Fourth Quarter 2023 Highlights (all metrics compared to
fourth quarter 2022)
- Total revenues of $821.9 million, down 5%
- Operating income of $37.9 million, down 57%; non-GAAP adjusted
operating income of $39.2 million, down 56%
- Operating margin of 4.6%, down 570 basis points; non-GAAP
adjusted operating margin of 4.8%, down 560 basis points
- Diluted EPS of $0.37, down 61%; non-GAAP adjusted diluted EPS
of $0.39, down 61%
2023 Highlights (all metrics compared to 2022)
- Total revenues of $3.28 billion, relatively flat
- Operating income of $176.4 million, down 45%; non-GAAP adjusted
operating income of $189.7 million, down 43%
- Operating margin of 5.4%, down 440 basis points; non-GAAP
adjusted operating margin of 5.8%, down 430 basis points
- Diluted EPS of $1.76, down 53%; non-GAAP adjusted diluted EPS
of $1.93, down 48%
Werner Enterprises, Inc. (Nasdaq: WERN), a premier
transportation and logistics provider, today reported results for
the fourth quarter and year ended December 31, 2023.
“Freight conditions remained challenging in the fourth quarter
with ongoing pricing pressure. Despite this, our nearly 14,000
talented Werner team members and cycle-tested management team
focused on what we can control. Our Dedicated business proved to be
durable and resilient, generating double-digit margins and growing
revenue per truck for the 9th year out of the last decade. Our
One-Way Trucking business’ miles per truck improved nearly 9% year
over year during the quarter, while rate per mile decline was more
favorable than industry benchmarks. Logistics volume was strong,
and revenue grew over 6% year over year, extending to 13 straight
quarters of growth,” said Derek J. Leathers, Chairman and CEO. “We
continue to execute on structural cost changes, realizing over $40
million of savings in 2023, helping to partially offset market
dynamics and conditions out of our control, such as rate pressure,
cost inflation and declining resale values of equipment. During the
quarter, operating cash flow remained strong, which we used to
reinvest in the business, pay down over $40 million in debt and
return value to our shareholders. Improved production, our elevated
rigor on operational excellence, cost savings, innovation, and
capital deployment positions us well to benefit as the market comes
more into balance.”
Total revenues for the quarter were $821.9 million, a decrease
of $39.5 million compared to the prior year quarter, due to a $54.7
million decrease in Truckload Transportation Services (“TTS”)
revenues, partially offset by Logistics revenues growth of $13.5
million, or 6%, including the ReedTMS acquisition. A significant
portion of the TTS revenue decline was due to $24.9 million lower
fuel surcharge revenues. Net of trucking fuel surcharge revenues,
consolidated total revenues decreased $14.6 million, or 2%, during
the quarter.
Operating income of $37.9 million decreased $50.4 million, or
57%, while operating margin of 4.6% decreased 570 basis points. On
a non-GAAP basis, adjusted operating income of $39.2 million
decreased $50.7 million, or 56%. Adjusted operating margin of 4.8%
declined 560 basis points from 10.4% for the same quarter last
year.
TTS operating income decreased $46.0 million, and TTS adjusted
operating income decreased $45.9 million. Logistics operating
income decreased $5.3 million and adjusted operating income
decreased $5.0 million. Corporate and Other (including driving
schools) operating income increased $0.8 million.
Net interest expense of $7.3 million increased $2.2 million
primarily due to higher interest rates for variable rate debt and
an increase in average debt outstanding. The effective income tax
rate during the quarter was 23.1%, compared to 24.7% in fourth
quarter 2022.
During fourth quarter 2023, we had losses on our strategic
investments of $0.3 million, compared to losses of $2.2 million, or
$0.03 per share, in fourth quarter 2022. 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 $23.6 million decreased
61%. On a non-GAAP basis, adjusted net income attributable to
Werner of $24.6 million decreased 61%. Diluted EPS of $0.37
decreased 61%. On a non-GAAP basis, adjusted diluted EPS of $0.39
decreased 61%.
