Exhibit 99.1
WERNER ENTERPRISES, INC.
14507 Frontier Road
P. O. Box 45308
Omaha, Nebraska 68145
FOR IMMEDIATE RELEASE
- --------------------- Contacts: John J. Steele
Executive Vice President, Treasurer and
Chief Financial Officer
(402) 894-3036
Robert E. Synowicki, Jr.
Executive Vice President and
Chief Information Officer
(402) 894-3000
WERNER ENTERPRISES REPORTS SECOND QUARTER 2008 REVENUES AND EARNINGS
Omaha, Nebraska, July 17, 2008:
- ---------------------------------
Werner Enterprises, Inc. (NASDAQ:WERN), one of the nation's largest
truckload transportation and logistics companies, reported revenues and
earnings for the second quarter ended June 30, 2008.
Revenues increased 9% to $578.2 million in second quarter 2008
compared to $531.3 million in second quarter 2007. Revenues, excluding
trucking fuel surcharges, declined 3% to $443.3 million in second
quarter 2008 compared to $457.9 million in second quarter 2007.
Earnings per share decreased 15% to 25 cents per share in second quarter
2008 compared to 30 cents per share in second quarter 2007. Werner made
significant sequential progress by improving earnings per share from 12
cents in first quarter 2008 to 25 cents in second quarter 2008.
Freight demand for the Company's Van Network of nearly 4,800 trucks
in its Regional, Expedited and medium-to-long haul Van ("Van") fleets
showed the normal seasonal improvement from first quarter to second
quarter 2008. The percentage of loads to trucks (pre-books) in April
and May 2008 were lower than in April and May 2007 and improved in June
2008, exceeding June 2007 levels. During the first half of July, Werner
experienced the normal seasonal decline following the holiday, and pre-
books tracked at about the same level as the first half of July 2007.
The Regional and Expedited markets demonstrated the strongest
improvement, with second quarter 2008 demand consistently exceeding
second quarter 2007.
Although the domestic economy remains sluggish, Werner experienced
improving freight demand over the last five weeks of second quarter 2008
due to the tightening of capacity. Management believes the primary
reason for the freight improvement during June 2008 is due to trucking
company failures, and shipper concerns about the potential for further
trucking company failures, which results in more shipments being offered
to high-service, financially-strong companies such as Werner. The rapid
increase in diesel fuel prices during second quarter 2008 likely caused
an acceleration of trucking company failures. As carrier failures have
been occurring, shippers' understanding of the overall fuel impact has
improved. In addition, many trucking companies, including Werner,
reduced the size of their fleets over the past year to adapt to the
challenging market conditions.
With respect to pricing and rates, the overall rate market has
shifted from a rate decrease market to a rate stable market. If freight
demand improves in the third quarter, the potential exists to begin
obtaining necessary rate increases in the second half of 2008.
In mid-March 2007, Werner began reducing its Van fleet to better
match declining load volumes with fewer trucks. This proactive decision
helped Werner achieve measurable performance improvement by increasing
average miles per tractor over 3% and improving revenue per total mile
slightly in second quarter 2008 compared to second quarter 2007. Werner
employees continue to work extremely hard to produce better asset
utilization and provide outstanding customer service, while at the same
time tightly managing controllable costs. In addition, the expanding
Werner Value Added Services ("VAS") logistics division is producing
continued improved results. The Company sincerely appreciates and
respects the outstanding performance of the entire Werner team during
these challenging times. The Company also believes it is well
positioned to capitalize on the anticipated forthcoming opportunities in
the markets it serves.
Diesel fuel prices reached unprecedented levels during second
quarter 2008. Compared to the same month in the prior year, diesel fuel
costs were $1.22 per gallon higher in April 2008, $1.63 per gallon
higher in May 2008, and $1.70 per gallon higher in June 2008. For the
first 17 days of July 2008 compared to the same period in 2007, average
fuel prices increased $1.77 per gallon. Fuel expense increased $55.0
million and rent and purchased transportation expense paid to owner-
operator drivers (which increased due to the higher fuel reimbursement)
increased $5.5 million, when comparing second quarter 2008 to second
quarter 2007.
Werner and the truckload industry as a whole do not recover the
entire fuel cost increase through fuel surcharge programs. In the past,
the Company negotiated higher rates with customers to recover the fuel
expense shortfall in base rates per mile. However, with the softer
freight market, Werner has not yet been able to recover the fuel expense
shortfall in base rates. As a result, increases in the cost of fuel may
continue to negatively impact earnings per share until freight market
conditions allow the Company to recover this shortfall from customers.
