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
Senior Vice President, Treasurer and
Chief Financial Officer
(402) 894-3036
WERNER ENTERPRISES REPORTS RECORD OPERATING REVENUES AND EARNINGS
Omaha, Nebraska January 20, 2005:
- --------------------------------
Werner Enterprises, Inc. (Nasdaq: WERN-news), one of the nation's
largest truckload transportation companies, reported record revenues and
earnings for the fourth quarter and year ended December 31, 2004.
Operating revenues increased 20% to $455.2 million compared to
$380.2 million in fourth quarter 2003. Net income increased 20% to
$25.8 million compared to $21.5 million in fourth quarter 2003.
Earnings per share for fourth quarter 2004 were $0.32 per share, or 21%
higher than the $0.26 per share earned in fourth quarter 2003.
For the year, operating revenues of $1.678 billion in 2004 were 15%
higher than $1.458 billion in 2003. Net income increased 18% to $87.3
million in 2004, compared to $73.7 million in 2003. Earnings per share
rose 20% to $1.08 per share in 2004, compared to $0.90 per share in
2003.
"Pricing and freight demand continued to gain momentum during
fourth quarter," said Chairman and Chief Executive Officer Clarence
(C.L.) Werner. "A constrained supply of trucks with qualified drivers,
combined with a steadily improving economy are providing truckload
carriers with the strongest pricing market in many years. Considering
the significant industry challenge of an extremely difficult driver
market, I expect that freight demand and pricing will continue to be
favorable in 2005. I would like to take this opportunity to extend a
sincere thank you to all of the outstanding men and women of Werner
Enterprises. Their hard work, dedication, and commitment to excellence
are the keys to our positive financial results."
Revenue per total mile, excluding fuel surcharges, rose 6.3% in
fourth quarter 2004 compared to fourth quarter 2003. The Company
exceeded its goals for contractual rate increases negotiated during
third and fourth quarter 2004. Werner genuinely appreciates the support
received from its partner customers during the rate increase process.
Their support is helping the Company to offset inflationary cost
increases for driver pay, truck engines, insurance, fuel, and tolls,
including significant state toll increases that recently became
effective.
A third consecutive quarter of record-setting fuel prices placed
significant cost pressures on the Company. Diesel fuel prices rose
rapidly in October from already-high price levels. The Company began to
realize some fuel pricing relief in the latter part of November and
December. Prices, excluding fuel taxes, averaged 18 cents a gallon
higher, or 14% higher in fourth quarter 2004 than third quarter 2004.
Further, prices in fourth quarter 2004 were 54 cents a gallon, or 59%
higher than fourth quarter 2003.
The Company's fuel surcharge program helped to lessen the earnings
impact of fuel prices. Werner's fuel surcharge per total mile was 16.5
cents in fourth quarter 2004 compared to 5.7 cents in fourth quarter
2003. During fourth quarter 2004, the Company's earnings were
negatively impacted by two cents per share compared to fourth quarter
2003 due to higher average fuel prices, net of fuel surcharge revenues.
Based on current fuel price trends for the first 20 days of January 2005
and assuming fuel prices remain at current levels for the remainder of
first quarter 2005, the Company expects that fuel will have a minimal
impact on first quarter 2005 earnings compared to first quarter 2004
earnings.
Recruiting and retaining company drivers and owner-operators
remains extremely demanding. Alternative jobs with an improving
economy, weak population demographics, and competitor pay raises are
expected to keep the driver market challenging. Even with these
formidable obstacles, Werner grew its tractor fleet by 147 trucks from
third quarter 2004 to fourth quarter 2004. The Company is growing its
student driver training program to attract more drivers to Werner and
the industry. Werner is also offering an increasing percentage of
driving jobs with more frequent home time in its growing dedicated,
regional, and network optimization fleets.
Value Added Services (VAS) revenues, primarily brokerage, continued
their stellar growth trend. VAS revenues increased 65% and gross margin
increased 145% in fourth quarter 2004 compared to fourth quarter 2003.
4Q04 4Q03
---------------- ---------------
Value Added Services (amounts in 000'S) $ % $ %
- --------------------------------------- ---------------- ---------------
Revenues $47,584 100.0 $28,905 100.0
Rent and purchased transportation expense 42,597 89.5 26,871 93.0
------- -------
Gross margin $ 4,987 10.5 $ 2,034 7.0
======= =======
During 2004, the expansion of our VAS services assisted customers
by providing needed capacity while driving cost out of their system.
During 2005, VAS is expanding its service offerings to include
multimodal. Multimodal provides for the movement of freight using a
blending of truck and rail intermodal service solutions. We expect
multimodal will further assist Werner customers with their capacity
needs, while at the same time enabling the Company to better manage its
freight needs in certain locations.
The Company's VAS business operates with a lower operating margin
and a substantially higher return on assets than the trucking business.
