Werner Enterprises, Inc. (Nasdaq: WERN), a premier transportation
and logistics provider, today reported record second quarter
operating income, net income and diluted earnings per share for the
quarter ended June 30, 2021.
“Werner achieved record second quarter results
based on our strong execution in a robust freight market,” said
Derek J. Leathers, Chairman, President and Chief Executive Officer.
“The rapidly recovering economy combined with a severely
constrained driver market is presenting labor challenges for
customers and carriers alike. I am proud of the Werner team for
working tirelessly and creatively to provide our customers with
best-in-class solutions and superior performance.”
Total revenues for the quarter were $649.8
million, an increase of $80.9 million compared to the prior year
quarter, due primarily to Truckload Transportation Services
revenues growth of $46.1 million and Logistics revenues growth of
$31.5 million.
Operating income of $76.9 million increased
$24.0 million, or 46%, while operating margin of 11.8% increased
250 basis points. On a non-GAAP basis, adjusted operating income of
$79.1 million increased $21.4 million, or 37%. Adjusted operating
margin of 12.2% improved 210 basis points from 10.1% for the same
quarter last year.
We generated operating margin expansion from
significantly higher revenues per total mile, continued strong
safety performance, effective cost management and improved gains on
sales of trucks and trailers. These improvements were partially
offset by inflationary cost increases for drivers, fuel and other
expenses and lower miles per truck due to a higher percentage of
Dedicated trucks to total trucks and fewer team drivers.
Interest expense of $0.7 million decreased from
$1.2 million due to lower average borrowings. The effective income
tax rate during the quarter was 25.5% compared to 24.8% in second
quarter 2020.
In first quarter 2021, Werner made a strategic
minority equity investment in TuSimple, an autonomous technology
company. TuSimple completed an initial public offering in April
2021. As a result, we recognized a $20.2 million, or $0.22 per
share, unrealized gain on our investment, which increased our
non-operating income in second quarter 2021.
Net income of $72.0 million increased 84%. On a
non-GAAP basis, adjusted net income of $58.7 million increased 37%.
Diluted earnings per share (EPS) for the quarter of $1.06 increased
87%. On a non-GAAP basis, adjusted diluted EPS of $0.86 increased
40%.
Key Consolidated Financial
Metrics
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(In thousands, except per
share amounts) |
2021 |
|
2020 |
|
Y/Y Change |
|
2021 |
|
2020 |
|
Y/Y Change |
Total revenues |
$ |
649,814 |
|
|
$ |
568,959 |
|
|
14 |
% |
|
$ |
1,266,260 |
|
|
$ |
1,161,662 |
|
|
9 |
% |
Truckload Transportation
Services revenues |
491,200 |
|
|
445,053 |
|
|
10 |
% |
|
954,149 |
|
|
909,916 |
|
|
5 |
% |
Werner Logistics revenues |
141,673 |
|
|
110,163 |
|
|
29 |
% |
|
279,526 |
|
|
222,327 |
|
|
26 |
% |
Operating income |
76,863 |
|
|
52,818 |
|
|
46 |
% |
|
139,334 |
|
|
83,884 |
|
|
66 |
% |
Operating margin |
11.8 |
% |
|
9.3 |
% |
|
250 bps |
|
11.0 |
% |
|
7.2 |
% |
|
380 bps |
Net income |
72,032 |
|
|
39,132 |
|
|
84 |
% |
|
118,524 |
|
|
62,190 |
|
|
91 |
% |
Diluted earnings per
share |
1.06 |
|
|
0.56 |
|
|
87 |
% |
|
1.74 |
|
|
0.89 |
|
|
94 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income
(1) |
79,113 |
|
|
57,695 |
|
|
37 |
% |
|
141,829 |
|
|
94,973 |
|
|
49 |
% |
Adjusted operating margin
(1) |
12.2 |
% |
|
10.1 |
% |
|
210 bps |
|
11.2 |
% |
|
8.2 |
% |
|
300 bps |
Adjusted net income (1) |
58,666 |
|
|
42,765 |
|
|
37 |
% |
|
105,340 |
|
|
70,451 |
|
|
50 |
% |
Adjusted diluted earnings per
share (1) |
0.86 |
|
|
0.62 |
|
|
40 |
% |
|
1.54 |
|
|
1.01 |
|
|
52 |
% |
(1) See GAAP to non-GAAP reconciliation
schedule.
Noteworthy Developments
- On July 1, 2021, Werner acquired an
80% equity ownership interest in ECM Transport Group (“ECM”) for a
purchase price of $142.4 million. ECM achieved revenues of $108
million in 2020 with an operating margin 19.8%. 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.
