Third Quarter 2024 Highlights (all metrics compared to
third quarter 2023)
- Total revenues of $745.7 million, down 9%
- Operating income of $17.6 million, down 54%; non-GAAP adjusted
operating income of $21.6 million, down 48%
- Operating margin of 2.4%, down 220 basis points; non-GAAP
adjusted operating margin of 2.9%, down 220 basis points
- Diluted EPS of $0.11, down 72%; non-GAAP adjusted diluted EPS
of $0.15, down 64%
Werner Enterprises, Inc. (Nasdaq: WERN), a premier
transportation and logistics provider, today reported results for
the third quarter ended September 30, 2024.
“Freight conditions remained challenging while tightening late
in the quarter from hurricane related supply chain disruptions.
One-Way Truckload revenue per total mile increased year over year
for the first time in seven quarters, and production improved for
the sixth consecutive quarter. Our Dedicated fleet grew
sequentially, and revenue per truck growth continued,” said Derek
Leathers, Chairman and CEO. “Pricing and margin pressures persist
in Logistics, and resale equipment values remain low. We continue
to make structural changes, driving operating efficiencies, cost
savings and advancing our technology roadmap. We continue to adapt
to ever-changing conditions and remain focused on positioning
Werner for strength and creating long-term value for our
shareholders as conditions improve.”
Total revenues for the quarter were $745.7 million, a decrease
of $72.0 million compared to the prior-year quarter, due to a $49.4
million, or 9%, decrease in Truckload Transportation Services
(“TTS”) revenues and a decline in Logistics revenues of $23.5
million, or 10%. A portion of the TTS revenue decline was due to
$20.0 million lower fuel surcharge revenues. Net of trucking fuel
surcharge revenues, consolidated total revenues decreased $52.1
million, or 7%, during the quarter.
Operating income of $17.6 million decreased $20.3 million, or
54%, while operating margin of 2.4% decreased 220 basis points. On
a non-GAAP basis, adjusted operating income of $21.6 million
decreased $20.2 million, or 48%. Adjusted operating margin of 2.9%
declined 220 basis points from 5.1% for the same quarter last
year.
TTS operating income and adjusted operating income both
decreased $17.2 million. Logistics operating loss was $0.3 million
compared to $2.0 million operating income prior year. Logistics had
adjusted operating income of $0.8 million, a decrease of $2.4
million. Corporate and Other (including driving schools) operating
loss increased $0.7 million.
Net interest expense of $9.3 million increased $2.3 million
primarily due to the impact of replacing lower-cost debt and
interest rate swaps with higher-cost debt and interest rate swaps
upon certain maturities in the second quarter, plus higher interest
rates for variable-rate debt and an increase in average debt
outstanding. The effective income tax rate during the quarter
increased to 23.5%, compared to 23.0% in third quarter 2023.
Net income attributable to Werner of $6.6 million decreased 72%.
On a non-GAAP basis, adjusted net income attributable to Werner of
$9.2 million decreased 65%. Diluted EPS of $0.11 decreased 72%. On
a non-GAAP basis, adjusted diluted EPS of $0.15 decreased 64%.
Key Consolidated Financial Metrics
Three Months Ended September
30,
Nine Months Ended September
30,
(In thousands, except per share
amounts)
2024
2023
Y/Y Change
2024
2023
Y/Y Change
Total revenues
$
745,701
$
817,744
(9)%
$
2,275,579
$
2,461,554
(8)%
Truckload Transportation Services
revenues
$
522,803
$
572,195
(9)%
$
1,610,998
$
1,730,717
(7)%
Werner Logistics revenues
$
206,774
$
230,252
(10)%
$
618,168
$
683,470
(10)%
Operating income
$
17,595
$
37,900
(54)%
$
52,794
$
138,484
(62)%
Operating margin
2.4
%
4.6
%
(220) bps
2.3
%
5.6
%
(330) bps
Net income attributable to Werner
$
6,565
$
23,704
(72)%
$
22,342
$
88,809
(75)%
Diluted earnings per share
$
0.11
$
0.37
(72)%
$
0.36
$
1.39
(75)%
Adjusted operating income (1)
$
21,606
$
41,851
(48)%
$
61,466
$
150,499
(59)%
Adjusted operating margin (1)
2.9
%
5.1
%
(220) bps
2.7
%
6.1
%
(340) bps
Adjusted net income attributable to Werner
(1)
$
9,233
$
26,617
(65)%
$
28,572
$
98,082
(71)%
Adjusted diluted earnings per share
(1)
$
0.15
$
0.42
(64)%
$
0.45
$
1.54
(70)%
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Consolidated.
