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 THIRD QUARTER 2008 REVENUES AND EARNINGS
Omaha, Nebraska, October 16, 2008:
---------------------------------
Werner Enterprises, Inc. (NASDAQ:WERN), one of the nation's largest
truckload transportation and logistics companies, reported revenues and
earnings for the third quarter ended September 30, 2008.
Revenues increased 14% to $584.1 million in third quarter 2008
compared to $510.3 million in third quarter 2007. Revenues, excluding
trucking fuel surcharges, increased 4% to $448.5 million in third
quarter 2008 compared to $433.0 million in third quarter 2007. Earnings
per share increased 5% to 31 cents per share in third quarter 2008
compared to 30 cents per share in third quarter 2007.
The ongoing diversification of the Company's service offerings from
the one-way Van fleet to Dedicated, Regional, Expedited, and North
America cross-border in the Truckload segment and Freight Management,
Intermodal, Brokerage and Werner Global Logistics international in the
Value Added Services segment helped lessen the impact of a lackluster
freight market in third 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.
Even in these increasingly challenging market conditions, Werner
again delivered with impressive productivity improvements within its
asset fleets. Average monthly miles per tractor increased by 350 miles,
an increase of 3.5%. At the same time, Werner lowered its average
percentage of empty miles by 50 basis points. The entire Werner team of
driver and non-driver professionals contributed to these positive
results.
Freight demand for the Company's Van Network of nearly 4,700 trucks
in its Regional, Expedited and medium-to-long haul Van ("Van") fleets
was less encouraging during third quarter 2008. The percentage of loads
to trucks ("pre-books") in July, August and September 2008 were
approximately the same as July, August and September 2007. The
strengthening of demand the Company experienced in June 2008 did not
continue into third quarter 2008, however third quarter 2008 pre-books
were relatively stable year over year, compared to weaker year-over-year
pre-books experienced during the first five months of 2008. Werner
believes that as a result of a significant number of carrier failures
that occurred during the first half of 2008, industry capacity remained
more in balance with freight demand in third quarter 2008 compared to
the excess of capacity at the beginning of 2008.
Freight demand during the latter part of third quarter 2008 and the
first two weeks of October 2008 has been disappointing but not
unexpected, considering the turbulence and uncertainty in the financial
markets. Consumer spending is being affected by the current lack of
confidence in the credit market and the stock market. Werner is
planning based on the assumption that this trend will continue. The
Company expects this will result in lackluster shipping volumes this
peak freight season.
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. Werner believes its
financial strength as a debt-free company places it in a unique position
to capitalize on the opportunities ahead.
Compared to unprecedented high diesel fuel prices in second quarter
2008, diesel fuel prices declined during third quarter 2008 but remained
higher than diesel fuel prices in third quarter 2007. When compared to
the same month in 2007, diesel fuel costs were $1.62 per gallon higher
in July 2008, $1.12 per gallon higher in August 2008, and $.82 per
gallon higher in September 2008. Fuel expense increased $43.4 million
and rent and purchased transportation expense paid to owner-operator
drivers (which increased due to the higher fuel reimbursement to owner-
operators) increased $5.9 million, when comparing third quarter 2008 to
third quarter 2007.
Over the past several years, Werner and the truckload industry have
not recovered all of the cost of rising fuel prices through fuel
surcharge programs. Each year in the past 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 that are 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 third quarter 2008 was unusual, as
fuel prices declined for most weeks during the quarter. 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 third quarter 2008, enabling the Company to
temporarily have lower net fuel expense, which helped to offset
uncompensated fuel costs such as truck idling, empty miles, and out-of-
route miles. All of these uncompensated fuel costs were higher in third
quarter 2008 than third quarter 2007 due to the higher average fuel
prices in third quarter 2008. If fuel prices remain stable going
forward, the Company does not expect the temporary favorable trend to
continue.