During second quarter 2008, the Company improved the controllable
aspects of fuel expense by implementing numerous initiatives to improve
fuel efficiency. These initiatives include reducing truck idle time,
lowering non-billable miles, continued increases in the percentage of
aerodynamic, more fuel-efficient trucks in the company truck fleet, and
installing auxiliary power units ("APUs") in company trucks. As of June
30, 2008, the Company had installed APUs in approximately 30% of the
company-owned truck fleet. The average miles per gallon ("mpg") of
company trucks improved in second quarter 2008 compared to second
quarter 2007.
Werner is proud to report that through the efforts of many Werner
employees, the Company has made meaningful positive progress by lowering
diesel fuel consumption through its proactive initiatives to improve
fuel mpg. Due strictly to these mpg improvements, Werner purchased
nearly two million fewer gallons in second quarter 2008 than in second
quarter 2007. Werner intends to continue these efforts as an
environmentally conscious company.
The U.S. Department of Energy national diesel fuel price index
exceeded $4.70 per gallon during June 2008 and averaged $4.37 per gallon
in second quarter 2008 compared to $2.81 per gallon in second quarter
2007. For longer haul shipments (over approximately 1,000 miles per
trip), the Company observed a modal shift for some shipments from
truckload to rail intermodal. The Company believes that because of the
effect of higher priced diesel fuel on truckload freight rates, some
price-sensitive shippers have been reallocating a greater portion of
their long-haul freight from truckload to rail intermodal in recent
months. This modal shift is supported by the Company's Intermodal unit
within VAS. Ultimately the customer is able to stay with Werner while
exploring the lowest cost delivery option on a shipment-by-shipment
basis. The Company also believes this partial modal shift has
contributed to the more significant decline in freight demand in the
longer haul truckload market, although in only rare cases has the
customer ultimately transitioned from Werner altogether. The Company
has already proactively adapted to this modal shift by reducing the
number of trucks in its Van fleet from 3,000 trucks in March 2007 to
approximately 2,100 trucks at June 30, 2008.
The driver recruiting and retention market remained less difficult
than a year ago. The weakness in the construction and automotive
industries and other factors continue to positively affect the Company's
driver availability and selectivity. In addition, the Company's strong
mileage utilization and financial strength are attractive to many
drivers when compared to many other carriers. During the past few
months, several large competitors reduced the maximum speed for their
company trucks to as low as 60 miles per hour ("mph") in order to
improve fuel mpg. This mph reduction essentially resulted in a pay cut
for their drivers who must work longer hours to earn the same amount of
pay. In addition, customer transit times in shipping lanes are
negatively impacted when the maximum mph is lowered. Werner continues
to carefully analyze all aspects of this issue and has no current plans
to change the maximum speed for its company trucks from 65 mph.
The ongoing diversification of the Company's service offerings away
from the Van fleet to Dedicated, Regional, Expedited, North America
International and logistics through the VAS division helped lessen the
impact of a weaker freight market in second quarter 2008. Customer
response to these growing service offerings continues to be very
positive. Werner intends to continue diversifying and growing these
service offerings.
To provide shippers with additional sources of managed capacity and
network analysis, as well as a more global footprint, the Company
continues to successfully grow its non-asset based VAS division. VAS
includes Brokerage, Freight Management, Intermodal and Werner Global
Logistics. In second quarter 2008, VAS received a record number of
freight management awards. These new awards are expected to generate
additional revenues across all Company business units (including
Brokerage, Intermodal, Dedicated and the Van Network) as they are
implemented in the second half of 2008. Werner's diverse portfolio of
logistics services, backed by the Company's asset-based fleets, has
become an attractive option to customers as they look to ensure they
have a competitive and seamless supply chain solution.