The Company's VAS business typically utilizes equipment provided by
other transportation providers, which dramatically reduces the Company's
asset investment and results in higher asset returns. Due to the
substantial growth in VAS business in fourth quarter 2004 compared to
fourth quarter 2003, the Company's overall operating ratio was affected.
If VAS rent and purchased transportation expenses are offset against VAS
revenues, the Company's operating ratio would be 100 basis points lower
in fourth quarter 2004 and 70 basis points lower in fourth quarter 2003.
From fourth quarter 2003 to fourth quarter 2004, the Company grew
the percentage of trucks in its Dedicated fleet from 33% to 38%.
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 the dedicated business has a
corresponding effect on these same operating statistics for the entire
Company. For example, if dedicated fleet business is excluded from the
total company operating statistics for both fourth quarter 2004 and
fourth quarter 2003, the empty mile percentage declined from 9.2% to
8.8% and the average miles per truck increased by 0.8%.
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 $2.7 million in fourth quarter 2004 compared
to $2.6 million in fourth quarter 2003. Werner Enterprises' wholly-
owned subsidiary, Fleet Truck Sales, is one of the largest domestic
truck sales entities with 16 truck sales locations throughout the United
States.
The average age of the Company truck fleet declined from 1.65 years
as of September 30, 2004 to 1.58 years as of December 31, 2004,
consistent with the Company's ongoing plans to gradually reduce the
average age of its fleet. The percentage of the Company fleet with the
post-October 2002 engines increased from 35% as of September 30, 2004 to
47% as of December 31, 2004.
Werner's financial position remains strong. The Company has no
debt and $108.8 million of cash as of December 31, 2004. Stockholder's
equity has grown to $773.2 million, or $9.76 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, assuming an adequate supply of drivers is available.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Quarter % of Quarter % of
Ended Operating Ended Operating
12/31/04 Revenues 12/31/03 Revenues
-------- --------- -------- ---------
Operating revenues $455,239 100.0 $380,234 100.0
-------- --------- -------- ---------
Operating expenses:
Salaries, wages and
benefits 139,839 30.7 131,509 34.6
Fuel 66,993 14.7 40,213 10.6
Supplies and maintenance 37,739 8.3 32,644 8.6
Taxes and licenses 28,081 6.2 27,030 7.1
Insurance and claims 19,799 4.4 17,564 4.6
Depreciation 37,392 8.2 35,758 9.4
Rent and purchased
transportation 80,218 17.6 58,024 15.2
Communications and
utilities 5,058 1.1 4,165 1.1
Other (1,848) (0.4) (890) (0.2)
-------- --------- -------- ---------
Total operating
expenses 413,271 90.8 346,017 91.0
-------- --------- -------- ---------
Operating income 41,968 9.2 34,217 9.0
-------- --------- -------- ---------
Other expense (income):
Interest expense 2 0.0 232 0.0
Interest income (784) (0.2) (487) (0.1)
Other 59 0.0 44 0.0
-------- --------- -------- ---------
Total other expense
(income) (723) (0.2) (211) (0.1)
-------- --------- -------- ---------
Income before income taxes 42,691 9.4 34,428 9.1
Income taxes 16,868 3.7 12,915 3.4
-------- --------- -------- ---------
Net income $25,823 5.7 $21,513 5.7
======== ========= ======== =========
Diluted shares outstanding 80,686 81,554
======== ========
Diluted earnings per share $.32 $.26
======== ========
OPERATING STATISTICS
(Quarter Ended December 31)
4Q04 % Change 4Q03
-------- --------- --------
Trucking revenues, net of
fuel surcharge (1) $358,598 8.1% $331,671
Trucking fuel surcharge
revenues (1) 42,523 194.0% 14,462
Non-trucking revenues,
including VAS (1) 51,547 61.7% 31,885
Other operating revenues (1) 2,571 16.0% 2,216
-------- --------
Operating revenues (1) $455,239 19.7% $380,234
======== ========
Average monthly miles per
tractor 10,076 (0.5%) 10,129
Average revenues per total
mile (2) $1.388 6.3% $1.306
Average revenues per loaded
mile (2) $1.564 6.4% $1.470
Average percentage of empty
miles 11.24% 0.9% 11.14%
Average trip length in
miles (loaded) 582 (2.5%) 597
Total miles (loaded and
empty) (1) 258,395 1.8% 253,924
Average tractors in service 8,548 2.3% 8,356
Average revenues per truck
per week (2) $3,227 5.7% $3,053
Capital expenditures,
net (1) $61,996 $47,944
Cash flow from
operations (1) $64,913 $49,727
Return on assets
(annualized) 8.5% 7.6%
Total tractors (at quarter
end)
Company 7,675 7,430
Owner-operator 925 920
-------- --------
Total tractors 8,600 8,350