Key Consolidated Financial Metrics
Three Months Ended December
31,
Year Ended December 31,
(In thousands, except per share
amounts)
2023
2022
Y/Y Change
2023
2022
Y/Y Change
Total revenues
$
821,945
$
861,491
(5
)%
$
3,283,499
$
3,289,978
0
%
Truckload Transportation Services
revenues
580,093
634,787
(9
)%
2,310,810
2,428,686
(5
)%
Werner Logistics revenues
226,963
213,485
6
%
910,433
793,492
15
%
Operating income
37,932
88,381
(57
)%
176,416
323,076
(45
)%
Operating margin
4.6
%
10.3
%
(570) bps
5.4
%
9.8
%
(440) bps
Net income attributable to Werner
23,573
60,166
(61
)%
112,382
241,256
(53
)%
Diluted earnings per share
0.37
0.94
(61
)%
1.76
3.74
(53
)%
Adjusted operating income (1)
39,206
89,917
(56
)%
189,705
333,164
(43
)%
Adjusted operating margin (1)
4.8
%
10.4
%
(560) bps
5.8
%
10.1
%
(430) bps
Adjusted net income attributable to Werner
(1)
24,639
62,840
(61
)%
122,721
239,164
(49
)%
Adjusted diluted earnings per share
(1)
0.39
0.99
(61
)%
1.93
3.70
(48
)%
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Consolidated.
Truckload Transportation Services (TTS) Segment
- Revenues of $580.1 million decreased $54.7 million; trucking
revenues, net of fuel surcharge, decreased 6%
- Operating income of $34.3 million decreased $46.0 million;
non-GAAP adjusted operating income of $37.2 million decreased $45.9
million due to a lower rate per mile in One-Way Truckload, smaller
overall fleet size, and lower gains on the sale of property and
equipment
- Operating margin of 5.9% decreased 680 basis points from
12.7%
- Non-GAAP adjusted operating margin, net of fuel surcharge, of
7.5% decreased 830 basis points from 15.8%
- Average segment trucks in service totaled 8,168, a decrease of
541 trucks year over year, or 6%
- Dedicated unit trucks at quarter end totaled 5,265, or 66% of
the total TTS segment fleet, compared to 5,450 trucks, or 63%, a
year ago
- Average revenues per truck per week, net of fuel surcharges,
increased 0.2% for TTS and increased 0.9% for Dedicated
During fourth quarter 2023, Dedicated experienced net reduction
in average trucks, down 3.3% year over year and down 0.3%
sequentially. Dedicated revenue per truck per week increased 0.9%
year over year, and despite a highly competitive environment and
normal churn, pipeline opportunities remain healthy and client
retention remains strong. One-Way Truckload customer freight demand
during fourth quarter 2023 was stable with slightly
better-than-expected peak volumes, but at significantly reduced
pricing compared to the prior-year period. One-Way rate per mile
was down 8.6% and fleet size was smaller year over year (down
11.0%), offset with the third consecutive quarter of higher total
miles per truck (up 8.7%).
