WERNER ENTERPRISES, INC.
14507 Frontier Road
P. O. Box 45308
Omaha, Nebraska 68145
FOR IMMEDIATE RELEASE Contact: Robert E. Synowicki, Jr.
- --------------------- Executive Vice President and
Chief Information Officer
(402) 894-3000
John J. Steele
Vice President, Treasurer and
Chief Financial Officer
(402) 894-3036
WERNER ENTERPRISES REPORTS SIXTH CONSECUTIVE QUARTER OF HIGHER OPERATING
REVENUES AND EARNINGS
Omaha, Nebraska, April 15, 2003:
- -------------------------------
Werner Enterprises, Inc. (Nasdaq:WERN-news), one of the nation's
largest truckload transportation companies, today reported higher
operating revenues and earnings for the first quarter ended March 31,
2003. Operating revenues increased 11% to $347.2 million compared to
$312.6 million in first quarter 2002. Net income increased 11% to $11.8
million compared to $10.6 million in first quarter 2002. Earnings per
share for first quarter 2003 were $.18 per share, or 12% higher than the
$.16 per share earned in first quarter 2002.
"Considering the difficult operating conditions we faced during
first quarter, I am pleased with our performance," said Chairman and
Chief Executive Officer Clarence (C.L.) Werner. "A lackluster freight
environment and record high fuel prices were challenges for much of the
quarter. However, as the quarter ended we were pleased to see
improvement in both of these areas."
Freight demand in January and much of February was disappointing,
no better than the weaker demand the Company experienced during the same
period a year ago. The normal seasonal freight pickup this March was a
bit stronger than in March a year ago. The Company continued to make
good rate progress, and revenue per loaded mile in first quarter 2003
increased by five cents a mile, or 4%, compared to first quarter a year
ago.
Average diesel fuel prices during first quarter 2003 reached a
twenty-year high. Diesel prices, excluding fuel taxes, averaged 43
cents per gallon, or 71% higher, in first quarter 2003 compared to first
quarter 2002. This increased the Company's fuel cost by over seven
cents per mile. To lessen the effect of fluctuating fuel prices on the
Company's margins, Werner collects fuel surcharge revenues from its
customers. These surcharge programs, which automatically adjust weekly
through fuel surcharge price brackets, continued in effect. However,
when fuel prices are increasing, the Company does not immediately
recover the price increase until the price reaches a higher surcharge
price bracket. The Company recouped much of the higher cost of fuel,
except for miles not billable to customers, out-of-route miles, and
truck engine idling.
Fuel surcharge revenues were $16.4 million higher in first quarter
2003 than first quarter 2002. Higher fuel expense, net of fuel
surcharge revenues, reduced earnings per share during first quarter 2003
by four cents per share compared to first quarter 2002. Higher fuel
prices also had the effect of increasing the Company's operating ratio
in first quarter 2003 due to the effect of significantly higher fuel
expense and higher fuel surcharge revenues. The Company's operating
ratio would have been 94.2% for first quarter 2003, if both revenues and
expenses were adjusted for the fuel surcharge revenues. Fuel prices
began to decrease from record levels during the last three weeks of
March 2003. For the first fifteen days of April 2003, diesel fuel
prices, excluding fuel taxes, averaged 18 cents per gallon higher than
the same period a year ago.
Effective October 1, 2002 all newly manufactured truck engines must
comply with the engine emission standards mandated by the Environmental
Protection Agency (EPA). All truck engines manufactured prior to
October 1, 2002 are not subject to these standards. For the first time
in the Company's history, there was inadequate time prior to
implementation for the engine manufacturers to provide a sufficient
sample of new engines for testing. To delay the business risk of buying
new engines until adequate testing is completed, Werner Enterprises
significantly increased the purchase of trucks with pre-October engines.
This reduced the average age of the company truck fleet from 1.5 years
at December 31, 2001 to 1.2 years as of December 31, 2002. The Company
received its remaining order of new trucks with pre-October engines from
its truck manufacturers in January 2003. The average age of the company
truck fleet at March 31, 2003 is 1.3 years. The Company expects its new
truck purchases during second quarter 2003 will be minimal. Truck
purchases in the second half of 2003 will depend on the Company's
ongoing testing and evaluation of the new engines.
The Company's insurance and claims expense was unusually high in
first quarter 2003 due to a combination of increased claims and
increased cost per claim. The Company has already aggressively taken
several preventative measures to increase safety awareness and renew
focus on this important area, including the formation of a Risk
Management Loss Prevention team.
Because of truckload carrier concerns with new truck engines and
lower industry production of new trucks over the last three years, the
resale value of Werner's premium used trucks has improved from the
historically low values of 2001. Gains on sales of equipment are
reflected as a reduction of Other Operating Expenses in the Company's
income statement and amounted to a gain of $1.4 million in first quarter
2003 compared to a loss of $0.2 million in first quarter of 2002, or an
improvement of one cent per share. To the extent the Company purchases
fewer new trucks in 2003, it may have fewer used trucks to sell in 2003.
The extent of the Company's sales of used trucks in 2003 will depend on
the ongoing testing of the new engines, freight demand, driver
availability, and used truck pricing.
During first quarter 2003, the Company purchased 110,000 shares of
its common stock at an average price per share of $18.12 per share, for
a total of $2.0 million.
The Company's financial position remains very strong. Cash
increased by $28.1 million to $58.0 million due to cash flow from
operations and reduced capital expenditures. The Company's cash exceeds
its only remaining debt of $20.0 million that matures in fourth quarter
2003. The Company has no truck or trailer operating leases and,
therefore, has no off balance sheet debt. Stockholders' equity has
grown to $657.3 million, or $10.31 per share.
