First Quarter 2024 Highlights (all metrics compared to
first quarter 2023)
- Total revenues of $769.1 million, down 8%
- Operating income of $15.6 million, down 71%; non-GAAP adjusted
operating income of $18.6 million, down 68%
- Operating margin of 2.0%, down 440 basis points; non-GAAP
adjusted operating margin of 2.4%, down 450 basis points
- Diluted EPS of $0.10, down 82%; non-GAAP adjusted diluted EPS
of $0.14, down 77%
Werner Enterprises, Inc. (Nasdaq: WERN), a premier
transportation and logistics provider, today reported results for
the first quarter ended March 31, 2024.
“Freight conditions remained challenging in the first quarter
with persistent excess industry capacity driving broad pricing
pressure combined with adverse weather and one-off expense
headwinds. Despite these market challenges, we focused on
controlling the controllables,” said Derek J. Leathers, Chairman
and CEO. “We continued a favorable production trend in One-Way,
grew revenue per truck in Dedicated and realized outsized volume
growth in our Power Only offering within Logistics. We generated
solid cash flow, executed on additional cost takeout, reduced our
debt and repurchased shares during the quarter. While we cannot
control the macro, we are focused on our long-term strategy and
structural improvements to position Werner well for capitalizing on
a tighter market.”
Total revenues for the quarter were $769.1 million, a decrease
of $63.6 million compared to the prior year quarter, due to a $37.2
million, or 6%, decrease in Truckload Transportation Services
(“TTS”) revenues and a decline in Logistics revenues of $26.2
million, or 11%. A portion of the TTS revenue decline was due to
$15.3 million lower fuel surcharge revenues. Net of trucking fuel
surcharge revenues, consolidated total revenues decreased $48.3
million, or 6%, during the quarter.
Operating income of $15.6 million decreased $37.8 million, or
71%, while operating margin of 2.0% decreased 440 basis points. On
a non-GAAP basis, adjusted operating income of $18.6 million
decreased $39.0 million, or 68%. Adjusted operating margin of 2.4%
declined 450 basis points from 6.9% for the same quarter last
year.
TTS operating income decreased $30.1 million, and TTS adjusted
operating income decreased $31.0 million. Logistics had an
operating loss of $2.3 million, a decrease of $7.3 million, and
Logistics had an adjusted operating loss of $1.2 million, a
decrease of $7.5 million. Corporate and Other (including driving
schools) operating income decreased $0.4 million.
Net interest expense of $6.3 million decreased $0.1 million
primarily due to a decrease in average debt outstanding, mostly
offset by higher interest rates for variable rate debt. The
effective income tax rate during the quarter increased to 32.9%,
compared to 24.3% in first quarter 2023 due to a higher amount of
unfavorable discrete income tax items.
During first quarter 2024, we had losses on our strategic
investments of $0.3 million, compared to losses of $0.1 million in
first quarter 2023. Consistent with prior reporting, increases or
decreases to the values of these strategic investments are adjusted
out for determining non-GAAP adjusted net income and non-GAAP
adjusted earnings per share.
Net income attributable to Werner of $6.3 million decreased 82%.
On a non-GAAP basis, adjusted net income attributable to Werner of
$8.6 million decreased 77%. Diluted EPS of $0.10 decreased 82%. On
a non-GAAP basis, adjusted diluted EPS of $0.14 decreased 77%.
Key Consolidated Financial
Metrics
Three Months Ended March 31,
(In thousands, except per share
amounts)
2024
2023
Y/Y Change
Total revenues
$
769,080
$
832,714
(8
)%
Truckload Transportation Services
revenues
551,126
588,330
(6
)%
Werner Logistics revenues
202,482
228,669
(11
)%
Operating income
15,588
53,386
(71
)%
Operating margin
2.0
%
6.4
%
(440) bps
Net income attributable to Werner
6,312
35,224
(82
)%
Diluted earnings per share
0.10
0.55
(82
)%
Adjusted operating income (1)
18,591
57,545
(68
)%
Adjusted operating margin (1)
2.4
%
6.9
%
(450) bps
Adjusted net income attributable to Werner
(1)
8,623
38,244
(77
)%
Adjusted diluted earnings per share
(1)
0.14
0.60
(77
)%
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Consolidated.