Truckload Transportation Services (TTS) Segment
- Revenues of $522.8 million decreased $49.4 million; trucking
revenues, net of fuel surcharge, decreased 6% year over year
- Operating income of $21.6 million decreased $17.2 million;
non-GAAP adjusted operating income of $24.5 million decreased $17.2
million due largely to lower gains on the sale of property and
equipment (down 69%) plus a smaller fleet size
- Operating margin of 4.1% decreased 270 basis points from 6.8%;
non-GAAP adjusted operating margin, net of fuel surcharge, of 5.3%
decreased 320 basis points from 8.5%
- Average segment trucks in service totaled 7,414, a decrease of
812 trucks year over year, or 9.9%
- Dedicated unit trucks at quarter end totaled 4,905, or 66% of
the total TTS segment fleet, compared to 5,260 trucks, or 64%, a
year ago
- Average revenues per truck per week, net of fuel surcharge,
increased 3.5% for TTS and increased 1.7% for Dedicated
During third quarter 2024, Dedicated experienced net reduction
in average trucks, down 8.5% year over year and down 1.9%
sequentially, although quarter-end fleet size was up 1.7%
sequentially. Dedicated average revenues per truck per week, net of
fuel surcharge, increased 1.7% year over year. Despite a highly
competitive environment, pipeline opportunities remain healthy and
client retention is over 90%. One-Way Truckload volume during third
quarter 2024 was steady, but ongoing excess market capacity results
in continued rate pressure. One-Way revenues per total mile, net of
fuel surcharge, increased 0.3% year over year. Despite a 12.3%
decline in One-Way average trucks, One-Way Truckload miles were
only down 6.6%, primarily due to the impact of a 6.6% increase in
total miles per truck per week, the sixth consecutive quarter of
improvement.
Key Truckload Transportation Services Segment Financial
Metrics
Three Months Ended September
30,
Nine Months Ended September
30,
(In thousands)
2024
2023
Y/Y Change
2024
2023
Y/Y Change
Trucking revenues, net of fuel
surcharge
$
449,864
$
482,169
(7)%
$
1,377,883
$
1,462,037
(6)%
Trucking fuel surcharge revenues
62,749
82,735
(24)%
205,698
247,713
(17)%
Non-trucking and other revenues
10,190
7,291
40%
27,417
20,967
31%
Total revenues
$
522,803
$
572,195
(9)%
$
1,610,998
$
1,730,717
(7)%
Operating income
$
21,607
$
38,846
(44)%
$
63,445
$
134,991
(53)%
Operating margin
4.1
%
6.8
%
(270) bps
3.9
%
7.8
%
(390) bps
Operating ratio
95.9
%
93.2
%
270 bps
96.1
%
92.2
%
390 bps
Adjusted operating income (1)
$
24,469
$
41,648
(41)%
$
70,501
$
143,288
(51)%
Adjusted operating margin (1)
4.7
%
7.3
%
(260) bps
4.4
%
8.3
%
(390) bps
Adjusted operating margin, net of fuel
surcharge (1)
5.3
%
8.5
%
(320) bps
5.0
%
9.7
%
(470) bps
Adjusted operating ratio (1)
95.3
%
92.7
%
260 bps
95.6
%
91.7
%
390 bps
Adjusted operating ratio, net of fuel
surcharge (1)
94.7
%
91.5
%
320 bps
95.0
%
90.3
%
470 bps
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Truckload Transportation Services
(TTS) Segment.
Werner Logistics Segment
- Revenues of $206.8 million decreased $23.5 million, or 10%
- Operating loss was $0.3 million compared to $2.0 million
operating income prior year; non-GAAP adjusted operating income of
$0.8 million decreased $2.4 million
- Operating margin of (0.2)% decreased 110 basis points from
0.9%; non-GAAP adjusted operating margin of 0.4% decreased 100
basis points from 1.4%
Truckload Logistics revenues (75% of Logistics revenues)
decreased $20.9 million, or 12%, driven by a decrease in shipments,
partially offset by an increase in revenue per shipment. Brokerage
volumes decreased year over year while Power Only volume increased
over 18%, marking the seventh consecutive quarter of Power Only
volume growth.
Intermodal revenues (14% of Logistics revenues) increased $2.0
million, or 7%, due to an increase in shipments, partially offset
by lower revenue per shipment year over year.