Value Added Services (amounts in 000's) 2Q08 2Q07
- --------------------------------------- ----------------- -----------------
Revenues $67,629 100.0% $75,849 100.0%
Rent and purchased transportation
expense 57,841 85.5 67,308 88.7
-------- --------
Gross margin 9,788 14.5 8,541 11.3
Other operating expenses 6,104 9.1 5,084 6.7
-------- --------
Operating income $3,684 5.4 $3,457 4.6
======== ========
YTD08 YTD07
----------------- -----------------
Revenues $129,815 100.0% $145,726 100.0%
Rent and purchased transportation
expense 110,520 85.1 129,237 88.7
-------- --------
Gross margin 19,295 14.9 16,489 11.3
Other operating expenses 11,944 9.2 10,092 6.9
-------- --------
Operating income $7,351 5.7 $6,397 4.4
======== ========
VAS had an 11% decline in reported revenues (as explained below),
15% gross margin growth, and 7% operating income growth in second
quarter 2008 compared to second quarter 2007. Beginning in third
quarter 2007, Werner and a large VAS customer negotiated a structural
change to such customer's continuing arrangement that resulted in a
reduction in VAS revenues and VAS rent and purchased transportation
expense of $19.5 million from second quarter 2007 to second quarter 2008
and $37.9 million from year to date June 2007 to year to date June 2008.
This change had no impact on the dollar amount of VAS gross margin or
operating income. Excluding the affected revenues for this customer,
VAS revenues grew 20% during the quarter and year to date in 2008
compared to the same period in 2007.
Brokerage continued to produce strong results with 17% revenue
growth and a slight decline in its gross margin percentage. The
tightening of truckload capacity due to increased carrier failures is
making it more challenging for Brokerage to obtain qualified third party
carriers at a comparable cost to prior quarters. Intermodal revenues
grew 21%, and the operating margin percentage improved. Werner Global
Logistics continues to generate solid growth and better results.
A comparison of the operating ratios (net of fuel surcharge
revenues) for the Truckload Transportation Services ("Truckload")
segment and VAS operating ratios for second quarters 2008 and 2007 and
year to date 2008 and 2007 is shown below.
Operating Ratios 2Q08 2Q07 Difference
- ---------------------- -------- ------- -----------
Truckload Transportation Services 93.0% 90.8% 2.2%
Value Added Services 94.6 95.4 (0.8)
YTD08 YTD07 Difference
-------- ------- -----------
Truckload Transportation Services 95.1% 92.2% 2.9%
Value Added Services 94.3 95.6 (1.3)
Higher fuel prices and higher fuel surcharge collections increase
the total Company operating ratio and the Truckload segment's operating
ratio when fuel surcharges are reported on a gross basis as revenues
versus netting against fuel expenses. Eliminating fuel surcharge
revenues, which are generally a more volatile source of revenue,
provides a more consistent basis for comparing the results of operations
from period to period. The Truckload segment's operating ratios for
second quarter 2008 and second quarter 2007 are 94.9% and 92.3%,
respectively, and for year to date 2008 and 2007 are 96.3% and 93.4%,
respectively, when fuel surcharge revenues are reported as revenues
instead of a reduction of operating expenses.
The Company's wholly owned subsidiary, Fleet Truck Sales, is one of
the largest equipment sales remarketing companies in the U.S. and has
been in business since 1992. Gains on sales of assets, primarily trucks
and trailers, decreased to $2.2 million in second quarter 2008 compared
to $7.6 million in second quarter 2007. In the first quarter 2008
earnings release issued on April 16, 2008, the Company noted that it
anticipated lower gains on sales of equipment in second quarter 2008
than in first quarter 2008 due to the effect of the softer freight
market and high fuel prices. From mid-April 2008 to June 2008, fuel
prices increased approximately 59 cents per gallon and trucking company
failures accelerated. As a result, buyer demand declined, and the
supply of used trucks increased. Based on current freight and fuel
conditions, the Company anticipates that gains on sales of equipment for
third quarter 2008 will be lower than the gains realized in second
quarter 2008. Gains on sales are reflected as a reduction of Other
Operating Expenses in the Company's income statement.
