lower range due to lower new truck and trailer deliveries |
TTS Guidance |
|
|
|
|
Dedicated RPTPW* growth |
3% to 5%(annual) |
0.3%(3Q21 vs. 3Q20) |
1% to 2%(4Q21 vs 4Q20) |
Lower miles per truck in 4Q21 due to fleet mix but improving from
3Q21 |
One-Way Truckload (OWT) RPTM* growth |
16% to 19%(2H21 vs. 2H20) |
21.8%(3Q21 vs. 3Q20) |
17% to 19%(4Q21 vs. 4Q20) |
Strong start to peak shipping season combined with fleet mix
changes |
Assumptions |
|
|
|
|
Effective income tax rate |
24.5% to 25.5%(annual) |
24.6%(3Q21) |
24.5% to 25.5%(annual) |
|
Truck ageTrailer age |
2.0 yearsLow-to-mid “4” years |
2.1 years4.4 years |
2.2 years4.4 years |
Reinvesting to maintain young fleet advantage, subject to timing of
OEM deliveries |
* Net of fuel surcharge
revenues
Conference Call Information
Werner Enterprises, Inc. will conduct a
conference call to discuss third quarter 2021 earnings today
beginning at 4:00 p.m. CT. The news release, live webcast of the
earnings conference call, and accompanying slide presentation will
be available at werner.com in the “Investors” section under “News
& Events” and then “Events Calendar.” To participate in the
conference call, please dial (844) 701-1165 (domestic) or (412)
317-5498 (international). Please mention to the operator that you
are dialing in for the Werner Enterprises call.
A replay of the conference call will be
available on October 28, 2021 at approximately 6:00 p.m. CT through
November 28, 2021 by dialing (877) 344-7529 (domestic) or (412)
317-0088 (international) and using the access code 10150334. A
replay of the webcast will also be available at werner.com in the
“Investors” section under “News & Events” and then “Events
Calendar.”
About Werner Enterprises
Werner Enterprises, Inc. (Nasdaq: WERN) delivers
superior truckload transportation and logistics services to
customers across the United States, Mexico and Canada. With 2020
revenues of $2.4 billion, an industry-leading modern truck and
trailer fleet, over 13,000 talented associates and our innovative
Werner Edge technology, we are an essential solutions provider for
customers who value the integrity of their supply chain and require
safe and exceptional on-time service. Werner provides Dedicated and
One-Way Truckload services as well as Logistics services that
include truckload brokerage, freight management, intermodal and
final mile. As an industry leader, Werner is deeply committed to
promoting sustainability and supporting diversity, equity and
inclusion.
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, 2020.
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 (“SEC”),
through the issuance of press releases or by other methods of
public disclosure.
Contact:John J. SteeleExecutive Vice President,
Treasurerand Chief Financial Officer(402) 894-3036
Source: Werner Enterprises, Inc.
Consolidated Financial
Information
INCOME STATEMENT |
(Unaudited) |
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
Operating revenues |
$ |
702,891 |
|
|
100.0 |
|
|
$ |
590,214 |
|
|
100.0 |
|
|
$ |
1,969,151 |
|
|
100.0 |
|
|
$ |
1,751,876 |
|
|
100.0 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and benefits |
234,250 |
|
|
33.3 |
|
|
197,151 |
|
|
33.4 |
|
|
649,198 |
|
|
33.0 |
|
|
598,129 |
|
|
34.1 |
|
Fuel |
64,692 |
|
|
9.2 |
|
|
37,933 |
|
|
6.4 |
|
|
174,033 |
|
|
8.8 |
|
|
117,381 |
|
|
6.7 |
|
Supplies and maintenance |
57,067 |
|
|
8.1 |
|
|
44,015 |
|
|
7.5 |
|
|
152,628 |
|
|
7.7 |
|
|
133,079 |
|
|
7.6 |
|
Taxes and licenses |
