Werner Enterprises, Inc. (Nasdaq: WERN), a premier transportation
and logistics provider, today reported results for the third
quarter ended September 30, 2022.
“Even though operating conditions have become
more challenging due to macroeconomic changes that are softening
the freight market, we produced good financial results,” said Derek
J. Leathers, Chairman, President and Chief Executive Officer.
“Strong and resilient performance from our durable Dedicated fleet
more than offset moderating results in our One-Way Truckload fleet
and Logistics segment. We are expecting a more subdued peak freight
market in fourth quarter compared to a very strong peak freight
market in fourth quarter a year ago.”
Total revenues for the quarter were $827.6
million, an increase of $124.7 million compared to the prior year
quarter, due to Truckload Transportation Services (“TTS”) revenues
growth of $94.2 million and Logistics revenues growth of $29.2
million.
Operating income of $76.3 million increased $4.9
million, or 7%, while operating margin of 9.2% decreased 90 basis
points. On a non-GAAP basis, adjusted operating income of $79.5
million increased $5.6 million, or 8%. Adjusted operating margin of
9.6% decreased 90 basis points from 10.5% for the same quarter last
year. Truckload Transportation Services grew operating income by
$11.2 million and adjusted operating income by $11.0 million.
Logistics operating income declined $2.5 million and adjusted
operating income declined by $2.0 million. Corporate and Other
(including driving schools) operating income declined by $3.8
million, due to start-up impacts from substantial growth in our
driver training school locations and temporary issues affecting two
school locations.
Interest expense of $2.8 million increased $1.5
million primarily due to an increase in average debt outstanding
and higher interest rates. The effective income tax rate during the
quarter was 24.3%, compared to 24.6% in third quarter 2021.
During third quarter 2022, our strategic
minority equity investments had market valuation changes causing a
net unrealized gain on equity securities, which resulted in higher
non-operating income of $0.1 million, compared to a net unrealized
gain of $16.1 million, or $0.18 per share, in third quarter 2021.
Consistent with prior reporting, market value increases or
decreases for these strategic minority investments are adjusted out
for determining non-GAAP adjusted net income and non-GAAP adjusted
earnings per share.
Net income attributable to Werner of $55.1
million decreased 14%. On a non-GAAP basis, adjusted net income
attributable to Werner of $57.2 million increased 7%. Diluted EPS
of $0.86 decreased 8%. On a non-GAAP basis, adjusted diluted EPS of
$0.90 increased 14%.
Key Consolidated Financial
Metrics
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(In
thousands, except per share amounts) |
|
2022 |
|
|
|
2021 |
|
|
Y/Y Change |
|
|
2022 |
|
|
|
2021 |
|
|
Y/Y Change |
Total revenues |
$ |
827,606 |
|
|
$ |
702,891 |
|
|
18 |
% |
|
$ |
2,428,487 |
|
|
$ |
1,969,151 |
|
|
23 |
% |
Truckload
Transportation Services revenues |
|
621,866 |
|
|
|
527,697 |
|
|
18 |
% |
|
|
1,793,899 |
|
|
|
1,481,846 |
|
|
21 |
% |
Werner
Logistics revenues |
|
187,138 |
|
|
|
157,968 |
|
|
18 |
% |
|
|
580,007 |
|
|
|
437,494 |
|
|
33 |
% |
Operating
income |
|
76,261 |
|
|
|
71,324 |
|
|
7 |
% |
|
|
234,695 |
|
|
|
210,658 |
|
|
11 |
% |
Operating
margin |
|
9.2 |
% |
|
|
10.1 |
% |
|
(90) bps |
|
|
9.7 |
% |
|
|
10.7 |
% |
|
(100) bps |
Net income
attributable to Werner |
|
55,051 |
|
|
|
63,761 |
|
|
(14)% |
|
|
181,090 |
|
|
|
182,285 |
|
|
(1)% |
Diluted
earnings per share |
|
0.86 |
|
|
|
0.94 |
|
|
(8)% |
|
|
2.79 |
|
|
|
2.68 |
|
|
4 |
% |
Adjusted
operating income(1) |
|
79,453 |
|
|
|
73,850 |
|
|
8 |
% |
|
|
243,247 |
|
|
|
215,679 |
|
|
13 |
% |
Adjusted
operating margin(1) |
|
9.6 |
% |
|
|
10.5 |
% |
|
(90) bps |
|
|
10.0 |
% |
|
|
11.0 |
% |
|
(100) bps |
Adjusted net
income attributable to Werner(1) |
|
57,231 |
|
|
|
53,404 |
|
|
7 |
% |
|
|
176,315 |
|
|
|
158,656 |
|
|
11 |
% |
Adjusted
diluted earnings per share(1) |
|
0.90 |
|
|
|
0.79 |
|
|
14 |
% |
|
|
2.72 |
|
|
|
2.33 |
|
|
17 |
% |
(1) See attached Reconciliation of Non-GAAP
Financial Measures - Consolidated.
Noteworthy Development
On October 1, 2022, Werner acquired a 100%
equity ownership interest in Baylor Trucking (“Baylor”) of Milan,
Indiana. Baylor achieved revenues of $81.5 million for the last
twelve months ended August 2022. Baylor is a premier truckload
carrier that operates 200 trucks and 980 trailers in the east
central and south central U.S. with their network of two terminals.
Baylor, with its highly skilled professional drivers and non-driver
associates, further strengthens our portfolio with their
exceptional service and stellar reputation.
