Exhibit 99.1
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 TENTH CONSECUTIVE QUARTER OF HIGHER OPERATING
REVENUES AND EARNINGS
Omaha, Nebraska, April 15, 2004:
- -------------------------------
Werner Enterprises, Inc. (Nasdaq: WERN-news), one of the nation's
largest truckload transportation companies, reported its tenth
consecutive year-over-year quarter of higher operating revenues and
earnings for the first quarter ended March 31, 2004. Operating revenues
increased 11% to $386.3 million compared to $347.2 million in first
quarter 2003. Net income increased 31% to $15.6 million compared to
$11.8 million in first quarter 2003. Earnings per share for first
quarter 2004 were $.19 per share, or 32% higher than the $.15 per share
earned in first quarter 2003.
"During first quarter, we were pleased that the demand for our
services was stronger than the weaker demand of first quarter a year
ago," said Chairman and Chief Executive Officer Clarence (C.L.) Werner.
"Typically, we experience a noticeable decline in freight volumes from
the seasonally strong fourth quarter to the seasonally weaker first
quarter. However, in first quarter 2004, the normal seasonal freight
decline was much lower. As the quarter progressed, freight volumes
continued their expected seasonal improvement from January through
March, which continued into the first half of April 2004."
In previous quarters, we commented about the new hours of
service (HOS) regulations that became effective for the trucking
industry on January 4, 2004. We anticipated that the new regulations
could have an overall negative impact on our average miles per tractor
due to operational changes, primarily resulting from the new 14-hour on-
duty rule. However, for first quarter 2004 compared to first quarter
2003, average miles per tractor increased 1.3%, even after considering
the 13% decline in average trip length. These excellent results are
attributable to our extensive HOS planning and driver training,
effective utilization of our proprietary paperless log software,
improved freight demand, better throughput at customer shipping and
receiving facilities, the new 34-hour restart driving rule, and one more
business day in first quarter 2004 compared to first quarter 2003 (64
business days compared to 63 business days). We were very pleased that
our medium-to-long haul drivers did not experience a decline in miles
per truck.
As a result of the HOS rule changes, we implemented increased
accessorial rates with our customers for multiple stop shipments and
tractor detention in first quarter 2004. We also increased driver pay
for multiple stop shipments and unanticipated delays that cause truck
downtime. Multiple stop revenue for non-dedicated shipments increased
slightly from first quarter 2003 to first quarter 2004, as the increased
rates per stop were offset by a 25% reduction in the number of multiple
stops. Tractor detention revenue increased only slightly as many
customers made operational changes to improve throughput at shipping and
receiving facilities, thereby reducing tractor delays.
The market for recruiting drivers became increasingly
challenging in first quarter 2004. For over two years, the owner-
operator driver market has been difficult. In recent months, the market
for recruiting experienced drivers tightened. While also challenging,
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. Beginning April 2004, the
Company instituted an optional per diem reimbursement program for
eligible company drivers. This program is expected to increase our
company driver's net pay per mile, after taxes. The tax benefits of
this per diem program are going to the Company's drivers. As a result,
it is expected that salaries, wages, and benefits will be slightly
lower, and the Company's effective income tax rate will be higher
beginning in second quarter 2004. The per diem program is expected to
be cost neutral to the Company and increase driver satisfaction through
higher net pay per mile.
Average fuel prices in first quarter 2004 were only 3 cents a
gallon, or 3%, lower than the twenty-year record high fuel prices of
first quarter 2003. However, fuel prices in first quarter 2004 were
significantly higher than historical price levels and were 33 cents a
gallon higher than average prices during the first quarters of the four
years prior to 2003. 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. The Company's fuel surcharge
program recoups 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 $18.0 million in first quarter 2004
compared to $18.6 million in first quarter 2003. Fuel expense, net of
fuel surcharge revenues, in first quarter 2004 had no positive or
negative impact on earnings per share compared to first quarter 2003.