24,419 |
|
|
3.5 |
|
|
24,032 |
|
|
4.1 |
|
|
71,396 |
|
|
3.6 |
|
|
70,835 |
|
|
4.1 |
|
Insurance and claims |
27,702 |
|
|
4.0 |
|
|
23,307 |
|
|
4.0 |
|
|
70,497 |
|
|
3.6 |
|
|
85,160 |
|
|
4.9 |
|
Depreciation and amortization |
68,615 |
|
|
9.8 |
|
|
62,980 |
|
|
10.7 |
|
|
196,431 |
|
|
10.0 |
|
|
199,487 |
|
|
11.4 |
|
Rent and purchased transportation |
161,061 |
|
|
22.9 |
|
|
131,843 |
|
|
22.3 |
|
|
458,474 |
|
|
23.3 |
|
|
378,989 |
|
|
21.6 |
|
Communications and utilities |
3,598 |
|
|
0.5 |
|
|
3,797 |
|
|
0.6 |
|
|
9,953 |
|
|
0.5 |
|
|
11,141 |
|
|
0.6 |
|
Other |
(9,837 |
) |
|
(1.4 |
) |
|
3,053 |
|
|
0.5 |
|
|
(24,117 |
) |
|
(1.2 |
) |
|
11,688 |
|
|
0.7 |
|
Total operating expenses |
631,567 |
|
|
89.9 |
|
|
528,111 |
|
|
89.5 |
|
|
1,758,493 |
|
|
89.3 |
|
|
1,605,889 |
|
|
91.7 |
|
Operating income |
71,324 |
|
|
10.1 |
|
|
62,103 |
|
|
10.5 |
|
|
210,658 |
|
|
10.7 |
|
|
145,987 |
|
|
8.3 |
|
Other expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
1,284 |
|
|
0.2 |
|
|
887 |
|
|
0.2 |
|
|
2,823 |
|
|
0.1 |
|
|
3,639 |
|
|
0.2 |
|
Interest income |
(287 |
) |
|
(0.1 |
) |
|
(323 |
) |
|
(0.1 |
) |
|
(918 |
) |
|
— |
|
|
(1,326 |
) |
|
(0.1 |
) |
Gain on investments in equity securities, net |
(16,090 |
) |
|
(2.3 |
) |
|
— |
|
|
— |
|
|
(36,281 |
) |
|
(1.8 |
) |
|
— |
|
|
— |
|
Other |
50 |
|
|
— |
|
|
55 |
|
|
— |
|
|
146 |
|
|
— |
|
|
123 |
|
|
— |
|
Total other expense (income) |
(15,043 |
) |
|
(2.2 |
) |
|
619 |
|
|
0.1 |
|
|
(34,230 |
) |
|
(1.7 |
) |
|
2,436 |
|
|
0.1 |
|
Income before income
taxes |
86,367 |
|
|
12.3 |
|
|
61,484 |
|
|
10.4 |
|
|
244,888 |
|
|
12.4 |
|
|
143,551 |
|
|
8.2 |
|
Income tax expense |
21,278 |
|
|
3.0 |
|
|
15,152 |
|
|
2.5 |
|
|
61,275 |
|
|
3.1 |
|
|
35,029 |
|
|
2.0 |
|
Net income |
65,089 |
|
|
9.3 |
|
|
46,332 |
|
|
7.9 |
|
|
183,613 |
|
|
9.3 |
|
|
108,522 |
|
|
6.2 |
|
Net income attributable to
noncontrolling interest |
(1,328 |
) |
|
(0.2 |
) |
|
— |
|
|
— |
|
|
(1,328 |
) |
|
— |
|
|
— |
|
|
— |
|
Net income attributable to Werner |
$ |
63,761 |
|
|
9.1 |
|
|
$ |
46,332 |
|
|
7.9 |
|
|
$ |
182,285 |
|
|
9.3 |
|
|
$ |
108,522 |
|
|
6.2 |
|
Diluted shares
outstanding |
67,834 |
|
|
|
|
69,449 |
|
|
|
|
68,136 |
|
|
|
|
69,500 |
|
|
|
Diluted earnings per
share |
$ |
0.94 |
|
|
|
|
$ |
0.67 |
|
|
|
|
$ |
2.68 |
|
|
|
|
$ |
1.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED BALANCE SHEET |
(In thousands, except share amounts) |
|
|
|
|
|
September 30,2021 |
|
December 31,2020 |
|
(Unaudited) |
|
|
|
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
45,428 |
|
|
$ |
29,334 |
|
Accounts receivable, trade, less allowance of $9,233 and $8,686,
respectively |
426,346 |
|
|
341,104 |
|
Other receivables |
26,524 |
|
|
23,491 |
|
Inventories and supplies |
11,787 |
|
|
12,062 |
|
Prepaid taxes, licenses and permits |
8,140 |
|
|
17,231 |
|
Other current assets |
51,566 |
|
|
33,694 |
|
Total current assets |
569,791 |
|
|
456,916 |
|
Property and equipment |
2,515,378 |
|
|
2,405,335 |
|
Less – accumulated
depreciation |
908,852 |
|
|
862,077 |
|
Property and equipment, net |
1,606,526 |
|
|
1,543,258 |
|
Goodwill |
44,710 |
|
|
— |
|
Intangible assets, net |
50,974 |
|
|
— |
|
Other non-current assets
(1) |
207,140 |
|
|
156,502 |
|
Total assets |
$ |
2,479,141 |
|
|
$ |
2,156,676 |
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
92,425 |
|
|
$ |
83,263 |
|
Current portion of long-term debt |
6,250 |
|
|
25,000 |
|
Insurance and claims accruals |
70,073 |
