WERNER ENTERPRISES INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - WERNER ENTERPRISES INC	wern-20150630x8k.htm

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 SECOND QUARTER 2015 REVENUES AND RECORD SECOND QUARTER EARNINGS

Omaha, Nebraska, July 20, 2015:

Werner Enterprises, Inc. (NASDAQ: WERN), one of the nation's largest transportation and logistics companies, reported revenues and record second quarter earnings for the second quarter ended June 30, 2015.

Summarized financial results for second quarter 2015 compared to second quarter 2014 are as follows (dollars in thousands, except per share data):



	Three Months Ended June 30,						Six Months Ended June 30,
	2015		2014		% Change		2015		2014		% Change
Total revenues	$	534,644	$	542,120	(1	)%	$	1,030,298	$	1,034,142	0	%
Trucking revenues, net of fuel surcharge	353,051		332,025		6	%	682,185		643,547		6	%
Value Added Services (“VAS”) revenues	103,450		100,501		3	%	194,310		185,655		5	%
Operating income	52,210		42,330		23	%	90,395		65,771		37	%
Net income	31,848		25,632		24	%	54,990		39,971		38	%
Earnings per diluted share	0.44		0.35		25	%	0.76		0.55		38	%

Freight demand in second quarter 2015 and so far in July 2015 continues to be stronger than the prior five years, with the exception of the same period in 2014 which was rebounding from severe winter weather in first quarter 2014 that temporarily backed up the freight network.

Constrained truck capacity combined with a gradually improving economy in the retail, consumer products and grocery products markets primarily served by us are contributing to strong freight demand. Truckload industry capacity is being challenged by an extremely competitive driver recruiting market and heightened regulatory cost increases for safety and truck ownership; we expect this favorable trend will continue. There are numerous pending and proposed federal safety initiatives that could further limit truckload and driver capacity in the next few years, including mandatory electronic logging devices (ELD’s), a national drug and alcohol driver data base, increased minimum liability insurance requirements for carriers, more sophisticated drug screening procedures for drivers and mandatory truck speed limiter devices.

Average revenues per tractor per week, net of fuel surcharge, increased 3.5% in second quarter 2015 compared to second quarter 2014. Continued focus on securing driver friendly, highly productive freight and improved freight selection using our proprietary freight optimization system enabled us to essentially maintain our average miles per truck in a strong, but not as stellar a freight market as second quarter 2014. Our average miles per truck declined slightly by 0.2% in second quarter 2015 compared to second quarter

Werner Enterprises, Inc. - Release of July 20, 2015

Page 2

2014. Average revenues per total mile, net of fuel surcharge, increased 3.8% in second quarter 2015 compared to second quarter 2014.

We are making continued progress implementing sustainable rate increases with our customers. These efforts are ongoing as we move forward in 2015 and work to recoup the cost increases associated with more expensive equipment, a shrinking supply of qualified drivers and an increasingly challenging regulatory environment. Strategic customers understand the collective capacity and service challenges facing our company and our industry and are supportive of Werner's ongoing initiatives to provide sustainable transportation solutions in support of their supply chain needs.

In second quarter 2015, we averaged 7,247 trucks in service in the Truckload segment and 51 intermodal drayage trucks in the VAS segment. On the strength of an intense company-wide focus to improve our driver recruiting and retention, we ended second quarter 2015 with 7,275 trucks in the Truckload segment, a sequential improvement of 165 trucks compared to first quarter 2015 and a year-over-year improvement of 240 trucks compared to second quarter 2014. Our Specialized Services unit, primarily Dedicated, ended the quarter with 3,700 trucks (or 51% of our total Truckload segment fleet).

Diesel fuel prices were $1.15 per gallon lower in second quarter 2015 than in second quarter 2014 and were 9 cents per gallon higher than in first quarter 2015. For the first 20 days of July 2015, the average diesel fuel price per gallon was $1.16 lower than the average diesel fuel price per gallon in the same period of 2014 and $1.11 lower than in third quarter 2014. The components of the Company's total fuel cost consist of and are recorded in our income statement as follows: (i) Fuel (fuel expense for company trucks excluding federal and state fuel taxes); (ii) Taxes and Licenses (federal and state fuel taxes); and (iii) Rent and Purchased Transportation (fuel component of our independent contractor costs, including the base cost of fuel and additional fuel surcharge reimbursement for costs exceeding the fuel base).

We continue to invest in equipment solutions to improve the safety, operational efficiency and fuel miles per gallon of our fleet. We increased our capital expenditures in the last 12 months to lower the average age of our truck fleet and attained an average age of 2.0 years as of June 30, 2015, which compares to an average age of 2.4 years as of June 30, 2014. Net capital expenditures in the first half of 2015 were $159 million compared to $63 million in the first half of 2014. We estimate net capital expenditures for the full year of 2015 to be in the range of $300 to $325 million, which we expect will enable us to further reduce the average age of our truck fleet to less than two years. We remain committed to investing in a best in class fleet for the benefit of our customers, our drivers and the Werner brand.

