Fourth Quarter 2022 Highlights (all metrics compared to
fourth quarter 2021)
- Total revenues of $861.5 million, up 13%
- Operating income of $88.4 million, down 10%; non-GAAP adjusted
operating income of $89.9 million, down 11%
- Operating margin of 10.3%, down 260 basis points; non-GAAP
adjusted operating margin of 10.4%, down 280 basis points
- Diluted EPS of $0.94, down 18%; non-GAAP adjusted diluted EPS
of $0.99, down 13%
2022 Highlights (all metrics compared to 2021)
- Total revenues of $3.29 billion, up 20%
- Operating income of $323.1 million, up 5%; non-GAAP adjusted
operating income of $333.2 million, up 5%
- Operating margin of 9.8%, down 150 basis points; non-GAAP
adjusted operating margin of 10.1%, down 150 basis points
- Diluted EPS of $3.74, down 2%; non-GAAP adjusted diluted EPS of
$3.70, up 7%
Werner Enterprises, Inc. (Nasdaq: WERN), a premier
transportation and logistics provider, today reported results for
the fourth quarter and year ended December 31, 2022.
“We made significant progress executing our strategy in 2022,
and also closed on two additive acquisitions in fourth quarter.
While changing macroeconomic conditions led to a lackluster
truckload and logistics freight market in fourth quarter, the
durability and resilience of our business model, combined with the
efforts of our determined and talented team, produced strong fourth
quarter results,” said Derek J. Leathers, Chairman, President and
CEO. “As we look out into what remains an uncertain and more
difficult operating environment, we remain laser focused on
implementing our DRIVE strategy to deliver value to our customers,
associates, shareholders, suppliers and carrier partners.”
Total revenues for the quarter were $861.5 million, an increase
of $96.3 million compared to the prior year quarter, due to
Truckload Transportation Services (“TTS”) revenues growth of $71.6
million and Logistics revenues growth of $28.5 million.
Operating income of $88.4 million decreased $10.1 million, or
10%, while operating margin of 10.3% decreased 260 basis points. On
a non-GAAP basis, adjusted operating income of $89.9 million
decreased $11.2 million, or 11%. Adjusted operating margin of 10.4%
declined 280 basis points from 13.2% for the same quarter last
year.
Truckload Transportation Services operating income decreased by
$7.9 million and adjusted operating income decreased by $6.9
million. Logistics operating income declined $1.9 million and
adjusted operating income declined by $3.9 million. Corporate and
Other (including driving schools) operating income decreased by
$0.4 million.
Interest expense of $5.8 million increased $4.2 million
primarily due to an increase in average debt outstanding and higher
interest rates. The effective income tax rate during the quarter
was 24.7%, compared to 23.0% in fourth quarter 2021.
During fourth quarter 2022, our strategic minority equity
investments had market valuation changes causing a net unrealized
loss on equity securities, which resulted in lower non-operating
income of $2.2 million, or $0.03 per share, compared to a net
unrealized gain, which resulted in higher non-operating income of
$4.0 million, or $0.05 per share, in fourth 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 $60.2 million decreased
22%. On a non-GAAP basis, adjusted net income attributable to
Werner of $62.8 million decreased 17%. Diluted EPS of $0.94
decreased 18%. On a non-GAAP basis, adjusted diluted EPS of $0.99
decreased 13%.
Key Consolidated Financial Metrics
Three Months Ended December
31,
Year Ended December 31,
(In thousands, except per share
amounts)
2022
2021
Y/Y Change
2022
2021
Y/Y Change
Total revenues
$
861,491
$
765,221
13
%
$
3,289,978
$
2,734,372
20
%
Truckload Transportation Services
revenues
634,787
563,227
13
%
2,428,686
2,045,073
19
%
Werner Logistics revenues
213,485
184,967
15
%
793,492
622,461
27
%
Operating income
88,381
98,488
(10
)%
323,076
309,146
5
%
Operating margin
10.3
%
12.9
%
(260) bps
9.8
%
11.3
%
(150) bps
Net income attributable to Werner
60,166
76,767
(22
)%
241,256
259,052
(7
)%
Diluted earnings per share
0.94
1.15
(18
)%
3.74
3.82
(2
)%
Adjusted operating income (1)
89,917
101,098
(11
)%
333,164
316,777
5
%
Adjusted operating margin (1)
10.4
%
13.2
%
(280) bps
10.1
%
11.6
%
(150) bps
Adjusted net income attributable to Werner
(1)
62,840
75,624
(17
)%
239,164
234,280
2
%
Adjusted diluted earnings per share
(1)
0.99
1.13
(13
)%
3.70
3.45
7
%
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Consolidated.