Truckload Transportation Services (TTS) Segment
- Revenues of $551.1 million decreased $37.2 million; trucking
revenues, net of fuel surcharge, decreased 5%
- Operating income of $20.8 million decreased $30.1 million;
non-GAAP adjusted operating income of $22.7 million decreased $31.0
million due to lower gains on the sale of property and equipment,
lower revenue per total mile, net of fuel surcharge, in One-Way
Truckload and overall smaller fleet size, partially offset by
favorability in One-Way average total miles per truck per week and
Dedicated average revenues per truck per week, net of fuel
surcharge
- Operating margin of 3.8% decreased 490 basis points from
8.7%
- Non-GAAP adjusted operating margin, net of fuel surcharge, of
4.7% decreased 600 basis points from 10.7%
- Average segment trucks in service totaled 7,935, a decrease of
626 trucks year over year, or 7%
- Dedicated unit trucks at quarter end totaled 5,080, or 65% of
the total TTS segment fleet, compared to 5,345 trucks, or 63%, a
year ago
- Average revenues per truck per week, net of fuel surcharge,
increased 2.8% for TTS and increased 1.3% for Dedicated
During first quarter 2024, Dedicated experienced net reduction
in average trucks, down 4.1% year over year and down 1.7%
sequentially. Dedicated average revenues per truck per week, net of
fuel surcharge, increased 1.3% year over year, and despite a highly
competitive environment and isolated fleet losses, pipeline
opportunities remain healthy and client retention remains strong at
over 93%. One-Way Truckload volume during first quarter 2024 was
steady and seasonally consistent, but revenues remained challenged
by ongoing rate pressure. One-Way revenues per total mile was down
5.1% and fleet size was smaller year over year (down 12.7%), offset
with the fourth consecutive quarter of higher total miles per truck
per week (up 11.3%). As a result, One-Way Truckload miles were down
only 2.8% despite a more sizable fleet reduction year over
year.
Key Truckload Transportation Services
Segment Financial Metrics
Three Months Ended March 31,
(In thousands)
2024
2023
Y/Y Change
Trucking revenues, net of fuel
surcharge
$
469,879
$
493,242
(5
)%
Trucking fuel surcharge revenues
72,983
88,301
(17
)%
Non-trucking and other revenues
8,264
6,787
22
%
Total revenues
$
551,126
$
588,330
(6
)%
Operating income
$
20,840
$
50,986
(59
)%
Operating margin
3.8
%
8.7
%
(490) bps
Operating ratio
96.2
%
91.3
%
490 bps
Adjusted operating income (1)
$
22,694
$
53,725
(58
)%
Adjusted operating margin (1)
4.1
%
9.1
%
(500) bps
Adjusted operating margin, net of fuel
surcharge (1)
4.7
%
10.7
%
(600) bps
Adjusted operating ratio (1)
95.9
%
90.9
%
500 bps
Adjusted operating ratio, net of fuel
surcharge (1)
95.3
%
89.3
%
600 bps
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Truckload Transportation Services
(TTS) Segment.
Werner Logistics Segment
- Revenues of $202.5 million decreased $26.2 million, or 11%
- Operating loss of $2.3 million decreased $7.3 million
- Operating margin of (1.2)% decreased 340 basis points from
2.2%
- Adjusted operating loss of $1.2 million decreased $7.5
million
- Adjusted operating margin of (0.6)% decreased 340 basis points
from 2.8%
Truckload Logistics revenues (76% of Logistics revenues)
decreased 13%, driven by a decrease in shipments and a decline in
revenue per shipment. Brokerage volumes decreased year-over-year
while Power Only volume was up over 20%.
Intermodal revenues (12% of Logistics revenues) decreased 15%,
due to lower revenue per shipment year over year, partially offset
by an increase in shipments. We achieved the fourth consecutive
quarter of a sequential increase in shipments.
Final Mile revenues (12% of Logistics revenues) increased $1.1
million, or 5%.
Logistics operating income decreased $7.3 million to a loss of
$2.3 million and adjusted operating income decreased $7.5 million
in first quarter 2024. Adverse weather combined with a competitive
freight and rate market in first quarter 2024 impacted Logistics
revenue and profitability despite normal seasonality in volume and
maintaining high client retention. We are focused on revenue
quality and managing yield, evidenced by achieving a consistent 15%
margin for three consecutive quarters of revenues less purchased
transportation expense and achieving operating expense reductions,
including a 7% year over year decrease in salaries, wages and
benefits.