Truckload Transportation Services (TTS)
Segment
- Revenues of $621.9 million increased $94.2 million
- Operating income of $74.1 million increased $11.3 million;
non-GAAP adjusted operating income of $76.3 million increased $11.0
million due to strength in our Dedicated fleet performance,
partially offset by moderating performance in One-Way
Truckload
- Operating margin of 11.9% remained flat; non-GAAP adjusted
operating margin of 12.3% decreased 10 basis points from 12.4%
- Non-GAAP adjusted operating margin, net of fuel, of 14.9%
increased 90 basis points from 14.0%
- Average segment trucks in service totaled 8,513, an increase of
352 trucks year over year, or 4.3%
- Dedicated unit trucks at quarter end totaled 5,430, or 63% of
the total TTS segment fleet, compared to 5,120 trucks, or 62%, a
year ago
- 4.6% increase in TTS average revenues per truck per week
During third quarter 2022, Dedicated continued
to experience strong and steady freight demand from its customers.
One-Way Truckload customer freight demand during third quarter 2022
moderated further from second quarter. During October, Dedicated
freight demand remained strong, and One-Way Truckload demand was
steady from third quarter with much fewer project and surge
opportunities as we enter peak season.
Comparisons of key financial metrics for the TTS
segment, including operating ratios (actual and net of fuel
surcharge revenues), are shown in the table below.
Key Truckload Transportation Services
Segment Financial Metrics
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(In
thousands) |
|
2022 |
|
|
|
2021 |
|
|
Y/Y Change |
|
|
2022 |
|
|
|
2021 |
|
|
Y/Y Change |
Trucking revenues, net of fuel surcharge |
$ |
503,677 |
|
|
$ |
461,380 |
|
|
9 |
% |
|
$ |
1,464,246 |
|
|
$ |
1,300,555 |
|
|
13 |
% |
Trucking
fuel surcharge revenues |
|
111,173 |
|
|
|
60,765 |
|
|
83 |
% |
|
|
309,629 |
|
|
|
165,663 |
|
|
87 |
% |
Non-trucking
and other revenues |
|
7,016 |
|
|
|
5,552 |
|
|
26 |
% |
|
|
20,024 |
|
|
|
15,628 |
|
|
28 |
% |
Total
revenues |
$ |
621,866 |
|
|
$ |
527,697 |
|
|
18 |
% |
|
$ |
1,793,899 |
|
|
$ |
1,481,846 |
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income |
|
74,117 |
|
|
|
62,856 |
|
|
18 |
% |
|
|
214,214 |
|
|
|
193,592 |
|
|
11 |
% |
Operating
margin |
|
11.9 |
% |
|
|
11.9 |
% |
|
— bps |
|
|
11.9 |
% |
|
|
13.1 |
% |
|
(120) bps |
Operating
ratio |
|
88.1 |
% |
|
|
88.1 |
% |
|
— bps |
|
|
88.1 |
% |
|
|
86.9 |
% |
|
120 bps |
Adjusted
operating income(1) |
|
76,341 |
|
|
|
65,382 |
|
|
17 |
% |
|
|
220,798 |
|
|
|
198,634 |
|
|
11 |
% |
Adjusted
operating margin(1) |
|
12.3 |
% |
|
|
12.4 |
% |
|
(10) bps |
|
|
12.3 |
% |
|
|
13.4 |
% |
|
(110) bps |
Adjusted
operating margin, net of fuel surcharge(1) |
|
14.9 |
% |
|
|
14.0 |
% |
|
90 bps |
|
|
14.9 |
% |
|
|
15.1 |
% |
|
(20) bps |
Adjusted
operating ratio(1) |
|
87.7 |
% |
|
|
87.6 |
% |
|
10 bps |
|
|
87.7 |
% |
|
|
86.6 |
% |
|
110 bps |
Adjusted
operating ratio, net of fuel surcharge(1) |
|
85.1 |
% |
|
|
86.0 |
% |
|
(90) bps |
|
|
85.1 |
% |
|
|
84.9 |
% |
|
20 bps |
(1) See attached Reconciliation of Non-GAAP
Financial Measures - Truckload Transportation Services (TTS)
Segment.
Werner Logistics Segment
- Revenues of $187.1 million increased $29.2 million, or 18%
- Operating income of $5.1 million decreased $2.5 million
- Operating margin of 2.7% decreased 210 basis points from
4.8%
- Adjusted operating income of $5.6 million decreased $2.0
million
- Adjusted operating margin of 3.0% decreased 180 basis points
from 4.8%
Truckload Logistics revenues (64% of Logistics
revenues) increased 4%, driven by a 6% increase in shipments,
partially offset by a 3% decrease in revenues per shipment.
Intermodal revenues (23% of Logistics revenues)
increased 10%, supported by a 37% increase in revenues per
shipment, partially offset by a 23% decrease in shipments.
Final Mile revenues (13% of Logistics revenues)
increased $21.0 million, due to the November 2021 acquisition of
NEHDS and continued growth from our national final mile agent
network.
Logistics operating income decreased $2.5
million and adjusted operating income decreased $2.0 million in
third quarter due to 180 basis points of adjusted operating margin
compression.
