Attached files
Exhibit 99.1
WERNER ENTERPRISES, INC.
14507 Frontier Road
P. O. Box 45308
Omaha, Nebraska 68145
FOR IMMEDIATE RELEASE Contact: John J. Steele
--------------------- Executive Vice President, Treasurer and
Chief Financial Officer
(402) 894-3036
WERNER ENTERPRISES REPORTS FOURTH QUARTER
AND ANNUAL 2010 REVENUES AND EARNINGS
Omaha, Nebraska, January 26, 2011:
---------------------------------
Werner Enterprises, Inc. (NASDAQ: WERN), one of the nation's
largest transportation and logistics companies, reported improved
revenues and earnings for the fourth quarter and year ended December 31,
2010.
Summarized financial results for fourth quarter and year 2010
compared to fourth quarter and year 2009 are as follows (dollars in
thousands, except per share data):
4Q10 4Q09 Difference 2010 2009 Difference
-------- -------- ---------- ---------- ---------- ----------
Total revenues $463,214 $439,638 5% $1,815,020 $1,666,470 9%
Trucking revenues,
net of fuel surcharge $327,682 $319,022 3% $1,287,068 $1,256,355 2%
Value Added Services
("VAS") revenues $59,834 $62,315 (4)% $250,983 $217,942 15%
Operating income $40,627 $30,620 33% $134,582 $96,691 39%
Net income $24,115 $18,004 34% $80,039 $56,584 41%
Earnings per diluted
share $0.33 $0.25 33% $1.10 $0.79 40%
Werner Enterprises achieved significantly improved results in 2010
compared to 2009. We would like to take this opportunity to thank all
of our associates for their hard work, dedication and continued
commitment to further improvement in 2011.
As noted in our third quarter 2010 earnings release, freight volume
trends in October 2010 in our One-Way Truckload business softened when
compared to third quarter 2010 and management's expectations for this
season of the year, and those trends continued into mid November 2010.
Freight volume trends improved in mid November 2010 through the first
week of December 2010 and then returned to more typical seasonal levels
for the remainder of December 2010. Freight trends thus far in January
have shown the typical seasonal decline from fourth quarter to first
quarter, and our freight volumes to date in 2011 have been slightly
lower than those in the same period of 2010.
Our average revenues per total mile increased 4.2% in fourth
quarter 2010 compared to fourth quarter 2009 due to rising contractual
pricing, higher spot market rates and a lower average percentage of
empty miles. Sequentially from third quarter 2010 to fourth quarter
2010, average revenues per total mile increased slightly, because few
customer contracts were eligible for renewal during fourth quarter 2010.
In the first half of 2011, a significant amount of our business will
become eligible for rate increases through contractual renewals or
repricing opportunities.
The safety regulatory landscape for the trucking industry is
rapidly changing, and we believe these changes will significantly impact
the trucking industry. We also believe we are well prepared and
positioned to adapt to these anticipated regulatory changes and achieve
continued success.
In December 2010, the Federal Motor Carrier Safety Administration
("FMCSA") took another significant step in implementing its Compliance
Safety Accountability 2010 ("CSA") program by making public on its
website the specific safety rating measurement and percentile ranking
scores for over 500,000 trucking companies. CSA also accumulates
information on commercial truck drivers. Under the CSA program, the
public can access carrier scores and data (including a carrier's
roadside safety inspection, out-of-service and moving violation
histories) for five Behavior Analysis and Safety Improvement Categories
("BASICs"). Our current CSA scores for each of the five publicly
available BASICs meet the FMCSA's acceptable performance threshold. As
carriers, shippers, brokers, vendors and others review, evaluate and
make operational and business decisions using CSA data, we anticipate
that drivers and trucking companies will leave the market, although it
is difficult to predict the duration and extent to which this may occur.
In December 2010, the FMCSA also issued a proposed rule that, if
adopted, would modify the hours of service ("HOS") regulations that
govern the work hours for commercial truck drivers. After a two-month
comment period, the FMCSA will evaluate comments from industry
constituents and the public and adopt a final HOS rule that must be
published by July 2011, pursuant to a prior legal settlement agreement.