Key Werner Logistics Segment Financial
Metrics
Three Months Ended March 31,
(In thousands)
2024
2023
Y/Y Change
Total revenues
$
202,482
$
228,669
(11
)%
Operating expenses:
Purchased transportation expense
172,487
188,498
(8
)%
Other operating expenses
32,324
35,234
(8
)%
Total operating expenses
204,811
223,732
(8
)%
Operating income (loss)
$
(2,329
)
$
4,937
(147
)%
Operating margin
(1.2
)%
2.2
%
(340) bps
Adjusted operating income (loss) (1)
$
(1,180
)
$
6,357
(119
)%
Adjusted operating margin (1)
(0.6
)%
2.8
%
(340) bps
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Werner Logistics Segment.
Cash Flow and Capital Allocation
Cash flow from operations in first quarter 2024 was $88.6
million compared to $166.8 million in first quarter 2023, a
decrease of 47%.
Net capital expenditures in first quarter 2024 were $19.0
million compared to $102.7 million in first quarter 2023, a
decrease of 81%. We plan to continue to invest in new trucks,
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 2.1 years and 5.0 years, respectively, as
of March 31, 2024.
Gains on sales of property and equipment in first quarter 2024
were $3.6 million, or $0.04 per share, compared to $18.3 million,
or $0.22 per share, in first quarter 2023. Year over year, we sold
18% fewer trucks and over 78% more 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.
During the quarter, we repurchased 0.2 million shares of common
stock for a total cost of $6.5 million, or an average price of
$38.64 per share. As of March 31, 2024, we had 2.1 million shares
remaining under our share repurchase authorization.
As of March 31, 2024, we had $60 million of cash and cash
equivalents and over $1.5 billion of stockholders’ equity. Total
debt outstanding was $598 million at March 31, 2024. After
considering letters of credit issued, we had available liquidity
consisting of cash and cash equivalents and available borrowing
capacity as of March 31, 2024 of $619 million.
2024 Guidance Metrics and
Assumptions
The following table summarizes our updated
2024 guidance assumptions:
Prior
(as of 2/6/24)
Actual
(as of 3/31/24)
New
(as of 4/30/24)
TTS truck count from BoY to
EoY
(3)% to 0% (annual)
(2)% (1Q24)
(6)% to (3)% (annual)
Net capital expenditures
$260M to $310M (annual)
$19M (1Q24)
$250M to $300M (annual)
TTS Guidance
Dedicated RPTPW* growth
0% to 3% (annual)
1.3% (1Q24 vs. 1Q23)
0% to 3% (annual)
One-Way Truckload RPTM*
growth
(6)% to (3)% (1H24 vs. 1H23)
(5.1)% (1Q24 vs. 1Q23)
(6)% to (3)% (1H24 vs. 1H23)
* Net of fuel surcharge
revenues
Assumptions
- Effective income tax rate of 32.9% in 1Q24 compared to 24.3% in
1Q23. Expect annual effective tax rate in the range of 24.5% to
25.5%.
- Average truck age of 2.1 years and average trailer age of 5.0
years as of 3/31/24. Expect average truck and trailer ages of 2.0
years and 5.0 years, respectively, as of 12/31/24.
