WERN - Werner Enterprises Reports Second Quarter 2020 Results

July, 29 2020 04:05 PM Werner Enterprises Inc.

Second Quarter 2020 Highlights (all metrics compared to second quarter 2019 unless otherwise noted)

Total revenues of $569.0 million, down 9%
Operating income of $52.8 million, down 10%; non-GAAP adjusted operating income of $57.7 million, down 3%
Operating margin of 9.3%, flat year over year; non-GAAP adjusted operating margin of 10.1%, up 70 bps
Diluted EPS of $0.56, down 9%; non-GAAP adjusted diluted EPS of $0.62, down 2%

OMAHA, Neb., July 29, 2020 (GLOBE NEWSWIRE) -- Werner Enterprises, Inc. (NASDAQ: WERN), one of the nation’s largest transportation and logistics companies, today reported financial results for the second quarter ended June 30, 2020.

“Despite the unprecedented and significant challenges of managing our business in a COVID-19 economy, our entire Werner team embraced these challenges and produced strong results in second quarter 2020,” said Derek J. Leathers, President and Chief Executive Officer. “Our front-line professional drivers and mechanics stepped up in a big way and ensured that essential goods were safely delivered on time and damage free. Our non-driver associates were careful to remain safe and healthy, while remaining productive and efficient.

“Our results in second quarter 2020 reflect freight demand in One-Way Truckload and Logistics that was lower than the same period a year ago. In April 2020, the impact of some customers closing or significantly curtailing their businesses caused a weakness in freight volumes. By mid-May and into June, many of these customers began to reopen their businesses which improved freight volumes as the quarter progressed. Thus far in July 2020, One-Way Truckload demand is relatively strong and higher than July 2019.

“We proactively managed and adapted our fleet and cost structure without compromising outstanding service. This enabled us to minimize the impact of the softer freight market on our results.

“Our freight base is designed to effectively manage through a more difficult economic environment, as a significant portion of our revenues comes from delivering essential goods and products. Revenues from our top 100 customers were 86% of our total revenues in the first half of 2020, and 64% of those revenues were from the discount retail, home improvement retail, food and beverage and consumer packaged goods verticals.”

Total revenues for the quarter decreased $58.6 million to $569.0 million versus the prior year quarter, primarily attributable to lower fuel surcharge and Logistics revenues.

Operating income of $52.8 million decreased $5.6 million, or 10%. Operating margin of 9.3% was flat, despite the more challenging freight and rate market in One-Way Truckload and Logistics. Our GAAP results included $3.7 million, or four cents per share, of additional depreciation expense related to a change in estimated life of certain trucks expected to be sold in 2020 (previously disclosed in first quarter 2020). On a non-GAAP basis, adjusted operating income of $57.7 million decreased $1.5 million, or 3%. Adjusted operating margin of 10.1% improved 70 basis points from 9.4% for the same quarter last year.

Interest expense of $1.2 million was $0.3 million lower, due to lower average borrowings. The effective income tax rate during the quarter was 24.8% compared to 25.2% in second quarter 2019. The current quarter tax rate was slightly lower than our expected range of 25% to 26% because of favorable discrete income tax items.

Net income of $39.1 million decreased 10%. On a non-GAAP basis, adjusted net income declined 3% to $42.8 million compared to $43.9 million for the same quarter last year. Diluted earnings per share (EPS) for the quarter of $0.56 decreased 9%. On a non-GAAP basis, adjusted diluted EPS of $0.62 decreased 2% compared to $0.63 in second quarter 2019.