- 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 $491.2 million
increased $46.1 million
- Operating income of $73.1 million
increased $21.9 million, or 43%; non-GAAP adjusted operating income
of $74.4 million increased $18.3 million, or 33%
- Operating margin of 14.9% increased
340 basis points from 11.5%; non-GAAP adjusted operating margin of
15.1% increased 250 basis points from 12.6%
- Non-GAAP adjusted operating margin,
net of fuel, of 17.1% increased 340 basis points from 13.7%
- Average segment trucks in service
totaled 7,664, a decrease of 98 trucks year over year, or 1.3%
- Dedicated unit trucks at quarter
end totaled 5,040 or 66% of the total TTS segment fleet, compared
to 4,535 trucks, or 59%, a year ago
- 6.7% increase in TTS average
revenues per truck per week
In our Dedicated and One-Way Truckload fleets,
freight demand was strong during second quarter 2021. Freight
demand has continued to be strong so far in third quarter 2021.
Total miles decreased 12.3 million miles in
second quarter 2021, caused by a higher percentage of Dedicated
trucks to total trucks and fewer team drivers, and 1.3% fewer
average trucks in service. TTS company truck miles decreased by
approximately 6.8 million miles, and independent contractor miles
decreased by approximately 5.5 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.
Fluctuating fuel prices and fuel surcharge revenues impact the
total company operating ratio and the TTS segment’s operating ratio
when fuel surcharges are reported on a gross basis as revenues
versus netting against fuel expenses. Eliminating fuel surcharge
revenues, which are generally a more volatile source of revenue,
provides a more consistent basis for comparing the results of
operations from period to period.
Key Truckload Transportation Services
Segment Financial Metrics
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(In thousands) |
2021 |
|
2020 |
|
Y/Y Change |
|
2021 |
|
2020 |
|
Y/Y Change |
Trucking revenues, net of fuel surcharge |
$ |
428,523 |
|
|
$ |
406,834 |
|
|
5 |
% |
|
$ |
839,175 |
|
|
$ |
815,932 |
|
|
3 |
% |
Trucking fuel surcharge
revenues |
57,439 |
|
|
34,208 |
|
|
68 |
% |
|
104,898 |
|
|
85,249 |
|
|
23 |
% |
Non-trucking and other
revenues |
5,238 |
|
|
4,011 |
|
|
31 |
% |
|
10,076 |
|
|
8,735 |
|
|
15 |
% |
Total revenues |
$ |
491,200 |
|
|
$ |
445,053 |
|
|
10 |
% |
|
$ |
954,149 |
|
|
$ |
909,916 |
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
73,108 |
|
|
51,225 |
|
|
43 |
% |
|
130,736 |
|
|
80,314 |
|
|
63 |
% |
Operating margin |
14.9 |
% |
|
11.5 |
% |
|
340 bps |
|
13.7 |
% |
|
8.8 |
% |
|
490 bps |
Operating ratio |
85.1 |
% |
|
88.5 |
% |
|
(340) bps |
|
86.3 |
% |
|
91.2 |
% |
|
(490) bps |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating income |
74,366 |
|
|
56,102 |
|
|
33 |
% |
|
133,252 |
|
|
91,403 |
|
|
46 |
% |
Adjusted operating margin |
15.1 |
% |
|
12.6 |
% |
|
250 bps |
|
14.0 |
% |
|
10.0 |
% |
|
400 bps |
Adjusted operating margin, net
of fuel surcharge |
17.1 |
% |
|
13.7 |
% |
|
340 bps |
|
15.7 |
% |
|
11.1 |
% |
|
460 bps |
Adjusted operating ratio |
84.9 |
% |
|
87.4 |
% |
|
(250) bps |
|
86.0 |
% |
|
90.0 |
% |
|
(400) bps |
Adjusted operating ratio, net
of fuel surcharge |
82.9 |
% |
|
86.3 |
% |
|
(340) bps |
|
84.3 |
% |
|
88.9 |
% |
|
(460) bps |
Werner Logistics Segment
- Revenues of $141.7 million
increased $31.5 million, or 29%
- Gross margin of 12.2% decreased 350
bps
- Operating income of $3.9 million
increased $0.8 million, or 25%
- Operating margin of 2.8% remained
flat
Logistics revenues of $142 million increased
29%. Logistics revenues increased 52%, if you exclude Werner Global
Logistics (WGL) revenues from second quarter 2020. Werner sold WGL
in first quarter 2021.
Truckload Logistics revenues (69% of total
Logistics revenues) increased 49%. Truckload Logistics volume
increased 10%, and revenues per shipment increased 37%.
Intermodal revenues (29% of Logistics revenues)
increased 52%, due to volume growth of 30% and 17% higher revenues
per shipment.
