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 FOURTH QUARTER AND ANNUAL 2008 REVENUES AND
EARNINGS
Omaha, Nebraska, January 22, 2009:
- ---------------------------------
Werner Enterprises, Inc. (NASDAQ:WERN), one of the nation's largest
truckload transportation and logistics companies, reported revenues and
earnings for the fourth quarter and year ended December 31, 2008.
Revenues decreased 7% to $490.6 million in fourth quarter 2008
compared to $525.7 million in fourth quarter 2007. Revenues, excluding
trucking fuel surcharges, decreased 5% to $414.2 million in fourth
quarter 2008 compared to $435.0 million in fourth quarter 2007.
Earnings per share increased 20% to 26 cents per share in fourth quarter
2008 compared to 22 cents per share in fourth quarter 2007. Fourth
quarter 2007 earnings per share included a six cent per share charge for
the anticipated settlement of an income tax matter.
For the full year, revenues increased 5% to $2.166 billion in 2008
compared to $2.071 billion in 2007. Revenues, excluding trucking fuel
surcharges, decreased 3% to $1.723 billion in 2008 compared to $1.769
billion in 2007. Earnings per share declined 7% to 94 cents per share
in 2008 compared to $1.02 per share in 2007.
The overall freight market became increasingly challenging as each
month progressed from mid-September to December 2008. A very weak
retail environment combined with extremely soft housing and
manufacturing markets resulted in fewer available shipments. This was
especially heightened in the truckload market and caused increased price
competition for freight in the spot market as carriers competed for
loads to keep their trucks productive. Freight rates were also lower in
the spot market due to the increased competition for freight and because
the decline in fuel prices resulted in lower freight rates from third
party brokerage companies and our Value Added Services ("VAS") segment
where the fuel surcharge is included in the base rate. As fourth
quarter 2008 progressed, Werner was able to reduce its reliance on third
party brokerage freight in this difficult freight market by reducing its
fleet, as described below, and increasing non-committed freight from its
VAS segment.
In the truckload segment, Werner again reduced the size of its Van
medium-to-long-haul fleet (the "Van" fleet) in fourth quarter 2008 by
500 trucks, partially offset by an increase in trucks in its Regional
and Expedited fleets. This helped reduce Werner's exposure to the
longer haul market, which remains the most difficult of the truckload
markets. In January 2009, Werner has reduced the Van fleet by an
additional 150 trucks. Since March 2007, Werner has reduced the Van
fleet from 3,000 trucks to about 1,350 trucks in January 2009. In
addition, management took several proactive steps during fourth quarter
2008 to reduce a variety of controllable costs.
The ongoing diversification of the Company's service offerings from
the Van fleet to Dedicated, Regional, Expedited, and North America
cross-border in the Truckload Transportation Services (Truckload)
segment and Freight Management, Intermodal, Brokerage and Werner Global
Logistics international in the VAS segment helped to partially offset
the impact of a very weak freight market in fourth quarter 2008.
Customer response to these growing service offerings continues to be
very positive. Werner intends to continue its customer centric strategy
of diversifying and growing these service offerings.
Despite the extremely challenging market conditions, Werner again
delivered impressive productivity improvements within its asset fleets.
During fourth quarter, average monthly miles per tractor increased by 71
miles, or 0.7%. At the same time, Werner lowered its average percentage
of empty miles slightly by 8 basis points. The entire Werner team of
driver and non-driver professionals contributed to these positive
results in a much more difficult market compared to fourth quarter a
year ago.
The severe tightening of the credit and financial markets may
create significant challenges for highly leveraged carriers that have
financing issues or refinancing needs. Unless freight and financial
market conditions improve quickly, Werner believes there is a higher
probability of increased carrier failures in 2009. Werner believes its
financial strength places it in a unique position to capitalize on the
opportunities ahead.
Diesel fuel prices declined rapidly during fourth quarter 2008.
When compared to the same month in 2007, diesel fuel costs were $0.05
per gallon higher in October 2008, $0.81 per gallon lower in November
2008, and $1.16 per gallon lower in December 2008.
Over the past several years, Werner and the truckload industry did
not recover all of the cost of rising fuel prices through fuel surcharge
programs. Each year in the prior four years, rising fuel costs (net of
fuel surcharge collections) had a negative impact on the Company's
operating income when compared to the previous year. The total negative
impact on the Company's operating income due to fuel expense, net of
fuel surcharge collections, during 2004 to 2007 was $61 million.
When fuel prices rise rapidly, there is a negative earnings lag
effect that occurs because the cost of fuel rises immediately and the
market indexes used to determine fuel surcharges increase at a slower
pace. As a result, during these rising fuel price periods, the negative
impact of fuel on the Company's financial results is more significant.