Call Information
Werner Enterprises, Inc. will conduct a conference call to
discuss first quarter 2024 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 April 30,
2024 at approximately 6:00 p.m. CT through May 30, 2024 by dialing
(877) 344-7529 (domestic) or (412) 317-0088 (international) and
using the access code 8240692. 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 2023 revenues of $3.3
billion, an industry-leading modern truck and trailer fleet, nearly
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 latest
available Annual Report on Form 10-K and any 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 March 31,
2024
2023
$
%
$
%
Operating revenues
$
769,080
100.0
$
832,714
100.0
Operating expenses:
Salaries, wages and benefits
265,403
34.5
268,315
32.2
Fuel
77,622
10.1
91,414
11.0
Supplies and maintenance
61,775
8.0
68,225
8.2
Taxes and licenses
25,164
3.3
25,425
3.1
Insurance and claims
36,362
4.7
36,485
4.4
Depreciation and amortization
74,270
9.7
74,313
8.9
Rent and purchased transportation
203,925
26.5
220,224
26.4
Communications and utilities
4,706
0.6
4,733
0.6
Other
4,265
0.6
(9,806
)
(1.2
)
Total operating expenses
753,492
98.0
779,328
93.6
Operating income
15,588
2.0
53,386
6.4
Other expense (income):
Interest expense
7,948
1.0
7,916
1.0
Interest income
(1,685
)
(0.2
)
(1,552
)
(0.2
)
Loss on investments in equity
securities
138
—
81
—
Loss from equity method investment
133
—
—
—
Other
(261
)
—
7
—
Total other expense, net
6,273
0.8
6,452
0.8
Income before income taxes
9,315
1.2
46,934
5.6
Income tax expense
3,067
0.4
11,400
1.3
Net income
6,248
0.8
35,534
4.3
Net loss (income) attributable to
noncontrolling interest
64
—
(310
)
(0.1
)
Net income attributable to Werner
$
6,312
0.8
$
35,224
4.2
Diluted shares outstanding
63,727
63,695
Diluted earnings per share
$
0.10
$
0.55
CONDENSED BALANCE SHEET
(In thousands, except share
amounts)
March 31, 2024
December 31, 2023
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
60,337
$
61,723
Accounts receivable, trade, less allowance
of $9,101 and $9,337, respectively
417,463
444,944
Other receivables
25,031
25,479
Inventories and supplies
17,173
18,077
Prepaid taxes, licenses and permits
12,803
16,505
Other current assets
64,509
67,900
Total current assets
597,316
634,628
Property and equipment
2,914,041
2,951,654
Less – accumulated depreciation
982,759
978,698
Property and equipment, net
1,931,282
1,972,956
Goodwill
129,104
129,104
Intangible assets, net
83,959
86,477
Other non-current assets (1)
337,169
334,771
Total assets
$
3,078,830
$
3,157,936
LIABILITIES, TEMPORARY EQUITY AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
136,242
$
135,990
Current portion of long-term debt
1,250
2,500
Insurance and claims accruals
81,537
81,794
Accrued payroll
48,318
50,549
Accrued expenses
22,202
30,282
Other current liabilities
24,503
29,470
Total current liabilities
314,052
330,585
Long-term debt, net of current portion
596,250
646,250
Other long-term liabilities
53,371
54,275
Insurance and claims accruals, net of
current portion (1)
235,685
239,700
Deferred income taxes
322,925
320,180
Total liabilities
1,522,283
1,590,990
Temporary equity - redeemable
noncontrolling interest
38,543
38,607
Stockholders’ equity:
Common stock, $.01 par value, 200,000,000
shares authorized; 80,533,536 shares issued; 63,412,833 and
63,444,681 shares outstanding, respectively
805
805
Paid-in capital
132,722
134,894
Retained earnings
1,950,819
1,953,385
Accumulated other comprehensive loss
(9,066
)
(9,684
)
Treasury stock, at cost; 17,120,703 and
17,088,855 shares, respectively
(557,276
)
(551,061
)
Total stockholders’ equity
1,518,004
1,528,339
Total liabilities, temporary equity and
stockholders’ equity
$
3,078,830
$
3,157,936
(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 March 31,
2024 and December 31, 2023.