The gross margin percentage decreased 350 bps
due to higher spot truckload and intermodal dray rates which
significantly increased the cost of capacity for contractual
brokerage shipments and Intermodal shipments in second quarter
2021. The Logistics gross profit remained flat while operating
income increased 25% as other operating expenses declined 6% due to
improved automation and efficiency.
Key Werner Logistics Segment Financial
Metrics
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(In thousands) |
2021 |
|
2020 |
|
Y/Y Change |
|
2021 |
|
2020 |
|
Y/Y Change |
Total revenues |
$ |
141,673 |
|
|
$ |
110,163 |
|
|
29 |
% |
|
$ |
279,526 |
|
|
$ |
222,327 |
|
|
26 |
% |
Rent and purchased
transportation expense |
124,388 |
|
|
92,842 |
|
|
34 |
% |
|
244,915 |
|
|
188,774 |
|
|
30 |
% |
Gross profit |
17,285 |
|
|
17,321 |
|
|
0 |
% |
|
34,611 |
|
|
33,553 |
|
|
3 |
% |
Other operating expenses |
13,358 |
|
|
14,182 |
|
|
(6) |
% |
|
26,110 |
|
|
29,329 |
|
|
(11) |
% |
Operating income |
3,927 |
|
|
3,139 |
|
|
25 |
% |
|
8,501 |
|
|
4,224 |
|
|
101 |
% |
Gross margin |
12.2 |
% |
|
15.7 |
% |
|
(350) bps |
|
12.4 |
% |
|
15.1 |
% |
|
(270) bps |
Operating margin |
2.8 |
% |
|
2.8 |
% |
|
— bps |
|
3.0 |
% |
|
1.9 |
% |
|
110 bps |
Cash Flow and Capital Allocation
Cash flow from operations in second quarter 2021
was $53.6 million compared to $154.0 million in second quarter
2020, a decrease of 65%. The decrease was primarily due to working
capital changes resulting from the timing of estimated income tax
payments and changes in accounts receivable.
Net capital expenditures in the second quarter
2021 were $65.1 million compared to $88.8 million in second quarter
2020, a decrease of 27%. 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 2.0 years and 4.1 years, respectively, as of June 30,
2021.
Gains on sales of equipment in second quarter
2021 were $13.5 million, or $0.15 per share, compared to $0.9
million, or $0.01 per share, in second quarter 2020. Year over
year, we sold more trucks and fewer 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.
We did not repurchase shares of our common stock
in second quarter 2021. As of June 30, 2021, we had 2.7 million
shares remaining under our share repurchase authorization.
As of June 30, 2021, we had $192 million of cash
and nearly $1.3 billion of stockholders’ equity. Total debt
outstanding increased $125 million during the quarter to $300
million at June 30, 2021. After considering letters of credit
issued, we had available liquidity consisting of cash and available
borrowing capacity as of June 30, 2021 of $441 million, prior to
the closing payment for ECM on July 1, 2021.
2021 Guidance Metrics and
Assumptions
The following table summarizes our updated 2021
guidance and assumptions:
2021 Guidance |
Prior (as of 4/28/21) |
Actual (as of 6/30/21) |
New (as of 7/29/21) |
Commentary |
TTS truck growth from BoY to EoY |
1% to 3%(annual) |
(2)%(YTD21) |
1% to 4%(annual) |
Includes ECM acquisition of 500 trucks |
Gains on sales of equipment |
$7M to $10M(2Q21) |
$13.5M (2Q21) |
$9M to $13M(3Q21) |
Guidance based on lower sales volume, higher pricing and subject to
timing of OEM new truck and trailer deliveries |
Net capital expenditures |
$275M to $300M(annual) |
$103M(YTD21) |
$275M to $300M(annual) |
Larger net CapEx in 2H21 due to timing of OEM deliveries |
TTS Guidance |
|
|
|
|
Dedicated RPTPW* growth |
3% to 5%(annual) |
2.4%(2Q21 vs. 2Q20) |
3% to 5%(annual) |
Rates in 2Q21 vs. 2Q20 above guidance range, miles per truck lower
due to fleet mix |
One-Way Truckload (OWT) RPTM* growth |
13% to 16%(2Q21 vs. 2Q20) |
16.7%(2Q21 vs. 2Q20) |
16% to 19%(2H21 vs. 2H20) |
New guidance includes the favorable impact of the ECM acquisition
in 2H21 (16% of OWT fleet) |
Assumptions |
|
|
|
|
Effective income tax rate |
24.5% to 25.5%(annual) |
25.5%(2Q21) |
24.5% to 25.5%(annual) |
|
Truck ageTrailer age |
2.0 yearsLow-to-mid “4” years |
2.0 years4.1 years |
2.0 yearsLow-to-mid “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 second 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 “Webcasts & Presentations.” 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 July 29, 2021 at approximately 6:00 p.m. CT through
August 29, 2021 by dialing (877) 344-7529 (domestic) or (412)
317-0088 (international) and using the access code 10150332. A
replay of the webcast will also be available at werner.com in the
“Investors” section under “News & Events” and then “Webcasts
& Presentations.”