At that time, it is expected the FMCSA will provide an HOS policy
implementation timetable for carriers. Since the FMCSA made significant
revisions to the HOS rules in 2003, the trucking industry has reduced
the number of large trucks involved in fatal crashes by 32%. Overall,
if the proposed HOS policies are adopted, we anticipate that throughout
the industry driver work hours would be reduced, causing lower driver
and truck productivity, reduced flexibility for carriers and customers,
increased traffic congestion, and increased rest area congestion. If
implemented, more drivers and more trucks would be needed to transport
the existing amount of truck freight in the market. The resulting
negative effect would likely be cost increases to carriers, shippers and
consumers.
In January or February 2011, the FMCSA is expected to issue
proposed rulemaking regarding the required use of electronic on-board
recorders ("EOBRs") to enhance the monitoring and enforcement of the
driver hours of service rules. If and when implemented, it is expected
that a significant number of trucking companies may be required to begin
using EOBRs. In 1998, Werner Enterprises became the first carrier under
a pilot program to receive a Department of Transportation exemption to
use an electronic hours of service system in place of paper logbooks.
We believe our current system is similar to the expected EOBR proposals.
For the last 13 years, Werner has managed the work hours of its drivers
using this internally developed system that is fully integrated with the
satellite tracking global positioning devices installed on Werner
trucks. If EOBRs become the required standard for most, if not all,
trucking companies, Werner believes this would help to level the
competitive playing field and be beneficial for our company.
We remain committed to maintaining our truck count at approximately
7,300 trucks. Our primary objectives continue to be expanding our
operating margins and improving our returns on assets, equity and
capital, while staying true to our expanded portfolio of services for
our customers.
We continue to diversify our business model with the goal of a
balanced portfolio of revenues comprised of One-Way Truckload (which
includes the Regional, medium-to-long-haul Van and Expedited fleets),
Dedicated and Logistics (VAS). Our specialized services unit, primarily
Dedicated, ended the quarter with 3,500 trucks (or 48% of our total
fleet).
Diesel fuel prices were 39 cents per gallon higher in fourth
quarter 2010 than in fourth quarter 2009 and were 26 cents per gallon
higher than in third quarter 2010. For the first 26 days of January
2011, the average diesel fuel price per gallon was 51 cents higher than
the average diesel fuel price per gallon in the same period of 2010 and
52 cents higher than in first quarter 2010.
The driver recruiting and retention market became more competitive
beginning in second quarter 2010 which continues into first quarter
2011. We anticipate that the driver market will become more challenging
during 2011. While historically higher national unemployment rates have
aided our driver recruiting and retention efforts, we believe that an
improved freight market, extended unemployment benefit payment programs
and changing industry safety regulations are tightening driver supply.
While we are not immune to fluctuations in the driver market, we
continue to believe we are in a better position in the current market
than many competitors because over 70% of our driving jobs are in more
attractive, shorter-haul Regional and Dedicated fleet operations that
enable us to return these drivers home more frequently.
Our commitment to improving our safety record continued in fourth
quarter 2010 with our accident frequency and severity declining compared
to fourth quarter 2009. We experienced higher loss development on prior
period claims in fourth quarter 2010. Insurance and claims costs per
mile decreased to 8.4 cents in fourth quarter 2010 compared to 8.7 cents
in fourth quarter 2009 and to 8.0 cents for the full year of 2010
compared to 9.6 cents for the full year of 2009. Although we have seen
significant improvements in our accident frequency and severity, we
remain committed to continued improvement in safety and reduction in
insurance and claims costs.
Gains on sales of assets were $2.8 million in fourth quarter 2010
compared to $1.3 million in fourth quarter 2009 and $1.4 million in
third quarter 2010. The market for the sale of used trucks and trailers
began to improve in third quarter 2010 and that trend accelerated in
fourth quarter 2010. Gains on sales are reflected as a reduction of
Other Operating Expenses in our income statement.
In third quarter 2010, we began buying new trucks with the 2010-
standard engines to replace older trucks we sell or trade. We remain
committed to the ongoing investment required to maintain a best-in-class
fleet while focusing on the lowest operating cost model for our
customers. We continue to invest in environmentally friendly equipment
solutions such as aerodynamic trucks, idling reduction systems, wide-
based tires, and tire inflation systems. Over the last three years,
Werner Enterprises has reduced its annual carbon footprint by over
148,000 tons. Our net capital expenditures in 2010 were $119.0 million.