|
|
76,917 |
|
Accrued payroll |
43,397 |
|
|
35,594 |
|
Accrued expenses |
27,574 |
|
|
25,032 |
|
Other current liabilities |
21,509 |
|
|
28,208 |
|
Total current liabilities |
261,228 |
|
|
274,014 |
|
Long-term debt, net of current
portion |
343,750 |
|
|
175,000 |
|
Other long-term
liabilities |
43,656 |
|
|
43,114 |
|
Insurance and claims accruals,
net of current portion (1) |
234,000 |
|
|
231,638 |
|
Deferred income taxes |
253,335 |
|
|
237,870 |
|
Stockholders’ equity: |
|
|
|
Common stock, $.01 par value, 200,000,000 shares authorized;
80,533,536 |
|
|
|
shares issued; 66,884,251 and 67,931,726 shares outstanding,
respectively |
805 |
|
|
805 |
|
Paid-in capital |
119,776 |
|
|
116,039 |
|
Retained earnings |
1,598,232 |
|
|
1,438,916 |
|
Accumulated other comprehensive loss |
(21,592 |
) |
|
(22,833 |
) |
Treasury stock, at cost; 13,649,285 and 12,601,810 shares,
respectively |
(390,664 |
) |
|
(337,887 |
) |
Total Werner stockholders’ equity |
1,306,557 |
|
|
1,195,040 |
|
Noncontrolling Interest |
36,615 |
|
|
— |
|
Total stockholders’ equity |
1,343,172 |
|
|
1,195,040 |
|
Total liabilities and
stockholders’ equity |
$ |
2,479,141 |
|
|
$ |
2,156,676 |
|
(1) Under the terms of our insurance policies,
we are the primary obligor of the damage award in the previously
mentioned adverse jury verdict, and as such, we have recorded a
$79.2 million receivable from our third party insurance providers
in other non-current assets and a corresponding liability of the
same amount in the long-term portion of insurance and claims
accruals in the unaudited condensed balance sheets as of September
30, 2021 and December 31, 2020.
|
SUPPLEMENTAL INFORMATION |
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Capital expenditures, net |
$ |
59,783 |
|
|
$ |
79,654 |
|
|
$ |
162,730 |
|
|
$ |
187,263 |
|
Cash flow from operations |
63,880 |
|
|
59,054 |
|
|
253,344 |
|
|
346,396 |
|
Return on assets
(annualized) |
10.8 |
% |
|
8.8 |
% |
|
10.8 |
% |
|
6.9 |
% |
Return on equity
(annualized) |
19.9 |
% |
|
16.0 |
% |
|
19.4 |
% |
|
12.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Segment Financial and Operating
Statistics Information
|
SEGMENT INFORMATION |
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenues |
|
|
|
|
|
|
|
Truckload Transportation Services |
$ |
527,697 |
|
|
$ |
458,256 |
|
|
$ |
1,481,846 |
|
|
$ |
1,368,172 |
|
Werner Logistics |
157,968 |
|
|
117,351 |
|
|
437,494 |
|
|
339,678 |
|
Other (1) |
17,004 |
|
|
14,156 |
|
|
49,128 |
|
|
42,539 |
|
Corporate |
434 |
|
|
481 |
|
|
1,222 |
|
|
1,542 |
|
Subtotal |
703,103 |
|
|
590,244 |
|
|
1,969,690 |
|
|
1,751,931 |
|
Inter-segment eliminations
(2) |
(212 |
) |
|
(30 |
) |
|
(539 |
) |
|
(55 |
) |
Total |
$ |
702,891 |
|
|
$ |
590,214 |
|
|
$ |
1,969,151 |
|
|
$ |
1,751,876 |
|
Operating Income |
|
|
|
|
|
|
|
Truckload Transportation
Services |
$ |
62,856 |
|
|
$ |
63,080 |
|
|
$ |
193,592 |
|
|
$ |
143,394 |
|
Werner Logistics |
7,650 |
|
|
(852 |
) |
|
16,151 |
|
|
3,372 |
|
Other (1) |
1,406 |
|
|
566 |
|
|
3,935 |
|
|
2,932 |
|
Corporate |
(588 |
) |
|
(691 |
) |
|
(3,020 |
) |
|
(3,711 |
) |
Total |
$ |
71,324 |
|
|
$ |
62,103 |
|
|
$ |
210,658 |
|
|
$ |
145,987 |
|
(1) Other includes our driver training schools,
transportation-related activities such as third-party equipment
maintenance and equipment leasing, and other business
activities.(2) Inter-segment eliminations represent transactions
between reporting segments that are eliminated in
consolidation.