Key Truckload Transportation Services Segment Financial
Metrics
Three Months Ended December
31,
Year Ended December 31,
(In thousands)
2023
2022
Y/Y Change
2023
2022
Y/Y Change
Trucking revenues, net of fuel
surcharge
$
487,408
$
518,393
(6
)%
$
1,949,445
$
1,982,639
(2
)%
Trucking fuel surcharge revenues
84,675
109,611
(23
)%
332,388
419,240
(21
)%
Non-trucking and other revenues
8,010
6,783
18
%
28,977
26,807
8
%
Total revenues
$
580,093
$
634,787
(9
)%
$
2,310,810
$
2,428,686
(5
)%
Operating income
$
34,339
$
80,341
(57
)%
$
169,330
$
294,555
(43
)%
Operating margin
5.9
%
12.7
%
(680) bps
7.3
%
12.1
%
(480) bps
Operating ratio
94.1
%
87.3
%
680 bps
92.7
%
87.9
%
480 bps
Adjusted operating income (1)
$
37,165
$
83,104
(55
)%
$
180,453
$
303,902
(41
)%
Adjusted operating margin (1)
6.4
%
13.1
%
(670) bps
7.8
%
12.5
%
(470) bps
Adjusted operating margin, net of fuel
surcharge (1)
7.5
%
15.8
%
(830) bps
9.1
%
15.1
%
(600) bps
Adjusted operating ratio (1)
93.6
%
86.9
%
670 bps
92.2
%
87.5
%
470 bps
Adjusted operating ratio, net of fuel
surcharge (1)
92.5
%
84.2
%
830 bps
90.9
%
84.9
%
600 bps
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Truckload Transportation Services
(TTS) Segment.
Werner Logistics Segment
- Revenues of $227.0 million increased $13.5 million, or 6%,
including ReedTMS acquisition which closed in November 2022
- Operating income of $4.6 million decreased $5.3 million
- Operating margin of 2.0% decreased 260 basis points from
4.6%
- Adjusted operating income of $3.0 million decreased $5.0
million
- Adjusted operating margin of 1.3% decreased 250 basis points
from 3.8%
Truckload Logistics revenues (77% of Logistics revenues)
increased 15%, driven by a double-digit increase in shipments
(including November 2022 ReedTMS acquisition), partially offset by
a decline in revenue per shipment.
Intermodal revenues (12% of Logistics revenues) decreased 27%,
due to fewer shipments and lower revenue per shipment year over
year; although we achieved the third consecutive quarter of a
sequential increase in shipments.
Final Mile revenues (11% of Logistics revenues) increased $1.4
million, or 6%.
Logistics operating income decreased $5.3 million and adjusted
operating income decreased $5.0 million in fourth quarter 2023, due
to a competitive freight and rate market in fourth quarter 2023
despite generally stronger volume and load growth overall.
Key Werner Logistics Segment Financial Metrics
Three Months Ended December
31,
Year Ended December 31,
(In thousands)
2023
2022
Y/Y Change
2023
2022
Y/Y Change
Total revenues
$
226,963
$
213,485
6
%
$
910,433
$
793,492
15
%
Operating expenses:
Purchased transportation expense
193,132
174,463
11
%
761,948
653,185
17
%
Other operating expenses
29,256
29,154
0
%
132,606
104,123
27
%
Total operating expenses
222,388
203,617
9
%
894,554
757,308
18
%
Operating income
$
4,575
$
9,868
(54
)%
$
15,879
$
36,184
(56
)%
Operating margin
2.0
%
4.6
%
(260) bps
1.7
%
4.6
%
(290) bps
Adjusted operating income (1)
$
3,023
$
8,028
(62
)%
$
18,045
$
35,844
(50
)%
Adjusted operating margin (1)
1.3
%
3.8
%
(250) bps
2.0
%
4.5
%
(250) 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 2023 was $118.3
million compared to $116.0 million in fourth quarter 2022, an
increase of 2%. Operating cash flow margins improved greater than
90 basis points for fourth quarter 2023 to 14% of operating
revenues and increased 80 basis points year to date 2023 to 14% of
operating revenues.
Net capital expenditures in fourth quarter 2023 were $34.5
million compared to $63.5 million in fourth quarter 2022, a
decrease of 46%. 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 4.9 years, respectively, as
of December 31, 2023.
Gains on sales of property and equipment in fourth quarter 2023
were $3.1 million, or $0.04 per share, compared to $25.9 million,
or $0.30 per share, in fourth quarter 2022. Year over year, we sold
11% fewer trucks and over 60% more trailers and realized
substantially 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 2023. As of December 31, 2023, we had 2.3 million shares
remaining under our share repurchase authorization.