Key Consolidated Financial Metrics


Three Months Ended June 30,

Six Months Ended June 30,
(In thousands, except per share amounts)
2020

2019

Y/Y Change

2020

2019

Y/Y Change
Total revenues
$
568,959


$
627,533


(9
)
%

$
1,161,662


$
1,223,650


(5
)
%
Truckload Transportation Services revenues
445,053


479,959


(7
)
%

909,916


942,850


(3
)
%
Werner Logistics revenues
110,163


130,883


(16
)
%

222,327


248,253


(10
)
%
Operating income
52,818


58,442


(10
)
%

83,884


106,461


(21
)
%
Operating margin
9.3
%

9.3
%

—

bps

7.2
%

8.7
%

(150
)
bps
Net income
39,132


43,318


(10
)
%

62,190


79,404


(22
)
%
Diluted earnings per share
0.56


0.62


(9
)
%

0.89


1.13


(21
)
%












Adjusted operating income ⁽¹⁾
57,695


59,209


(3
)
%

94,973


108,378


(12
)
%
Adjusted operating margin ⁽¹⁾
10.1
%

9.4
%

70

bps

8.2
%

8.9
%

(70
)
bps
Adjusted net income ⁽¹⁾
42,765


43,891


(3
)
%

70,451


80,837


(13
)
%
Adjusted diluted earnings per share ⁽¹⁾
0.62


0.63


(2
)
%

1.01


1.15


(12
)
%

(1) See GAAP to non-GAAP reconciliation schedule.

Truckload Transportation Services (TTS) Segment

Revenues of $445.1 million decreased $34.9 million
Operating income of $51.2 million decreased $0.4 million, or 1%; non-GAAP adjusted operating income of $56.1 million increased $3.7 million, or 7%
Operating margin of 11.5% increased 70 basis points from 10.8%; non-GAAP adjusted operating margin of 12.6% increased 170 basis points from 10.9%
Average segment trucks in service totaled 7,762, a decrease of 175 trucks year over year
Dedicated unit trucks at quarter end totaled 4,535, or 59% of the total TTS segment fleet, compared to 4,580 trucks, or 58%, a year ago

Revenues decreased $34.9 million due to a $28.3 million decrease in fuel surcharge revenues and a 2.2% decrease in average trucks in service, partially offset by a 1.1% increase in average revenues per truck. The average revenues per truck increase was due primarily to an increase in average revenues per total mile, partially offset by a decline in average miles per truck. The increase in average revenues per total mile was due primarily to relative strength in Dedicated pricing, partially offset by a 1.9% decrease in One-Way Truckload pricing. The percentage decrease in One-Way Truckload average revenues per total mile was lower than anticipated, due to the improving freight market in May and June 2020.

In our Dedicated fleet, freight demand remained strong in second quarter 2020. Approximately three-quarters of our Dedicated revenues are with essential products customers, and their freight volumes were generally strong during second quarter 2020. A few Dedicated customers were more significantly impacted by COVID-19 and had lower volumes. Our Dedicated truck count temporarily declined by 150 trucks from first quarter 2020 to second quarter 2020 due to customers impacted by COVID-19, a lack of new business implementations in second quarter 2020 and lower driver availability. We expect Dedicated new business implementations to begin to pick up in third quarter 2020 as businesses reopen.

In second quarter 2020, TTS company truck miles decreased by approximately 2.5 million miles, and independent contractor miles decreased by approximately 3.9 million miles.

Comparisons of key financial metrics for the TTS segment, including operating ratios (actual and net of fuel surcharge revenues), are shown below. Fluctuating fuel prices and fuel surcharge revenues impact the total company operating ratio and the TTS 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.