Key Werner Logistics Segment Financial
Metrics
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
(In
thousands) |
|
2022 |
|
|
|
2021 |
|
|
Y/Y Change |
|
|
2022 |
|
|
|
2021 |
|
|
Y/Y Change |
Total revenues |
$ |
187,138 |
|
|
$ |
157,968 |
|
|
18 |
% |
|
$ |
580,007 |
|
|
$ |
437,494 |
|
|
33 |
% |
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Purchased transportation expense |
|
154,960 |
|
|
|
134,972 |
|
|
15 |
% |
|
|
478,722 |
|
|
|
379,887 |
|
|
26 |
% |
Other operating expenses |
|
27,033 |
|
|
|
15,346 |
|
|
76 |
% |
|
|
74,969 |
|
|
|
41,456 |
|
|
81 |
% |
Total operating expenses |
|
181,993 |
|
|
|
150,318 |
|
|
21 |
% |
|
|
553,691 |
|
|
|
421,343 |
|
|
31 |
% |
Operating
income |
$ |
5,145 |
|
|
$ |
7,650 |
|
|
(33)% |
|
$ |
26,316 |
|
|
$ |
16,151 |
|
|
63 |
% |
Operating
margin |
|
2.7 |
% |
|
|
4.8 |
% |
|
(210) bps |
|
|
4.5 |
% |
|
|
3.7 |
% |
|
80 bps |
Adjusted
operating income(1) |
$ |
5,645 |
|
|
$ |
7,650 |
|
|
(26)% |
|
$ |
27,816 |
|
|
$ |
15,138 |
|
|
84 |
% |
Adjusted
operating margin(1) |
|
3.0 |
% |
|
|
4.8 |
% |
|
(180) bps |
|
|
4.8 |
% |
|
|
3.5 |
% |
|
130 bps |
(1) See attached Reconciliation of Non-GAAP
Financial Measures - Werner Logistics Segment.
Cash Flow and Capital
Allocation
Cash flow from operations in third quarter 2022
was $65.2 million compared to $63.9 million in third quarter 2021,
an increase of 2%.
Net capital expenditures in third quarter 2022
were $100.6 million compared to $59.8 million in third quarter
2021, an increase of 68%. 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 were 2.3 years and 4.8 years,
respectively, as of September 30, 2022.
Gains on sales of equipment in third quarter
2022 were $21.5 million, or $0.25 per share, compared to $15.3
million, or $0.17 per share, in third quarter 2021. Year over year,
we sold more trucks and a similar number of trailers and realized
higher average gains per truck and trailer. Gains on sales of
assets are reflected as a reduction of Other Operating Expenses in
our income statement.
During the quarter, we repurchased 215,204
shares of common stock for a total cost of $8.3 million, or an
average price of $38.51 per share. As of September 30, 2022, we had
2.3 million shares remaining under our share repurchase
authorization.
As of September 30, 2022, we had $126 million of
cash and nearly $1.4 billion of stockholders’ equity. Total debt
outstanding was $574 million at September 30, 2022. After
considering letters of credit issued, we had available liquidity
consisting of cash and available borrowing capacity as of September
30, 2022 of $287 million, prior to the closing payment for Baylor
on October 3, 2022.
2022 Guidance Metrics and
Assumptions
The following table summarizes our updated 2022
guidance and assumptions:
2022 Guidance |
Prior (as of 8/3/22) |
Actual (as of 9/30/22) |
New (as of 11/2/22) |
Commentary |
TTS truck growth from BoY to EoY |
2% to 5% (annual) |
3% (YTD22) |
3% to 5% (annual) |
Includes Baylor trucks acquired 10/1/22; rest of fleet flat to
slightly lower in 4Q22 |
Net capital expenditures |
$275M to $325M (annual) |
$254.1M (YTD22) |
$300M to $325M (annual) |
Subject to availability of new equipment |
TTS Guidance |
|
|
|
|
Dedicated RPTPW* growth |
6% to 8% (annual) |
8.6% (YTD22 vs. YTD21) |
6% to 8% (4Q22 vs. 4Q21) |
Expect continued strong rate levels to offset inflationary
costs |
One-Way Truckload RPTM* growth |
2% to 5% (3Q22 vs. 3Q21) |
2.5% (3Q22 vs. 3Q21) |
(3)% to 0% (4Q22 vs. 4Q21) |
Moderating OWT freight market, tough YOY RPTM comps, much fewer
premium pricing opportunities in 4Q22 |
Assumptions |
|
|
|
|
Effective income tax rate |
24.5% to 25.5% (annual) |
24.3% (YTD22) |
24.0% to 24.5% (annual) |
|
Truck age Trailer age |
2.2 years 4.8 years |
2.3 years 4.8 years |
2.3 years 5.0 years |
Subject to availability of new equipment |
* Net of fuel surcharge
revenues
Call Information
Werner Enterprises, Inc. will conduct a
conference call to discuss third quarter 2022 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 November 2, 2022 at approximately 6:00 p.m. CT
through December 2, 2022 by dialing (877) 344-7529 (domestic) or
(412) 317-0088 (international) and using the access code 1122972. 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 2021
revenues of $2.7 billion, an industry-leading modern truck and
trailer fleet, over 14,000 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, 2021 and subsequently filed Quarterly Reports on Form 10-Q.