As of December 31, 2023, we had $62 million of cash and cash
equivalents and $1.5 billion of stockholders’ equity. Total debt
outstanding was $649 million at December 31, 2023. After
considering letters of credit issued, we had available liquidity
consisting of cash and cash equivalents and available borrowing
capacity as of December 31, 2023 of $526 million.
Introducing 2024 Guidance
2023 Guidance (as of
11/1/23)
2023 Actual (as of
12/31/23)
2024 Guidance (as of
2/6/24)
TTS truck count from BoY to
EoY
(5)% to (3)% (annual)
(7)% (2023)
(3)% to 0% (annual)
Net capital expenditures
$425M to $450M (annual)
$409M (2023)
$260M to $310M (annual)
TTS Guidance
Dedicated RPTPW* growth
0% to 3% (annual)
1.5% (2023)
0% to 3% (annual)
One-Way Truckload RPTM*
growth
(9)% to (7)% (4Q23 vs. 4Q22)
(8.6)% (4Q23 vs. 4Q22)
(6)% to (3)% (1H24 vs. 1H23)
* Net of fuel surcharge
revenues
Assumptions
- Effective income tax rate of 24.5% to 25.5% in 2024 compared to
24.0% in 2023.
- Expect average truck age of 2.1 years and average trailer age
of 5.0 years as of 12/31/24, compared to 2.1 years and 4.9 years as
of 12/31/23, respectively.
Call Information
Werner Enterprises, Inc. will conduct a conference call to
discuss fourth quarter 2023 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 6,
2024 at approximately 6:00 p.m. CT through March 6, 2024 by dialing
(877) 344-7529 (domestic) or (412) 317-0088 (international) and
using the access code 1321524. 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 Annual Report
on Form 10-K for the year ended December 31, 2022 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,
2023
2022
2023
2022
$
%
$
%
$
%
$
%
Operating revenues
$
821,945
100.0
$
861,491
100.0
$
3,283,499
100.0
$
3,289,978
100.0
Operating expenses:
Salaries, wages and benefits
269,816
32.8
260,531
30.2
1,072,558
32.7
1,020,609
31.0
Fuel
85,478
10.4
111,447
12.9
345,001
10.5
437,299
13.3
Supplies and maintenance
63,124
7.7
65,406
7.6
256,494
7.8
253,096
7.7
Taxes and licenses
25,999
3.2
25,289
2.9
102,684
3.1
97,929
3.0
Insurance and claims
33,964
4.1
44,301
5.2
138,516
4.2
147,365
4.5
Depreciation and amortization
75,712
9.2
73,826
8.6
299,509
9.1
279,923
8.5
Rent and purchased transportation
224,418
27.3
207,662
24.1
886,284
27.0
777,464
23.6
Communications and utilities
4,523
0.6
4,429
0.5
18,480
0.6
15,856
0.5
Other
979
0.1
(19,781
)
(2.3
)
(12,443
)
(0.4
)
(62,639
)
(1.9
)
Total operating expenses
784,013
95.4
773,110
89.7
3,107,083
94.6
2,966,902
90.2
Operating income
37,932
4.6
88,381
10.3
176,416
5.4
323,076
9.8
Other expense (income):
Interest expense
8,819
1.1
5,824
0.7
33,535
1.0
11,828
0.4
Interest income
(1,523
)
(0.2
)
(751
)
(0.1
)
(6,701
)
(0.2
)
(1,731
)
(0.1
)
Loss (gain) on investments in equity
securities, net
242
—
2,208
0.3
278
—
(12,195
)
(0.4
)
Loss from equity method investment
92
—
—
—
1,046
0.1
—
—
Other
100
—
112
—
477
—
388
—
Total other expense (income)
7,730
0.9
7,393
0.9
28,635
0.9
(1,710
)
(0.1
)
Income before income taxes
30,202
3.7
80,988
9.4
147,781
4.5
324,786
9.9
Income tax expense
6,970
0.9
19,977
2.3
35,491
1.1
79,206
2.4
Net income
23,232
2.8
61,011
7.1
112,290
3.4
245,580
7.5
Net loss (income) attributable to