The fuel price trend in fourth quarter 2008 was unusual, as fuel prices
declined every week during fourth quarter 2008. In a period of declining
fuel prices, the Company generally experiences a temporary favorable
earnings lag effect, since fuel costs decline at a faster pace than the
market indexes used to determine fuel surcharge collections. This
occurred during fourth quarter 2008, enabling the Company to temporarily
have lower net fuel expense, that helped to offset uncompensated fuel
costs such as truck idling, empty miles, and out-of-route miles. If
fuel prices remain stable or increase going forward, the Company does
not expect the temporary favorable trend to continue.
During fourth quarter 2008, the Company continued to improve its
fuel miles per gallon ("mpg") by continuing its numerous initiatives to
improve fuel efficiency. These initiatives include reducing truck idle
time, lowering non-billable miles, increasing the percentage of
aerodynamic, more fuel-efficient trucks in the company truck fleet and
installing auxiliary power units ("APUs") in company trucks. As of
December 31, 2008, the Company had installed APUs in approximately 50%
of the company-owned truck fleet.
Werner is again proud to report that through the efforts of its
employees, it is making meaningful positive progress by lowering diesel
fuel consumption through its proactive initiatives to improve fuel mpg.
Due strictly to these mpg improvements, Werner purchased 1.9 million
fewer gallons of diesel fuel in fourth quarter 2008 than in fourth
quarter 2007. This equates to a reduction of approximately 21,000 tons
of carbon dioxide emissions. Werner intends to continue these and other
environmentally conscious initiatives, including its active
participation as a U.S. Environmental Protection Agency SmartWay
Transport Partner.
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 segment. VAS
includes Brokerage, Freight Management, Intermodal and Werner Global
Logistics.
VAS revenue growth declined to 6% in fourth quarter 2008 compared
to fourth quarter 2007, primarily due to two factors. VAS provided
7,300 more non-committed loads to the trucking fleets in fourth quarter
2008 than in fourth quarter 2007 to help cushion the impact of a soft
freight market. In addition, the average rate per brokerage load
decreased by 4% in fourth quarter 2008 compared to fourth quarter 2007,
primarily due to lower fuel prices. Excluding the impact of these two
factors, VAS revenues would have grown 20% in fourth quarter 2008
compared to fourth quarter 2007.
Value Added Services (amounts in thousands) 4Q08 4Q07
- ------------------------------------------- ---------------- ----------------
Revenues $61,861 100.0% $58,190 100.0%
Rent and purchased transportation expense 52,140 84.3 49,467 85.0
-------- --------
Gross margin 9,721 15.7 8,723 15.0
Other operating expenses 6,821 11.0 5,883 10.1
-------- --------
Operating income $2,900 4.7 $2,840 4.9
======== ========
2008 2007
---------------- ----------------
Revenues $265,262 100.0% $258,433 100.0%
Rent and purchased transportation expense 225,498 85.0 224,667 86.9
-------- --------
Gross margin 39,764 15.0 33,766 13.1
Other operating expenses 25,194 9.5 21,348 8.3
-------- --------
Operating income $14,570 5.5 $12,418 4.8
======== ========
VAS generated a 6% increase in revenues, 11% gross margin growth
and 2% operating income growth in fourth quarter 2008 compared to fourth
quarter 2007. Brokerage continued to produce strong results with 7%
revenue growth and a decline in its gross margin percentage. The
tightening of truckload capacity due to increased carrier failures and
the decline in fuel prices has made it more challenging for Brokerage to
obtain qualified third party carriers at a comparable margin to prior
quarters. Intermodal revenues grew 20%. Werner Global Logistics
continues to grow revenues both on a year over year basis and
sequentially.
VAS had a 3% increase in reported revenues (as explained below) in
2008 compared to 2007. Beginning in third quarter 2007, Werner and a
large VAS customer negotiated a structural change to the customer's
continuing arrangement that resulted in a reduction in VAS revenues and
VAS rent and purchased transportation expense of $36.3 million from the
year 2007 to the year 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 19% in 2008 compared to
2007.
Comparisons of the operating ratios (net of fuel surcharge
revenues) for the Truckload segment and VAS operating ratios for the
fourth quarters and full years 2008 and 2007 are shown below.
Operating Ratios 4Q08 4Q07 Difference
- ---------------- ----- ----- ----------
Truckload Transportation Services 92.3% 91.9% 0.4%
Value Added Services 95.3 95.1 0.2
2008 2007 Difference
----- ----- ----------
Truckload Transportation Services 93.4% 91.9% 1.5%
Value Added Services 94.5 95.2 (0.7)
Fluctuating fuel prices and fuel surcharge collections impact 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
fourth quarters 2008 and 2007 are 93.7% and 93.5%, respectively, and for
the full year 2008 and 2007 are 95.0% and 93.2%, respectively, when fuel
surcharge revenues are reported as revenues instead of a reduction of
operating expenses.