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. Steele Executive Vice
President, Treasurer and 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 EndedSeptember 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
Operating revenues |
$ |
827,606 |
|
|
100.0 |
|
|
$ |
702,891 |
|
|
100.0 |
|
|
$ |
2,428,487 |
|
|
100.0 |
|
|
$ |
1,969,151 |
|
|
100.0 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and benefits |
|
264,443 |
|
|
32.0 |
|
|
|
234,250 |
|
|
33.3 |
|
|
|
760,078 |
|
|
31.3 |
|
|
|
649,198 |
|
|
33.0 |
|
Fuel |
|
111,985 |
|
|
13.5 |
|
|
|
64,692 |
|
|
9.2 |
|
|
|
325,852 |
|
|
13.4 |
|
|
|
174,033 |
|
|
8.8 |
|
Supplies and maintenance |
|
68,009 |
|
|
8.2 |
|
|
|
57,067 |
|
|
8.1 |
|
|
|
187,690 |
|
|
7.7 |
|
|
|
152,628 |
|
|
7.7 |
|
Taxes and licenses |
|
25,016 |
|
|
3.0 |
|
|
|
24,419 |
|
|
3.5 |
|
|
|
72,640 |
|
|
3.0 |
|
|
|
71,396 |
|
|
3.6 |
|
Insurance and claims |
|
34,501 |
|
|
4.2 |
|
|
|
27,702 |
|
|
4.0 |
|
|
|
103,064 |
|
|
4.2 |
|
|
|
70,497 |
|
|
3.6 |
|
Depreciation and amortization |
|
70,397 |
|
|
8.5 |
|
|
|
68,615 |
|
|
9.8 |
|
|
|
206,097 |
|
|
8.5 |
|
|
|
196,431 |
|
|
10.0 |
|
Rent and purchased transportation |
|
187,449 |
|
|
22.6 |
|
|
|
161,061 |
|
|
22.9 |
|
|
|
569,802 |
|
|
23.5 |
|
|
|
458,474 |
|
|
23.3 |
|
Communications and utilities |
|
3,720 |
|
|
0.5 |
|
|
|
3,598 |
|
|
0.5 |
|
|
|
11,427 |
|
|
0.5 |
|
|
|
9,953 |
|
|
0.5 |
|
Other |
|
(14,175 |
) |
|
(1.7 |
) |
|
|
(9,837 |
) |
|
(1.4 |
) |
|
|
(42,858 |
) |
|
(1.8 |
) |
|
|
(24,117 |
) |
|
(1.2 |
) |
Total operating expenses |
|
751,345 |
|
|
90.8 |
|
|
|
631,567 |
|
|
89.9 |
|
|
|
2,193,792 |
|
|
90.3 |
|
|
|
1,758,493 |
|
|
89.3 |
|
Operating
income |
|
76,261 |
|
|
9.2 |
|
|
|
71,324 |
|
|
10.1 |
|
|
|
234,695 |
|
|
9.7 |
|
|
|
210,658 |
|
|
10.7 |
|
Other
expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
2,778 |
|
|
0.3 |
|
|
|
1,284 |
|
|
0.2 |
|
|
|
6,004 |
|
|
0.3 |
|
|
|
2,823 |
|
|
0.1 |
|
Interest income |
|
(392 |
) |
|
— |
|
|
|
(287 |
) |
|
(0.1 |
) |
|
|
(980 |
) |
|
— |
|
|
|
(918 |
) |
|
— |
|
Gain on investments in equity securities, net |
|
(114 |
) |
|
— |
|
|
|
(16,090 |
) |
|
(2.3 |
) |
|
|
(14,403 |
) |
|
(0.6 |
) |
|
|
(36,281 |
) |
|
(1.8 |
) |
Other |
|
77 |
|
|
— |
|
|
|
50 |
|
|
— |
|
|
|
276 |
|
|
— |
|
|
|
146 |
|
|
— |
|
Total other expense (income) |
|
2,349 |
|
|
0.3 |
|
|
|
(15,043 |
) |
|
(2.2 |
) |
|
|
(9,103 |
) |
|
(0.3 |
) |
|
|
(34,230 |
) |
|
(1.7 |
) |
Income
before income taxes |
|
73,912 |
|
|
8.9 |
|
|
|
86,367 |
|
|
12.3 |
|
|
|
243,798 |
|
|
10.0 |
|
|
|
244,888 |
|
|
12.4 |
|
Income tax
expense |
|
17,987 |
|
|
2.1 |
|
|
|
21,278 |
|
|
3.0 |
|
|
|
59,229 |
|
|
2.4 |
|
|
|
61,275 |
|
|
3.1 |
|
Net income |
|
55,925 |
|
|
6.8 |
|
|
|
65,089 |
|
|
9.3 |
|
|
|
184,569 |
|
|
7.6 |
|
|
|
183,613 |
|
|
9.3 |
|
Net income
attributable to noncontrolling interest |
|
(874 |
) |
|
(0.1 |
) |
|
|
(1,328 |
) |
|
(0.2 |
) |
|
|
(3,479 |
) |
|
(0.1 |
) |
|
|
(1,328 |
) |
|
— |
|
Net income attributable to Werner |
$ |
55,051 |
|
|
6.7 |
|
|
$ |
63,761 |
|
|
9.1 |
|
|
$ |
181,090 |
|
|
7.5 |
|
|
$ |
182,285 |
|
|
9.3 |
|
Diluted
shares outstanding |
|
63,782 |
|
|
|
|
|
67,834 |
|
|
|
|
|
64,819 |
|
|
|
|
|
68,136 |
|
|
|
Diluted
earnings per share |
$ |
0.86 |
|
|
|
|
$ |
0.94 |
|
|
|
|
$ |
2.79 |
|
|
|
|
$ |
2.68 |
|
|
|
CONDENSED BALANCE
SHEET |
(In thousands,
except share amounts) |
|
|
|
|
|
September 30,2022 |
|
December 31,2021 |
|
(Unaudited) |
|
|
|
|
|
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
125,683 |
|
|
$ |
54,196 |
|
Accounts receivable, trade, less allowance of $10,142 and $9,169,
respectively |
|
493,139 |
|
|
|
460,518 |
|
Other receivables |
|
24,480 |
|
|
|
24,449 |
|
Inventories and supplies |
|
12,849 |
|
|
|
11,140 |
|
Prepaid taxes, licenses and permits |
|
8,510 |
|
|
|
17,549 |
|
Other current assets |
|
65,845 |
|
|
|
63,361 |
|
Total current assets |