|
OPERATING STATISTICS BY SEGMENT |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
|
|
Nine Months Ended September 30, |
|
|
|
2021 |
|
2020 |
|
% Chg |
|
2021 |
|
2020 |
|
% Chg |
Truckload
Transportation Services segment |
|
|
|
|
|
|
|
|
|
|
|
Average trucks in service |
8,161 |
|
|
|
7,615 |
|
|
7.2 |
|
% |
|
7,872 |
|
|
|
7,746 |
|
|
|
1.6 |
|
% |
Average revenues per truck per week (1) |
$ |
4,349 |
|
|
|
$ |
4,216 |
|
|
3.2 |
|
% |
|
$ |
4,236 |
|
|
|
$ |
4,082 |
|
|
|
3.8 |
|
% |
Total trucks (at quarter
end) |
|
|
|
|
|
|
|
|
|
|
|
Company |
7,905 |
|
|
|
7,245 |
|
|
9.1 |
|
% |
|
7,905 |
|
|
|
7,245 |
|
|
|
9.1 |
|
% |
Independent contractor |
315 |
|
|
|
465 |
|
|
(32.3 |
) |
% |
|
315 |
|
|
|
465 |
|
|
|
(32.3 |
) |
% |
Total trucks |
8,220 |
|
|
|
7,710 |
|
|
6.6 |
|
% |
|
8,220 |
|
|
|
7,710 |
|
|
|
6.6 |
|
% |
Total trailers (at quarter
end) |
25,245 |
|
|
|
22,350 |
|
|
13.0 |
|
% |
|
25,245 |
|
|
|
22,350 |
|
|
|
13.0 |
|
% |
One-Way
Truckload |
|
|
|
|
|
|
|
|
|
|
|
Trucking revenues, net of fuel
surcharge (in 000’s) |
$ |
190,314 |
|
|
|
$ |
173,021 |
|
|
10.0 |
|
% |
|
$ |
513,324 |
|
|
|
$ |
518,854 |
|
|
|
(1.1 |
) |
% |
Average trucks in service |
3,110 |
|
|
|
3,048 |
|
|
2.0 |
|
% |
|
2,894 |
|
|
|
3,156 |
|
|
|
(8.3 |
) |
% |
Total trucks (at quarter
end) |
3,100 |
|
|
|
2,995 |
|
|
3.5 |
|
% |
|
3,100 |
|
|
|
2,995 |
|
|
|
3.5 |
|
% |
Average percentage of empty
miles |
11.17 |
|
% |
|
11.70 |
% |
|
(4.5 |
) |
% |
|
11.08 |
|
% |
|
12.18 |
|
% |
|
(9.0 |
) |
% |
Average revenues per truck per
week (1) |
$ |
4,708 |
|
|
|
$ |
4,366 |
|
|
7.8 |
|
% |
|
$ |
4,549 |
|
|
|
$ |
4,215 |
|
|
|
7.9 |
|
% |
Average % change YOY in
revenues per total mile (1) |
21.8 |
|
% |
|
2.9 |
% |
|
|
|
16.2 |
|
% |
|
(0.9 |
) |
% |
|
|
Average % change YOY in total
miles per truck per week |
(11.4 |
) |
% |
|
1.4 |
% |
|
|
|
(7.2 |
) |
% |
|
2.0 |
|
% |
|
|
Average completed trip length
in miles (loaded) |
731 |
|
|
|
866 |
|
|
(15.6 |
) |
% |
|
814 |
|
|
|
847 |
|
|
|
(3.9 |
) |
% |
Dedicated |
|
|
|
|
|
|
|
|
|
|
|
Trucking revenues, net of fuel
surcharge (in 000’s) |
$ |
271,066 |
|
|
|
$ |
244,314 |
|
|
10.9 |
|
% |
|
$ |
787,231 |
|
|
|
$ |
714,413 |
|
|
|
10.2 |
|
% |
Average trucks in service |
5,051 |
|
|
|
4,567 |
|
|
10.6 |
|
% |
|
4,978 |
|
|
|
4,590 |
|
|
|
8.5 |
|
% |
Total trucks (at quarter