The driver recruiting and retention market has improved from a year
ago. The weakness in the construction and automotive industries and a
rising national unemployment rate 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 drivers when compared to many other carriers.
The Company's wholly owned subsidiary, Fleet Truck Sales, is one of
the largest equipment sales remarketing companies in the U.S., in
business since 1992. Gains on sales of assets, primarily trucks and
trailers, decreased to $1.1 million in fourth quarter 2008 compared to
$3.6 million in fourth quarter 2007. Carrier failures and company fleet
reductions have increased the supply of used trucks for sale, while
buyer demand for used trucks is weak due to the soft freight market and
a shortage of available financing. 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. During the recent
turbulence in the financial and credit markets, Werner believes that the
Company's financial strength separates it from carriers that are highly
leveraged. The Company ended the quarter with $30.0 million of debt and
$48.6 million of cash, after paying the $150.3 million special dividend
to shareholders in December 2008. The Company expects to repay the
$30.0 million of debt in first quarter 2009. Stockholders' equity is
$745.5 million, or $10.42 per share.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Quarter % of Quarter % of
Ended Operating Ended Operating
12/31/08 Revenues 12/31/07 Revenues
-------- --------- -------- ---------
Operating revenues $490,574 100.0 $525,728 100.0
-------- --------- -------- ---------
Operating expenses:
Salaries, wages and
benefits 143,644 29.3 147,192 28.0
Fuel 84,515 17.2 117,548 22.4
Supplies and maintenance 40,188 8.2 39,477 7.5
Taxes and licenses 26,559 5.4 28,894 5.5
Insurance and claims 26,983 5.5 23,641 4.5
Depreciation 42,303 8.6 41,721 7.9
Rent and purchased
transportation 90,256 18.4 90,909 17.3
Communications and
utilities 4,751 1.0 4,846 0.9
Other 748 0.2 (2,301) (0.4)
-------- --------- -------- ---------
Total operating
expenses 459,947 93.8 491,927 93.6
-------- --------- -------- ---------
Operating income 30,627 6.2 33,801 6.4
-------- --------- -------- ---------
Other expense (income):
Interest expense 74 0.0 57 0.0
Interest income (923) (0.2) (1,000) (0.2)
Other (277) (0.1) 75 0.0
-------- --------- -------- ---------
Total other expense
(income) (1,126) (0.3) (868) (0.2)
-------- --------- -------- ---------
Income before income taxes 31,753 6.5 34,669 6.6
Income taxes 13,106 2.7 19,084 3.6
-------- --------- -------- ---------
Net income $18,647 3.8 $15,585 3.0
======== ========= ======== =========
Diluted shares outstanding 71,836 71,988
======== ========
Diluted earnings per share $.26 $.22
======== ========
OPERATING STATISTICS
Quarter Quarter
Ended Ended
12/31/08 % Change 12/31/07
-------- -------- --------
Trucking revenues, net of
fuel surcharge (1) $346,158 -6.4% $369,943
Trucking fuel surcharge
revenues (1) 76,391 -15.8% 90,717
Non-trucking revenues,
including VAS (1) 64,197 6.1% 60,528
Other operating revenues (1) 3,828 -15.7% 4,540
-------- --------
Operating revenues (1) $490,574 -6.7% $525,728
======== ========
Average monthly miles per
tractor 10,089 0.7% 10,018
Average revenues per total
mile (2) $1.444 -2.2% $1.476
Average revenues per loaded
mile (2) $1.669 -2.2% $1.707
Average percentage of empty
miles 13.45% -0.6% 13.53%
Average trip length in
miles (loaded) 530 -3.6% 550
Total miles (loaded and
empty) (1) 239,640 -4.4% 250,637
Average tractors in service 7,917 -5.1% 8,339
Average revenues per
tractor per week (2) $3,363 -1.4% $3,412
Capital expenditures, net (1) $34,587 ($1,210)
Cash flow from operations (1) $69,918 $40,799
Return on assets (annualized) 5.4% 4.6%
Total tractors (at quarter
end)
Company 7,000 7,470
Owner-operator 700 780
-------- --------
Total tractors 7,700 8,250
Total trailers (truck and
intermodal, quarter end) 24,940 24,855
(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
12/31/08 Revenues 12/31/07 Revenues
---------- --------- ---------- ---------
Operating revenues $2,165,599 100.0 $2,071,187 100.0
---------- --------- ---------- ---------
Operating expenses:
Salaries, wages and