Final Mile revenues (11% of Logistics revenues) decreased $4.6
million, or 17%, due to lower volume for furniture and appliances,
and timing of isolated churn ahead of new customer facilities being
implemented.
Logistics operating income and adjusted operating income both
decreased $2.4 million year over year in third quarter 2024. An
ongoing competitive environment resulting in lower Truckload
Logistics volumes and compressed gross margins led to a lower
adjusted operating margin. We are focused on revenue quality and
lowering cost to serve.
Key Werner Logistics Segment Financial Metrics
Three Months Ended September
30,
Nine Months Ended September
30,
(In thousands)
2024
2023
Y/Y Change
2024
2023
Y/Y Change
Total revenues
$
206,774
$
230,252
(10)%
$
618,168
$
683,470
(10)%
Operating expenses:
Purchased transportation expense
176,205
194,921
(10)%
525,758
568,816
(8)%
Other operating expenses
30,914
33,319
(7)%
94,534
103,350
(9)%
Total operating expenses
207,119
228,240
(9)%
620,292
672,166
(8)%
Operating income (loss)
$
(345
)
$
2,012
(117)%
$
(2,124
)
$
11,304
(119)%
Operating margin
(0.2
)%
0.9
%
(110) bps
(0.3
%)
1.7
%
(200) bps
Adjusted operating income (1)
$
804
$
3,161
(75)%
$
1,322
$
15,022
(91)%
Adjusted operating margin (1)
0.4
%
1.4
%
(100) bps
0.2
%
2.2
%
(200) bps
(1) See attached Reconciliation of
Non-GAAP Financial Measures - Werner Logistics Segment.
Cash Flow and Capital Allocation
Cash flow from operations in third quarter 2024 was $61.0
million compared to $74.2 million in third quarter 2023, a decrease
of 18%.
Net capital expenditures in third quarter 2024 were $87.9
million compared to $120.0 million in third quarter 2023, a
decrease of 27%. We continue to prioritize business reinvestment in
safe and modern equipment, including trucks and trailers, as well
as in technology, our terminal network and our talent. The average
ages of our truck and trailer fleets were 2.0 years and 5.2 years,
respectively, as of September 30, 2024. Maintaining an
industry-leading low-age, modern fleet improves our driver
experience and results in more effective equipment maintenance,
safety and fuel efficiency.
Gains on sales of property and equipment in third quarter 2024
were $2.6 million, or $0.03 per share, compared to $9.1 million, or
$0.11 per share, in third quarter 2023. Year over year, we sold 22%
fewer trucks and 76% more trailers and realized lower average gains
per truck and trailer. Gains on sales of property and equipment are
reflected as a reduction of other operating expenses in our income
statement.
We did not repurchase shares of our common stock in third
quarter 2024. As of September 30, 2024, we had 3.9 million shares
remaining under our share repurchase authorization.
As of September 30, 2024, we had $55 million of cash and cash
equivalents and $1.4 billion of stockholders’ equity. Total debt
outstanding was $690 million at September 30, 2024, flat year over
year. After considering letters of credit issued, we had available
liquidity consisting of cash and cash equivalents and available
borrowing capacity as of September 30, 2024 of $434 million.
2024 Guidance Metrics and Assumptions
The following table summarizes our updated 2024 guidance
assumptions:
Prior (as of
7/30/24)
Actual (as of
9/30/24)
New (as of
10/29/24)
TTS truck count from beginning of
year to end of year
(6)% to (3)% (annual)
(7)% (YTD24)
(8)% to (6)% (annual)
Net capital expenditures
$225M to $275M (annual)
$206M (YTD24)
$240M to $260M (annual)
TTS Guidance
Dedicated RPTPW* growth
0% to 3% (annual)
1.1% (YTD24)
0% to 3% (annual)
One-Way Truckload RPTM*
growth
(3)% to 0% (3Q24 vs. 3Q23)
0.3% (3Q24 vs. 3Q23)
0% to 3% (4Q24 vs. 4Q23)
* Net of fuel surcharge
revenues
Assumptions
- Effective income tax rate of 23.5% in third quarter 2024
compared to 23.0% in third quarter 2023. Expect annual effective
tax rate in the range of 25.5% to 26.5%.
- Average truck age of 2.0 years and average trailer age of 5.2
years as of September 30, 2024. Expect average truck and trailer
ages of 2.1 years and 5.4 years, respectively, as of December 31,
2024.