Noteworthy Developments
On November 5, 2022, Werner acquired ReedTMS Logistics
(“ReedTMS”) of Tampa, Florida. ReedTMS is a leading asset-light
logistics provider and truckload carrier that offers a
comprehensive suite of freight brokerage and truckload solutions to
a diverse customer base. ReedTMS achieved revenues of $372.0
million for the last 12 months ended September 30, 2022, 90%
freight brokerage and 10% trucking. ReedTMS further strengthens our
freight brokerage capabilities with its extensive freight brokerage
network and elevates our logistics portfolio with new
customers.
On October 1, 2022, Werner acquired Baylor Trucking (“Baylor”)
of Milan, Indiana. Baylor achieved revenues of $81.5 million for
the last 12 months ended August 31, 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 $634.8 million increased $71.6 million
- Operating income of $80.3 million decreased $7.9 million;
non-GAAP adjusted operating income of $83.1 million decreased $6.9
million due to strength in our Dedicated fleet performance,
partially offset by moderating performance in One-Way
Truckload
- Operating margin of 12.7% decreased 300 basis points from
15.7%; non-GAAP adjusted operating margin of 13.1% decreased 290
basis points from 16.0%
- Non-GAAP adjusted operating margin, net of fuel, of 15.8%
decreased 240 basis points from 18.2%
- Average segment trucks in service totaled 8,709, an increase of
396 trucks year over year, or 4.8%
- Dedicated unit trucks at quarter end totaled 5,450, or 63% of
the total TTS segment fleet, compared to 5,235 trucks, or 63%, a
year ago
- 1.3% increase in TTS average revenues per truck per week
During fourth quarter 2022, Dedicated experienced solid and
steady freight demand from our customers. One-Way Truckload
customer freight demand during fourth quarter 2022 was seasonally
weaker than normal compared to a strong freight market in fourth
quarter 2021.
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 Ended December
31,
Year Ended December 31,
(In thousands)
2022
2021
Y/Y Change
2022
2021
Y/Y Change
Trucking revenues, net of fuel
surcharge
$
518,393
$
488,593
6
%
$
1,982,639
$
1,789,148
11
%
Trucking fuel surcharge revenues
109,611
68,501
60
%
419,240
234,164
79
%
Non-trucking and other revenues
6,783
6,133
11
%
26,807
21,761
23
%
Total revenues
$
634,787
$
563,227
13
%
$
2,428,686
$
2,045,073
19
%
Operating income
$
80,341
$
88,231
(9
)%
$
294,555
$
281,823
5
%
Operating margin
12.7
%
15.7
%
(300) bps
12.1
%
13.8
%
(170) bps
Operating ratio
87.3
%
84.3
%
300 bps
87.9
%
86.2
%
170 bps
Adjusted operating income (1)
$
83,104
$
90,044
(8
)%
$
303,902
$
288,678
5
%
Adjusted operating margin (1)
13.1
%
16.0
%
(290) bps
12.5
%
14.1
%
(160) bps
Adjusted operating margin, net of fuel
surcharge (1)
15.8
%
18.2
%
(240) bps
15.1
%
15.9
%
(80) bps
Adjusted operating ratio (1)
86.9
%
84.0
%
290 bps
87.5
%
85.9
%
160 bps
Adjusted operating ratio, net of fuel
surcharge (1)
84.2
%
81.8
%
240 bps
84.9
%
84.1
%
80 bps
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Truckload Transportation Services
(TTS) Segment.