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, through
the issuance of press releases or by other methods of public
disclosure.
To supplement our financial results presented on
a GAAP basis, we provide certain non-GAAP financial measures,
including adjusted operating income, adjusted net income and
adjusted diluted earnings per share. 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 a substitute for 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.
Contact:John J. SteeleExecutive Vice President,
Treasurerand Chief Financial Officer(402) 894-3036
Source: Werner Enterprises, Inc.
|
INCOME STATEMENT |
|
(Unaudited) |
|
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
|
$ |
|
% |
Operating revenues |
$ |
649,814 |
|
|
|
100.0 |
|
|
|
$ |
568,959 |
|
|
|
100.0 |
|
|
|
$ |
1,266,260 |
|
|
|
100.0 |
|
|
|
$ |
1,161,662 |
|
|
|
100.0 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, wages and benefits |
210,095 |
|
|
|
32.4 |
|
|
|
194,981 |
|
|
|
34.3 |
|
|
|
414,948 |
|
|
|
32.8 |
|
|
|
400,978 |
|
|
|
34.5 |
|
|
Fuel |
58,503 |
|
|
|
9.0 |
|
|
|
30,677 |
|
|
|
5.4 |
|
|
|
109,341 |
|
|
|
8.6 |
|
|
|
79,448 |
|
|
|
6.8 |
|
|
Supplies and maintenance |
49,414 |
|
|
|
7.6 |
|
|
|
43,343 |
|
|
|
7.6 |
|
|
|
95,561 |
|
|
|
7.5 |
|
|
|
89,064 |
|
|
|
7.7 |
|
|
Taxes and licenses |
23,744 |
|
|
|
3.7 |
|
|
|
23,953 |
|
|
|
4.2 |
|
|
|
46,977 |
|
|
|
3.7 |
|
|
|
46,803 |
|
|
|
4.0 |
|
|
Insurance and claims |
20,739 |
|
|
|
3.2 |
|
|
|
25,789 |
|
|
|
4.5 |
|
|
|
42,795 |
|
|
|
3.4 |
|
|
|
61,853 |
|
|
|
5.3 |
|
|
Depreciation |
63,865 |
|
|
|
9.8 |
|
|
|
67,670 |
|
|
|
11.9 |
|
|
|
127,816 |
|
|
|
10.1 |
|
|
|
136,507 |
|
|
|
11.8 |
|
|
Rent and purchased transportation |
150,920 |
|
|
|
23.2 |
|
|
|
120,704 |
|
|
|
21.2 |
|
|
|
297,413 |
|
|
|
23.5 |
|
|
|
247,146 |
|
|
|
21.3 |
|
|
Communications and utilities |
3,333 |
|
|
|
0.5 |
|
|
|
3,536 |
|
|
|
0.6 |
|
|
|
6,355 |
|
|
|
0.5 |
|
|
|
7,344 |
|
|
|
0.6 |
|
|
Other |
(7,662 |
) |
|
|
(1.2 |
) |
|
|
5,488 |
|
|
|
1.0 |
|
|
|
(14,280 |
) |
|
|
(1.1 |
) |
|
|
8,635 |
|
|
|
0.8 |
|
|
Total operating expenses |
572,951 |
|
|
|
88.2 |
|
|
|
516,141 |
|
|
|
90.7 |
|
|
|
1,126,926 |
|
|
|
89.0 |
|
|
|
1,077,778 |
|
|
|
92.8 |
|
|
Operating income |
76,863 |
|
|
|
11.8 |
|
|
|
52,818 |
|
|
|
9.3 |
|
|
|
139,334 |
|
|
|
11.0 |
|
|
|
83,884 |
|
|
|
7.2 |
|
|
Other expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
701 |
|
|
|
0.1 |
|
|
|
1,161 |
|
|
|
0.2 |
|
|
|
1,539 |
|
|
|
0.1 |
|
|
|
2,752 |
|
|
|
0.2 |
|
|
Interest income |
(334 |
) |
|
|
(0.1 |
) |
|
|
(377 |
) |
|
|
(0.1 |
) |
|
|
(631 |
) |
|
|
— |
|
|
|
(1,003 |
) |
|
|
(0.1 |
) |
|
Gain on equity investment |
(20,191 |
) |
|
|
(3.1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(20,191 |
) |
|
|
(1.6 |
) |
|
|
— |
|
|
|
— |
|
|
Other |
54 |
|
|
|
— |
|
|
|
23 |
|
|
|
— |
|
|
|
96 |
|
|
|
— |
|
|
|
68 |
|
|
|
— |
|
|
Total other expense (income) |
(19,770 |
) |
|
|
(3.1 |
) |
|
|
807 |
|
|
|
0.1 |
|
|
|
(19,187 |
) |