|
730,506 |
|
|
|
631,213 |
|
Property and
equipment |
|
2,780,691 |
|
|
|
2,557,825 |
|
Less –
accumulated depreciation |
|
1,061,578 |
|
|
|
944,582 |
|
Property and equipment, net |
|
1,719,113 |
|
|
|
1,613,243 |
|
Goodwill |
|
74,404 |
|
|
|
74,618 |
|
Intangible
assets, net |
|
51,238 |
|
|
|
55,315 |
|
Other
non-current assets(1) |
|
283,868 |
|
|
|
229,324 |
|
Total
assets |
$ |
2,859,129 |
|
|
$ |
2,603,713 |
|
|
|
|
|
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’
EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
115,860 |
|
|
$ |
93,987 |
|
Current portion of long-term debt |
|
5,000 |
|
|
|
5,000 |
|
Insurance and claims accruals |
|
77,663 |
|
|
|
72,594 |
|
Accrued payroll |
|
47,619 |
|
|
|
44,333 |
|
Accrued expenses |
|
31,553 |
|
|
|
28,758 |
|
Other current liabilities |
|
24,939 |
|
|
|
24,011 |
|
Total current liabilities |
|
302,634 |
|
|
|
268,683 |
|
Long-term
debt, net of current portion |
|
568,750 |
|
|
|
422,500 |
|
Other
long-term liabilities |
|
42,765 |
|
|
|
43,314 |
|
Insurance
and claims accruals, net of current portion(1) |
|
238,689 |
|
|
|
237,220 |
|
Deferred
income taxes |
|
281,057 |
|
|
|
268,499 |
|
Total liabilities |
|
1,433,895 |
|
|
|
1,240,216 |
|
Temporary
equity - redeemable noncontrolling interest |
|
38,676 |
|
|
|
35,947 |
|
Stockholders’ equity: |
|
|
|
Common stock, $.01 par value, 200,000,000 shares authorized;
80,533,536 |
|
|
|
shares issued; 63,202,053 and 65,790,112 shares outstanding,
respectively |
|
805 |
|
|
|
805 |
|
Paid-in capital |
|
127,046 |
|
|
|
121,904 |
|
Retained earnings |
|
1,823,927 |
|
|
|
1,667,104 |
|
Accumulated other comprehensive loss |
|
(13,435 |
) |
|
|
(20,604 |
) |
Treasury stock, at cost; 17,331,483 and 14,743,424 shares,
respectively |
|
(551,785 |
) |
|
|
(441,659 |
) |
Total stockholders’ equity |
|
1,386,558 |
|
|
|
1,327,550 |
|
Total
liabilities, temporary equity and stockholders’ equity |
$ |
2,859,129 |
|
|
$ |
2,603,713 |
|
(1) Under the terms of our insurance policies,
we are the primary obligor of the damage award in a previously
disclosed 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, 2022 and December 31, 2021.
SUPPLEMENTAL
INFORMATION |
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Capital
expenditures, net |
$ |
100,649 |
|
|
$ |
59,783 |
|
|
$ |
254,072 |
|
|
$ |
162,730 |
|
Cash flow
from operations |
|
65,189 |
|
|
|
63,880 |
|
|
|
332,716 |
|
|
|
253,344 |
|
Return on
assets (annualized) |
|
7.8 |
% |
|
|
10.8 |
% |
|
|
9.0 |
% |
|
|
10.8 |
% |
Return on
equity (annualized) |
|
15.9 |
% |
|
|
19.9 |
% |
|
|
17.7 |
% |
|
|
19.4 |
% |
Segment Financial and Operating Statistics
Information
SEGMENT
INFORMATION |
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenues |
|
|
|
|
|
|
|
Truckload
Transportation Services |
$ |
621,866 |
|
|
$ |
527,697 |
|
|
$ |
1,793,899 |
|
|
$ |
1,481,846 |
|
Werner
Logistics |
|
187,138 |
|
|
|
157,968 |
|
|
|
580,007 |
|
|
|
437,494 |
|
Other(1) |
|
18,469 |
|
|
|
17,004 |
|
|
|
54,928 |
|
|
|
49,128 |
|
Corporate |
|
535 |
|
|
|
434 |
|
|
|
1,402 |
|
|
|
1,222 |
|
Subtotal |
|
828,008 |
|
|
|
703,103 |
|
|
|
2,430,236 |
|
|
|
1,969,690 |
|
Inter-segment eliminations(2) |
|
(402 |
) |
|
|
(212 |
) |
|
|
(1,749 |
) |
|
|
(539 |
) |
Total |
$ |
827,606 |
|
|
$ |
702,891 |
|
|
$ |
2,428,487 |
|
|
$ |
1,969,151 |
|
Operating
Income |
|
|
|
|
|
|
|
Truckload
Transportation Services |
$ |
74,117 |
|
|
$ |
62,856 |
|
|
$ |
214,214 |
|
|
$ |
193,592 |
|
Werner
Logistics |
|
5,145 |
|
|
|
7,650 |
|
|
|
26,316 |
|
|
|
16,151 |
|
Other(1) |
|
(1,091 |
) |
|
|
1,406 |
|
|
|
(185 |
) |
|
|
3,935 |
|
Corporate |
|
(1,910 |
) |
|
|
(588 |
) |
|
|
(5,650 |
) |
|
|
(3,020 |
) |
Total |
$ |
76,261 |
|
|
$ |
71,324 |
|
|
$ |
234,695 |
|
|
$ |
210,658 |
|
(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 EndedSeptember 30, |
|
|
|
|
2022 |
|
|
|
2021 |
|
|
% Chg |
|
|
2022 |
|
|
|