SUPPLEMENTAL INFORMATION
(Unaudited)
(In thousands)
Three Months Ended March 31,
2024
2023
Capital expenditures, net
$
19,035
$
102,743
Cash flow from operations
88,585
166,847
Return on assets (annualized)
0.8
%
4.5
%
Return on equity (annualized)
1.6
%
9.4
%
Segment Financial and Operating
Statistics Information
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended March 31,
2024
2023
Revenues
Truckload Transportation Services
$
551,126
$
588,330
Werner Logistics
202,482
228,669
Other (1)
18,953
20,501
Corporate
590
475
Subtotal
773,151
837,975
Inter-segment eliminations (2)
(4,071
)
(5,261
)
Total
$
769,080
$
832,714
Operating Income
(Loss)
Truckload Transportation Services
$
20,840
$
50,986
Werner Logistics
(2,329
)
4,937
Other (1)
(209
)
549
Corporate
(2,714
)
(3,086
)
Total
$
15,588
$
53,386
(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 March 31,
2024
2023
% Chg
Truckload
Transportation Services segment
Average trucks in service
7,935
8,561
(7.3
)%
Average revenues per truck per week
(1)
$
4,555
$
4,432
2.8
%
Total trucks (at quarter end)
Company
7,535
8,170
(7.8
)%
Independent contractor
275
305
(9.8
)%
Total trucks
7,810
8,475
(7.8
)%
Total trailers (at quarter end)
27,650
27,440
0.8
%
One-Way
Truckload
Trucking revenues, net of fuel surcharge
(in 000’s)
$
168,837
$
183,130
(7.8
)%
Average trucks in service
2,786
3,191
(12.7
)%
Total trucks (at quarter end)
2,730
3,130
(12.8
)%
Average percentage of empty miles
14.90
%
14.09
%
5.7
%
Average revenues per truck per week
(1)
$
4,661
$
4,414
5.6
%
Average % change YOY in revenues per total
mile (1)
(5.1
)%
(3.2
)%
Average % change YOY in total miles per
truck per week
11.3
%
(2.8
)%
Average completed trip length in miles
(loaded)
591
620
(4.7
)%
Dedicated
Trucking revenues, net of fuel surcharge
(in 000’s)
$
301,042
$
310,112
(2.9
)%
Average trucks in service
5,149
5,370
(4.1
)%
Total trucks (at quarter end)
5,080
5,345
(5.0
)%
Average revenues per truck per week
(1)
$
4,497
$
4,441
1.3
%
Werner Logistics
segment
Average trucks in service
26
39
(33.3
)%
Total trucks (at quarter end)
21
32
(34.4
)%
Total trailers (at quarter end)
3,115
2,580
20.7
%
(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 revenues, less
purchased transportation expense; 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 March 31,
2024
2023
Non-GAAP Adjusted Operating Income
and Non-GAAP Adjusted Operating
Margin (1)
$
% of Op. Rev.
$
% of Op. Rev.
Operating income and operating margin –
(GAAP)
$
15,588
2.0
%
$
53,386
6.4
%
Non-GAAP adjustments:
Insurance and claims (2)
485
0.1
%
1,387
0.2
%
Amortization of intangible assets (3)
2,518
0.3
%
2,772
0.3
%
Non-GAAP adjusted operating income and
non-GAAP adjusted operating margin
$
18,591
2.4
%
$
57,545
6.9
%
Three Months Ended March 31,
2024
2023
Non-GAAP Adjusted Net Income
Attributable to Werner and Non-GAAP Adjusted Diluted EPS (1)
$
Diluted EPS
$
Diluted EPS
Net income attributable to Werner and
diluted EPS – (GAAP)
$
6,312
$
0.10
$
35,224
$
0.55
Non-GAAP adjustments:
Insurance and claims (2)
485
0.01
1,387
0.02
Amortization of intangible assets, net of
amount attributable to noncontrolling interest (3)
2,346
0.04
2,600
0.04
Loss on investments in equity securities
(4)
138
—
81
—
Loss from equity method investment (5)
133
—
—
—
Income tax effect of above adjustments
(6)
(791
)
(0.01
)
(1,048
)
(0.01
)
Non-GAAP adjusted net income attributable
to Werner and non-GAAP adjusted diluted EPS
$
8,623
$
0.14
$
38,244
$
0.60
Three Months Ended March 31,
2024
2023
Non-GAAP Adjusted
Operating Revenues, Net of Fuel Surcharge (1)
$
$
Operating revenues – (GAAP)
$
769,080
$
832,714
Non-GAAP adjustment:
Trucking fuel surcharge (7)
(72,983
)
(88,301
)
Non-GAAP Operating revenues, net of fuel
surcharge
$
696,097
$
744,413
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES – TRUCKLOAD TRANSPORTATION SERVICES (TTS)
SEGMENT
(unaudited)
(In thousands)
Three Months Ended March 31,
2024
2023
Non-GAAP Adjusted Operating
Income and Non-GAAP Adjusted Operating
Margin (1)
$
% of Op. Rev.
$
% of Op. Rev.
Operating income and operating margin –
(GAAP)
$
20,840
3.8
%
$
50,986
8.7
%
Non-GAAP adjustments:
Insurance and claims (2)
485
0.1
%
1,387
0.2
%
Amortization of intangible assets (3)
1,369
0.2
%
1,352
0.2
%
Non-GAAP adjusted operating income and
non-GAAP adjusted operating margin
$
22,694
4.1
%
$
53,725
9.1
%
Three Months Ended March 31,
2024
2023
Non-GAAP Adjusted Operating Expenses
and Non-GAAP Adjusted Operating
Ratio (1)
$
% of Op. Rev.