end) |
5,120 |
|
|
|
4,715 |
|
|
8.6 |
|
% |
|
5,120 |
|
|
|
4,715 |
|
|
|
8.6 |
|
% |
Average revenues per truck per
week (1) |
$ |
4,129 |
|
|
|
$ |
4,115 |
|
|
0.3 |
|
% |
|
$ |
4,055 |
|
|
|
$ |
3,990 |
|
|
|
1.6 |
|
% |
Werner Logistics
segment |
|
|
|
|
|
|
|
|
|
|
|
Average trucks in service |
41 |
|
|
|
31 |
|
|
32.3 |
|
% |
|
38 |
|
|
|
31 |
|
|
|
22.6 |
|
% |
Total trucks (at quarter
end) |
50 |
|
|
|
32 |
|
|
56.3 |
|
% |
|
50 |
|
|
|
32 |
|
|
|
56.3 |
|
% |
Total trailers (at quarter
end) |
1,515 |
|
|
|
1,325 |
|
|
14.3 |
|
% |
|
1,515 |
|
|
|
1,325 |
|
|
|
14.3 |
|
% |
(1) Net of fuel surcharge revenues
Non-GAAP Financial Measures and
Reconciliations
To supplement our financial results presented in
accordance with generally accepted accounting principles in the
United States of America (“GAAP”), we provide certain non-GAAP
financial measures as defined by the SEC Regulation G, including
non-GAAP adjusted operating income; non-GAAP adjusted operating
margin; non-GAAP adjusted operating margin, net of fuel surcharge;
non-GAAP adjusted net income attributable to Werner; non-GAAP
adjusted diluted earnings per share; non-GAAP adjusted operating
expenses; non-GAAP adjusted operating expenses, net of fuel
surcharge; non-GAAP adjusted operating ratio; and non-GAAP adjusted
operating ratio, net of fuel surcharge. We believe these non-GAAP
financial measures provide a more useful comparison of our
performance from period to period because they exclude the effect
of items that, in our opinion, do not reflect our core operating
performance. Our non-GAAP financial measures are not meant to be
considered in isolation or as substitutes for their comparable GAAP
measures and should be read only in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
There are limitations to using non-GAAP financial measures.
Although we believe that they improve comparability in analyzing
our period to period performance, they could limit comparability to
other companies in our industry if those companies define these
measures differently. Because of these limitations, our non-GAAP
financial measures should not be considered measures of income
generated by our business. Management compensates for these
limitations by primarily relying on GAAP results and using non-GAAP
financial measures on a supplemental basis.