2021 |
|
|
% Chg |
Truckload Transportation Services segment |
|
|
|
|
|
|
|
|
|
|
|
Average trucks in service |
|
8,513 |
|
|
|
8,161 |
|
|
4.3 |
% |
|
|
8,346 |
|
|
|
7,872 |
|
|
6.0 |
% |
Average
revenues per truck per week(1) |
$ |
4,551 |
|
|
$ |
4,349 |
|
|
4.6 |
% |
|
$ |
4,499 |
|
|
$ |
4,236 |
|
|
6.2 |
% |
Total trucks
(at quarter end) |
|
|
|
|
|
|
|
|
|
|
|
Company |
|
8,335 |
|
|
|
7,905 |
|
|
5.4 |
% |
|
|
8,335 |
|
|
|
7,905 |
|
|
5.4 |
% |
Independent contractor |
|
245 |
|
|
|
315 |
|
|
(22.2)% |
|
|
245 |
|
|
|
315 |
|
|
(22.2)% |
Total trucks |
|
8,580 |
|
|
|
8,220 |
|
|
4.4 |
% |
|
|
8,580 |
|
|
|
8,220 |
|
|
4.4 |
% |
Total
trailers (at quarter end) |
|
25,825 |
|
|
|
25,245 |
|
|
2.3 |
% |
|
|
25,825 |
|
|
|
25,245 |
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-Way Truckload |
|
|
|
|
|
|
|
|
|
|
|
Trucking
revenues, net of fuel surcharge (in 000’s) |
$ |
189,620 |
|
|
$ |
190,314 |
|
|
(0.4)% |
|
$ |
564,553 |
|
|
$ |
513,324 |
|
|
10.0 |
% |
Average
trucks in service |
|
3,154 |
|
|
|
3,110 |
|
|
1.4 |
% |
|
|
3,107 |
|
|
|
2,894 |
|
|
7.4 |
% |
Total trucks
(at quarter end) |
|
3,150 |
|
|
|
3,100 |
|
|
1.6 |
% |
|
|
3,150 |
|
|
|
3,100 |
|
|
1.6 |
% |
Average
percentage of empty miles |
|
13.00 |
% |
|
|
11.17 |
% |
|
16.4 |
% |
|
|
12.39 |
% |
|
|
11.08 |
% |
|
11.8 |
% |
Average
revenues per truck per week(1) |
$ |
4,624 |
|
|
$ |
4,708 |
|
|
(1.8)% |
|
$ |
4,659 |
|
|
$ |
4,549 |
|
|
2.4 |
% |
Average %
change YOY in revenues per total mile(1) |
|
2.5 |
% |
|
|
21.8 |
% |
|
|
|
|
11.7 |
% |
|
|
16.2 |
% |
|
|
Average %
change YOY in total miles per truck per week |
(4.2)% |
|
(11.4)% |
|
|
|
(8.3)% |
|
(7.2)% |
|
|
Average
completed trip length in miles (loaded) |
|
668 |
|
|
|
731 |
|
|
(8.6)% |
|
|
691 |
|
|
|
814 |
|
|
(15.1)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dedicated |
|
|
|
|
|
|
|
|
|
|
|
Trucking
revenues, net of fuel surcharge (in 000’s) |
$ |
314,057 |
|
|
$ |
271,066 |
|
|
15.9 |
% |
|
$ |
899,693 |
|
|
$ |
787,231 |
|
|
14.3 |
% |
Average
trucks in service |
|
5,359 |
|
|
|
5,051 |
|
|
6.1 |
% |
|
|
5,239 |
|
|
|
4,978 |
|
|
5.2 |
% |
Total trucks
(at quarter end) |
|
5,430 |
|
|
|
5,120 |
|
|
6.1 |
% |
|
|
5,430 |
|
|
|
5,120 |
|
|
6.1 |
% |
Average
revenues per truck per week(1) |
$ |
4,508 |
|
|
$ |
4,129 |
|
|
9.2 |
% |
|
$ |
4,404 |
|
|
$ |
4,055 |
|
|
8.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Werner Logistics segment |
|
|
|
|
|
|
|
|
|
|
|
Average
trucks in service |
|
54 |
|
|
|
41 |
|
|
31.7 |
% |
|
|
55 |
|
|
|
38 |
|
|
44.7 |
% |
Total trucks
(at quarter end) |
|
50 |
|
|
|
50 |
|
|
— |
% |
|
|
50 |
|
|
|
50 |
|
|
— |
% |
Total
trailers (at quarter end) |
|
2,045 |
|
|
|
1,515 |
|
|
35.0 |
% |
|
|
2,045 |
|
|
|
1,515 |
|
|
35.0 |
% |
(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
revenues, net of fuel surcharge; 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.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES –
CONSOLIDATED (unaudited) (In thousands, except per share
amounts)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Non-GAAP Adjusted Operating Income
andNon-GAAP Adjusted Operating
Margin(1) |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
Operating income and operating margin – (GAAP) |
|
$ |
76,261 |
|
9.2 |
% |
|
$ |
71,324 |
|
10.1 |
% |
|
$ |
234,695 |
|
9.7 |
% |
|
$ |
210,658 |
|
|
10.7 |
% |
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance and claims(2) |
|
|
1,365 |
|
0.2 |
% |
|
|
1,300 |
|
0.2 |
% |
|
|
4,007 |
|
0.1 |
% |
|
|
3,816 |
|
|
0.2 |
% |
Gain on sale of Werner Global Logistics(3) |
|
|
— |
|
— |
% |
|
|
— |
|
— |
% |
|
|
— |
|
— |
% |
|
|
(1,013 |
) |
|
(0.1)% |
Amortization of intangible assets(4) |
|
|
1,359 |
|
0.2 |
% |
|
|
1,226 |
|
0.2 |
% |
|
|
4,077 |
|
0.2 |
% |
|
|
1,226 |
|
|
0.1 |
% |
Acquisition expenses(5) |
|
|
468 |
|
— |
% |
|
|
— |
|
— |
% |
|
|
468 |
|
— |
% |
|
|
992 |