During third 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
September 30, 2008, the Company had installed APUs in approximately 40%
of the company-owned truck fleet.
Werner is again proud to report that through the efforts of many
Werner employees, the Company 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 2.6 million fewer gallons of diesel fuel in third quarter 2008
than in third quarter 2007. This equates to a reduction of
approximately 29,000 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 Value Added Services
("VAS") segment. VAS includes Brokerage, Freight Management, Intermodal
and Werner Global Logistics. In third quarter 2008, VAS began
implementing a record number of freight management business awards, due
in part to the Company's comprehensive and proprietary Transportation
Management System. This new business is beginning to generate
additional revenues across all Company business units (including
Brokerage, Intermodal, Dedicated and the Van Network). 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 thousands) 3Q08 3Q07
------------------------------------------- ---------------- ---------------
Revenues $73,586 100.0% $54,517 100.0%
Rent and purchased transportation
expense 62,838 85.4 45,963 84.3
------- -------
Gross margin 10,748 14.6 8,554 15.7
Other operating expenses 6,429 8.7 5,373 9.9
------- -------
Operating income $4,319 5.9 $3,181 5.8
======= =======
YTD08 YTD07
----------------- ----------------
Revenues $203,401 100.0% $200,243 100.0%
Rent and purchased transportation
expense 173,358 85.2 175,200 87.5
-------- --------
Gross margin 30,043 14.8 25,043 12.5
Other operating expenses 18,373 9.1 15,465 7.7
-------- --------
Operating income $11,670 5.7 $9,578 4.8
======== ========
VAS generated a 35% increase in revenues, 26% gross margin growth,
and 36% operating income growth in third quarter 2008 compared to third
quarter 2007. Brokerage continued to produce strong results with 41%
revenue growth and a decline in its gross margin percentage. The
tightening of truckload capacity due to increased carrier failures has
made it more challenging for Brokerage to obtain qualified third party
carriers at a comparable cost to prior quarters. Intermodal revenues
grew 47%, and the operating margin percentage improved. Werner Global
Logistics is generating increased revenue growth and became profitable
in third quarter 2008.
VAS had a 2% increase in reported revenues (as explained below)
year to date in 2008 compared to the same period in 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 $36.3 million from year to date September 2007
to year to date September 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 24% year to date in 2008
compared to the same period in 2007.
A comparison of the operating ratios (net of fuel surcharge
revenues) for the Truckload Transportation Services ("Truckload")
segment and VAS operating ratios for third quarters 2008 and 2007 and
year to date 2008 and 2007 is shown below.
Operating Ratios 3Q08 3Q07 Difference
---------------- -------- ------- ------------
Truckload Transportation Services 91.0% 91.2% (0.2)%
Value Added Services 94.1 94.2 (0.1)
YTD08 YTD07 Difference
-------- ------- ------------
Truckload Transportation Services 93.8% 91.8% 2.0%
Value Added Services 94.3 95.2 (0.9)
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
third quarter 2008 and third quarter 2007 are 93.4% and 92.7%,
respectively, and for year to date 2008 and 2007 are 95.3% and 93.1%,
respectively, when fuel surcharge revenues are reported as revenues
instead of a reduction of operating expenses.