Werner Logistics Segment
- Revenues of $213.5 million increased $28.5 million, or 15%
- Operating income of $9.9 million decreased $1.9 million
- Operating margin of 4.6% decreased 170 basis points from
6.3%
- Adjusted operating income of $8.0 million decreased $3.9
million
- Adjusted operating margin of 3.8% decreased 260 basis points
from 6.4%
Truckload Logistics revenues (71% of Logistics revenues)
increased 20%, driven by a 34% increase in shipments, partially
offset by an 11% decline in revenues per shipment. Excluding the
eight weeks of ReedTMS Logistics revenues in fourth quarter 2022,
Truckload Logistics revenues declined 17% in fourth quarter
year-over-year.
Intermodal revenues (17% of Logistics revenues) decreased 23%,
due to a 25% decline in shipments, partially offset by a 3%
increase in revenues per shipment.
Final Mile revenues (12% of Logistics revenues) increased $14
million due primarily to a full quarter impact in 2022 from the
November 2021 NEHDS acquisition compared to the six weeks of
revenues in 2021.
Logistics operating income decreased $1.9 million and adjusted
operating income decreased $3.9 million in fourth quarter 2022, due
to a seasonally soft freight market in fourth quarter 2022 compared
to a strong freight market with significant project, surge and peak
pricing freight opportunities in fourth quarter 2021.
Key Werner Logistics Segment Financial Metrics
Three Months Ended December
31,
Year Ended December 31,
(In thousands)
2022
2021
Y/Y Change
2022
2021
Y/Y Change
Total revenues
$
213,485
$
184,967
15
%
$
793,492
$
622,461
27
%
Operating expenses:
Purchased transportation expense
174,463
155,492
12
%
653,185
535,379
22
%
Other operating expenses
29,154
17,753
64
%
104,123
59,209
76
%
Total operating expenses
203,617
173,245
18
%
757,308
594,588
27
%
Operating income
$
9,868
$
11,722
(16
)%
$
36,184
$
27,873
30
%
Operating margin
4.6
%
6.3
%
(170) bps
4.6
%
4.5
%
10 bps
Adjusted operating income (1)
$
8,028
$
11,889
(32
)%
$
35,844
$
27,027
33
%
Adjusted operating margin (1)
3.8
%
6.4
%
(260) bps
4.5
%
4.3
%
20 bps
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Werner Logistics Segment.
Cash Flow and Capital Allocation
Cash flow from operations in fourth quarter 2022 was $116.0
million compared to $79.5 million in fourth quarter 2021, an
increase of 46%.
Net capital expenditures in fourth quarter 2022 were $63.5
million compared to $30.3 million in fourth quarter 2021, an
increase of 109%. 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 5.0 years, respectively, as
of December 31, 2022.
Gains on sales of property and equipment in fourth quarter 2022
were $25.9 million, or $0.30 per share, compared to $21.2 million,
or $0.24 per share, in fourth quarter 2021. Year over year, we sold
more trucks and trailers and realized lower average gains per truck
and trailer. Gains on sales of property and equipment are reflected
as a reduction of Other Operating Expenses in our income
statement.
We did not repurchase shares of our common stock in fourth
quarter 2022. As of December 31, 2022, we had 2.3 million shares
remaining under our share repurchase authorization.
As of December 31, 2022, we had $107 million of cash and over
$1.4 billion of stockholders’ equity. Total debt outstanding was
$694 million at December 31, 2022. In December 2022, we finalized a
new $1.075 billion five-year unsecured syndicated credit facility
with six banks, to expand our credit capacity, and we extended most
of our debt maturities out to 2027. After considering letters of
credit issued, we had available liquidity consisting of cash and
available borrowing capacity as of December 31, 2022 of $523
million.
Introducing 2023 Guidance Metrics and Assumptions
2022 Results (as of
12/31/22)
2023 Guidance (as of
2/7/23)
Commentary
TTS truck growth from BoY to
EoY
3% (2022)
1% to 4% (annual)
- Majority of 2023 growth planned for Dedicated and back half
weighted
Net capital expenditures
$317.6M (2022)
$350M to $400M (annual)
- Subject to availability of new equipment
TTS Guidance
Dedicated RPTPW* growth
5.0% (4Q22 vs. 4Q21)
0% to 3% (annual)
- Expect low single digit increase YoY with difficult comp
One-Way Truckload RPTM*
growth
0.4% (4Q22 vs. 4Q21)
(3)% to (6)% (1H23 vs. 1H22)
- Softening OWT freight market earlier in the year then
strengthening in 2H23
* Net of fuel surcharge
revenues
Assumptions
- Effective income tax rate of 24.0% to 25.0% in 2023 compared to
4Q22 of 24.7%.