noncontrolling interest
341
0.1
(845
)
(0.1
)
92
—
(4,324
)
(0.2
)
Net income attributable to Werner
$
23,573
2.9
$
60,166
7.0
$
112,382
3.4
$
241,256
7.3
Diluted shares outstanding
63,780
63,695
63,718
64,579
Diluted earnings per share
$
0.37
$
0.94
$
1.76
$
3.74
CONDENSED BALANCE SHEET
(In thousands, except share
amounts)
December 31, 2023
December 31, 2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
61,723
$
107,240
Accounts receivable, trade, less allowance
of $9,337 and $10,271, respectively
444,944
518,815
Other receivables
25,479
29,875
Inventories and supplies
18,077
14,527
Prepaid taxes, licenses and permits
16,505
17,699
Other current assets
67,900
74,459
Total current assets
634,628
762,615
Property and equipment
2,951,654
2,885,641
Less – accumulated depreciation
978,698
1,060,365
Property and equipment, net
1,972,956
1,825,276
Goodwill
129,104
132,717
Intangible assets, net
86,477
81,502
Other non-current assets (1)
334,771
295,145
Total assets
$
3,157,936
$
3,097,255
LIABILITIES, TEMPORARY EQUITY AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
135,990
$
124,483
Current portion of long-term debt
2,500
6,250
Insurance and claims accruals
81,794
78,620
Accrued payroll
50,549
49,793
Accrued expenses
30,282
20,358
Other current liabilities
29,470
30,016
Total current liabilities
330,585
309,520
Long-term debt, net of current portion
646,250
687,500
Other long-term liabilities
54,275
59,677
Insurance and claims accruals, net of
current portion (1)
239,700
244,946
Deferred income taxes
320,180
313,278
Total liabilities
1,590,990
1,614,921
Temporary equity - redeemable
noncontrolling interest
38,607
38,699
Stockholders’ equity:
Common stock, $.01 par value, 200,000,000
shares authorized; 80,533,536 shares issued; 63,444,681 and
63,223,003 shares outstanding, respectively
805
805
Paid-in capital
134,894
129,837
Retained earnings
1,953,385
1,875,873
Accumulated other comprehensive loss
(9,684
)
(11,292
)
Treasury stock, at cost; 17,088,855 and
17,310,533 shares, respectively
(551,061
)
(551,588
)
Total stockholders’ equity
1,528,339
1,443,635
Total liabilities, temporary equity and
stockholders’ equity
$
3,157,936
$
3,097,255
(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, 2023 and 2022.
SUPPLEMENTAL INFORMATION
(Unaudited)
(In thousands)
Three Months Ended December
31,
Year Ended December 31,
2023
2022
2023
2022
Capital expenditures, net
$
34,537
$
63,507
$
408,698
$
317,579
Cash flow from operations
118,347
115,995
474,366
448,711
Return on assets (annualized)
2.9
%
8.2
%
3.6
%
8.8
%
Return on equity (annualized)
6.0
%
16.8
%
7.3
%
17.5
%
Segment Financial and Operating Statistics
Information
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended December
31,
Year Ended December 31,
2023
2022
2023
2022
Revenues
Truckload Transportation Services
$
580,093
$
634,787
$
2,310,810
$
2,428,686
Werner Logistics
226,963
213,485
910,433
793,492
Other (1)
18,974
16,257
78,063
71,185
Corporate
420
431
1,883
1,833
Subtotal
826,450
864,960
3,301,189
3,295,196
Inter-segment eliminations (2)
(4,505
)
(3,469
)
(17,690
)
(5,218
)
Total
$
821,945
$
861,491
$
3,283,499
$
3,289,978
Operating Income