$
% of Op. Rev.
Operating expenses and operating ratio –
(GAAP)
$
530,286
96.2
%
$
537,344
91.3
%
Non-GAAP adjustments:
Insurance and claims (2)
(485
)
(0.1
)%
(1,387
)
(0.2
)%
Amortization of intangible assets (3)
(1,369
)
(0.2
)%
(1,352
)
(0.2
)%
Non-GAAP adjusted operating expenses and
non-GAAP adjusted operating ratio
$
528,432
95.9
%
$
534,605
90.9
%
Three Months Ended March 31,
Non-GAAP Adjusted Operating Revenues,
Net of Fuel Surcharge; 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)
2024
2023
$
$
Operating revenues – (GAAP)
$
551,126
$
588,330
Less: Trucking fuel surcharge (7)
(72,983
)
(88,301
)
Operating revenues, net of fuel surcharge
– (Non-GAAP)
478,143
500,029
Operating expenses – (GAAP)
530,286
537,344
Non-GAAP adjustments:
Trucking fuel surcharge (7)
(72,983
)
(88,301
)
Insurance and claims (2)
(485
)
(1,387
)
Amortization of intangible assets (3)
(1,369
)
(1,352
)
Non-GAAP adjusted operating expenses, net
of fuel surcharge
455,449
446,304
Non-GAAP adjusted operating income
$
22,694
$
53,725
Non-GAAP adjusted operating margin, net of
fuel surcharge
4.7
%
10.7
%
Non-GAAP adjusted operating ratio, net of
fuel surcharge
95.3
%
89.3
%
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES – WERNER LOGISTICS SEGMENT
(unaudited)
(In thousands)
Three Months Ended
March 31, 2024
December 31, 2023
September 30, 2023
March 31, 2023
Non-GAAP Adjusted Operating Revenues,
Less Purchased Transportation Expense
(1)
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
Operating revenues – (GAAP)
$
202,482
100.0
%
$
226,963
100.0
%
$
230,252
100.0
%
$
228,669
100.0
%
Non-GAAP adjustment:
Purchased transportation expense (8)
(172,487
)
(85.2
)%
(193,132
)
(85.1
)%
(194,921
)
(84.7
)%
(188,498
)
(82.4
)%
Non-GAAP adjusted operating revenues, less
purchased transportation expense
$
29,995
14.8
%
$
33,831
14.9
%
$
35,331
15.3
%
$
40,171
17.6
%
Three Months Ended March 31,
2024
2023
Non-GAAP Adjusted Operating Income
(Loss) and Non-GAAP Adjusted Operating
Margin (1)
$
% of Op. Rev.
$
% of Op. Rev.
Operating income (loss) and operating
margin – (GAAP)
$
(2,329
)
(1.2
)%
$
4,937
2.2
%
Non-GAAP adjustments:
Amortization of intangible assets (3)
1,149
0.6
%
1,420
0.6
%
Non-GAAP adjusted operating income (loss)
and non-GAAP adjusted operating margin
$
(1,180
)
(0.6
)%
$
6,357
2.8
%
(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 revenues, less purchased transportation
expense; 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, excluding months where the plaintiffs
requested an extension of time to respond to our petition for
review. 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) 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. This item is included in our Truckload
Transportation Services and Werner Logistics segments.
(4) Represents non-operating
mark-to-market adjustments for gains/losses on our minority equity
investments, which we account for under Accounting Standards
Codification (“ASC”) 321, Investments – Equity Securities.
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. We record changes in the
value of our investments in equity securities in other expense
(income) in our Income Statement.
(5) Represents earnings/losses from our
equity method investment, which we account for under ASC 323,
Investments - Equity Method and Joint Ventures. Management believes
excluding the effect of earnings/losses from our equity method
investment provides a more useful comparison of our performance
from period to period. We record earnings/losses from our equity
method investment in other expense (income) in our Income
Statement.
(6) 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 2023 has
been updated to reflect the annual incremental income tax rate.
(7) 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.
(8) Management believes excluding
purchased transportation expense from Werner Logistics operating
revenues provides a useful measurement of our ability to source and
sell services provided by third parties.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240430775034/en/
Christopher D. Wikoff Executive Vice President, Treasurer and
Chief Financial Officer (402) 894-3700
Werner Enterprises (NASDAQ:WERN)
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