Fuel prices for the first half of April 2004 are 18 cents a gallon,
or 20%, higher than the same period in April 2003. Fuel prices declined
in the latter part of March 2003 after the beginning of the war in Iraq.
As was disclosed previously by the Company, during second quarter 2003
earnings per share were positively impacted by two cents a share
compared to second quarter 2002 due to the temporary lag benefit of fuel
surcharge revenues. Assuming that current fuel price levels in the
first half of April continue through the remainder of second quarter
2004, the Company anticipates that fuel will have a negative impact of
approximately five cents per share in second quarter 2004 compared to
second quarter 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 March 31, 2004, approximately 15%
of the Company's fleet consisted of company-owned 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 is increasing 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 1.7 years as of March 31,
2004. The Company now plans to maintain its three-year sale/trade cycle
for tractors and does not expect the age of its truck fleet to increase
significantly during 2004.
Gains on sales of revenue equipment, primarily trucks, are
reflected as a reduction of Other Operating Expenses in the Company's
income statement and were $1.6 million in first quarter 2004 compared to
$1.4 million in first quarter 2003. Gains increased due to an increase
in the number of trucks sold. During first quarter 2004, the Company
expanded 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 almost one-quarter of its
total truck fleet in first quarter 2003 to over one-third of its total
truck fleet in first quarter 2004. Much of the 850-truck growth in the
dedicated fleet occurred in fourth quarter 2003. Since the Company's
overall truck fleet increased 150 trucks in the last twelve months, the
growth in the dedicated fleet was primarily 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 a corresponding effect on these same operating
statistics for the entire Company. The Company's operating statistics
are reported in the accompanying financial results. For example, if the
dedicated fleet business is excluded from the total company operating
statistics for both first quarter 2004 and first quarter 2003, the empty
mile percentage declined from 10.4% to 9.7%.
Non-trucking revenues grew 80% from $20.1 million in first quarter
2003 to $36.3 million in first quarter 2004. Most of this revenue
growth came from our brokerage group. Non-trucking revenue consists of
freight brokerage, freight transportation management, and intermodal
services. The following table details the non-trucking revenue and the
related rent and purchased transportation expense:
Non-trucking operation 1Q04 1Q03
---------------------- ------ ------
Revenues $36,253 $20,149
Rent and purchased transportation expense 32,954 18,691
------ ------
Gross margin $ 3,299 $ 1,458
====== ======
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
that grew from zero revenue in 1999 to one of the five largest U.S.
cross-border carriers in 3 1/2 years. 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. Comparable data
for the non-trucking business shown in the table above for the quarters
of 2002 and 2003 is available on the Company's website (www.werner.com)
in the Investor Relations section.
During first quarter 2004, the Company purchased 511,600 shares of
its common stock at an average price of $18.46 per share, for a total of
$9.4 million. The Company has an additional 4.5 million shares
available for repurchase under the Board of Directors' existing
authorization.