Key Truckload Transportation Services Segment Financial Metrics


Three Months Ended June 30,

Six Months Ended June 30,
(In thousands)
2020

2019

Y/Y Change

2020

2019

Y/Y Change
Trucking revenues, net of fuel surcharge
$
406,834


$
411,460


(1
)
%

$
815,932


$
809,151


1

%
Trucking fuel surcharge revenues
34,208


62,533


(45
)
%

85,249


120,710


(29
)
%
Non-trucking and other revenues
4,011


5,966


(33
)
%

8,735


12,989


(33
)
%
Total revenues
$
445,053


$
479,959


(7
)
%

$
909,916


$
942,850


(3
)
%












Operating income
51,225


51,665


(1
)
%

80,314


94,618


(15
)
%
Operating margin
11.5
%

10.8
%

70

bps

8.8
%

10.0
%

(120
)
bps
Operating ratio
88.5
%

89.2
%

(70
)
bps

91.2
%

90.0
%

120

bps














Adjusted operating income
56,102


52,432


7

%

91,403


96,535


(5
)
%
Adjusted operating margin
12.6
%

10.9
%

170

bps

10.0
%

10.2
%

(20
)
bps
Adjusted operating ratio
87.4
%

89.1
%

(170
)
bps

90.0
%

89.8
%

20

bps
Adjusted operating ratio, net of fuel surcharge
86.3
%

87.4
%

(110
)
bps

88.9
%

88.3
%

60

bps

Werner Logistics Segment

Revenues of $110.2 million decreased $20.7 million, or 16%
Gross margin of 15.7% decreased 40 bps
Operating income of $3.1 million decreased $2.0 million, or 39%
Operating margin of 2.8% decreased 120 bps

Truckload Logistics revenues (60% of total Logistics revenues) declined 24% due to a softer freight market, which reduced volumes by 9%. Lower rates and lower fuel prices reduced all-in Truckload Logistics revenue per load by 15%. Intermodal revenues declined 10%, while International revenues increased 20%.

The gross margin percentage decreased 40 bps to 15.7% due primarily to a softer freight market and contractual brokerage sustaining a rising cost of capacity in May and June 2020. The logistics operating margin declined 120 bps to 2.8% as the 18% decline in gross profit exceeded the 11% decline in other operating expenses.

Key Werner Logistics Segment Financial Metrics


Three Months Ended June 30,

Six Months Ended June 30,
(In thousands)
2020

2019

Y/Y Change

2020

2019

Y/Y Change
Total revenues
$
110,163


$
130,883


(16
)
%

$
222,327


$
248,253


(10
)
%
Rent and purchased transportation expense
92,842


109,836


(15
)
%

188,774


206,856


(9
)
%
Gross profit
17,321


21,047


(18
)
%

33,553


41,397


(19
)
%
Other operating expenses
14,182


15,865


(11
)
%

29,329


31,504


(7
)
%
Operating income
3,139


5,182


(39
)
%

4,224


9,893


(57
)
%
Gross margin
15.7
%

16.1
%

(40
)
bps

15.1
%

16.7
%

(160
)
bps
Operating margin
2.8
%

4.0
%

(120
)
bps

1.9
%

4.0
%

(210
)
bps

Cash Flow and Capital Allocation

Cash flow from operations in second quarter 2020 was $154.0 million compared to $81.6 million in second quarter 2019, an increase of 89%, due primarily to an improvement in certain working capital items.

Net capital expenditures in second quarter 2020 were $88.8 million compared to $79.0 million in second quarter 2019, an increase of 12%. We plan to continue to invest in new trucks and trailers and our terminals to improve our driver experience, increase operational efficiency and more effectively manage our maintenance, safety and fuel costs. The average age of our truck fleet remains low by industry standards and was 2.0 years as of June 30, 2020.

Gains on sales of equipment in second quarter 2020 were $0.9 million, or $0.01 per share, compared to $4.5 million, or $0.05 per share, in the prior-year quarter. Year over year, we sold 20% fewer trucks and 23% fewer trailers, and we realized significantly lower average gains per truck and slightly lower average gains per trailer. Pricing in the market for our used trucks was weak in second quarter 2020 due to low demand. As a reminder, gains on sales of assets are reflected as a reduction of Other Operating Expenses in our income statement.

We did not repurchase shares of our common stock in second quarter 2020. As of June 30, 2020, we had 4.0 million shares remaining under our share repurchase authorization.

We repaid $75 million of debt in second quarter 2020 and had $175 million of debt outstanding as of June 30, 2020. As of June 30, 2020, we had $65 million of cash and over $1.1 billion of stockholders’ equity.