(Loss)
Truckload Transportation Services
$
34,339
$
80,341
$
169,330
$
294,555
Werner Logistics
4,575
9,868
15,879
36,184
Other (1)
(244
)
(2,419
)
69
(2,604
)
Corporate
(738
)
591
(8,862
)
(5,059
)
Total
$
37,932
$
88,381
$
176,416
$
323,076
(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,
2023
2022
% Chg
2023
2022
% Chg
Truckload
Transportation Services segment
Average trucks in service
8,168
8,709
(6.2
)%
8,326
8,437
(1.3
)%
Average revenues per truck per week
(1)
$
4,590
$
4,579
0.2
%
$
4,502
$
4,519
(0.4
)%
Total trucks (at quarter end)
Company
7,740
8,305
(6.8
)%
7,740
8,305
(6.8
)%
Independent contractor
260
295
(11.9
)%
260
295
(11.9
)%
Total trucks
8,000
8,600
(7.0
)%
8,000
8,600
(7.0
)%
Total trailers (at quarter end)
27,850
27,650
0.7
%
27,850
27,650
0.7
%
One-Way
Truckload
Trucking revenues, net of fuel surcharge
(in 000’s)
$
178,118
$
201,460
(11.6
)%
$
713,762
$
766,013
(6.8
)%
Average trucks in service
2,929
3,292
(11.0
)%
3,042
3,153
(3.5
)%
Total trucks (at quarter end)
2,735
3,150
(13.2
)%
2,735
3,150
(13.2
)%
Average percentage of empty miles
14.92
%
13.58
%
9.9
%
14.36
%
12.70
%
13.1
%
Average revenues per truck per week
(1)
$
4,678
$
4,708
(0.6
)%
$
4,512
$
4,672
(3.4
)%
Average % change YOY in revenues per total
mile (1)
(8.6
)%
0.4
%
(5.5
)%
8.6
%
Average % change YOY in total miles per
truck per week
8.7
%
(4.6
)%
2.2
%
(7.4
)%
Average completed trip length in miles
(loaded)
594
633
(6.2
)%
595
675
(11.9
)%
Dedicated
Trucking revenues, net of fuel surcharge
(in 000’s)
$
309,290
$
316,933
(2.4
)%
$
1,235,683
$
1,216,626
1.6
%
Average trucks in service
5,239
5,417
(3.3
)%
5,284
5,284
—
%
Total trucks (at quarter end)
5,265
5,450
(3.4
)%
5,265
5,450
(3.4
)%
Average revenues per truck per week
(1)
$
4,541
$
4,501
0.9
%
$
4,496
$
4,428
1.5
%
Werner Logistics
segment
Average trucks in service
39
45
(13.3
)%
37
52
(28.8
)%
Total trucks (at quarter end)
35
39
(10.3
)%
35
39
(10.3
)%
Total trailers (at quarter end)
2,960
2,315
27.9
%
2,960
2,315
27.9
%
(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,
2023
2022
2023
2022
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)
$
37,932
4.6
%
$
88,381
10.3
%
$
176,416
5.4
%
$
323,076
9.8
%
Non-GAAP adjustments:
Insurance and claims (2)
1,457
0.2
%
1,387
0.1
%
5,664
0.2
%
5,394
0.2
%
Amortization of intangible assets (3)
2,517
0.3
%
2,036
0.2
%
10,325
0.3
%
6,113
0.2
%
Acquisition expenses (4)
—
—
%
613
0.1
%
—
—
%
1,081
—
%
Contingent consideration adjustments
(5)
(2,700
)
(0.3
)%
(2,500
)
(0.3
)%
(2,700
)
(0.1
)%
(2,500
)
(0.1
)%
Non-GAAP adjusted operating income and
non-GAAP adjusted operating margin
$
39,206
4.8
%
$
89,917
10.4
%
$
189,705
5.8
%
$
333,164
10.1
%
Three Months Ended December
31,
Year Ended December 31,
2023
2022
2023
2022
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)
$
23,573
$
0.37
$
60,166
$
0.94
$
112,382
$
1.76
$
241,256
$
3.74
Non-GAAP adjustments:
Insurance and claims (2)
1,457
0.02
1,387
0.02
5,664
0.09
5,394
0.08
Amortization of intangible assets, net of
amount attributable to noncontrolling interest (3)
2,345
0.04
1,864
0.03
9,637
0.15
5,425
0.08
Acquisition expenses (4)
—
—
613
0.01
—
—
1,081
0.02