|
|
0.1 |
% |
Non-GAAP
adjusted operating income and non-GAAP adjusted operating
margin |
|
$ |
79,453 |
|
9.6 |
% |
|
$ |
73,850 |
|
10.5 |
% |
|
$ |
243,247 |
|
10.0 |
% |
|
$ |
215,679 |
|
|
11.0 |
% |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Non-GAAP Adjusted Net IncomeAttributable
to Werner and Non-GAAPAdjusted Diluted
EPS(1) |
|
$ |
|
Diluted EPS |
|
$ |
|
Diluted EPS |
|
$ |
|
Diluted EPS |
|
$ |
|
Diluted EPS |
Net income attributable to Werner and diluted EPS – (GAAP) |
|
$ |
55,051 |
|
|
$ |
0.86 |
|
|
$ |
63,761 |
|
|
$ |
0.94 |
|
|
$ |
181,090 |
|
|
$ |
2.79 |
|
|
$ |
182,285 |
|
|
$ |
2.68 |
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance and claims(2) |
|
|
1,365 |
|
|
|
0.02 |
|
|
|
1,300 |
|
|
|
0.02 |
|
|
|
4,007 |
|
|
|
0.06 |
|
|
|
3,816 |
|
|
|
0.05 |
|
Gain on sale of Werner Global Logistics(3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,013 |
) |
|
|
(0.01 |
) |
Amortization of intangible assets, net of amount attributable to
noncontrolling interest(4) |
|
|
1,187 |
|
|
|
0.02 |
|
|
|
981 |
|
|
|
0.02 |
|
|
|
3,561 |
|
|
|
0.06 |
|
|
|
981 |
|
|
|
0.01 |
|
Acquisition expenses(5) |
|
|
468 |
|
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
|
|
468 |
|
|
|
0.01 |
|
|
|
992 |
|
|
|
0.01 |
|
Gain on investments in equity securities, net(6) |
|
|
(114 |
) |
|
|
— |
|
|
|
(16,090 |
) |
|
|
(0.24 |
) |
|
|
(14,403 |
) |
|
|
(0.22 |
) |
|
|
(36,281 |
) |
|
|
(0.53 |
) |
Income tax effect of above adjustments(7) |
|
|
(726 |
) |
|
|
(0.01 |
) |
|
|
3,452 |
|
|
|
0.05 |
|
|
|
1,592 |
|
|
|
0.02 |
|
|
|
7,876 |
|
|
|
0.12 |
|
Non-GAAP
adjusted net income attributable toWerner and non-GAAP adjusted
diluted EPS |
|
$ |
57,231 |
|
|
$ |
0.90 |
|
|
$ |
53,404 |
|
|
$ |
0.79 |
|
|
$ |
176,315 |
|
|
$ |
2.72 |
|
|
$ |
158,656 |
|
|
$ |
2.33 |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES –
TRUCKLOAD TRANSPORTATION SERVICES (TTS) SEGMENT (unaudited) (In
thousands)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Non-GAAP Adjusted Operating Income
andNon-GAAP Adjusted Operating
Margin(1) |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
Operating income and operating margin – (GAAP) |
|
$ |
74,117 |
|
11.9 |
% |
|
$ |
62,856 |
|
11.9 |
% |
|
$ |
214,214 |
|
11.9 |
% |
|
$ |
193,592 |
|
13.1 |
% |
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance and claims(2) |
|
|
1,365 |
|
0.2 |
% |
|
|
1,300 |
|
0.3 |
% |
|
|
4,007 |
|
0.2 |
% |
|
|
3,816 |
|
0.2 |
% |
Amortization of intangible assets(4) |
|
|
859 |
|
0.2 |
% |
|
|
1,226 |
|
0.2 |
% |
|
|
2,577 |
|
0.2 |
% |
|
|
1,226 |
|
0.1 |
% |
Non-GAAP
adjusted operating income andnon-GAAP adjusted operating
margin |
|
$ |
76,341 |
|
12.3 |
% |
|
$ |
65,382 |
|
12.4 |
% |
|
$ |
220,798 |
|
12.3 |
% |
|
$ |
198,634 |
|
13.4 |
% |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Non-GAAP Adjusted Operating Expenses
andNon-GAAP Adjusted Operating
Ratio(1) |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
Operating expenses and operating ratio – (GAAP) |
|
$ |
547,749 |
|
|
88.1 |
% |
|
$ |
464,841 |
|
|
88.1 |
% |
|
$ |
1,579,685 |
|
|
88.1 |
% |
|
$ |
1,288,254 |
|
|
86.9 |
% |
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance and claims(2) |
|
|
(1,365 |
) |
|
(0.2)% |
|
|
(1,300 |
) |
|
(0.3)% |
|
|
(4,007 |
) |
|
(0.2)% |
|
|
(3,816 |
) |
|
(0.2)% |
Amortization of intangible assets(4) |
|
|
(859 |
) |
|
(0.2)% |
|
|
(1,226 |
) |
|
(0.2)% |
|
|
(2,577 |
) |
|
(0.2)% |
|
|
(1,226 |
) |
|
(0.1)% |
Non-GAAP
adjusted operating expenses andnon-GAAP adjusted operating
ratio |
|
$ |
545,525 |
|
|
87.7 |
% |
|
$ |
462,315 |
|
|
87.6 |
% |
|
$ |
1,573,101 |
|
|
87.7 |
% |
|
$ |
1,283,212 |
|
|
86.6 |
% |
|
|
Three Months
EndedSeptember 30, |
|
Nine Months
EndedSeptember 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) |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
$ |
|
$ |
|
$ |
|
$ |
Operating
revenues – (GAAP) |