2020 Guidance Metrics and Assumptions

The following table summarizes our updated 2020 guidance and assumptions:

2020 Guidance

Prior Annual
Guidance
(as of 4/28/20)

2Q20
Actual
(as of 6/30/20)

Current Annual
Guidance
(as of 7/29/20)

Commentary

TTS truck growth from Y/E 2019 to Y/E 2020

(5)% to 0%

(4)%

(3)% to (1)%

Dedicated fleet startups in 2H20, social distancing continues at driver schools

Gains on sales of equipment

No guidance

$0.9M (2Q20)

No guidance

Gains in line with internal goals, used truck demand slightly improving, difficult to predict 2H20

Net capital expenditures

$260M to $300M

$107.6M (1H20)

$260M to $300M

OEM new truck delivery delays in 1H20, catch up in 2H20

One-Way Truckload
RPTM Guidance

1H20 vs 1H19
Guidance

1H20 vs 1H19
Actual

2H20 vs 2H19
Guidance

One-Way Truckload RPTM

(7)% to (5)%

(2.7)%

(1)% to 2%

1H20: outperformance due to freight market improvement in May/June
2H20: assumes no round 2 of stay-at-home order programs in 2H20

Assumptions

Effective tax rate

25% to 26%

24.8% (2Q20)

24.5% to 25.5%

Truck age
Trailer age

Low “2” years
Low-to-mid “4” years

2.0 years
4.1 years

2.0 years
Low-to-mid “4” years

Our liability insurance policies renew on August 1, 2020. As a result of the tightening of capacity in the commercial trucking insurance markets, we currently expect the premiums for these policies to increase by at least $7 million on an annual basis, noting that policy coverages and rates are not yet finalized. We also expect to continue to be responsible for the first $10.0 million per claim under these new policies.

Conference Call Information

Werner Enterprises, Inc. will conduct a conference call to discuss second quarter 2020 earnings today beginning at 4:00 p.m. CT. The news release, live webcast of the earnings conference call, and accompanying slide presentation will be available at www.werner.com in the “Investors” section under “News and Events” and then “Webcasts & Presentations.” To participate on the conference call, please dial (844) 701-1165 (domestic) or (412) 317-5498 (international). Please mention to the operator that you are dialing in for the Werner Enterprises call.

A replay of the conference call will be available on July 29, 2020 at approximately 6:00 p.m. CT through August 29, 2020 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and using the access code 10137241. A replay of the webcast will also be available at www.werner.com in the “Investors” section under “News and Events” and then “Webcasts & Presentations.”

About Werner Enterprises

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 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 expedited van; and temperature-controlled. The Werner Logistics portfolio includes truck brokerage, freight management, intermodal, international and final mile 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, 2019 and Quarterly Report on Form 10-Q for the period ended March 31, 2020.

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.

Contact:
John J. Steele
Executive Vice President, Treasurer
and Chief Financial Officer
(402) 894-3036

Source: Werner Enterprises, Inc.


INCOME STATEMENT

(Unaudited)

(In thousands, except per share amounts)











Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

$

%

$

%

$

%

$

%
Operating revenues
$
568,959


100.0


$
627,533


100.0


$
1,161,662


100.0


$
1,223,650


100.0

Operating expenses:















Salaries, wages and benefits
194,981


34.3


206,001


32.8


400,978


34.5


408,800


33.4

Fuel
30,677


5.4


61,064


9.7


79,448


6.8


117,202


9.6

Supplies and maintenance
43,343


7.6


44,371


7.1


89,064


7.7


90,056


7.4

Taxes and licenses
23,953


4.2


23,643


3.8


46,803


4.0


46,544


3.8

Insurance and claims
25,789


4.5


20,992


3.4


61,853


5.3


43,701


3.6

Depreciation
67,670


11.9


61,437


9.8


136,507


11.8


122,196


10.0

Rent and purchased transportation
120,704


21.2


146,176


23.3


247,146


21.3


279,012


22.8

Communications and utilities
3,536


0.6


3,903


0.6


7,344


0.6


7,914


0.6

Other
5,488


1.0


1,504


0.2


8,635


0.8


1,764


0.1

Total operating expenses
516,141


90.7


569,091


90.7


1,077,778


92.8


1,117,189


91.3

Operating income
52,818


9.3


58,442


9.3


83,884


7.2


106,461


8.7

Other expense (income):





