We expect to increase our net capital expenditures in 2011 to a range of
$150.0 million to $200.0 million, which is based on a more normalized
replacement cycle for our trucks and trailers.
To provide shippers with additional sources of managed capacity and
network analysis, we continue to develop our non-asset-based VAS
segment. VAS includes Brokerage, Freight Management, Intermodal and
Werner Global Logistics (International).
4Q10 4Q09 2010 2009
Value Added Services -------------- -------------- --------------- ---------------
(amounts in 000's) $ % $ % $ % $ %
-------------------- -------------- -------------- --------------- ---------------
Revenues $59,834 100.0 $62,315 100.0 $250,983 100.0 $217,942 100.0
Rent and purchased
transportation expense 50,553 84.5 52,096 83.6 213,567 85.1 181,215 83.1
------- ------- -------- --------
Gross margin 9,281 15.5 10,219 16.4 37,416 14.9 36,727 16.9
Other operating expenses 6,519 10.9 6,198 9.9 26,411 10.5 24,377 11.2
------- ------- -------- --------
Operating income $2,762 4.6 $4,021 6.5 $11,005 4.4 $12,350 5.7
======= ======= ======== ========
The following table shows the change in shipment volume and average
revenue (excluding logistics fee revenue) per shipment for all VAS
shipments.
% %
4Q10 4Q09 Difference Change 2010 2009 Difference Change
------ ------ ---------- ------ ------- ------- ---------- ------
Total VAS shipments 60,884 65,249 (4,365) (7)% 261,396 243,286 18,110 7%
Less: Non-committed
shipments to Truckload
segment 20,499 26,190 (5,691) (22)% 93,760 93,825 (65) 0%
------ ------ ---------- ------- ------- ----------
Net VAS shipments 40,385 39,059 1,326 3% 167,636 149,461 18,175 12%
====== ====== ========== ======= ======= ==========
Average revenue
per shipment $1,376 $1,373 $3 0% $1,346 $1,321 $25 2%
====== ====== ========== ======= ======= ==========
In fourth quarter 2010, VAS revenues decreased 4%, gross margin
dollars decreased 9% and operating income dollars decreased 31% compared
to fourth quarter 2009. Operating income was essentially flat on a
sequential basis from third quarter 2010 to fourth quarter 2010.
Brokerage revenues in fourth quarter 2010 increased 14% compared to
fourth quarter 2009 due primarily to increased shipment volume.
Brokerage gross margin dollars increased at a lower rate of 7% because
of the 90-basis point decline in the gross margin percentage over the
same quarterly periods. Sequentially, the Brokerage gross margin
percentage was flat from third quarter 2010 to fourth quarter 2010.
Intermodal revenues increased 4% and intermodal operating income
decreased 16%, comparing fourth quarter 2010 to fourth quarter 2009.
Werner Global Logistics revenues declined 31% and operating results
declined significantly in fourth quarter 2010 compared to fourth quarter
2009. This is attributed to a decrease in the number of shipments
related to several international projects that ended during the latter
part of second quarter 2010 and due to earlier peak shipping volumes for
international shipments in third quarter 2010 relative to fourth quarter
2010.
Comparisons of the operating ratios (net of fuel surcharge
revenues) for the Truckload segment and VAS segment for fourth quarters
and full years 2010 and 2009 are shown below.
Operating Ratios 4Q10 4Q09 Difference 2010 2009 Difference
---------------- ----- ----- ---------- ----- ----- ----------
Truckload Transportation Services 88.4% 91.7% (3.3)% 90.6% 93.3% (2.7)%
Value Added Services 95.4 93.5 1.9 95.6 94.3 1.3
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 quarter 2010 and fourth quarter 2009 are 90.4% and 92.9%,
respectively, and for 2010 and 2009 are 92.1% and 94.1%, respectively,
when fuel surcharge revenues are reported as revenues instead of a
reduction of operating expenses.