- Average truck age of 2.2 years and trailer age of 5.0 years as
of 12/31/23, compared to 2.3 years and 5.0 years as of
12/31/22.
Call Information
Werner Enterprises, Inc. will conduct a conference call to
discuss fourth 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 February 7,
2023 at approximately 6:00 p.m. CT through March 7, 2023 by dialing
(877) 344-7529 (domestic) or (412) 317-0088 (international) and
using the access code 6540190. 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 2022 revenues of $3.3
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.
Consolidated Financial Information
INCOME STATEMENT
(Unaudited)
(In thousands, except per share
amounts)
Three Months Ended December
31,
Year Ended December 31,
2022
2021
2022
2021
$
%
$
%
$
%
$
%
Operating revenues
$
861,491
100.0
$
765,221
100.0
$
3,289,978
100.0
$
2,734,372
100.0
Operating expenses:
Salaries, wages and benefits
260,531
30.2
245,814
32.1
1,020,609
31.0
895,012
32.7
Fuel
111,447
12.9
71,833
9.4
437,299
13.3
245,866
9.0
Supplies and maintenance
65,406
7.6
54,073
7.1
253,096
7.7
206,701
7.6
Taxes and licenses
25,289
2.9
24,699
3.2
97,929
3.0
96,095
3.5
Insurance and claims
44,301
5.2
28,161
3.7
147,365
4.5
98,658
3.6
Depreciation and amortization
73,826
8.6
71,269
9.3
279,923
8.5
267,700
9.8
Rent and purchased transportation
207,662
24.1
182,685
23.9
777,464
23.6
641,159
23.4
Communications and utilities
4,429
0.5
3,507
0.4
15,856
0.5
13,460
0.5
Other
(19,781
)
(2.3
)
(15,308
)
(2.0
)
(62,639
)
(1.9
)
(39,425
)
(1.4
)
Total operating expenses
773,110
89.7
666,733
87.1
2,966,902
90.2
2,425,226
88.7
Operating income
88,381
10.3
98,488
12.9
323,076
9.8
309,146
11.3
Other expense (income):
Interest expense
5,824
0.7
1,600
0.2
11,828
0.4
4,423
0.2
Interest income
(751
)
(0.1
)
(293
)
—
(1,731
)
(0.1
)
(1,211
)
(0.1
)
Loss (gain) on investments in equity
securities, net
2,208
0.3
(4,036
)
(0.5
)
(12,195
)
(0.4
)
(40,317
)
(1.5
)
Other
112
—
90
—
388
—
236
—
Total other expense (income)
7,393
0.9
(2,639
)
(0.3
)
(1,710
)
(0.1
)
(36,869
)
(1.4
)
Income before income taxes
80,988
9.4
101,127
13.2
324,786
9.9
346,015
12.7
Income tax expense
19,977
2.3
23,262
3.0
79,206
2.4
84,537
3.1
Net income
61,011
7.1
77,865
10.2
245,580
7.5
261,478
9.6
Net income attributable to noncontrolling
interest
(845
)
(0.1
)
(1,098
)
(0.2
)
(4,324
)
(0.2
)
(2,426
)
(0.1
)
Net income attributable to Werner
$
60,166
7.0
$
76,767
10.0
$
241,256
7.3
$
259,052
9.5
Diluted shares outstanding
63,695
66,850
64,579
67,855
Diluted earnings per share
$
0.94
$
1.15
$
3.74
$
3.82
CONDENSED BALANCE SHEET
(In thousands, except share
amounts)
December 31, 2022
December 31, 2021
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
107,240
$
54,196
Accounts receivable, trade, less allowance
of $10,271 and $9,169, respectively
518,815
460,518
Other receivables
29,875
24,449
Inventories and supplies
14,527
11,140
Prepaid taxes, licenses and permits
17,699
17,549
Other current assets
74,459
63,361
Total current assets
762,615
631,213
Property and equipment
2,885,641
2,557,825
Less – accumulated depreciation
1,060,365
944,582
Property and equipment, net
1,825,276
1,613,243
Goodwill
132,717
74,618
Intangible assets, net
81,502
55,315
Other non-current assets (1)
295,145
229,324
Total assets
$
3,097,255
$
2,603,713