Contingent consideration adjustments
(5)
(2,700
)
(0.04
)
(2,500
)
(0.04
)
(2,700
)
(0.04
)
(2,500
)
(0.04
)
Loss (gain) on investments in equity
securities, net (6)
242
—
2,208
0.04
278
0.01
(12,195
)
(0.19
)
Loss from equity method investment (7)
92
—
—
—
1,046
0.02
—
—
Income tax effect of above adjustments
(8)
(370
)
—
(898
)
(0.01
)
(3,586
)
(0.06
)
703
0.01
Non-GAAP adjusted net income attributable
to Werner and non-GAAP adjusted diluted EPS
$
24,639
$
0.39
$
62,840
$
0.99
$
122,721
$
1.93
$
239,164
$
3.70
Three Months Ended December
31,
Year Ended December 31,
2023
2022
2023
2022
Non-GAAP Adjusted
Operating Revenues, Net of Fuel Surcharge (1)
$
$
$
$
Operating revenues – (GAAP)
$
821,945
$
861,491
$
3,283,499
$
3,289,978
Non-GAAP adjustment:
Trucking fuel surcharge (9)
(84,675
)
(109,611
)
(332,388
)
(419,240
)
Non-GAAP Operating revenues, net of fuel
surcharge
$
737,270
$
751,880
$
2,951,111
$
2,870,738
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES – TRUCKLOAD TRANSPORTATION SERVICES (TTS)
SEGMENT
(unaudited)
(In thousands)
Three Months Ended December
31,
Year Ended December 31,
2023
2022
2023
2022
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)
$
34,339
5.9
%
$
80,341
12.7
%
$
169,330
7.3
%
$
294,555
12.1
%
Non-GAAP adjustments:
Insurance and claims (2)
1,457
0.3
%
1,387
0.2
%
5,664
0.3
%
5,394
0.2
%
Amortization of intangible assets (3)
1,369
0.2
%
1,376
0.2
%
5,459
0.2
%
3,953
0.2
%
Non-GAAP adjusted operating income and
non-GAAP adjusted operating margin
$
37,165
6.4
%
$
83,104
13.1
%
$
180,453
7.8
%
$
303,902
12.5
%
Three Months Ended December
31,
Year Ended December 31,
2023
2022
2023
2022
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)
$
545,754
94.1
%
$
554,446
87.3
%
$
2,141,480
92.7
%
$
2,134,131
87.9
%
Non-GAAP adjustments:
Insurance and claims (2)
(1,457
)
(0.3
)%
(1,387
)
(0.2
)%
(5,664
)
(0.3
)%
(5,394
)
(0.2
)%
Amortization of intangible assets (3)
(1,369
)
(0.2
)%
(1,376
)
(0.2
)%
(5,459
)
(0.2
)%
(3,953
)
(0.2
)%
Non-GAAP adjusted operating expenses and
non-GAAP adjusted operating ratio
$
542,928
93.6
%
$
551,683
86.9
%
$
2,130,357
92.2
%
$
2,124,784
87.5
%
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)
2023
2022
2023
2022
$
$
$
$
Operating revenues – (GAAP)
$
580,093
$
634,787
$
2,310,810
$
2,428,686
Less: Trucking fuel surcharge (9)
(84,675
)
(109,611
)
(332,388
)
(419,240
)
Operating revenues, net of fuel surcharge
– (Non-GAAP)
495,418
525,176
1,978,422
2,009,446
Operating expenses – (GAAP)
545,754
554,446
2,141,480
2,134,131
Non-GAAP adjustments:
Trucking fuel surcharge (9)
(84,675
)
(109,611
)
(332,388
)
(419,240
)
Insurance and claims (2)
(1,457
)
(1,387
)
(5,664
)
(5,394
)
Amortization of intangible assets (3)
(1,369
)
(1,376
)
(5,459
)
(3,953
)
Non-GAAP adjusted operating expenses, net
of fuel surcharge
458,253
442,072
1,797,969
1,705,544
Non-GAAP adjusted operating income
$
37,165
$
83,104
$
180,453
$
303,902
Non-GAAP adjusted operating margin, net of
fuel surcharge
7.5
%
15.8
%
9.1
%
15.1
%
Non-GAAP adjusted operating ratio, net of
fuel surcharge
92.5
%
84.2
%
90.9
%
84.9
%
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES – WERNER LOGISTICS SEGMENT
(unaudited)