Our financial position remains strong. We ended 2010 with no debt,
$14.0 million of cash, and stockholders' equity of $669.0 million, after
paying a $116.3 million special dividend to shareholders in December
2010.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Quarter % of Quarter % of
Ended Operating Ended Operating
12/31/10 Revenues 12/31/09 Revenues
-------- --------- -------- ---------
Operating revenues $463,214 100.0 $439,638 100.0
-------- --------- -------- ---------
Operating expenses:
Salaries, wages and benefits 130,684 28.2 129,506 29.4
Fuel 85,199 18.4 72,863 16.6
Supplies and maintenance 38,525 8.3 35,775 8.1
Taxes and licenses 23,804 5.1 24,384 5.5
Insurance and claims 18,286 4.0 19,186 4.4
Depreciation 39,394 8.5 38,299 8.7
Rent and purchased transportation 84,287 18.2 85,578 19.5
Communications and utilities 3,867 0.8 3,624 0.8
Other (1,459) (0.3) (197) 0.0
-------- --------- -------- ---------
Total operating expenses 422,587 91.2 409,018 93.0
-------- --------- -------- ---------
Operating income 40,627 8.8 30,620 7.0
-------- --------- -------- ---------
Other expense (income):
Interest expense 30 0.0 17 0.0
Interest income (412) (0.1) (435) (0.1)
Other (38) (0.0) (114) (0.0)
-------- --------- -------- ---------
Total other expense (income) (420) (0.1) (532) (0.1)
-------- --------- -------- ---------
Income before income taxes 41,047 8.9 31,152 7.1
Income taxes 16,932 3.7 13,148 3.0
-------- --------- -------- ---------
Net income $24,115 5.2 $18,004 4.1
======== ========= ======== =========
Diluted shares outstanding 72,989 72,335
======== ========
Diluted earnings per share $.33 $.25
======== ========
OPERATING STATISTICS
Quarter Ended Quarter Ended
12/31/10 % Change 12/31/09
------------- -------- -------------
Trucking revenues, net of fuel surcharge (1) $327,682 2.7% $319,022
Trucking fuel surcharge revenues (1) 70,189 29.7% 54,108
Non-trucking revenues, including VAS (1) 62,005 -2.4% 63,545
Other operating revenues (1) 3,338 12.7% 2,963
------------- -------------
Operating revenues (1) $463,214 5.4% $439,638
============= =============
Average monthly miles per tractor 9,970 -1.7% 10,145
Average revenues per total mile (2) $1.501 4.2% $1.440
Average revenues per loaded mile (2) $1.690 3.6% $1.632
Average percentage of empty miles 11.19% -5.3% 11.82%
Average trip length in miles (loaded) 442 -4.5% 463
Total miles (loaded and empty) (1) 218,309 -1.5% 221,599
Average tractors in service 7,299 0.2% 7,281
Average revenues per tractor per week (2) $3,453 2.5% $3,370
Capital expenditures, net (1) $35,936 $22,097
Cash flow from operations (1) $73,236 $25,134
Return on assets (annualized) 7.8% 5.7%
Total tractors (at quarter end)
Company 6,595 6,575
Owner-operator 680 675
------------- -------------
Total tractors 7,275 7,250
Total trailers (truck and intermodal,
quarter end) 23,850 23,880
(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
12/31/10 Revenues 12/31/09 Revenues
---------- --------- ---------- ---------
Operating revenues $1,815,020 100.0 $1,666,470 100.0
---------- --------- ---------- ---------
Operating expenses:
Salaries, wages and benefits 527,576 29.1 522,962 31.4
Fuel 313,518 17.3 247,640 14.9
Supplies and maintenance 155,943 8.6 141,402 8.5
Taxes and licenses 94,018 5.2 96,406 5.8
Insurance and claims 69,991 3.8 83,458 5.0
Depreciation 152,242 8.4 155,315 9.3
Rent and purchased transportation 352,648 19.4 305,854 18.4
Communications and utilities 15,123 0.8 15,856 0.9
Other (621) 0.0 886 0.0
---------- --------- ---------- ---------
Total operating expenses 1,680,438 92.6 1,569,779 94.2
---------- --------- ---------- ---------
Operating income 134,582 7.4 96,691 5.8
---------- --------- ---------- ---------
Other expense (income):
Interest expense 47 0.0 99 0.0
Interest income (1,536) (0.1) (1,779) (0.1)
Other (166) (0.0) (466) (0.0)
---------- --------- ---------- ---------
Total other expense (income) (1,655) (0.1) (2,146) (0.1)
---------- --------- ---------- ---------
Income before income taxes 136,237 7.5 98,837 5.9
Income taxes 56,198 3.1 42,253 2.5
---------- --------- ---------- ---------
Net income 80,039 4.4 $56,584 3.4
========== ========= ========== =========
Diluted shares outstanding 72,807 72,075
========== ==========
Diluted earnings per share $1.10 $.79
========== ==========
OPERATING STATISTICS
Year Year
Ended Ended
12/31/10 % Change 12/31/09