The driver recruiting and retention market remained less difficult
than 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 $2.8 million in third quarter 2008 compared to
$5.5 million in third quarter 2007. Carrier failures and company fleet
reductions have increased the supply of used trucks for sale, while
buyer demand for the purchase of used trucks remains lackluster. 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, we believe that the
Company's financial strength separates it from carriers that are highly
leveraged. The Company ended the quarter with no debt and $136.3
million of cash. Stockholders' equity is $880.8 million, or $12.40 per
share.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Quarter % of Quarter % of
Ended Operating Ended Operating
9/30/08 Revenues 9/30/07 Revenues
-------- ----- -------- -----
Operating revenues $584,057 100.0 $510,260 100.0
-------- ----- -------- -----
Operating expenses:
Salaries, wages and
benefits 150,616 25.8 150,789 29.5
Fuel 145,280 24.9 101,859 20.0
Supplies and maintenance 41,566 7.1 40,698 8.0
Taxes and licenses 26,733 4.6 28,796 5.6
Insurance and claims 28,727 4.9 22,001 4.3
Depreciation 41,653 7.1 41,087 8.0
Rent and purchased
transportation 107,948 18.5 87,537 17.2
Communications and
utilities 4,769 0.8 4,978 1.0
Other (1,257) (0.2) (4,549) (0.9)
-------- ----- -------- -----
Total operating
expenses 546,035 93.5 473,196 92.7
-------- ----- -------- -----
Operating income 38,022 6.5 37,064 7.3
-------- ----- -------- -----
Other expense (income):
Interest expense 3 0.0 527 0.1
Interest income (1,012) (0.2) (1,015) (0.2)
Other 27 0.0 54 0.0
-------- ----- -------- -----
Total other expense
(income) (982) (0.2) (434) (0.1)
-------- ----- -------- -----
Income before income taxes 39,004 6.7 37,498 7.4
Income taxes 16,558 2.9 15,648 3.1
-------- ----- -------- -----
Net income $22,446 3.8 $21,850 4.3
======== ===== ======== =====
Diluted shares outstanding 71,825 73,501
======== ========
Diluted earnings per share $.31 $.30
======== ========
OPERATING STATISTICS
Quarter Ended Quarter Ended
9/30/08 % Change 9/30/07
---------- ---------- ----------
Trucking revenues, net of
fuel surcharge (1) $367,401 -1.2% $371,746
Trucking fuel surcharge
revenues (1) 135,525 75.4% 77,286
Non-trucking revenues,
including VAS (1) 76,070 34.1% 56,725
Other operating revenues (1) 5,061 12.4% 4,503
---------- ----------
Operating revenues (1) $584,057 14.5% $510,260
========== ==========
Average monthly miles per
tractor 10,306 3.5% 9,956
Average revenues per total
mile (2) $1.480 0.4% $1.474
Average revenues per loaded
mile (2) $1.699 -0.2% $1.702
Average percentage of empty
miles 12.88% -3.7% 13.38%
Average trip length in
miles (loaded) 539 -2.0% 550
Total miles (loaded and
empty) (1) 248,197 -1.6% 252,128
Average tractors in service 8,028 -4.9% 8,441
Average revenues per
tractor per week (2) $3,521 3.9% $3,388
Capital expenditures, net (1) $14,421 ($2,097)
Cash flow from operations (1) $69,002 $52,862
Return on assets
(annualized) 6.5% 6.3%
Total tractors (at quarter
end)
Company 7,335 7,620
Owner-operator 705 810
---------- ----------
Total tractors 8,040 8,430
Total trailers (truck and
intermodal, quarter end) 24,140 24,765
(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
Nine Months % of Nine Months % of
Ended Operating Ended Operating
9/30/08 Revenues 9/30/07 Revenues
---------- ----- ---------- -----
Operating revenues $1,675,025 100.0 $1,545,459 100.0
---------- ----- ---------- -----
Operating expenses:
Salaries, wages and
benefits 442,391 26.4 451,645 29.2
Fuel 424,079 25.3 290,862 18.8
Supplies and maintenance 123,336 7.4 120,366 7.8
Taxes and licenses 82,884 4.9 88,276 5.7
Insurance and claims 77,366 4.6 70,128 4.6
Depreciation 125,132 7.5 125,273 8.1
Rent and purchased
transportation 307,631 18.4 296,655 19.2