|
|
(1.5 |
) |
|
|
1,817 |
|
|
|
0.1 |
|
|
Income before income
taxes |
96,633 |
|
|
|
14.9 |
|
|
|
52,011 |
|
|
|
9.2 |
|
|
|
158,521 |
|
|
|
12.5 |
|
|
|
82,067 |
|
|
|
7.1 |
|
|
Income tax expense |
24,601 |
|
|
|
3.8 |
|
|
|
12,879 |
|
|
|
2.3 |
|
|
|
39,997 |
|
|
|
3.1 |
|
|
|
19,877 |
|
|
|
1.7 |
|
|
Net income |
$ |
72,032 |
|
|
|
11.1 |
|
|
|
$ |
39,132 |
|
|
|
6.9 |
|
|
|
$ |
118,524 |
|
|
|
9.4 |
|
|
|
$ |
62,190 |
|
|
|
5.4 |
|
|
Diluted shares
outstanding |
68,216 |
|
|
|
|
|
69,435 |
|
|
|
|
|
68,237 |
|
|
|
|
|
69,531 |
|
|
|
|
Diluted earnings per
share |
$ |
1.06 |
|
|
|
|
|
$ |
0.56 |
|
|
|
|
|
$ |
1.74 |
|
|
|
|
|
$ |
0.89 |
|
|
|
|
|
GAAP TO NON-GAAP RECONCILIATION |
|
(Unaudited) |
|
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Operating revenues |
$ |
649,814 |
|
|
|
$ |
568,959 |
|
|
|
$ |
1,266,260 |
|
|
|
$ |
1,161,662 |
|
|
Operating expenses |
572,951 |
|
|
|
516,141 |
|
|
|
1,126,926 |
|
|
|
1,077,778 |
|
|
Operating income |
76,863 |
|
|
|
52,818 |
|
|
|
139,334 |
|
|
|
83,884 |
|
|
Total other expense
(income) |
(19,770 |
) |
|
|
807 |
|
|
|
(19,187 |
) |
|
|
1,817 |
|
|
Income before income
taxes |
96,633 |
|
|
|
52,011 |
|
|
|
158,521 |
|
|
|
82,067 |
|
|
Income tax expense |
24,601 |
|
|
|
12,879 |
|
|
|
39,997 |
|
|
|
19,877 |
|
|
Net income |
$ |
72,032 |
|
|
|
$ |
39,132 |
|
|
|
$ |
118,524 |
|
|
|
$ |
62,190 |
|
|
Diluted shares
outstanding |
68,216 |
|
|
|
69,435 |
|
|
|
68,237 |
|
|
|
69,531 |
|
|
Diluted earnings per
share |
$ |
1.06 |
|
|
|
$ |
0.56 |
|
|
|
$ |
1.74 |
|
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
|
Adjusted for: |
|
|
|
|
|
|
|
Operating expenses |
$ |
572,951 |
|
|
|
$ |
516,141 |
|
|
|
$ |
1,126,926 |
|
|
|
$ |
1,077,778 |
|
|
Insurance and claims (1) |
(1,258 |
) |
|
|
(1,198 |
) |
|
|
(2,516 |
) |
|
|
(2,396 |
) |
|
Acquisition expenses (2) |
(992 |
) |
|
|
— |
|
|
|
(992 |
) |
|
|
— |
|
|
Gain on sale of Werner Global Logistics (3) |
— |
|
|
|
— |
|
|
|
1,013 |
|
|
|
— |
|
|
Depreciation (4) |
— |
|
|
|
(3,679 |
) |
|
|
— |
|
|
|
(8,693 |
) |
|
Adjusted operating
expenses |
570,701 |
|
|
|
511,264 |
|
|
|
1,124,431 |
|
|
|
1,066,689 |
|
|
Adjusted operating income
(5) |
79,113 |
|
|
|
57,695 |
|
|
|
141,829 |
|
|
|
94,973 |
|
|
Total other expense
(income) |
(19,770 |
) |
|
|
807 |
|
|
|
(19,187 |
) |
|
|
1,817 |
|
|
Adjusted for: |
|
|
|
|
|
|
|
Gain on equity investment (6) |
20,191 |
|
|
|
— |
|
|
|
20,191 |
|
|
|
— |
|
|
Adjusted income before income
taxes |
78,692 |
|
|
|
56,888 |
|
|
|
140,825 |
|
|
|
93,156 |
|
|
Adjusted income tax
expense |
20,026 |
|
|
|
14,123 |
|
|
|
35,485 |
|
|
|
22,705 |
|
|
Adjusted net income (5) |
$ |
58,666 |
|
|
|
$ |
42,765 |
|
|
|
$ |
105,340 |
|
|
|
$ |
70,451 |
|
|
Diluted shares
outstanding |
68,216 |
|
|
|
69,435 |
|
|
|
68,237 |
|
|
|
69,531 |
|
|
Adjusted diluted earnings per
share (5) |
$ |
0.86 |
|
|
|
$ |
0.62 |
|
|
|
$ |
1.54 |
|
|
|
$ |
1.01 |
|
|
(1) During second 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.