Interest expense
1,161


0.2


1,429


0.2


2,752


0.2


2,287


0.2

Interest income
(377
)

(0.1
)

(989
)

(0.1
)

(1,003
)

(0.1
)

(1,892
)

(0.2
)
Other
23


—


58


—


68


—


(58
)

—

Total other expense (income)
807


0.1


498


0.1


1,817


0.1


337


—

Income before income taxes
52,011


9.2


57,944


9.2


82,067


7.1


106,124


8.7

Income tax expense
12,879


2.3


14,626


2.3


19,877


1.7


26,720


2.2

Net income
$
39,132


6.9


$
43,318


6.9


$
62,190


5.4


$
79,404


6.5

Diluted shares outstanding
69,435




69,893




69,531




70,229



Diluted earnings per share
$
0.56




$
0.62




$
0.89




$
1.13


GAAP TO NON-GAAP RECONCILIATION

(Unaudited)

(In thousands, except per share amounts)









Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019
Operating revenues
$
568,959


$
627,533


$
1,161,662


$
1,223,650

Operating expenses
516,141


569,091


1,077,778


1,117,189

Operating income
52,818


58,442


83,884


106,461

Total other expense (income)
807


498


1,817


337

Income before income taxes
52,011


57,944


82,067


106,124

Income tax expense
12,879


14,626


19,877


26,720

Net income
$
39,132


$
43,318


$
62,190


$
79,404

Diluted shares outstanding
69,435


69,893


69,531


70,229

Diluted earnings per share
$
0.56


$
0.62


$
0.89


$
1.13









Adjusted for:







Operating expenses
516,141


569,091


1,077,778


1,117,189

Insurance and claims ⁽¹⁾
(1,198
)

(767
)

(2,396
)

(1,917
)
Depreciation ⁽²⁾
(3,679
)

—


(8,693
)

—

Adjusted operating expenses
511,264


568,324


1,066,689


1,115,272

Adjusted operating income ⁽³⁾
57,695


59,209


94,973


108,378

Total other expense (income)
807


498


1,817


337

Adjusted income before income taxes
56,888


58,711


93,156


108,041

Adjusted income tax expense
14,123


14,820


22,705


27,204

Adjusted net income ⁽³⁾
$
42,765


$
43,891


$
70,451


$
80,837

Diluted shares outstanding
69,435


69,893


69,531


70,229

Adjusted diluted earnings per share ⁽³⁾
$
0.62


$
0.63


$
1.01


$
1.15

(1) During second quarter 2020 and 2019, we accrued pre-tax insurance and claims expense for interest related to a previously disclosed excess adverse jury verdict rendered on May 17, 2018 in a lawsuit arising from a December 2014 accident. The Company is appealing this verdict. Additional information about the accident was included in our Current Report on Form 8-K dated May 17, 2018. Under our insurance policies in effect on the date of this accident, our maximum liability for this accident is $10.0 million (plus pre-judgment and post-judgment interest) with premium-based insurance coverage that exceeds the jury verdict amount. Interest is accrued at $0.4 million per month until such time as the outcome of our appeal is finalized excluding the months of June and July 2019 where the plaintiffs requested an extension of time to respond to our appeal. Management believes excluding the effect of this item provides a more useful comparison of our performance from period to period. This item is included in the Truckload Transportation Services segment in our Segment Information table.

(2) During first quarter 2020, we changed the estimated life of certain trucks currently expected to be sold in 2020 to more rapidly depreciate these trucks to their estimated residual values due to the weak used truck market. These trucks will continue to depreciate at the same higher rate per truck until the trucks are sold. Management believes excluding the effect of this unusual and infrequent item provides a more useful comparison of our performance from period to period. This item is included in the Truckload Transportation Services segment in our Segment Information table.

