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 NINTH CONSECUTIVE QUARTER OF HIGHER OPERATING
REVENUES AND EARNINGS
Omaha, Nebraska, January 22, 2004:
- ---------------------------------
Werner Enterprises, Inc. (Nasdaq: WERN-news), one of the nation's
largest truckload transportation companies, reported its ninth
consecutive year-over-year quarter of higher operating revenues and
earnings for the fourth quarter ended December 31, 2003. Operating
revenues increased 8% to $380.2 million compared to $352.4 million in
fourth quarter 2002. Net income increased 22% to $21.5 million compared
to $17.6 million in fourth quarter 2002. Earnings per share for fourth
quarter 2003 were $.26 per share, or 22% higher than the $.22 per share
earned in fourth quarter 2002.
For the year, operating revenues of $1.458 billion in 2003 were 9%
higher than $1.341 billion in 2002. Net income increased 20% to $73.7
million in 2003, compared to $61.6 million in 2002. Earnings per share
increased 19% to $.90 per share in 2003, compared to $.76 per share in
2002.
"During fourth quarter, demand for our services was stronger than
fourth quarter a year ago," said Chairman and Chief Executive Officer
Clarence (C.L.) Werner. "Freight demand from several of our retail and
consumer products customers improved compared to the same period a year
ago. In addition, freight demand for the first three weeks of January
2004 has been stronger than the weaker demand of the same period a year
ago. I anticipate we will continue to see tightened truckload capacity
in 2004 due to a more challenging driver market and the impact of the
new hours of service rules. We are continuing to execute our plan of
limited fleet growth and remain focused on improving our operating
margin."
On January 4, the new federal regulations that govern driver
hours of service (HOS) became effective. These are the most significant
changes to the HOS regulations in over 60 years. Beginning last
October, Werner Enterprises started testing the HOS with a large number
of its drivers using its proprietary Paperless Log System software that
(1) monitors driver hours on a real-time basis and (2) preplans the
assignment of shipments to drivers based on their available driving
hours. This testing, combined with a comprehensive driver-training
program, helped to fully prepare the Company for the HOS changes. The
new HOS may create different operational issues for most truckload
carriers that use paper-based HOS recordkeeping systems. These carriers
depend on the driver's declaration of available driving hours at the
time of dispatch and the driver's knowledge of the new HOS rules. These
systems are not proactive, but are reactive. They rely on the carrier's
after-the-fact comparison of driver reported hours to actual hours using
various time-dated receipts or documents.
Measuring the overall impact of the HOS changes is very preliminary
at this time since the new regulations have been effective for only a
little more than two weeks. Our initial data suggests that our average
miles per truck for the first two weeks compared to the same two weeks a
year ago may be slightly lower due to the HOS changes. The Company
believes it is minimizing the impact on miles per truck through
proactive planning using its Paperless Log System and by working closely
with customers to reduce delay time. Effective January 2004, the
Company increased its accessorial charges to customers for multiple stop
shipments and its rates for equipment detention. Werner also raised its
driver stop pay and is implementing pay changes to drivers for delay
time due to equipment detention.
The market for recruiting drivers became more difficult in fourth
quarter 2003. For the last two years, the owner-operator driver market
has been challenging. In recent months, the market for recruiting
qualified drivers tightened. The Company continues to have success
recruiting drivers from driver training schools. In addition to the
driver stop pay and detention pay changes described above, the Company
also increased mileage bonus pay for Van solo drivers effective July
2003.
Average fuel prices in fourth quarter 2003 were 5 cents a gallon,
or 5%, higher than fourth quarter 2002. 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 as fuel prices change, continued in effect. Fuel
surcharge revenues were $14.5 million in fourth quarter 2003 compared to
$12.1 million in fourth quarter 2002. Fuel expense, net of fuel
surcharge revenues, in fourth quarter 2003 had no impact on earnings per
share compared to fourth quarter 2002. Fuel surcharges were $61.4
million in 2003 compared to $29.1 million in 2002. Fuel expense, net of
fuel surcharge revenues, in 2003 also had no impact on earnings per
share compared to 2002. For the first three weeks of January 2004, fuel
prices were 8 cents a gallon, or 9%, higher than the same period in
January 2003.
Werner Enterprises is continuing ongoing testing of the EPA-
compliant truck engines, in particular the Caterpillar ACERT engines and
the Detroit Diesel EGR engines. As of December 31, 2003, approximately
10% of the Company's fleet consisted of trucks with these engines. To
date, the Company's testing indicates that the fuel mile per gallon
(mpg) degradation is a reduction of approximately 0.3 mpg to 0.5 mpg.
Also, depreciation expense will increase due to the higher cost of the
new engines. The average age of the Company's truck fleet remains among
the newest in the industry at 1.6 years as of December 31, 2003. To
allow time for continued testing of the new trucks with EPA-compliant
engines, the Company has decided to extend the age of a portion of its
trucks scheduled to be sold or traded during 2004.