Call Information
Werner Enterprises, Inc. will conduct a conference call to
discuss third quarter 2024 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 werner.com
in the “Investors” section under “News & Events” and then
“Events Calendar.” To participate in 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 October 29,
2024 at approximately 6:00 p.m. CT through November 29, 2024 by
dialing (877) 344-7529 (domestic) or (412) 317-0088 (international)
and using the access code 8096197. A replay of the webcast will
also be available at werner.com in the “Investors” section under
“News & Events” and then “Events Calendar.”
About Werner Enterprises
Werner Enterprises, Inc. (Nasdaq: WERN) delivers superior
truckload transportation and logistics services to customers across
the United States, Mexico and Canada. With 2023 revenues of $3.3
billion, an industry-leading modern truck and trailer fleet, over
13,000 talented associates and our innovative Werner EDGE®
technology, we are an essential solutions provider for customers
who value the integrity of their supply chain and require safe and
exceptional on-time service. Werner® provides Dedicated and One-Way
Truckload services as well as Logistics services that include
truckload brokerage, freight management, intermodal and final mile.
As an industry leader, Werner is deeply committed to promoting
sustainability and supporting diversity, equity and inclusion.
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 latest
available Annual Report on Form 10-K and any subsequently filed
Quarterly Reports on Form 10-Q.
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 (“SEC”), through the
issuance of press releases or by other methods of public
disclosure.
Consolidated Financial Information
INCOME STATEMENT
(Unaudited)
(In thousands, except per share
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
$
%
$
%
$
%
$
%
Operating revenues
$
745,701
100.0
$
817,744
100.0
$
2,275,579
100.0
$
2,461,554
100.0
Operating expenses:
Salaries, wages and benefits
258,335
34.6
268,054
32.8
783,492
34.4
802,742
32.6
Fuel
64,886
8.7
90,369
11.0
214,506
9.4
259,523
10.5
Supplies and maintenance
61,548
8.2
60,181
7.4
185,311
8.2
193,370
7.9
Taxes and licenses
23,565
3.2
25,852
3.2
74,223
3.3
76,685
3.1
Insurance and claims
27,678
3.7
31,261
3.8
95,937
4.2
104,552
4.2
Depreciation and amortization
71,584
9.6
74,586
9.1
218,526
9.6
223,797
9.1
Rent and purchased transportation
211,667
28.4
224,556
27.5
626,009
27.5
661,866
26.9
Communications and utilities
4,186
0.6
4,555
0.6
13,019
0.6
13,957
0.6
Other
4,657
0.6
430
—
11,762
0.5
(13,422
)
(0.5
)
Total operating expenses
728,106
97.6
779,844
95.4
2,222,785
97.7
2,323,070
94.4
Operating income
17,595
2.4
37,900
4.6
52,794
2.3
138,484
5.6
Other expense (income):
Interest expense
11,093
1.5
8,661
1.1
28,084
1.2
24,716
1.0
Interest income
(1,834
)
(0.3
)
(1,727
)
(0.2
)
(5,305
)
(0.2
)
(5,178
)
(0.2
)
Loss on investments in equity securities,
net
37
—
34
—
227
—
36
—
Loss (earnings) from equity method
investment
(295
)
—
110
—
(21
)
—
954
—
Other
50
—
284
—
(181
)
—
377
—
Total other expense, net
9,051
1.2
7,362
0.9
22,804
1.0
20,905
0.8
Income before income taxes
8,544
1.2
30,538
3.7
29,990
1.3
117,579
4.8
Income tax expense
2,004
0.3
7,034
0.8
8,002
0.3
28,521
1.2
Net income
6,540
0.9
23,504
2.9
21,988
1.0
89,058
3.6
Net loss (income) attributable to
noncontrolling interest
25
—
200
—
354
—
(249
)
—
Net income attributable to Werner
$
6,565
0.9
$
23,704
2.9
$
22,342
1.0
$
88,809
3.6
Diluted shares outstanding
62,022
63,737
62,862
63,703
Diluted earnings per share
$
0.11
$
0.37
$
0.36
$
1.39
CONDENSED BALANCE SHEET
(In thousands, except share
amounts)
September 30, 2024
December 31, 2023
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
54,660
$
61,723
Accounts receivable, trade, less allowance
of $7,496 and $9,337, respectively
384,023
444,944
Other receivables