(3) Our definition of the non-GAAP measures adjusted operating income, adjusted net income and adjusted diluted earnings per share begins with (a) operating expenses, the most comparable GAAP measure. We subtract the insurance and claims jury verdict interest accrual and the additional depreciation expense from (a) to arrive at adjusted operating expenses, which we subtract from operating revenues to arrive at (b) adjusted operating income. We subtract (c) total other expense (income) from (b) adjusted operating income to arrive at (d) adjusted income before income taxes. We calculate adjusted income tax expense by applying the incremental income tax rate excluding discrete items to the net pre-tax adjustments and adding this additional income tax to GAAP income tax expense. We then subtract adjusted income tax expense from adjusted income before income taxes to arrive at adjusted net income. The adjusted net income is divided by the diluted shares outstanding to calculate the adjusted diluted earnings per share.


SEGMENT INFORMATION

(Unaudited)

(In thousands)







Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019
Revenues







Truckload Transportation Services
$
445,053


$
479,959


$
909,916


$
942,850

Werner Logistics
110,163


130,883


222,327


248,253

Other ⁽¹⁾
13,315


16,096


28,383


31,568

Corporate
442


629


1,061


1,218

Subtotal
568,973


627,567


1,161,687


1,223,889

Inter-segment eliminations ⁽²⁾
(14
)

(34
)

(25
)

(239
)
Total
$
568,959


$
627,533


$
1,161,662


$
1,223,650









Operating Income







Truckload Transportation Services
$
51,225


$
51,665


$
80,314


$
94,618

Werner Logistics
3,139


5,182


4,224


9,893

Other ⁽¹⁾
(534
)

2,293


2,366


3,472

Corporate
(1,012
)

(698
)

(3,020
)

(1,522
)
Total
$
52,818


$
58,442


$
83,884


$
106,461

(1) Other includes our driver training schools, transportation-related activities such as third-party equipment maintenance and equipment leasing, and other business activities.

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


OPERATING STATISTICS BY SEGMENT

(Unaudited)









Three Months Ended June 30,



Six Months Ended June 30,



2020

2019

% Chg

2020

2019

% Chg
Truckload Transportation Services segment











Average tractors in service
7,762



7,937



(2.2
)
%

7,812



7,912



(1.3
)
%
Average revenues per tractor per week⁽¹⁾
$
4,032



$
3,988



1.1

%

$
4,017



$
3,934



2.1

%
Total tractors (at quarter end)