(In thousands)
Three Months Ended December
31,
Year Ended December 31,
2023
2022
2023
2022
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)
$
4,575
2.0
%
$
9,868
4.6
%
$
15,879
1.7
%
$
36,184
4.6
%
Non-GAAP adjustments:
Amortization of intangible assets (3)
1,148
0.5
%
660
0.3
%
4,866
0.6
%
2,160
0.2
%
Contingent consideration adjustment
(5)
(2,700
)
(1.2
)%
(2,500
)
(1.1
)%
(2,700
)
(0.3
)%
(2,500
)
(0.3
)%
Non-GAAP adjusted operating income and
non-GAAP adjusted operating margin
$
3,023
1.3
%
$
8,028
3.8
%
$
18,045
2.0
%
$
35,844
4.5
%
(1) Non-GAAP adjusted operating income;
non-GAAP adjusted operating margin; non-GAAP adjusted operating
margin, net of fuel surcharge; non-GAAP adjusted net income
attributable to Werner; non-GAAP adjusted diluted earnings per
share; non-GAAP adjusted operating revenues, net of fuel surcharge;
non-GAAP adjusted operating expenses; non-GAAP adjusted operating
expenses, net of fuel surcharge; non-GAAP adjusted operating ratio;
and non-GAAP adjusted operating ratio, net of fuel surcharge should
be considered in addition to, rather than as substitutes for, GAAP
operating income; GAAP operating margin; GAAP net income
attributable to Werner; GAAP diluted earnings per share; GAAP
operating revenues; GAAP operating expenses; and GAAP operating
ratio, which are their most directly comparable GAAP financial
measures.
(2) We accrued pre-tax insurance and
claims expense for interest related to a previously disclosed
excess adverse jury verdict rendered on May 17, 2018 in a lawsuit
arising from a December 2014 accident. The Company is appealing
this verdict. Additional information about the accident was
included in our Current Report on Form 8-K dated May 17, 2018.
Under our insurance policies in effect on the date of this
accident, our maximum liability for this accident is $10.0 million
(plus pre-judgment and post-judgment interest) with premium-based
insurance coverage that exceeds the jury verdict amount. We
continue to accrue pre-tax insurance and claims expense for
interest at $0.5 million per month until such time as the outcome
of our appeal is finalized. Management believes excluding the
effect of this item provides a more useful comparison of our
performance from period to period. This item is included in 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) 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.
(5) Contingent consideration, also
referred to as earnout, adjustments related to our business
acquisitions are excluded because management does not believe these
adjustments are indicative of our core operating performance. These
adjustments are recorded in other operating expenses in our Income
Statement and are included in our Werner Logistics segment.
(6) 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.
(7) 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.
(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 2023 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/20240206756247/en/
Christopher D. Wikoff Executive Vice President, Treasurer and
Chief Financial Officer (402) 894-3700
Werner Enterprises (NASDAQ:WERN)
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