LIABILITIES, TEMPORARY EQUITY AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
124,483
$
93,987
Current portion of long-term debt
6,250
5,000
Insurance and claims accruals
78,620
72,594
Accrued payroll
49,793
44,333
Accrued expenses
20,358
28,758
Other current liabilities
30,016
24,011
Total current liabilities
309,520
268,683
Long-term debt, net of current portion
687,500
422,500
Other long-term liabilities
59,677
43,314
Insurance and claims accruals, net of
current portion (1)
244,946
237,220
Deferred income taxes
313,278
268,499
Total liabilities
1,614,921
1,240,216
Temporary equity - redeemable
noncontrolling interest
38,699
35,947
Stockholders’ equity:
Common stock, $.01 par value, 200,000,000
shares authorized; 80,533,536
shares issued; 63,223,003 and 65,790,112
shares outstanding, respectively
805
805
Paid-in capital
129,837
121,904
Retained earnings
1,875,873
1,667,104
Accumulated other comprehensive loss
(11,292
)
(20,604
)
Treasury stock, at cost; 17,310,533 and
14,743,424 shares, respectively
(551,588
)
(441,659
)
Total stockholders’ equity
1,443,635
1,327,550
Total liabilities, temporary equity and
stockholders’ equity
$
3,097,255
$
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 December
31, 2022 and 2021.
SUPPLEMENTAL INFORMATION
(Unaudited)
(In thousands)
Three Months Ended December
31,
Year Ended December 31,
2022
2021
2022
2021
Capital expenditures, net
$
63,507
$
30,319
$
317,579
$
193,049
Cash flow from operations
115,995
79,475
448,711
332,819
Return on assets (annualized)
8.2
%
12.2
%
8.8
%
11.1
%
Return on equity (annualized)
16.8
%
23.0
%
17.5
%
20.4
%
Segment Financial and Operating Statistics
Information
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended December
31,
Year Ended December 31,
2022
2021
2022
2021
Revenues
Truckload Transportation Services
$
634,787
$
563,227
$
2,428,686
$
2,045,073
Werner Logistics
213,485
184,967
793,492
622,461
Other (1)
16,257
16,980
71,185
66,108
Corporate
431
407
1,833
1,629
Subtotal
864,960
765,581
3,295,196
2,735,271
Inter-segment eliminations (2)
(3,469
)
(360
)
(5,218
)
(899
)
Total
$
861,491
$
765,221
$
3,289,978
$
2,734,372
Operating
Income
Truckload Transportation Services
$
80,341
$
88,231
$
294,555
$
281,823
Werner Logistics
9,868
11,722
36,184
27,873
Other (1)
(2,419
)
1,012
(2,604
)
4,947
Corporate
591
(2,477
)
(5,059
)
(5,497
)
Total
$
88,381
$
98,488
$
323,076
$
309,146
(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 Ended December
31,
Year Ended December 31,
2022
2021
% Chg
2022
2021
% Chg
Truckload
Transportation Services segment
Average trucks in service
8,709
8,313
4.8
%
8,437
7,982
5.7
%
Average revenues per truck per week
(1)
$
4,579
$
4,521
1.3
%
$
4,519
$
4,311
4.8
%
Total trucks (at quarter end)
Company
8,305
8,050
3.2
%
8,305
8,050
3.2
%
Independent contractor
295
290
1.7
%
295
290
1.7
%
Total trucks
8,600
8,340
3.1
%
8,600
8,340
3.1
%
Total trailers (at quarter end)
27,650
25,760
7.3
%
27,650
25,760
7.3
%
One-Way
Truckload
Trucking revenues, net of fuel surcharge
(in 000’s)
$
201,460
$
197,346
2.1
%
$
766,013
$
710,673
7.8
%
Average trucks in service
3,292
3,088
6.6
%
3,153
2,942
7.2
%
Total trucks (at quarter end)
3,150
3,105
1.4
%
3,150
3,105
1.4
%
Average percentage of empty miles
13.58
%
11.76
%
15.5
%
12.70
%
11.25
%
12.9
%
Average revenues per truck per week
(1)
$
4,708
$
4,916
(4.2
)%
$
4,672
$
4,645