The Company's financial position remains strong. The Company ended
the quarter with no debt and $77.5 million of cash. Stockholders'
equity is $854.7 million, or $12.14 per share.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Quarter % of Quarter % of
Ended Operating Ended Operating
6/30/08 Revenues 6/30/07 Revenues
-------- ----- -------- -----
Operating revenues $578,181 100.0 $531,286 100.0
-------- ----- -------- -----
Operating expenses:
Salaries, wages and
benefits 148,588 25.7 150,335 28.3
Fuel 154,963 26.8 99,918 18.8
Supplies and maintenance 41,261 7.2 40,077 7.6
Taxes and licenses 27,886 4.8 29,317 5.5
Insurance and claims 23,907 4.2 23,922 4.5
Depreciation 41,683 7.2 41,629 7.8
Rent and purchased
transportation 105,220 18.2 108,903 20.5
Communications and
utilities 4,820 0.8 5,182 1.0
Other (1,015) (0.2) (6,383) (1.2)
-------- ----- -------- -----
Total operating
expenses 547,313 94.7 492,900 92.8
-------- ----- -------- -----
Operating income 30,868 5.3 38,386 7.2
-------- ----- -------- -----
Other expense (income):
Interest expense 3 0.0 1,057 0.2
Interest income (964) (0.2) (923) (0.2)
Other 1 0.0 46 0.0
-------- ----- -------- -----
Total other expense
(income) (960) (0.2) 180 0.0
-------- ----- -------- -----
Income before income taxes 31,828 5.5 38,206 7.2
Income taxes 13,716 2.4 15,952 3.0
-------- ----- -------- -----
Net income $18,112 3.1 $22,254 4.2
======== ===== ======== =====
Diluted shares outstanding 71,417 74,748
======== ========
Diluted earnings per share $.25 $.30
======== ========
OPERATING STATISTICS
Quarter Ended Quarter Ended
6/30/08 % Change 6/30/07
----------- ---------- -----------
Trucking revenues, net of
fuel surcharge (1) $368,577 -1.8% $375,169
Trucking fuel surcharge
revenues (1) 134,929 83.8% 73,403
Non-trucking revenues,
including VAS (1) 69,510 -11.1% 78,184
Other operating revenues (1) 5,165 14.0% 4,530
----------- -----------
Operating revenues (1) $578,181 8.8% $531,286
=========== ===========
Average monthly miles per
tractor 10,397 3.2% 10,078
Average revenues per total
mile (2) $1.465 0.1% $1.463
Average revenues per loaded
mile (2) $1.690 0.3% $1.685
Average percentage of empty
miles 13.35% 1.2% 13.19%
Average trip length in
miles (loaded) 540 -3.7% 561
Total miles (loaded and
empty) (1) 251,630 -1.9% 256,486
Average tractors in service 8,068 -4.9% 8,483
Average revenues per
tractor per week (2) $3,514 3.3% $3,402
Capital expenditures, net (1) $40,582 ($2,189)
Cash flow from operations (1) $40,164 $66,268
Return on assets
(annualized) 5.3% 6.2%
Total tractors (at quarter
end)
Company 7,320 7,530
Owner-operator 730 820
----------- -----------
Total tractors 8,050 8,350
Total trailers (truck and
intermodal, quarter end) 24,700 24,800
(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Six Months % of Six Months % of
Ended Operating Ended Operating
6/30/08 Revenues 6/30/07 Revenues
----------- ---------- ----------- ----------
Operating revenues $1,090,968 100.0 $1,035,199 100.0
----------- ---------- ----------- ----------
Operating expenses:
Salaries, wages and
benefits 291,775 26.7 300,856 29.1
Fuel 278,799 25.6 189,003 18.3
Supplies and maintenance 81,770 7.5 79,668 7.7
Taxes and licenses 56,151 5.1 59,480 5.7
Insurance and claims 48,639 4.5 48,127 4.7
Depreciation 83,479 7.6 84,186 8.1
Rent and purchased
transportation 199,683 18.3 209,118 20.2
Communications and
utilities 10,059 0.9 10,274 1.0
Other (3,673) (0.3) (11,165) (1.1)
----------- ---------- ----------- ----------
Total operating
expenses 1,046,682 95.9 969,547 93.7
----------- ---------- ----------- ----------
Operating income 44,286 4.1 65,652 6.3
----------- ---------- ----------- ----------
Other expense (income):
Interest expense 6 0.0 2,393 0.2
Interest income (2,037) (0.1) (1,974) (0.2)
Other 52 0.0 118 0.0
----------- ---------- ----------- ----------
Total other expense
(income) (1,979) (0.1) 537 0.0
----------- ---------- ----------- ----------
Income before income taxes 46,265 4.2 65,115 6.3
Income taxes 19,778 1.8 27,193 2.6
----------- ---------- ----------- ----------
Net income $26,487 2.4 $37,922 3.7
=========== ========== =========== ==========
Diluted shares outstanding 71,438 75,477
=========== ===========
Diluted earnings per share $.37 $.50
=========== ===========
OPERATING STATISTICS
YTD 08 % Change YTD 07
---------- ---------- ----------
Trucking revenues, net of
fuel surcharge (1) $717,001 -3.3% $741,475
Trucking fuel surcharge
revenues (1) 230,698 72.4% 133,786
Non-trucking revenues,