The following tables present reconciliations of
each non-GAAP financial measure to its most directly comparable
GAAP financial measure as required by SEC Regulation G. In
addition, information regarding each of the excluded items as well
as our reasons for excluding them from our non-GAAP results is
provided below. The income tax effect of the non-GAAP adjustments
is calculated using the incremental income tax rate excluding
discrete items.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES –
CONSOLIDATED(unaudited)(In thousands, except per share amounts)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Non-GAAP Adjusted
Operating Income and Non-GAAP Adjusted Operating
Margin (1) |
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
Operating income and operating margin – (GAAP) |
$ |
71,324 |
|
10.1 |
% |
|
$ |
62,103 |
|
10.5 |
% |
|
$ |
210,658 |
|
|
10.7 |
|
% |
|
$ |
145,987 |
|
8.3 |
% |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance and claims (2) |
1,300 |
|
0.2 |
% |
|
1,238 |
|
0.2 |
% |
|
3,816 |
|
|
0.2 |
|
% |
|
3,634 |
|
0.2 |
% |
Acquisition expenses (3) |
— |
|
— |
% |
|
— |
|
— |
% |
|
992 |
|
|
0.1 |
|
% |
|
— |
|
— |
% |
Gain on sale of Werner Global Logistics (4) |
— |
|
— |
% |
|
— |
|
— |
% |
|
(1,013 |
) |
|
(0.1 |
) |
% |
|
— |
|
— |
% |
Depreciation (5) |
— |
|
— |
% |
|
921 |
|
0.2 |
% |
|
— |
|
|
— |
|
% |
|
9,614 |
|
0.6 |
% |
Amortization of intangible assets (6) |
1,226 |
|
0.2 |
% |
|
— |
|
— |
% |
|
1,226 |
|
|
0.1 |
|
% |
|
— |
|
— |
% |
Non-GAAP adjusted operating
income and non-GAAP adjusted operating margin |
$ |
73,850 |
|
10.5 |
% |
|
$ |
64,262 |
|
10.9 |
% |
|
$ |
215,679 |
|
|
11.0 |
|
% |
|
$ |
159,235 |
|
9.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Non-GAAP Adjusted Net
Income Attributable to Werner and
Non-GAAP Adjusted Diluted EPS
(1) |
$ |
|
Diluted EPS |
|
$ |
|
Diluted EPS |
|
$ |
|
Diluted EPS |
|
$ |
Diluted EPS |
Net income attributable to Werner and diluted EPS – (GAAP) |
$ |
63,761 |
|
|
$ |
0.94 |
|
|
$ |
46,332 |
|
|
$ |
0.67 |
|
|
$ |
182,285 |
|
|
$ |
2.68 |
|
|
$ |
108,522 |
|
|
$ |
1.56 |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance and claims (2) |
1,300 |
|
|
0.02 |
|
|
1,238 |
|
|
0.02 |
|
|
3,816 |
|
|
0.05 |
|
|
3,634 |
|
|
0.05 |
|
Acquisition expenses (3) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
992 |
|
|
0.01 |
|
|
— |
|
|
— |
|
Gain on sale of Werner Global Logistics (4) |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,013 |
) |
|
(0.01 |
) |
|
— |
|
|
— |
|
Depreciation (5) |
— |
|
|
— |
|
|
921 |
|
|
0.01 |
|
|
— |
|
|
— |
|
|
9,614 |
|
|
0.14 |
|
Amortization of intangible assets, net of amount attributable to
noncontrolling interest (6) |
981 |
|
|
0.02 |
|
|
— |
|
|
— |
|
|
981 |
|
|
0.01 |
|
|
— |
|
|
— |
|
Gain on investments in equity securities, net (7) |
(16,090 |
) |
|
(0.24 |
) |
|
— |
|
|
— |
|
|
(36,281 |
) |
|
(0.53 |
) |
|
— |
|
|
— |
|
Income tax effect of above adjustments |
3,522 |
|
|
0.05 |
|
|
(550 |
) |
|
(0.01 |
) |
|
8,034 |
|
|
0.12 |
|
|
(3,378 |
) |
|
(0.05 |
) |
Non-GAAP adjusted net income
attributable to Werner and non-GAAP adjusted diluted EPS |
$ |
53,474 |
|
|
$ |
0.79 |
|
|
$ |
47,941 |
|
|
$ |
0.69 |
|
|
$ |
158,814 |
|
|
$ |
2.33 |
|
|
$ |
118,392 |
|
|
$ |
1.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES –
TRUCKLOAD TRANSPORTATION SERVICES (TTS) SEGMENT(unaudited)(In
thousands)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Non-GAAP Adjusted
Operating Income and Non-GAAP Adjusted Operating
Margin (1) |
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
Operating income and operating margin – (GAAP) |
$ |
62,856 |
|
11.9 |
% |
|
$ |
63,080 |
|
13.8 |
% |
|
$ |
193,592 |
|
13.1 |
% |
|
$ |
143,394 |
|
10.5 |
% |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
. |
|
|
|
|
|
|
Insurance and claims (2) |
1,300 |