Total trailers (at quarter
end) 23,540 22,800
(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
INCOME STATEMENT DATA
(In thousands, except per share amounts)
Year % of Year % of
Ended Operating Ended Operating
12/31/04 Revenues 12/31/03 Revenues
---------- --------- ---------- ---------
Operating revenues $1,678,043 100.0 $1,457,766 100.0
---------- --------- ---------- ---------
Operating expenses:
Salaries, wages and
benefits 544,424 32.5 513,551 35.2
Fuel 218,095 13.0 160,465 11.0
Supplies and maintenance 138,999 8.3 123,680 8.5
Taxes and licenses 109,720 6.5 104,392 7.2
Insurance and claims 76,991 4.6 73,032 5.0
Depreciation 144,535 8.6 135,168 9.3
Rent and purchased
transportation 289,186 17.2 215,463 14.8
Communications and
utilities 18,919 1.1 16,480 1.1
Other (4,154) (0.2) (1,969) (0.2)
---------- --------- ---------- ---------
Total operating
expenses 1,536,715 91.6 1,340,262 91.9
---------- --------- ---------- ---------
Operating income 141,328 8.4 117,504 8.1
---------- --------- ---------- ---------
Other expense (income):
Interest expense 13 0.0 1,099 0.1
Interest income (2,580) (0.2) (1,699) (0.1)
Other 198 0.0 128 0.0
---------- --------- ---------- ---------
Total other expense
(income) (2,369) (0.2) (472) 0.0
---------- --------- ---------- ---------
Income before income taxes 143,697 8.6 117,976 8.1
Income taxes 56,387 3.4 44,249 3.0
---------- --------- ---------- ---------
Net income $87,310 5.2 $73,727 5.1
========== ========= ========== =========
Diluted shares outstanding 80,868 81,668
========== ==========
Diluted earnings per share $1.08 $.90
========== ==========
OPERATING STATISTICS
(Year Ended December 31)
2004 % Change 2003
---------- --------- ----------
Trucking revenues, net of
fuel surcharge (1) $1,378,705 7.2% $1,286,674
Trucking fuel surcharge
revenues (1) 114,135 85.4% 61,571
Non-trucking revenues,
including VAS (1) 175,490 73.9% 100,916
Other operating revenues (1) 9,713 12.9% 8,605
---------- ----------
Operating revenues (1) $1,678,043 15.1% $1,457,766
========== ==========
Average monthly miles per
tractor 10,137 (0.1%) 10,143
Average revenues per total
mile (2) $1.341 5.0% $1.277
Average revenues per loaded
mile (2) $1.511 5.6% $1.431
Average percentage of empty
miles 11.29% 4.8% 10.77%
Average trip length in
miles (loaded) 583 (7.0%) 627
Total miles (loaded and
empty) (1) 1,028,458 2.0% 1,008,024
Average tractors in service 8,455 2.1% 8,282
Average revenues per truck
per week (2) $3,136 5.0% $2,988
Capital expenditures,
net (1) $196,190 $103,597
Cash flow from
operations (1) $226,582 $207,474
Return on assets 7.5% 6.7%
Total tractors (at quarter
end)
Company 7,675 7,430
Owner-operator 925 920
---------- ----------
Total tractors 8,600 8,350
Total trailers (at quarter
end) 23,540 22,800
(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
BALANCE SHEET DATA
(In thousands, except share amounts)
12/31/04 12/31/03
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $108,807 $101,409
Accounts receivable, trade,
less allowance of $8,189
and $6,043, respectively 186,771 152,461
Other receivables 11,832 8,892
Inventories and supplies 9,658 9,877
Prepaid taxes, licenses and permits 15,292 14,957
Other current assets 18,896 17,691
---------- ----------
Total current assets 351,256 305,287
---------- ----------
Property and equipment 1,374,649 1,261,252
Less - accumulated depreciation 511,651 455,565
---------- ----------
Property and equipment, net 862,998 805,687
---------- ----------
Other non-current assets 11,521 10,553
---------- ----------
$1,225,775 $1,121,527
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $49,618 $40,903
Insurance and claims accruals 55,095 55,201
Accrued payroll 19,579 15,828
Current deferred income taxes 15,569 15,151
Other current liabilities 17,705 15,392
---------- ----------
Total current liabilities 157,566 142,475
---------- ----------
Insurance and claims accruals, net
of current portion 84,301 71,301
Deferred income taxes 210,739 198,640
Stockholders' equity:
Common stock, $.01 par value,
200,000,000 shares authorized;
80,533,536 shares issued;
79,197,747 and 79,714,271 shares
outstanding, respectively 805 805
Paid-in capital 106,695 108,706
Retained earnings 691,035 614,011
Accumulated other comprehensive loss (861) (837)
Treasury stock, at cost;
1,335,789 and 819,265 shares,
respectively (24,505) (13,574)
---------- ----------
Total stockholders' equity 773,169 709,111
---------- ----------
$1,225,775 $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 8,600 trucks and 23,540 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.