(2) During second quarter 2021, we incurred
legal and professional fees related to the acquisition of ECM
Transport Group, which was finalized on July 1, 2021. The expenses
are included within other operating expenses in the Income
Statement and in Corporate operating income in our Segment
Information table.
(3) 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 the Werner Logistics segment in
our Segment Information table.
(4) 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
the Truckload Transportation Services segment in our Segment
Information table.
(5) Our definition of the non-GAAP measures
adjusted operating income, adjusted net income and adjusted diluted
earnings per share begins with (a) operating expenses, the most
comparable GAAP measure. We subtract the insurance and claims jury
verdict interest accrual, the acquisition expenses, and the
additional depreciation expense and add the gain on sale of WGL to
(a) to arrive at adjusted operating expenses, which we subtract
from operating revenues to arrive at (b) adjusted operating income.
We subtract (c) total other expense (income) adjusted to remove the
gain on equity investment from (b) adjusted operating income to
arrive at (d) adjusted income before income taxes. We calculate
adjusted income tax expense by applying the incremental income tax
rate excluding discrete items to the net pre-tax adjustments and
adding this additional income tax to GAAP income tax expense. We
then subtract adjusted income tax expense from adjusted income
before income taxes to arrive at adjusted net income. The adjusted
net income is divided by the diluted shares outstanding to
calculate the adjusted diluted earnings per share.
(6) Non-operating, mark-to-market gain on our
ownership interest in TuSimple, an autonomous technology company.
TuSimple completed its initial public offering in April 2021. Upon
completion, our equity investment was converted to Class A common
shares. We account for our interest, which represents less than 1%,
under ASC 321, Investments - Equity Securities. We record changes
in the value of our investment, based on the share price reported
by Nasdaq, in other expense (income) in the Income Statement.
Management believes excluding the effect of this item provides a
more useful comparison of our performance from period to
period.
|
SEGMENT INFORMATION |
|
(Unaudited) |
|
(In thousands) |
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenues |
|
|
|
|
|
|
|
Truckload Transportation Services |
$ |
491,200 |
|
|
|
$ |
445,053 |
|
|
|
$ |
954,149 |
|
|
|
$ |
909,916 |
|
|
Werner Logistics |
141,673 |
|
|
|
110,163 |
|
|
|
279,526 |
|
|
|
222,327 |
|
|
Other (1) |
16,725 |
|
|
|
13,315 |
|
|
|
32,124 |
|
|
|
28,383 |
|
|
Corporate |
409 |
|
|
|
442 |
|
|
|
788 |
|
|
|
1,061 |
|
|
Subtotal |
650,007 |
|
|
|
568,973 |
|
|
|
1,266,587 |
|
|
|
1,161,687 |
|
|
Inter-segment eliminations
(2) |
(193 |
) |
|
|
(14 |
) |
|
|
(327 |
) |
|
|
(25 |
) |
|
Total |
$ |
649,814 |
|
|
|
$ |
568,959 |
|
|
|
$ |
1,266,260 |
|
|
|
$ |
1,161,662 |
|
|
|
|
|
|
|
|
|
|
Operating Income |
|
|
|
|
|
|
|
Truckload Transportation
Services |
$ |
73,108 |
|
|
|
$ |
51,225 |
|
|
|
$ |