Gains on sales of equipment, primarily trucks, are reflected as a
reduction of Other Operating Expenses in the Company's income statement
and amounted to a gain of $2.6 million in fourth quarter 2003 compared
to a gain of $1.7 million in fourth quarter 2002. Gains increased due
to a higher average sales price, and gain, per truck in fourth quarter
2003. During first quarter 2004, the Company is expanding its Fleet
Truck Sales network from 15 locations to 16 locations. Fleet Truck
Sales, one of the largest class 8 truck sales entities in the United
States, has been in operation since 1992 and is a continuing resource
for the Company to remarket its used trucks.
Werner grew its dedicated fleet from about one-quarter of its total
truck fleet in fourth quarter 2002 to about one-third of its total truck
fleet in fourth quarter 2003. Much of this growth occurred in fourth
quarter 2003. Since the Company's overall truck fleet increased only
slightly, the growth in the dedicated fleet was offset by a reduction in
the Company's medium-to-long haul van fleet. Dedicated fleet business
tends to have lower miles per trip, a higher empty mile percentage, a
higher rate per loaded mile, and lower miles per truck per month. The
growth in dedicated business has had a corresponding effect on these
same operating statistics for the entire Company. The Company's
operating statistics are reported in the accompanying financial results.
During the latter part of 2003 and continuing into 2004, the
Company expanded its brokerage and intermodal service offerings by
adding senior management and developing new computer systems. This
business model is similar to the one the Company used in developing its
Mexico division which grew from zero revenue in 1999 to one of the five
largest U.S. cross-border carriers in 3 1/2 years. The growth in
brokerage and intermodal is expected to help increase the Company's non-
trucking revenues in 2004. These less asset-intensive businesses are
expected to have a lower operating margin and a higher return on assets
than the Company's truckload business.
In fourth quarter 2002, the Company sold a portion of its ownership
interest in Transplace, a leading provider of transportation logistics
services. The Company realized earnings of one cent per share in fourth
quarter 2002 from this transaction.
During fourth quarter 2003, the Company purchased 280,000 shares of
its common stock at an average price of $17.71 per share, for a total of
$5.0 million.
The Company's financial position remains strong. Werner
Enterprises became debt-free in December as its only remaining debt of
$20 million was repaid. Werner has no truck or trailer operating leases
and, therefore, has no off-balance-sheet debt. Due to the debt
repayment, annual truck licensing, and stock repurchases, the company's
cash position declined from $125.8 million at September 30, 2003 to
$101.4 million at December 31, 2003. Cash flow from operations of
$207.5 million in 2003 was lower than $226.3 million in 2002 due to
lower truck purchases in 2003. This caused lower 2003 tax depreciation
and a smaller payable for trucks received at year-end. These two items
related to lower truck purchases reduced cash flow from operations by
$64.4 million in 2003 compared to 2002. Stockholders' equity has grown
to $709.1 million, or $8.90 per share.
The Company's continuing goal is to improve its annual operating
margin to 10% or better before increasing the Company's fleet growth
rate.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Quarter % of Quarter % of
Ended Operating Ended Operating
12/31/03 Revenues 12/31/02 Revenues
-------- -------- -------- --------
Operating revenues $380,234 100.0 $352,380 100.0
-------- -------- -------- --------
Operating expenses:
Salaries, wages and
benefits 131,509 34.6 128,093 36.4
Fuel 40,213 10.6 37,406 10.6
Supplies and maintenance 32,644 8.6 30,006 8.5
Taxes and licenses 27,030 7.1 25,788 7.3
Insurance and claims 17,564 4.6 13,560 3.8
Depreciation 35,758 9.4 32,347 9.2
Rent and purchased
transportation 58,024 15.2 54,019 15.3
Communications and
utilities 4,165 1.1 3,837 1.1
Other (890) (0.2) (551) (0.1)
-------- -------- -------- --------
Total operating
expenses 346,017 91.0 324,505 92.1
-------- -------- -------- --------
Operating income 34,217 9.0 27,875 7.9
-------- -------- -------- --------
Other expense (income):
Interest expense 232 0.0 541 0.1
Interest income (487) (0.1) (436) (0.1)
Other 44 0.0 (454) (0.1)
-------- -------- -------- --------
Total other expense
(income) (211) (0.1) (349) (0.1)
-------- -------- -------- --------
Income before income taxes 34,428 9.1 28,224 8.0
Income taxes 12,915 3.4 10,585 3.0
-------- -------- -------- --------
Net income $21,513 5.7 $17,639 5.0
======== ======== ======== ========
Diluted shares outstanding 81,554 81,565
======== ========
Diluted earnings per share $.26 $.22
======== ========
OPERATING STATISTICS
(Quarter Ended December 31)
% Change
----------
Average monthly miles per
tractor 10,129 (1.1%) 10,238
Average revenues per total
mile (1) $1.306 3.9% $1.257
Average revenues per loaded
mile (1) $1.470 5.8% $1.390
Average percentage of empty
miles 11.14% 16.4% 9.57%
Average tractors in service 8,356 2.6% 8,145
Average revenues per truck
per week (1) $3,053 2.8% $2,969
Non-trucking revenues (in
thousands) $34,101 32.1% $25,822
Capital expenditures, net $47,944 $84,291
Cash flow from operations $49,727 $48,479
Total tractors (at quarter
end)
Company 7,430 7,180
Owner-operator 920 1,020
------- -------
Total tractors 8,350 8,200
Total trailers (at quarter
end) 22,800 20,880
(1) Net of fuel surcharge revenues.