The Company's financial position remains strong. Werner
Enterprises is debt-free and has no truck or trailer operating leases
and, therefore, has no off-balance-sheet debt. Cash flow from
operations was $59.5 million in first quarter 2004 compared to $40.3
million in first quarter 2003. Stockholders' equity is $714.4 million,
or $9.01 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
3/31/04 Revenues 3/31/03 Revenues
-------- --------- -------- ---------
Operating revenues $386,280 100.0 $347,208 100.0
-------- --------- -------- ---------
Operating expenses:
Salaries, wages and
benefits 133,312 34.5 123,127 35.5
Fuel 45,752 11.9 44,945 12.9
Supplies and maintenance 32,894 8.5 28,759 8.3
Taxes and licenses 27,512 7.1 25,720 7.4
Insurance and claims 19,507 5.0 19,141 5.5
Depreciation 34,985 9.1 32,721 9.4
Rent and purchased
transportation 63,150 16.4 50,082 14.4
Communications and
utilities 4,548 1.2 3,995 1.2
Other (239) (0.1) (265) (0.1)
-------- --------- -------- ---------
Total operating
expenses 361,421 93.6 328,225 94.5
-------- --------- -------- ---------
Operating income 24,859 6.4 18,983 5.5
-------- --------- -------- ---------
Other expense (income):
Interest expense 2 0.0 305 0.1
Interest income (535) (0.1) (274) (0.1)
Other 37 0.0 9 0.0
-------- --------- -------- ---------
Total other expense
(income) (496) (0.1) 40 0.0
-------- --------- -------- ---------
Income before income taxes 25,355 6.5 18,943 5.5
Income taxes 9,787 2.5 7,104 2.1
-------- --------- -------- ---------
Net income $15,568 4.0 $11,839 3.4
======== ========= ======== =========
Diluted shares outstanding 81,357 81,423
======== ========
Diluted earnings per share $.19 $.15
======== ========
OPERATING STATISTICS
(Quarter Ended March 31)
1Q04 % Change 1Q03
-------- -------- --------
Trucking revenues, net of
fuel surcharge $329,733 7.6% $306,514
Trucking fuel surcharge
revenues 17,971 (3.2%) 18,567
Non-trucking revenues 36,253 79.9% 20,149
Other operating revenues 2,323 17.4% 1,978
-------- --------
Operating revenues $386,280 11.3% $347,208
======== ========
Average monthly miles per
tractor 10,034 1.3% 9,908
Average revenues per total
mile (1) $1.298 4.1% $1.247
Average revenues per loaded
mile (1) $1.470 5.4% $1.395
Average percentage of empty
miles 11.69% 10.4% 10.59%
Average trip length in miles
(loaded) 580 (12.5%) 663
Average tractors in service 8,436 2.0% 8,268
Average revenues per truck
per week (1) $3,007 5.4% $2,852
Capital expenditures, net $32,421 $10,056
Cash flow from operations $59,508 $40,262
Total tractors (at quarter
end)
Company 7,495 7,275
Owner-operator 930 1,000
-------- --------
Total tractors 8,425 8,275
Total trailers (at quarter
end) 22,960 21,040
(1) Net of fuel surcharge revenues.
BALANCE SHEET DATA
(In thousands)
3/31/04 12/31/03
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $118,680 $101,409
Accounts receivable, trade,
less allowance of $7,224
and $6,043, respectively 154,116 152,461
Other receivables 11,592 8,892
Inventories and supplies 9,458 9,877
Prepaid taxes, licenses
and permits 11,677 14,957
Other current assets 19,396 17,691
----------- -----------
Total current assets 324,919 305,287
----------- -----------
Property and equipment 1,277,995 1,261,252
Less - accumulated depreciation 473,840 455,565
----------- -----------
Property and equipment, net 804,155 805,687
----------- -----------
Other non-current assets 10,746 10,553
----------- -----------
$1,139,820 $1,121,527
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $38,238 $40,903
Insurance and claims accruals 58,908 55,201
Accrued payroll 18,441 15,828
Income taxes payable 9,709 2,288
Current deferred income taxes 15,151 15,151
Other current liabilities 14,915 13,104
----------- -----------
Total current liabilities 155,362 142,475
----------- -----------
Insurance and claims accruals, net
of current portion 74,301 71,301
Deferred income taxes 195,795 198,640
Stockholders' equity:
Common stock, $.01 par value,
200,000,000 shares authorized;
80,533,536 shares issued;
79,287,257 and 79,714,271 shares
outstanding, respectively 805 805
Paid-in capital 108,211 108,706
Retained earnings 627,596 614,011
Accumulated other comprehensive loss (790) (837)
Treasury stock, at cost;
1,246,279 and 819,265 shares,
respectively (21,460) (13,574)
----------- -----------
Total stockholders' equity 714,362 709,111
----------- -----------
$1,139,820 $1,121,527
=========== ===========
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 transportation companies
with a fleet of 8,425 trucks and 22,960 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,
2003. 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.