The driver recruiting market remained very challenging during second quarter 2015. Several difficult market factors persist including a declining number of, and increased competition for, driver training school graduates, a gradually declining national unemployment rate, aging truck driver demographics and increased truck safety regulations.

Gains on sales of assets were $6.7 million in second quarter 2015. This compares to gains on sales of assets of $5.2 million in second quarter 2014, which included a $1.6 million gain from the sale of real estate, and gains on sales of assets of $5.5 million in first quarter 2015. In second quarter 2015, we realized higher average gains per truck and trailer and sold more trucks and trailers than in second quarter 2014. Gains on sales of assets are reflected as a reduction of Other Operating Expenses in our income statement.

Werner Enterprises, Inc. - Release of July 20, 2015

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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).



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Value Added Services (amounts in thousands)	$		%	$		%	$		%	$		%
Operating revenues	$	103,450	100.0	$	100,501	100.0	$	194,310	100.0	$	185,655	100.0
Rent and purchased transportation expense	87,448		84.5	87,209		86.8	165,321		85.1	159,763		86.1
Gross margin	16,002		15.5	13,292		13.2	28,989		14.9	25,892		13.9
Other operating expenses	10,998		10.7	11,037		11.0	21,536		11.1	21,782		11.7
Operating income	$	5,004	4.8	$	2,255	2.2	$	7,453	3.8	$	4,110	2.2

In second quarter 2015, VAS revenues increased $2.9 million or 3%, and operating income dollars increased $2.7 million or 122%, compared to second quarter 2014. Our on-going efforts to address customer pricing, contractual and operational issues within VAS resulted in the best quarterly gross margin and operating income percentages since second quarter 2013. The VAS gross margin percentage in second quarter 2015 of 15.5% improved year over year compared to the gross margin percentage of 13.2% in second quarter 2014 and also improved sequentially from the 14.3% gross margin in first quarter 2015. The VAS operating income percentage in second quarter 2015 of 4.8% improved from second quarter 2014 of 2.2% and first quarter 2015 of 2.7%.

Comparisons of the operating ratios for the Truckload segment (net of fuel surcharge revenues of $58.3 million and $92.7 million in second quarters 2015 and 2014, respectively, and $114.7 million and $179.8 million in the year-to-date 2015 and 2014 periods, respectively) and the VAS segment are shown below.



	Three Months Ended June 30,						Six Months Ended June 30,
Operating Ratios	2015		2014		Difference		2015		2014		Difference
Truckload Transportation Services	86.8	%	88.6	%	(1.8	)%	88.0	%	90.9	%	(2.9	)%
Value Added Services	95.2	%	97.8	%	(2.6	)%	96.2	%	97.8	%	(1.6	)%

Fluctuating fuel prices and fuel surcharge revenues 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 second quarter 2015 and second quarter 2014 are 88.7% and 91.1%, respectively, and for year-to-date 2015 and 2014 are 89.7% and 92.9%, respectively, when fuel surcharge revenues are reported as revenues instead of a reduction of operating expenses.

Our financial position remains strong. As of June 30, 2015, we had $75.0 million of debt outstanding and $878.2 million of stockholders' equity. During second quarter 2015, the Company purchased 225,000 shares of its common stock for a total cost of $6.4 million.

Werner Enterprises, Inc. - Release of July 20, 2015

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	INCOME STATEMENT
	(Unaudited)
	(In thousands, except per share amounts)

	Three Months Ended June 30,										Six Months Ended June 30,
	2015					2014					2015					2014
	$			%		$			%		$			%		$			%
Operating revenues	$	534,644		100.0		$	542,120		100.0		$	1,030,298		100.0		$	1,034,142		100.0
Operating expenses:
Salaries, wages and benefits	160,376			30.0		144,506			26.7		311,841			30.3		279,219			27.0
Fuel	57,381			10.7		92,131			17.0		110,141			10.7		183,206			17.7
Supplies and maintenance	46,388			8.7		45,887			8.5		94,045			9.1		91,741			8.9
Taxes and licenses	22,763			4.3		21,311			3.9		43,843			4.3		42,143			4.0
Insurance and claims	20,615			3.8		19,180			3.5		42,662			4.1		39,386			3.8
Depreciation	48,264			9.0		44,573			8.2		93,984			9.1		87,696			8.5
Rent and purchased transportation	124,952			23.4		128,239			23.7		238,700			23.2		239,885			23.2
Communications and utilities	3,837			0.7		3,409			0.6		7,515			0.7		6,908			0.7
Other	(2,142		)	(0.4	)	554			0.1		(2,828		)	(0.3	)	(1,813		)	(0.2	)
Total operating expenses	482,434			90.2		499,790			92.2		939,903			91.2		968,371			93.6
Operating income	52,210			9.8		42,330			7.8		90,395			8.8		65,771			6.4
Other expense (income):
Interest expense	583			0.1		136			—		1,058			0.1		230			—
Interest income	(697		)	(0.1	)	(660		)	(0.1	)	(1,328		)	(0.1	)	(1,315		)	(0.1	)
Other	135			—		(45		)	—		225			—		(41		)	—
Total other expense (income)	21			—		(569		)	(0.1	)	(45		)	—		(1,126		)	(0.1	)
Income before income taxes	52,189			9.8		42,899			7.9		90,440			8.8		66,897			6.5
Income taxes	20,341			3.8		17,267			3.2		35,450			3.5		26,926			2.6
Net income	$	31,848		6.0		$	25,632		4.7		$	54,990		5.3		$	39,971		3.9