benefits 586,035 27.1 598,837 28.9
Fuel 508,594 23.5 408,410 19.7
Supplies and maintenance 163,524 7.6 159,843 7.7
Taxes and licenses 109,443 5.0 117,170 5.7
Insurance and claims 104,349 4.8 93,769 4.5
Depreciation 167,435 7.7 166,994 8.1
Rent and purchased
transportation 397,887 18.4 387,564 18.7
Communications and
utilities 19,579 0.9 20,098 1.0
Other (4,182) (0.2) (18,015) (0.9)
---------- --------- ---------- ---------
Total operating
expenses 2,052,664 94.8 1,934,670 93.4
---------- --------- ---------- ---------
Operating income 112,935 5.2 136,517 6.6
---------- --------- ---------- ---------
Other expense (income):
Interest expense 83 0.0 2,977 0.2
Interest income (3,972) (0.2) (3,989) (0.2)
Other (198) 0.0 247 0.0
---------- --------- ---------- ---------
Total other expense
(income) (4,087) (0.2) (765) 0.0
---------- --------- ---------- ---------
Income before income taxes 117,022 5.4 137,282 6.6
Income taxes 49,442 2.3 61,925 3.0
---------- --------- ---------- ---------
Net income $67,580 3.1 $75,357 3.6
========== ========= ========== =========
Diluted shares outstanding 71,658 74,114
========== ==========
Diluted earnings per share $.94 $1.02
========== ==========
OPERATING STATISTICS
Year Year
Ended Ended
12/31/08 % Change 12/31/07
---------- -------- ----------
Trucking revenues, net of
fuel surcharge (1) $1,430,560 -3.5% $1,483,164
Trucking fuel surcharge
revenues (1) 442,614 46.7% 301,789
Non-trucking revenues,
including VAS (1) 273,896 2.1% 268,388
Other operating revenues (1) 18,529 3.8% 17,846
---------- ----------
Operating revenues (1) $2,165,599 4.6% $2,071,187
========== ==========
Average monthly miles per
tractor 10,165 2.8% 9,888
Average revenues per total
mile (2) $1.461 -0.2% $1.464
Average revenues per loaded
mile (2) $1.686 -0.4% $1.692
Average percentage of empty
miles 13.35% -1.0% 13.48%
Average trip length in
miles (loaded) 538 -3.6% 558
Total miles (loaded and
empty) (1) 979,211 -3.3% 1,012,964
Average tractors in service 8,028 -6.0% 8,537
Average revenues per
tractor per week (2) $3,427 2.6% $3,341
Capital expenditures, net (1) $114,978 $26,068
Cash flow from operations (1) $259,130 $227,985
Return on assets (annualized) 5.0% 5.4%
Total tractors (at quarter
end)
Company 7,000 7,470
Owner-operator 700 780
---------- ----------
Total tractors 7,700 8,250
Total trailers (truck and
intermodal, quarter end) 24,940 24,855
(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
BALANCE SHEET DATA
(In thousands, except share amounts)
12/31/08 12/31/07
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $48,624 $25,090
Accounts receivable, trade, less allowance
of $9,555 and $9,765, respectively 185,936 213,496
Other receivables 18,739 14,587
Inventories and supplies 10,644 10,747
Prepaid taxes, licenses and permits 16,493 17,045
Current deferred income taxes 30,789 26,702
Other current assets 20,659 21,500
---------- ----------
Total current assets 331,884 329,167
---------- ----------
Property and equipment 1,613,102 1,605,445
Less - accumulated depreciation 686,463 633,504
---------- ----------
Property and equipment, net 926,639 971,941
---------- ----------
Other non-current assets 16,795 20,300
---------- ----------
$1,275,318 $1,321,408
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $46,684 $49,652
Current portion of long-term debt 30,000 -
Insurance and claims accruals 79,830 76,189
Accrued payroll 25,850 21,753
Other current liabilities 19,006 19,395
---------- ----------
Total current liabilities 201,370 166,989
---------- ----------
Other long-term liabilities 7,406 14,165
Insurance and claims accruals,
net of current portion 120,500 110,500
Deferred income taxes 200,512 196,966
Stockholders' equity:
Common stock, $.01 par value,
200,000,000 shares authorized;
80,533,536 shares issued;
71,576,267 and 70,373,189 shares
outstanding, respectively 805 805
Paid-in capital 93,343 101,024
Retained earnings 826,511 923,411
Accumulated other comprehensive loss (7,146) (169)
Treasury stock, at cost; 8,957,269 and
10,160,347 shares, respectively (167,983) (192,283)
---------- ----------
Total stockholders' equity 745,530 832,788
---------- ----------
$1,275,318 $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.