|
0.3 |
% |
|
1,238 |
|
0.2 |
% |
|
3,816 |
|
0.2 |
% |
|
3,634 |
|
0.2 |
% |
Depreciation (5) |
— |
|
— |
% |
|
921 |
|
0.2 |
% |
|
— |
|
— |
% |
|
9,614 |
|
0.7 |
% |
Amortization of intangible assets (6) |
1,226 |
|
0.2 |
% |
|
— |
|
— |
% |
|
1,226 |
|
0.1 |
% |
|
— |
|
— |
% |
Non-GAAP adjusted operating
income and non-GAAP adjusted operating margin |
$ |
65,382 |
|
12.4 |
% |
|
$ |
65,239 |
|
14.2 |
% |
|
$ |
198,634 |
|
13.4 |
% |
|
$ |
156,642 |
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Non-GAAP Adjusted
Operating Expenses and Non-GAAP Adjusted Operating
Ratio (1) |
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
Operating expenses and operating ratio – (GAAP) |
$ |
464,841 |
|
|
88.1 |
|
% |
|
$ |
395,176 |
|
|
86.2 |
|
% |
|
$ |
1,288,254 |
|
|
86.9 |
|
% |
|
$ |
1,224,778 |
|
|
89.5 |
|
% |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance and claims (2) |
(1,300 |
) |
|
(0.3 |
) |
% |
|
(1,238 |
) |
|
(0.2 |
) |
% |
|
(3,816 |
) |
|
(0.2 |
) |
% |
|
(3,634 |
) |
|
(0.2 |
) |
% |
Depreciation (5) |
— |
|
|
— |
|
% |
|
(921 |
) |
|
(0.2 |
) |
% |
|
— |
|
|
— |
|
% |
|
(9,614 |
) |
|
(0.7 |
) |
% |
Amortization of intangible assets (6) |
(1,226 |
) |
|
(0.2 |
) |
% |
|
— |
|
|
— |
|
% |
|
(1,226 |
) |
|
(0.1 |
) |
% |
|
— |
|
|
— |
|
% |
Non-GAAP adjusted operating
expenses and non-GAAP adjusted operating ratio |
$ |
462,315 |
|
|
87.6 |
|
% |
|
$ |
393,017 |
|
|
85.8 |
|
% |
|
$ |
1,283,212 |
|
|
86.6 |
|
% |
|
$ |
1,211,530 |
|
|
88.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
Non-GAAP
Adjusted Operating Expenses, Net of Fuel Surcharge;
Non-GAAP Adjusted Operating Margin, Net of Fuel
Surcharge; and Non-GAAP Adjusted Operating Ratio,
Net of Fuel Surcharge (1) |
2021 |
|
2020 |
|
2021 |
|
2020 |
$ |
|
$ |
|
$ |
|
$ |
Operating revenues – (GAAP) |
$ |
527,697 |
|
|
|
$ |
458,256 |
|
|
|
$ |
1,481,846 |
|
|
|
$ |
1,368,172 |
|
|
Less: Trucking fuel surcharge
(8) |
(60,765 |
) |
|
|
(36,799 |
) |
|
|
(165,663 |
) |
|
|
(122,048 |
) |
|
Operating revenues, net of
fuel surcharge – (Non-GAAP) |
466,932 |
|
|
|
421,457 |
|
|
|
1,316,183 |
|
|
|
1,246,124 |
|
|
Operating expenses –
(GAAP) |
464,841 |
|
|
|
395,176 |
|
|
|
1,288,254 |
|
|
|
1,224,778 |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
Trucking fuel surcharge (8) |
(60,765 |
) |
|
|
(36,799 |
) |
|
|
(165,663 |
) |
|
|
(122,048 |
) |
|
Insurance and claims (2) |
(1,300 |
) |
|
|
(1,238 |
) |
|
|
(3,816 |
) |
|
|
(3,634 |
) |
|
Depreciation (5) |
— |
|
|
|
(921 |
) |
|
|
— |
|
|
|
(9,614 |
) |
|
Amortization of intangible assets (6) |
(1,226 |
) |
|
|
— |
|
|
|
(1,226 |
) |
|
|
— |
|
|
Non-GAAP adjusted operating
expenses, net of fuel surcharge |
401,550 |
|
|
|
356,218 |
|
|
|
1,117,549 |
|
|
|
1,089,482 |
|
|
Non-GAAP adjusted operating
income |
$ |
65,382 |
|
|
|
$ |
65,239 |
|
|
|
$ |
198,634 |
|
|
|
$ |
156,642 |
|
|
Non-GAAP adjusted operating
margin, net of fuel surcharge |
14.0 |
|
% |
|
15.5 |
|
% |
|
15.1 |
|
% |
|
12.6 |
|
% |
Non-GAAP adjusted operating
ratio, net of fuel surcharge |
86.0 |
|
% |
|
84.5 |
|
% |
|
84.9 |
|
% |
|
87.4 |
|
% |
(1) Non-GAAP adjusted operating income; non-GAAP
adjusted operating margin; non-GAAP adjusted operating margin, net
of fuel surcharge; non-GAAP adjusted net income attributable to
Werner; non-GAAP adjusted diluted earnings per share; non-GAAP
adjusted operating expenses; non-GAAP adjusted operating expenses,
net of fuel surcharge; non-GAAP adjusted operating ratio; and
non-GAAP adjusted operating ratio, net of fuel surcharge should be
considered in addition to, rather than as substitutes for, GAAP
operating income; GAAP operating margin; GAAP net income
attributable to Werner; GAAP diluted earnings per share; GAAP
operating expenses; and GAAP operating ratio, which are their most
directly comparable GAAP financial measures.