Diluted shares outstanding	72,424					72,597					72,482					72,882
Diluted earnings per share	$	0.44				$	0.35				$	0.76				$	0.55



	SEGMENT INFORMATION
	(Unaudited)
	(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Revenues
Truckload Transportation Services	$	417,015		$	429,390		$	807,578		$	832,575
Value Added Services	103,450			100,501			194,310			185,655
Other	13,924			12,258			27,909			16,247
Corporate	725			829			1,246			1,387
Subtotal	535,114			542,978			1,031,043			1,035,864
Inter-segment eliminations (1)	(470		)	(858		)	(745		)	(1,722		)
Total	$	534,644		$	542,120		$	1,030,298		$	1,034,142

Operating Income
Truckload Transportation Services	$	47,312		$	38,320		$	83,154		$	59,100
Value Added Services	5,004			2,255			7,453			4,110
Other	(239		)	357			(684		)	841
Corporate	133			1,398			472			1,720
Total	$	52,210		$	42,330		$	90,395		$	65,771

(1) Inter-segment eliminations represent transactions between reporting segments that are eliminated in consolidation.

Werner Enterprises, Inc. - Release of July 20, 2015

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	OPERATING STATISTICS BY SEGMENT
	(Unaudited)

	Three Months Ended June 30,								Six Months Ended June 30,
	2015			2014			% Change		2015			2014			% Change
Truckload Transportation Services segment
Average percentage of empty miles	12.21		%	12.14		%	0.6	%	12.18		%	12.06		%	1.0	%
Average trip length in miles (loaded)	476			466			2.1	%	479			466			2.8	%
Average tractors in service	7,247			7,055			2.7	%	7,130			7,029			1.4	%
Average revenues per tractor per week (1)	$	3,748		$	3,620		3.5	%	$	3,680		$	3,521		4.5	%
Total trailers (at quarter end)	22,070			21,865					22,070			21,865
Total tractors (at quarter end)
Company	6,615			6,375					6,615			6,375
Independent contractor	660			660					660			660
Total tractors	7,275			7,035					7,275			7,035

Value Added Services segment
Average tractors in service	51			48					51			47
Total trailers (at quarter end)	1,695			1,730					1,695			1,730
Total tractors (at quarter end)	57			55					57			55

(1) Net of fuel surcharge revenues.



	SUPPLEMENTAL INFORMATION
	(Unaudited)
	(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Capital expenditures, net	$	74,541		$	46,761		$	159,406		$	62,807
Cash flow from operations	69,469			31,336			190,455			90,545
Return on assets (annualized)	8.3		%	7.4		%	7.3		%	5.8		%
Return on equity (annualized)	14.7		%	13.1		%	12.9		%	10.3		%

Werner Enterprises, Inc. - Release of July 20, 2015

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	CONDENSED BALANCE SHEET
	(In thousands, except share amounts)

	June 30, 2015			December 31, 2014
	(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	47,491		$	22,604
Accounts receivable, trade, less allowance of $9,616 and $10,017, respectively	258,823			266,727
Other receivables	21,283			20,316
Inventories and supplies	16,756			17,824
Prepaid taxes, licenses and permits	7,374			14,914
Current deferred income taxes	34,568			34,066
Income taxes receivable	2,950			23,435
Other current assets	26,827			26,458
Total current assets	416,072			426,344

Property and equipment	1,850,826			1,786,229
Less – accumulated depreciation	766,340			772,447
Property and equipment, net	1,084,486			1,013,782

Other non-current assets	42,857			40,336
Total assets	$	1,543,415		$	1,480,462

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	87,981		$	64,827
Insurance and claims accruals	62,067			73,814
Accrued payroll	32,286			28,121
Other current liabilities	21,445			19,768
Total current liabilities	203,779			186,530

Long-term debt, net of current portion	75,000			75,000
Other long-term liabilities	17,940			20,021
Insurance and claims accruals, net of current portion	130,545			123,445
Deferred income taxes	237,911			241,606

Stockholders’ equity:
Common stock, $.01 par value, 200,000,000 shares authorized; 80,533,536
shares issued; 71,882,822 and 72,038,368 shares outstanding, respectively	805			805
Paid-in capital	104,909			101,803
Retained earnings	962,876			915,085
Accumulated other comprehensive loss	(10,672		)	(9,375		)
Treasury stock, at cost; 8,650,714 and 8,495,168 shares, respectively	(179,678		)	(174,458		)
Total stockholders’ equity	878,240			833,860
Total liabilities and stockholders' equity	$	1,543,415		$	1,480,462

Werner Enterprises, Inc. - Release of July 20, 2015

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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 van, temperature-controlled and flatbed; medium-to-long-haul, regional and local van; and expedited 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 Market^SM 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, 2014.

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.

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