Communications and
utilities 14,828 0.9 15,252 1.0
Other (4,930) (0.3) (15,714) (1.0)
---------- ----- ---------- -----
Total operating
expenses 1,592,717 95.1 1,442,743 93.4
---------- ----- ---------- -----
Operating income 82,308 4.9 102,716 6.6
---------- ----- ---------- -----
Other expense (income):
Interest expense 9 0.0 2,920 0.2
Interest income (3,049) (0.2) (2,989) (0.2)
Other 79 0.0 172 0.0
---------- ----- ---------- -----
Total other expense
(income) (2,961) (0.2) 103 0.0
---------- ----- ---------- -----
Income before income taxes 85,269 5.1 102,613 6.6
Income taxes 36,336 2.2 42,841 2.7
---------- ----- ---------- -----
Net income $48,933 2.9 $59,772 3.9
========== ===== ========== =====
Diluted shares outstanding 71,575 74,810
========== ==========
Diluted earnings per share $.68 $.80
========== ==========
OPERATING STATISTICS
YTD 08 % Change YTD 07
---------- -------- ----------
Trucking revenues, net of
fuel surcharge (1) $1,084,402 -2.6% $1,113,221
Trucking fuel surcharge
revenues (1) 366,223 73.5% 211,072
Non-trucking revenues,
including VAS (1) 209,699 0.9% 207,860
Other operating revenues (1) 14,701 10.5% 13,306
---------- ----------
Operating revenues (1) $1,675,025 8.4% $1,545,459
========== ==========
Average monthly miles per
tractor 10,189 3.5% 9,846
Average revenues per total
mile (2) $1.466 0.4% $1.460
Average revenues per loaded
mile (2) $1.691 0.2% $1.688
Average percentage of empty
miles 13.31% -1.2% 13.47%
Average trip length in
miles (loaded) 540 -3.7% 561
Total miles (loaded and
empty) (1) 739,571 -3.0% 762,327
Average tractors in service 8,065 -6.3% 8,603
Average revenues per
tractor per week (2) $3,448 3.9% $3,318
Capital expenditures, net (1) $80,391 $27,278
Cash flow from operations (1) $189,212 $187,186
Return on assets
(annualized) 4.8% 5.6%
Total tractors (at quarter
end)
Company 7,335 7,620
Owner-operator 705 810
---------- ----------
Total tractors 8,040 8,430
Total trailers (truck and
intermodal, quarter end) 24,140 24,765
(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
BALANCE SHEET DATA
(In thousands, except share amounts)
9/30/08 12/31/07
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $136,315 $25,090
Accounts receivable, trade, less
allowance of $9,921 and $9,765,
respectively 231,931 213,496
Other receivables 15,512 14,587
Inventories and supplies 10,048 10,747
Prepaid taxes, licenses
and permits 7,266 17,045
Current deferred income taxes 31,433 26,702
Other current assets 23,571 21,500
----------- -----------
Total current assets 456,076 329,167
----------- -----------
Property and equipment 1,608,906 1,605,445
Less - accumulated depreciation 675,132 633,504
----------- -----------
Property and equipment, net 933,774 971,941
----------- -----------
Other non-current assets 17,457 20,300
----------- -----------
$1,407,307 $1,321,408
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $58,004 $49,652
Insurance and claims accruals 86,360 76,189
Accrued payroll 28,336 21,753
Other current liabilities 27,454 19,395
----------- -----------
Total current liabilities 200,154 166,989
----------- -----------
Other long-term liabilities 7,447 14,165
Insurance and claims accruals,
net of current portion 118,500 110,500
Deferred income taxes 200,398 196,966
Stockholders' equity:
Common stock, $.01 par value,
200,000,000 shares authorized;
80,533,536 shares issued;
71,025,892 and 70,373,189 shares
outstanding, respectively 805 805
Paid-in capital 96,757 101,024
Retained earnings 961,752 923,411
Accumulated other comprehensive
loss 249 (169)
Treasury stock, at cost; 9,507,644
and 10,160,347 shares,
respectively (178,755) (192,283)
----------- -----------
Total stockholders' equity 880,808 832,788
----------- -----------
$1,407,307 $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.