|
$ |
621,866 |
|
|
$ |
527,697 |
|
|
$ |
1,793,899 |
|
|
$ |
1,481,846 |
|
Less:
Trucking fuel surcharge(8) |
|
|
(111,173 |
) |
|
|
(60,765 |
) |
|
|
(309,629 |
) |
|
|
(165,663 |
) |
Operating revenues, net of fuel surcharge – (Non-GAAP) |
|
|
510,693 |
|
|
|
466,932 |
|
|
|
1,484,270 |
|
|
|
1,316,183 |
|
Operating
expenses – (GAAP) |
|
|
547,749 |
|
|
|
464,841 |
|
|
|
1,579,685 |
|
|
|
1,288,254 |
|
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Trucking fuel surcharge(8) |
|
|
(111,173 |
) |
|
|
(60,765 |
) |
|
|
(309,629 |
) |
|
|
(165,663 |
) |
Insurance and claims(2) |
|
|
(1,365 |
) |
|
|
(1,300 |
) |
|
|
(4,007 |
) |
|
|
(3,816 |
) |
Amortization of intangible assets(4) |
|
|
(859 |
) |
|
|
(1,226 |
) |
|
|
(2,577 |
) |
|
|
(1,226 |
) |
Non-GAAP
adjusted operating expenses, net of fuel surcharge |
|
|
434,352 |
|
|
|
401,550 |
|
|
|
1,263,472 |
|
|
|
1,117,549 |
|
Non-GAAP
adjusted operating income |
|
$ |
76,341 |
|
|
$ |
65,382 |
|
|
$ |
220,798 |
|
|
$ |
198,634 |
|
Non-GAAP
adjusted operating margin, net of fuel surcharge |
|
|
14.9 |
% |
|
|
14.0 |
% |
|
|
14.9 |
% |
|
|
15.1 |
% |
Non-GAAP
adjusted operating ratio, net of fuel surcharge |
|
|
85.1 |
% |
|
|
86.0 |
% |
|
|
85.1 |
% |
|
|
84.9 |
% |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES –
WERNER LOGISTICS SEGMENT (unaudited) (In thousands)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Non-GAAP Adjusted Operating Income
andNon-GAAP Adjusted Operating
Margin(1) |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
|
$ |
|
% of Op. Rev. |
Operating income and operating margin – (GAAP) |
|
$ |
5,145 |
|
2.7 |
% |
|
$ |
7,650 |
|
4.8 |
% |
|
$ |
26,316 |
|
4.5 |
% |
|
$ |
16,151 |
|
|
3.7 |
% |
Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Werner Global Logistics(3) |
|
|
— |
|
— |
% |
|
|
— |
|
— |
% |
|
|
— |
|
— |
% |
|
|
(1,013 |
) |
|
(0.2)% |
Amortization of intangible assets(4) |
|
|
500 |
|
0.3 |
% |
|
|
— |
|
— |
% |
|
|
1,500 |
|
0.3 |
% |
|
|
— |
|
|
— |
% |
Non-GAAP
adjusted operating income andnon-GAAP adjusted operating
margin |
|
$ |
5,645 |
|
3.0 |
% |
|
$ |
7,650 |
|
4.8 |
% |
|
$ |
27,816 |
|
4.8 |
% |
|
$ |
15,138 |
|
|
3.5 |
% |
(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 revenues, net of fuel surcharge; 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 revenues; GAAP operating expenses; and GAAP operating
ratio, which are their most directly comparable GAAP financial
measures.
(2) 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. We
continue to accrue pre-tax insurance and claims expense for
interest at $0.5 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 first quarter 2021, we sold Werner
Global Logistics 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.
(4) Amortization expense related to intangible
assets acquired in the ECM Associated, LLC (“ECM”) and NEHDS
Logistics, LLC (“NEHDS”) acquisitions on July 1, 2021 and November
22, 2021, respectively, is excluded because management does not
believe it is indicative of our core operating performance.
Amortization expense for ECM and NEHDS is included in our Truckload
Transportation Services and Werner Logistics segments,
respectively, in our Segment Information table.
(5) We incurred business acquisition-related
expenses including legal and professional fees. 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.
(6) Represents non-operating mark-to-market
adjustments for unrealized gains/losses on our minority equity
investments, which we account for 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.
(7) The income tax effect of the non-GAAP
adjustments is calculated using the incremental income tax rate
excluding discrete items, and the income tax effect for 2021 has
been updated to reflect the annual incremental income tax rate.
(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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