130,736 |
|
|
|
$ |
80,314 |
|
|
Werner Logistics |
3,927 |
|
|
|
3,139 |
|
|
|
8,501 |
|
|
|
4,224 |
|
|
Other (1) |
1,663 |
|
|
|
(534 |
) |
|
|
2,529 |
|
|
|
2,366 |
|
|
Corporate |
(1,835 |
) |
|
|
(1,012 |
) |
|
|
(2,432 |
) |
|
|
(3,020 |
) |
|
Total |
$ |
76,863 |
|
|
|
$ |
52,818 |
|
|
|
$ |
139,334 |
|
|
|
$ |
83,884 |
|
|
(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 June 30, |
|
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
2020 |
|
% Chg |
|
2021 |
|
2020 |
|
% Chg |
Truckload
Transportation Services segment |
|
|
|
|
|
|
|
|
|
|
|
Average trucks in service |
7,664 |
|
|
|
7,762 |
|
|
|
(1.3 |
) |
% |
|
7,727 |
|
|
|
7,812 |
|
|
|
(1.1 |
) |
% |
Average revenues per truck per week (1) |
$ |
4,301 |
|
|
|
$ |
4,032 |
|
|
|
6.7 |
|
% |
|
$ |
4,177 |
|
|
|
$ |
4,017 |
|
|
|
4.0 |
|
% |
Total trucks (at quarter
end) |
|
|
|
|
|
|
|
|
|
|
|
Company |
7,305 |
|
|
|
7,165 |
|
|
|
2.0 |
|
% |
|
7,305 |
|
|
|
7,165 |
|
|
|
2.0 |
|
% |
Independent contractor |
340 |
|
|
|
485 |
|
|
|
(29.9 |
) |
% |
|
340 |
|
|
|
485 |
|
|
|
(29.9 |
) |
% |
Total trucks |
7,645 |
|
|
|
7,650 |
|
|
|
(0.1 |
) |
% |
|
7,645 |
|
|
|
7,650 |
|
|
|
(0.1 |
) |
% |
Total trailers (at quarter
end) |
23,090 |
|
|
|
21,820 |
|
|
|
5.8 |
|
% |
|
23,090 |
|
|
|
21,820 |
|
|
|
5.8 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
One-Way
Truckload |
|
|
|
|
|
|
|
|
|
|
|
Trucking revenues, net of fuel
surcharge (in 000’s) |
$ |
166,171 |
|
|
|
$ |
167,984 |
|
|
|
(1.1 |
) |
% |
|
$ |
323,010 |
|
|
|
$ |
345,833 |
|
|
|
(6.6 |
) |
% |
Average trucks in service |
2,715 |
|
|
|
3,149 |
|
|
|
(13.8 |
) |
% |
|
2,785 |
|
|
|
3,210 |
|
|
|
(13.2 |
) |
% |
Total trucks (at quarter
end) |
2,605 |
|
|
|
3,115 |
|
|
|
(16.4 |
) |
% |
|
2,605 |
|
|
|
3,115 |
|
|
|
(16.4 |
) |
% |
Average percentage of empty
miles |
10.72 |
|
% |
|
13.01 |
|
% |
|
(17.6 |
) |
% |
|
11.04 |
|
% |
|
12.41 |
|
% |
|
(11.0 |
) |
% |
Average revenues per truck per
week (1) |
$ |
4,709 |
|
|
|
$ |
4,103 |
|
|
|
14.8 |
|
% |
|
$ |
4,461 |
|
|
|
$ |
4,143 |
|
|
|
7.7 |
|
% |
Average % change YOY in
revenues per total mile (1) |
16.7 |
|
% |
|
(1.9 |
) |
% |
|
|
|
13.1 |
|
% |
|
(2.7 |
) |
% |
|
|
Average % change YOY in total
miles per truck per week |
(1.7 |
) |
% |
|
(0.3 |
) |
% |
|
|
|
(4.8 |
) |
% |
|
2.3 |
|
% |
|
|
Average completed trip length
in miles (loaded) |
877 |
|
|
|
813 |
|
|
|
7.9 |
|
% |
|
865 |
|
|
|
838 |
|
|
|
3.2 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Dedicated |
|
|
|
|
|
|
|
|
|
|
|
Trucking revenues, net of fuel
surcharge (in 000’s) |
$ |
262,352 |
|
|
|
$ |
238,850 |
|
|
|
9.8 |
|
% |
|
$ |
516,165 |
|
|
|
$ |
470,099 |
|
|
|
9.8 |
|
% |
Average trucks in service |
4,949 |
|
|
|
4,613 |
|
|
|
7.3 |
|
% |
|
4,942 |
|
|
|
4,602 |
|
|
|
7.4 |
|
% |
Total trucks (at quarter
end) |
5,040 |
|
|
|
4,535 |
|
|
|
11.1 |
|
% |
|
5,040 |
|
|
|
4,535 |
|
|
|
11.1 |
|
% |
Average revenues per truck per
week (1) |
$ |
4,079 |
|
|
|
$ |
3,983 |
|
|
|
2.4 |
|
% |
|
$ |
4,018 |
|
|
|
$ |
3,928 |
|
|
|
2.3 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Werner Logistics
segment |
|
|
|
|
|
|
|
|
|
|
|
Average trucks in service |
34 |
|
|
|