(2) During third quarter 2021 and 2020, we
accrued pre-tax insurance and claims expense for interest related
to a previously disclosed excess adverse jury verdict rendered on
May 17, 2018 in a lawsuit arising from a December 2014 accident.
The Company is appealing this verdict. Additional information about
the accident was included in our Current Report on Form 8-K dated
May 17, 2018. Under our insurance policies in effect on the date of
this accident, our maximum liability for this accident is $10.0
million (plus pre-judgment and post-judgment interest) with
premium-based insurance coverage that exceeds the jury verdict
amount. Interest is accrued at $0.4 million per month until such
time as the outcome of our appeal is finalized. Management believes
excluding the effect of this item provides a more useful comparison
of our performance from period to period. This item is included in
the Truckload Transportation Services segment in our Segment
Information table.
(3) During second quarter 2021, we incurred
legal and professional fees related to the acquisition of ECM,
which was finalized on July 1, 2021. Acquisition-related expenses
are excluded as management believes these costs are not
representative of the costs of managing our on-going business. The
expenses are included within other operating expenses in our Income
Statement and in Corporate operating income in our Segment
Information table.
(4) During first quarter 2021, we sold Werner
Global Logistics (“WGL”) freight forwarding services for
international ocean and air shipments to Scan Global Logistics
Group, which resulted in the pre-tax gain on sale. Management
believes excluding the effect of this unusual and infrequent item
provides a more useful comparison of our performance from period to
period. This item is included in our Werner Logistics segment in
our Segment Information table.
(5) During first quarter 2020, we changed the
estimated life of certain trucks expected to be sold in 2020 to
more rapidly depreciate these trucks to their estimated residual
values due to the weak used truck market. These trucks continued to
depreciate at the same higher rate per truck, until all were sold.
Management believes excluding the effect of this unusual and
infrequent item provides a more useful comparison of our
performance from period to period. This item is included in our
Truckload Transportation Services segment in our Segment
Information table.
(6) Amortization expense related to intangible
assets acquired in the ECM acquisition is excluded because
management does not believe it is indicative of our core operating
performance. This item is included in our Truckload Transportation
Services segment in our Segment Information table.
(7) Represents non-operating mark-to-market
adjustments for gains/losses on our ownership interests in
TuSimple, an autonomous technology company, and Mastery Logistics
Systems, Inc., a transportation management systems company. We
account for these ownership interests under ASC 321, Investments -
Equity Securities. We record changes in the value of our
investments in equity securities in other expense (income) in our
Income Statement. Management believes excluding the effect of
gains/losses on our investments in equity securities provides a
more useful comparison of our performance from period to
period.
(8) Fluctuating fuel prices and fuel surcharge
revenues impact the total company operating ratio and the TTS
segment operating ratio when fuel surcharges are reported on a
gross basis as revenues versus netting the fuel surcharges against
fuel expenses. Management believes netting fuel surcharge revenues,
which are generally a more volatile source of revenue, against fuel
expenses provides a more consistent basis for comparing the results
of operations from period to period.
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