including VAS (1) 133,629 -11.6% 151,135
Other operating revenues (1) 9,640 9.5% 8,803
---------- ----------
Operating revenues (1) $1,090,968 5.4% $1,035,199
========== ==========
Average monthly miles per
tractor 10,132 3.5% 9,792
Average revenues per total
mile (2) $1.459 0.4% $1.453
Average revenues per loaded
mile (2) $1.688 0.5% $1.680
Average percentage of empty
miles 13.53% 0.1% 13.51%
Average trip length in
miles (loaded) 541 -4.6% 567
Total miles (loaded and
empty) (1) 491,374 -3.7% 510,200
Average tractors in service 8,083 -6.9% 8,684
Average revenues per
tractor per week (2) $3,412 3.9% $3,284
Capital expenditures, net (1) $65,970 $29,375
Cash flow from operations (1) $120,210 $134,324
Return on assets
(annualized) 3.9% 5.3%
Total tractors (at quarter
end)
Company 7,320 7,530
Owner-operator 730 820
---------- ----------
Total tractors 8,050 8,350
Total trailers (truck and
intermodal, quarter end) 24,700 24,800
(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
BALANCE SHEET DATA
(In thousands, except share amounts)
6/30/08 12/31/07
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $77,523 $25,090
Accounts receivable,trade, less
allowance of $10,283 and $9,765, 234,991 213,496
respectively
Other receivables 14,488 14,587
Inventories and supplies 10,013 10,747
Prepaid taxes, licenses
and permits 7,809 17,045
Current deferred income taxes 30,327 26,702
Other current assets 20,192 21,500
------------ ------------
Total current assets 395,343 329,167
------------ ------------
Property and equipment 1,621,247 1,605,445
Less - accumulated depreciation 662,690 633,504
------------ ------------
Property and equipment, net 958,557 971,941
------------ ------------
Other non-current assets 18,244 20,300
------------ ------------
$1,372,144 $1,321,408
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $63,808 $49,652
Insurance and claims accruals 81,650 76,189
Accrued payroll 25,715 21,753
Other current liabilities 26,051 19,395
------------ ------------
Total current liabilities 197,224 166,989
------------ ------------
Other long-term liabilities 7,416 14,165
Insurance and claims accruals,
net of current portion 116,000 110,500
Deferred income taxes 196,760 196,966
Stockholders' equity:
Common stock, $.01 par value,
200,000,000 shares authorized;
80,533,536 shares issued;
70,422,549 and 70,373,189 shares
outstanding, respectively 805 805
Paid-in capital 99,807 101,024
Retained earnings 942,858 923,411
Accumulated other comprehensive
loss 2,018 (169)
Treasury stock, at cost; 10,110,987
and 10,160,347 shares,
respectively (190,744) (192,283)
------------ ------------
Total stockholders' equity 854,744 832,788
------------ ------------
$1,372,144 $1,321,408
============ ============
Werner Enterprises, Inc. was founded in 1956 and is a premier
transportation and logistics company, with coverage throughout the
United States, Canada, Mexico, Asia, Europe and South America. Werner
maintains its global headquarters in Omaha, Nebraska and maintains
offices throughout North America and China. Werner is among the five
largest truckload carriers in the United States, with a diversified
portfolio of transportation services that includes dedicated, medium-to-
long-haul, regional and local van capacity, expedited, temperature-
controlled and flatbed services. Werner's Value Added Services
portfolio includes freight management, truck brokerage, intermodal,
load/mode and network optimization and freight forwarding. Werner,
through its subsidiary companies, is a licensed U.S. NVOCC, U.S. Customs
Broker, Class A Freight Forwarder in China, licensed China NVOCC, TSA-
approved Indirect Air Carrier, and IATA Accredited Cargo Agent.
Werner Enterprises, Inc.'s common stock trades on the NASDAQ Global
Select MarketSM under the symbol "WERN". For further information about
Werner, visit the Company's website at www.werner.com.
Note: This press release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Such forward-
looking statements are based on information currently available to the
Company's management and are current only as of the date made. For that
reason, undue reliance should not be placed on any such forward-looking
statement. 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, 2007. 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. Any
such updates or revisions may be made by filing reports with the
Securities and Exchange Commission, through the issuance of press
releases or by other methods of public disclosure.