31 |
|
|
|
9.7 |
|
% |
|
36 |
|
|
|
32 |
|
|
|
12.5 |
|
% |
Total trucks (at quarter
end) |
41 |
|
|
|
30 |
|
|
|
36.7 |
|
% |
|
41 |
|
|
|
30 |
|
|
|
36.7 |
|
% |
Total trailers (at quarter
end) |
1,325 |
|
|
|
1,635 |
|
|
|
(19.0 |
) |
% |
|
1,325 |
|
|
|
1,635 |
|
|
|
(19.0 |
) |
% |
(1) Net of fuel surcharge revenues
|
SUPPLEMENTAL INFORMATION |
|
(Unaudited) |
|
(In thousands) |
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Capital expenditures, net |
$ |
65,081 |
|
|
$ |
88,769 |
|
|
$ |
102,947 |
|
|
$ |
107,609 |
|
Cash flow from operations |
53,597 |
|
|
153,966 |
|
|
189,464 |
|
|
287,342 |
|
Return on assets
(annualized) |
12.7 |
% |
|
7.5 |
% |
|
10.7 |
% |
|
5.9 |
% |
Return on equity
(annualized) |
22.9 |
% |
|
14.0 |
% |
|
19.2 |
% |
|
11.1 |
% |
|
CONDENSED BALANCE SHEET |
|
(In thousands, except share amounts) |
|
|
|
|
|
June 30, 2021 |
|
December 31, 2020 |
|
(Unaudited) |
|
|
|
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
192,128 |
|
|
|
$ |
29,334 |
|
|
Accounts receivable, trade, less allowance of $8,988 and $8,686,
respectively |
391,082 |
|
|
|
341,104 |
|
|
Other receivables |
25,120 |
|
|
|
23,491 |
|
|
Inventories and supplies |
11,899 |
|
|
|
12,062 |
|
|
Prepaid taxes, licenses and permits |
7,970 |
|
|
|
17,231 |
|
|
Other current assets |
38,312 |
|
|
|
33,694 |
|
|
Total current assets |
666,511 |
|
|
|
456,916 |
|
|
|
|
|
|
Property and equipment |
2,428,268 |
|
|
|
2,405,335 |
|
|
Less – accumulated
depreciation |
893,453 |
|
|
|
862,077 |
|
|
Property and equipment, net |
1,534,815 |
|
|
|
1,543,258 |
|
|
|
|
|
|
Other non-current assets
(1) |
181,541 |
|
|
|
156,502 |
|
|
Total assets |
$ |
2,382,867 |
|
|
|
$ |
2,156,676 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
94,367 |
|
|
|
$ |
83,263 |
|
|
Current portion of long-term debt |
— |
|
|
|
25,000 |
|
|
Insurance and claims accruals |
65,321 |
|
|
|
76,917 |
|
|
Accrued payroll |
48,420 |
|
|
|
35,594 |
|
|
Accrued expenses |
25,972 |
|
|
|
25,032 |
|
|
Other current liabilities |
20,107 |
|
|
|
28,208 |
|
|
Total current liabilities |
254,187 |
|
|
|
274,014 |
|
|
|
|
|
|
Long-term debt, net of current
portion |
300,000 |
|
|
|
175,000 |
|
|
Other long-term
liabilities |
42,568 |
|
|
|
43,114 |
|
|
Insurance and claims accruals,
net of current portion (1) |
236,270 |
|
|
|
231,638 |
|
|
Deferred income taxes |
253,259 |
|
|
|
237,870 |
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Common stock, $.01 par value, 200,000,000 shares authorized;
80,533,536 |
|
|
|
shares issued; 67,931,873 and 67,931,726 shares outstanding,
respectively |
805 |
|
|
|
805 |
|
|
Paid-in capital |
117,069 |
|
|
|
116,039 |
|
|
Retained earnings |
1,542,497 |
|
|
|
1,438,916 |
|
|
Accumulated other comprehensive loss |
(20,873 |
) |
|
|
(22,833 |
) |
|
Treasury stock, at cost; 12,601,663 and 12,601,810 shares,
respectively |
(342,915 |
) |
|
|
(337,887 |
) |
|
Total stockholders’ equity |
1,296,583 |
|
|
|
1,195,040 |
|
|
Total liabilities and
stockholders’ equity |
$ |
2,382,867 |
|
|
|
$ |
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 June 30,
2021 and December 31, 2020.
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