---------- -------- ----------
Trucking revenues, net of fuel surcharge (1) $1,287,068 2.4% $1,256,355
Trucking fuel surchargerevenues (1) 254,764 44.1% 176,744
Non-trucking revenues, including VAS (1) 259,628 16.9% 222,159
Other operating revenues (1) 13,560 20.9% 11,212
---------- ----------
Operating revenues (1) $1,815,020 8.9% $1,666,470
========== ==========
Average monthly miles per tractor 10,012 0.8% 9,936
Average revenues per total mile (2) $1.477 2.6% $1.439
Average revenues per loaded mile (2) $1.668 1.4% $1.645
Average percentage of empty miles 11.43% -8.7% 12.52%
Average trip length in miles (loaded) 445 -3.9% 463
Total miles (loaded and empty) (1) 871,290 -0.2% 872,856
Average tractors in service 7,252 -0.9% 7,321
Average revenues per tractor per week (2) $3,413 3.4% $3,300
Capital expenditures, net (1) $119,033 $98,846
Cash flow from operations (1) $228,483 $194,440
Return on assets (annualized) 6.6% 4.5%
Total tractors (at quarter end)
Company 6,595 6,575
Owner-operator 680 675
---------- ----------
Total tractors 7,275 7,250
Total trailers (truck and intermodal,
quarter end) 23,850 23,880
(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
BALANCE SHEET DATA
(In thousands, except share amounts)
12/31/10 12/31/09
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $13,966 $18,430
Accounts receivable, trade, less allowance of
$9,484 and $9,167, respectively 190,264 180,740
Other receivables 10,431 10,366
Inventories and supplies 16,868 12,725
Prepaid taxes, licenses and permits 14,934 14,628
Current deferred income taxes 27,829 24,808
Other current assets 23,407 22,807
---------- ----------
Total current assets 297,699 284,504
---------- ----------
Property and equipment 1,549,637 1,580,711
Less - accumulated depreciation 708,582 708,809
---------- ----------
Property and equipment, net 841,055 871,902
---------- ----------
Other non-current assets 12,798 16,603
---------- ----------
$1,151,552 $1,173,009
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $57,708 $47,056
Insurance and claims accruals 71,857 65,667
Accrued payroll 18,838 17,567
Other current liabilities 20,037 16,451
---------- ----------
Total current liabilities 168,440 146,741
---------- ----------
Other long-term liabilities 10,380 8,760
Insurance and claims accruals, net of current portion 113,250 113,500
Deferred income taxes 190,507 199,358
Stockholders' equity:
Common stock, $.01 par value, 200,000,000 shares
authorized; 80,533,536 shares issued; 72,644,998
and 71,896,512 shares outstanding, respectively 805 805
Paid-in capital 91,872 92,389
Retained earnings 728,216 778,890
Accumulated other comprehensive loss (3,420) (5,556)
Treasury stock, at cost; 7,888,538 and 8,637,024
shares, respectively (148,498) (161,878)
---------- ----------
Total stockholders' equity 668,975 704,650
---------- ----------
$1,151,552 $1,173,009
========== ==========
Werner Enterprises, Inc. was founded in 1956 and is a premier
transportation and logistics company, with coverage throughout North
America, Asia, Europe, South America, Africa and Australia. Werner
maintains its global headquarters in Omaha, Nebraska and maintains
offices in the United States, Canada, Mexico, China and Australia.
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;
expedited; temperature-controlled; and flatbed services. Werner's Value
Added Services portfolio includes freight management, truck brokerage,
intermodal, and international services. International services are
provided through Werner's domestic and global subsidiary companies and
include ocean, air and ground transportation; freight forwarding; and
customs brokerage.
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.
This press release may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended. Such forward-looking
statements are based on information presently available to the Company's
management and are current only as of the date made. 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,
2009. For those reasons, undue reliance should not be placed on any
forward-looking statement. 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 or as may be
required by applicable securities law. Any such updates or revisions
may be made by filing reports with the U.S. Securities and Exchange
Commission, through the issuance of press releases or by other methods
of public disclosure.