Company
7,165



7,350



(2.5
)
%

7,165



7,350



(2.5
)
%
Independent contractor
485



585



(17.1
)
%

485



585



(17.1
)
%
Total tractors
7,650



7,935



(3.6
)
%

7,650



7,935



(3.6
)
%
Total trailers (at quarter end)
21,820



23,235



(6.1
)
%

21,820



23,235



(6.1
)
%












One-Way Truckload











Trucking revenues, net of fuel surcharge (in 000’s)
$
167,984



$
184,279



(8.8
)
%

$
345,833



$
364,413



(5.1
)
%
Average tractors in service
3,149



3,379



(6.8
)
%

3,210



3,368



(4.7
)
%
Total tractors (at quarter end)
3,115



3,355



(7.2
)
%

3,115



3,355



(7.2
)
%
Average percentage of empty miles
13.01

%

12.18

%

6.8

%

12.41

%

11.90

%

4.3

%
Average revenues per tractor per week ⁽¹⁾
$
4,103



$
4,195



(2.2
)
%

$
4,143



$
4,161



(0.4
)
%
Average % change YOY in revenues per total mile ⁽¹⁾
(1.9
)
%

(2.7
)
%



(2.7
)
%

1.8

%


Average % change YOY in total miles per tractor per week
(0.3
)
%

(3.4
)
%



2.3

%

(3.4
)
%


Average completed trip length in miles (loaded)
813



834



(2.5
)
%

838



844



(0.7
)
%












Dedicated











Trucking revenues, net of fuel surcharge (in 000’s)
$
238,850



$
227,181



5.1

%

$
470,099



$
444,738



5.7

%
Average tractors in service
4,613



4,558



1.2

%

4,602



4,544



1.3

%
Total tractors (at quarter end)
4,535



4,580



(1.0
)
%

4,535



4,580



(1.0
)
%
Average revenues per tractor per week ⁽¹⁾
$
3,983



$
3,833



3.9

%

$
3,928



$
3,764



4.4

%












Werner Logistics segment











Average tractors in service
31



37



(16.2
)
%

32



38



(15.8
)
%
Total tractors (at quarter end)
30



35



(14.3
)
%

30



35



(14.3
)
%
Total trailers (at quarter end)
1,635



1,670



(2.1
)
%

1,635



1,670



(2.1
)
%

(1) Net of fuel surcharge revenues


SUPPLEMENTAL INFORMATION

(Unaudited)

(In thousands)







Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019
Capital expenditures, net
$
88,769


$
78,989


$
107,609


$
162,353

Cash flow from operations
153,966


81,567


287,342


220,336

Return on assets (annualized)
7.5
%

8.2
%

5.9
%

7.5
%
Return on equity (annualized)
14.0
%

15.0
%

11.1
%

13.2
%


CONDENSED BALANCE SHEET

(In thousands, except share amounts)





June 30, 2020

December 31, 2019

(Unaudited)






ASSETS



Current assets:



Cash and cash equivalents
$
65,389


$
26,418

Accounts receivable, trade, less allowance of $8,720 and $7,921, respectively
299,383


322,846

Other receivables
24,060


52,221

Inventories and supplies
8,713


9,243

Prepaid taxes, licenses and permits
7,900


16,757

Other current assets
26,142


38,849

Total current assets
431,587


466,334





Property and equipment
2,368,543


2,343,536

Less – accumulated depreciation
868,379


817,260

Property and equipment, net
1,500,164


1,526,276





Other non-current assets ⁽¹⁾
147,962


151,254

Total assets
$
2,079,713


$
2,143,864





LIABILITIES AND STOCKHOLDERS’ EQUITY



Current liabilities:



Accounts payable
$
84,263


$
94,634

Current portion of long-term debt
—


75,000

Insurance and claims accruals
80,857


69,810

Accrued payroll
42,199


38,347

Income taxes payable
15,706


—

Other current liabilities
26,598


31,049

Total current liabilities
249,623


308,840





Long-term debt, net of current portion
175,000


225,000

Other long-term liabilities
39,338


21,129

Insurance and claims accruals, net of current portion ⁽¹⁾
234,819


228,218

Deferred income taxes
244,545


249,669





Stockholders’ equity:



Common stock, $.01 par value, 200,000,000 shares authorized; 80,533,536



shares issued; 69,097,033 and 69,244,525 shares outstanding, respectively
805


805

Paid-in capital
111,634


112,649

Retained earnings
1,344,361


1,294,608

Accumulated other comprehensive loss
(29,912
)

(14,728
)
Treasury stock, at cost; 11,436,503 and 11,289,011 shares, respectively
(290,500
)

(282,326
)
Total stockholders’ equity
1,136,388


1,111,008

Total liabilities and stockholders’ equity
$
2,079,713


$
2,143,864

(1) Under the terms of our insurance policies, we are the primary obligor of the damage award in the previously mentioned adverse jury verdict, and as such, we have recorded a $79.2 million receivable from our third party insurance providers in other non-current assets and a corresponding liability of the same amount in the long-term portion of insurance and claims accruals in the unaudited condensed balance sheets as of June 30, 2020 and December 31, 2019.

Company Name:	Werner Enterprises Inc.
Stock Symbol:	WERN
Market:	NASDAQ
Website:	werner.com

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