0.6
%
Average % change YOY in revenues per total
mile (1)
0.4
%
19.2
%
8.6
%
17.3
%
Average % change YOY in total miles per
truck per week
(4.6
)%
(11.1
)%
(7.4
)%
(8.2
)%
Average completed trip length in miles
(loaded)
633
715
(11.5
)%
675
786
(14.1
)%
Dedicated
Trucking revenues, net of fuel surcharge
(in 000’s)
$
316,933
$
291,244
8.8
%
$
1,216,626
$
1,078,475
12.8
%
Average trucks in service
5,417
5,225
3.7
%
5,284
5,040
4.8
%
Total trucks (at quarter end)
5,450
5,235
4.1
%
5,450
5,235
4.1
%
Average revenues per truck per week
(1)
$
4,501
$
4,287
5.0
%
$
4,428
$
4,116
7.6
%
Werner Logistics
segment
Average trucks in service
45
49
(8.2
)%
52
41
26.8
%
Total trucks (at quarter end)
39
55
(29.1
)%
39
55
(29.1
)%
Total trailers (at quarter end)
2,315
1,465
58.0
%
2,315
1,465
58.0
%
(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 December
31,
Year Ended December 31,
2022
2021
2022
2021
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)
$
88,381
10.3
%
$
98,488
12.9
%
$
323,076
9.8
%
$
309,146
11.3
%
Non-GAAP adjustments:
Insurance and claims (2)
1,387
0.1
%
1,321
0.1
%
5,394
0.2
%
5,137
0.2
%
Gain on sale of Werner Global Logistics
(3)
—
—
%
—
—
%
—
—
%
(1,013
)
(0.1
)%
Amortization of intangible assets (4)
2,036
0.2
%
659
0.1
%
6,113
0.2
%
1,885
0.1
%
Acquisition expenses (5)
613
0.1
%
630
0.1
%
1,081
—
%
1,622
0.1
%
Contingent consideration adjustment
(6)
(2,500
)
(0.3
)%
—
—
%
(2,500
)
(0.1
)%
—
—
%
Non-GAAP adjusted operating income and
non-GAAP adjusted operating margin
$
89,917
10.4
%
$
101,098
13.2
%
$
333,164
10.1
%
$
316,777
11.6
%
Three Months Ended December
31,
Year Ended December 31,
2022
2021
2022
2021
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)
$
60,166
$
0.94
$
76,767
$
1.15
$
241,256
$
3.74
$
259,052
$
3.82
Non-GAAP adjustments:
Insurance and claims (2)
1,387
0.02
1,321
0.02
5,394
0.08
5,137
0.08
Gain on sale of Werner Global Logistics
(3)
—
—
—
—
—
—
(1,013
)
(0.02
)
Amortization of intangible assets, net of
amount attributable to noncontrolling interest (4)
1,864
0.03
560
0.01
5,425
0.08
1,541
0.02
Acquisition expenses (5)
613
0.01
630
0.01
1,081
0.02
1,622
0.02
Contingent consideration adjustment
(6)
(2,500
)
(0.04
)
—
—
(2,500
)
(0.04
)
—
—
Loss (gain) on investments in equity
securities, net (7)
2,208
0.04
(4,036
)
(0.06
)
(12,195
)
(0.19
)
(40,317
)
(0.59
)
Income tax effect of above adjustments
(8)
(898
)
(0.01
)
382
—
703
0.01
8,258
0.12
Non-GAAP adjusted net income attributable
to Werner and non-GAAP adjusted diluted EPS
$
62,840
$
0.99
$
75,624
$
1.13
$
239,164
$
3.70
$
234,280
$
3.45
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES – TRUCKLOAD TRANSPORTATION SERVICES (TTS)
SEGMENT
(unaudited)
(In thousands)
Three Months Ended December
31,
Year Ended December 31,
2022
2021
2022
2021
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)
$
80,341
12.7
%
$
88,231
15.7
%
$
294,555
12.1
%
$
281,823
13.8
%
Non-GAAP adjustments:
Insurance and claims (2)
1,387
0.2
%
1,321
0.2
%
5,394
0.2
%
5,137
0.2
%
Amortization of intangible assets (4)
1,376
0.2
%
492
0.1
%
3,953
0.2
%
1,718
0.1
%
Non-GAAP adjusted operating income and
non-GAAP adjusted operating margin
$
83,104
13.1
%
$
90,044
16.0
%
$
303,902
12.5
%
$
288,678
14.1
%
Three Months Ended December
31,
Year Ended December 31,
2022
2021
2022
2021
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)