INCOME STATEMENT DATA
(In thousands, except per share amounts)
Year % of Year % of
Ended Operating Ended Operating
12/31/03 Revenues 12/31/02 Revenues
---------- -------- ---------- --------
Operating revenues $1,457,766 100.0 $1,341,456 100.0
---------- -------- ---------- --------
Operating expenses:
Salaries, wages and
benefits 513,551 35.2 486,315 36.3
Fuel 160,465 11.0 125,189 9.3
Supplies and maintenance 123,680 8.5 119,972 8.9
Taxes and licenses 104,392 7.2 98,741 7.4
Insurance and claims 73,032 5.0 51,192 3.8
Depreciation 135,168 9.3 121,702 9.1
Rent and purchased
transportation 215,463 14.8 222,571 16.6
Communications and
utilities 16,480 1.1 14,808 1.1
Other (1,969) (0.2) 1,512 0.1
---------- -------- ---------- --------
Total operating
expenses 1,340,262 91.9 1,242,002 92.6
---------- -------- ---------- --------
Operating income 117,504 8.1 99,454 7.4
---------- -------- ---------- --------
Other expense (income):
Interest expense 1,099 0.1 2,857 0.2
Interest income (1,699) (0.1) (2,340) (0.2)
Other 128 0.0 333 0.0
---------- -------- ---------- --------
Total other expense
(income) (472) 0.0 850 0.0
---------- -------- ---------- --------
Income before income taxes 117,976 8.1 98,604 7.4
Income taxes 44,249 3.0 36,977 2.8
---------- -------- ---------- --------
Net income $73,727 5.1 $61,627 4.6
========== ======== ========== ========
Diluted shares outstanding 81,668 81,522
========== ==========
Diluted earnings per share $.90 $.76
========== ==========
OPERATING STATISTICS
(Year Ended December 31)
% Change
----------
Average monthly miles per
tractor 10,143 (1.4%) 10,290
Average revenues per total
mile (1) $1.277 3.4% $1.235
Average revenues per loaded
mile (1) $1.431 4.8% $1.366
Average percentage of empty
miles 10.77% 12.3% 9.59%
Average miles per trip
(loaded) 627 (7.0%) 674
Average tractors in service 8,282 3.9% 7,971
Average revenues per truck
per week (1) $2,988 1.9% $2,932
Non-trucking revenues (in
thousands) $109,521 12.8% $97,130
Capital expenditures, net $103,597 $237,790
Cash flow from operations $207,474 $226,271
Total tractors (at year
end)
Company 7,430 7,180
Owner-operator 920 1,020
-------- --------
Total tractors 8,350 8,200
Total trailers (at year
end) 22,800 20,880
(1) Net of fuel surcharge revenues.
BALANCE SHEET DATA
(In thousands)
12/31/03 12/31/02
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $101,409 $29,885
Accounts receivable, trade, less
allowance of $6,043 and $4,459,
respectively 152,461 131,889
Other receivables 8,892 10,335
Inventories and supplies 9,877 9,777
Prepaid taxes, licenses and permits 14,957 13,535
Income taxes receivable - 9,811
Other current assets 17,691 14,317
---------- ----------
Total current assets 305,287 219,549
---------- ----------
Property and equipment 1,261,252 1,212,488
Less - accumulated depreciation 455,565 380,221
---------- ----------
Property and equipment, net 805,687 832,267
---------- ----------
Other non-current assets 10,553 11,062
---------- ----------
$1,121,527 $1,062,878
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $40,903 $50,546
Current portion of long-term debt - 20,000
Insurance and claims accruals 55,201 47,358
Accrued payroll 15,828 18,374
Current deferred income taxes 15,151 17,710
Other current liabilities 15,392 11,885
---------- ----------
Total current liabilities 142,475 165,873
---------- ----------
Insurance and claims accruals,
net of current portion 71,301 47,801
Deferred income taxes 198,640 201,561
Stockholders' equity:
Common stock, $.01 par value,
200,000,000 shares authorized;
80,533,536 shares issued;
79,714,271 and 79,726,180 shares
outstanding, respectively 805 805
Paid-in capital 108,706 107,366
Retained earnings 614,011 547,467
Accumulated other comprehensive loss (837) (216)
Treasury stock, at cost; 819,265
and 807,356 shares, respectively (13,574) (7,779)
---------- ----------
Total stockholders' equity 709,111 647,643
---------- ----------
$1,121,527 $1,062,878
========== ==========
Werner Enterprises is a full-service transportation company
providing truckload and logistics 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
8,350 trucks and 22,800 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.