The Company's continuing goal is to improve its annual operating
margin to 10% or better before returning the Company's fleet growth rate
to levels achieved during the 1990's. Even with the significant
challenges of first quarter 2003, the Company made progress on this
front.
"Our new fleet, diversified freight base, proprietary operating
technology, debt-free financial position, strong cash flow, and
dedicated work force give me a great deal of confidence that Werner
Enterprises will be able to achieve its goals," said C.L. Werner.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Quarter % of Quarter % of
Ended Operating Ended Operating
3/31/03 Revenues 3/31/02 Revenues
-------- -------- -------- --------
Operating revenues $347,208 100.0 $312,575 100.0
-------- -------- -------- --------
Operating expenses:
Salaries, wages and
benefits 123,127 35.5 115,502 37.0
Fuel 44,945 12.9 25,061 8.0
Supplies and maintenance 28,759 8.3 30,056 9.6
Taxes and licenses 25,720 7.4 23,882 7.7
Insurance and claims 19,141 5.5 11,606 3.7
Depreciation 32,721 9.4 29,202 9.3
Rent and purchased
transportation 50,082 14.4 55,415 17.7
Communications and
utilities 3,995 1.2 3,717 1.2
Other (265) (0.1) 849 0.3
-------- -------- -------- --------
Total operating
expenses 328,225 94.5 295,290 94.5
-------- -------- -------- --------
Operating income 18,983 5.5 17,285 5.5
-------- -------- -------- --------
Other expense (income):
Interest expense 305 0.1 758 0.2
Interest income (274) (0.1) (674) (0.2)
Other 9 0.0 212 0.1
-------- -------- -------- --------
Total other expense 40 0.0 296 0.1
-------- -------- -------- --------
Income before income taxes 18,943 5.5 16,989 5.4
Income taxes 7,104 2.1 6,371 2.0
-------- -------- -------- --------
Net income $11,839 3.4 $10,618 3.4
======== ======== ======== ========
Diluted shares outstanding 65,139 65,310
======== ========
Diluted earnings per share $.18 $.16
======== ========
OPERATING STATISTICS
(Quarter Ended March 31)
% Change
----------
Average monthly miles per
tractor 9,908 (1.8%) 10,087
Average revenues per total
mile (1) $1.247 3.1% $1.210
Average revenues per loaded
mile (1) $1.395 3.7% $1.345
Average percentage of empty
miles 10.59% 5.9% 10.00%
Average tractors in service 8,268 4.9% 7,882
Average revenues per truck
per week (1) $2,852 1.2% $2,818
Non-trucking revenues (in
thousands) $22,127 2.7% $21,543
Capital expenditures, net $10,056 $45,656
Cash flow from operations $40,262 $56,543
Total tractors (at quarter
end)
Company 7,275 6,725
Owner-operator 1,000 1,175
-------- --------
Total tractors 8,275 7,900
Total trailers (at quarter
end) 21,040 19,935
(1) Net of fuel surcharge revenues.
BALANCE SHEET DATA
(In thousands)
3/31/03 12/31/02
---------- ----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $58,018 $29,885
Accounts receivable, trade, less
allowance of $4,803 and $4,459,
respectively 136,878 131,889
Other receivables 13,652 10,335
Inventories and supplies 9,687 9,777
Prepaid taxes, licenses and permits 10,893 13,535
Income taxes receivable 6,240 9,811
Other current assets 13,183 14,317
---------- ----------
Total current assets 248,551 219,549
---------- ----------
Property and equipment 1,213,034 1,212,488
Less - accumulated depreciation 402,131 380,221
---------- ----------
Property and equipment, net 810,903 832,267
---------- ----------
Other non-current assets 10,731 11,062
---------- ----------
$1,070,185 $1,062,878
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $33,552 $50,546
Current portion of long-term debt 20,000 20,000
Insurance and claims accruals 50,889 47,358
Accrued payroll 20,256 18,374
Current deferred income taxes 17,710 17,710
Other current liabilities 12,561 11,885
---------- ----------
Total current liabilities 154,968 165,873
---------- ----------
Insurance and claims accruals,
net of current portion 53,301 47,801
Deferred income taxes 204,592 201,561
Stockholders' equity:
Common stock, $.01 par value,
200,000,000 shares authorized;
64,427,173 shares issued;
63,760,195 and 63,781,288 shares
outstanding, respectively 644 644
Paid-in capital 107,868 107,527
Retained earnings 558,031 547,467
Accumulated other comprehensive loss (303) (216)
Treasury stock, at cost; 666,978
and 645,885 shares, respectively (8,916) (7,779)
---------- ----------
Total stockholders' equity 657,324 647,643
---------- ----------
$1,070,185 $1,062,878
========== ==========
Werner Enterprises is a full-service transportation company
providing truckload services throughout the 48 states, portions of
Canada and Mexico. C.L. Werner founded the Company in 1956. Werner is
one of the nation's largest truckload carriers with a fleet of 8,275
trucks and 21,040 trailers.
Werner Enterprises' common stock is traded on The Nasdaq Stock
Market under the symbol WERN. The Werner Enterprises web site address
is www.werner.com.
Note: This press release contains forward-looking statements,
which are based on information currently available. Actual results
could differ materially from those anticipated as a result of a number
of factors, including, but not limited to, those discussed in Item 7 of
the Company's Annual Report on Form 10-K for the year ended December 31,
2002. The Company assumes no obligation to update any forward-looking
statement to the extent it becomes aware that it will not be achieved
for any reason.