$
554,446
87.3
%
$
474,996
84.3
%
$
2,134,131
87.9
%
$
1,763,250
86.2
%
Non-GAAP adjustments:
Insurance and claims (2)
(1,387
)
(0.2
)%
(1,321
)
(0.2
)%
(5,394
)
(0.2
)%
(5,137
)
(0.2
)%
Amortization of intangible assets (4)
(1,376
)
(0.2
)%
(492
)
(0.1
)%
(3,953
)
(0.2
)%
(1,718
)
(0.1
)%
Non-GAAP adjusted operating expenses and
non-GAAP adjusted operating ratio
$
551,683
86.9
%
$
473,183
84.0
%
$
2,124,784
87.5
%
$
1,756,395
85.9
%
Three Months Ended December
31,
Year Ended December 31,
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)
$
634,787
$
563,227
$
2,428,686
$
2,045,073
Less: Trucking fuel surcharge (9)
(109,611
)
(68,501
)
(419,240
)
(234,164
)
Operating revenues, net of fuel surcharge
– (Non-GAAP)
525,176
494,726
2,009,446
1,810,909
Operating expenses – (GAAP)
554,446
474,996
2,134,131
1,763,250
Non-GAAP adjustments:
Trucking fuel surcharge (9)
(109,611
)
(68,501
)
(419,240
)
(234,164
)
Insurance and claims (2)
(1,387
)
(1,321
)
(5,394
)
(5,137
)
Amortization of intangible assets (4)
(1,376
)
(492
)
(3,953
)
(1,718
)
Non-GAAP adjusted operating expenses, net
of fuel surcharge
442,072
404,682
1,705,544
1,522,231
Non-GAAP adjusted operating income
$
83,104
$
90,044
$
303,902
$
288,678
Non-GAAP adjusted operating margin, net of
fuel surcharge
15.8
%
18.2
%
15.1
%
15.9
%
Non-GAAP adjusted operating ratio, net of
fuel surcharge
84.2
%
81.8
%
84.9
%
84.1
%
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES – WERNER LOGISTICS SEGMENT
(unaudited)
(In thousands)
Three Months Ended December
31,
Year Ended December 31,
2022
2021
2022
2021
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)
$
9,868
4.6
%
$
11,722
6.3
%
$
36,184
4.6
%
$
27,873
4.5
%
Non-GAAP adjustments:
Gain on sale of Werner Global Logistics
(3)
—
—
%
—
—
%
—
—
%
(1,013
)
(0.2
)%
Amortization of intangible assets (4)
660
0.3
%
167
0.1
%
2,160
0.2
%
167
—
%
Contingent consideration adjustment
(6)
(2,500
)
(1.1
)%
—
—
%
(2,500
)
(0.3
)%
—
—
%
Non-GAAP adjusted operating income and
non-GAAP adjusted operating margin
$
8,028
3.8
%
$
11,889
6.4
%
$
35,844
4.5
%
$
27,027
4.3
%
(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
our 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 our business acquisitions is excluded because management does
not believe it is indicative of our core operating performance.
(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) The contingent consideration, also referred to as earnout,
period related to the NEHDS Logistics, LLC acquisition ended on
December, 31, 2022 and did not result in any additional cash
payments, as the financial performance goals were not achieved. As
a result, a favorable adjustment was recorded in other operating
expense in our Income Statement. Management believes excluding the
effect of income/expense associated with contingent consideration
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.
(7) 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.
(8) 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 2022 has been updated to
reflect the annual incremental income tax rate.
(9) 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230207005898/en/
John J. Steele Executive Vice President, Treasurer and Chief
Financial Officer (402) 894-3036
Werner Enterprises (NASDAQ:WERN)
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