25,199
25,479
Inventories and supplies
15,442
18,077
Prepaid taxes, licenses and permits
7,218
16,505
Other current assets
60,424
67,900
Total current assets
546,966
634,628
Property and equipment
3,022,296
2,951,654
Less – accumulated depreciation
1,001,471
978,698
Property and equipment, net
2,020,825
1,972,956
Goodwill
129,104
129,104
Intangible assets, net
78,924
86,477
Other non-current assets (1)
345,898
334,771
Total assets
$
3,121,717
$
3,157,936
LIABILITIES, TEMPORARY EQUITY AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
164,410
$
135,990
Current portion of long-term debt
—
2,500
Insurance and claims accruals
81,155
81,794
Accrued payroll
54,833
50,549
Accrued expenses
22,227
30,282
Other current liabilities
35,084
29,470
Total current liabilities
357,709
330,585
Long-term debt, net of current portion
690,000
646,250
Other long-term liabilities
66,867
54,275
Insurance and claims accruals, net of
current portion (1)
228,192
239,700
Deferred income taxes
292,139
320,180
Total liabilities
1,634,907
1,590,990
Temporary equity - redeemable
noncontrolling interest
38,253
38,607
Stockholders’ equity:
Common stock, $.01 par value, 200,000,000
shares authorized; 80,533,536 shares issued; 61,807,803 and
63,444,681 shares outstanding, respectively
805
805
Paid-in capital
137,219
134,894
Retained earnings
1,949,543
1,953,385
Accumulated other comprehensive loss
(21,437
)
(9,684
)
Treasury stock, at cost; 18,725,733 and
17,088,855 shares, respectively
(617,573
)
(551,061
)
Total stockholders’ equity
1,448,557
1,528,339
Total liabilities, temporary equity and
stockholders’ equity
$
3,121,717
$
3,157,936
(1) Under the terms of our insurance
policies, we are the primary obligor of the damage award in a
previously disclosed 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 September
30, 2024 and December 31, 2023.
SUPPLEMENTAL INFORMATION
(Unaudited)
(In thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Capital expenditures, net
$
87,909
$
119,970
$
206,105
$
374,161
Cash flow from operations
$
61,043
$
74,229
$
258,700
$
356,019
Return on assets (annualized)
0.8
%
3.0
%
0.9
%
3.8
%
Return on equity (annualized)
1.7
%
6.1
%
1.9
%
7.8
%
Segment Financial and Operating Statistics
Information
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Revenues
Truckload Transportation Services
$
522,803
$
572,195
$
1,610,998
$
1,730,717
Werner Logistics
206,774
230,252
618,168
683,470
Other (1)
18,698
19,212
55,118
59,089
Corporate
674
487
1,877
1,463
Subtotal
748,949
822,146
2,286,161
2,474,739
Inter-segment eliminations (2)
(3,248
)
(4,402
)
(10,582
)
(13,185
)
Total
$
745,701
$
817,744
$
2,275,579
$
2,461,554
Operating Income
(Loss)
Truckload Transportation Services
$
21,607
$
38,846
$
63,445
$
134,991
Werner Logistics
(345
)
2,012
(2,124
)
11,304
Other (1)
(980
)
(150
)
(2,155
)
313
Corporate
(2,687
)
(2,808
)
(6,372
)
(8,124
)
Total
$
17,595
$
37,900
$
52,794
$
138,484
(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 September
30,
Nine Months Ended September
30,
2024
2023
% Chg
2024
2023
% Chg
Truckload
Transportation Services segment
Average trucks in service
7,414
8,226
(9.9
)%
7,660
8,379
(8.6
)%
Average revenues per truck per week
(1)
$
4,667
$
4,509
3.5
%
$
4,612
$
4,474
3.1
%
Total trucks (at quarter end)
Company
7,155
7,905
(9.5
)%
7,155
7,905
(9.5
)%
Independent contractor
290
265
9.4
%
290
265
9.4
%
Total trucks
7,445
8,170
(8.9
)%
7,445
8,170
(8.9
)%
Total trailers (at quarter end)
25,860
27,150
(4.8
)%
25,860
27,150
(4.8
)%
One-Way
Truckload
Trucking revenues, net of fuel surcharge
(in 000’s)
$
164,577
$
175,690
(6.3
)%
$
502,697
$
535,644
(6.2
)%
Average trucks in service
2,605
2,972
(12.3
)%
2,707
3,079
(12.1
)%
Total trucks (at quarter end)
2,540
2,910
(12.7
)%
2,540
2,910
(12.7
)%
Average percentage of empty miles
15.33
%
14.43
%
6.2
%
14.98
%
14.18
%
5.6
%
Average revenues per truck per week
(1)
$
4,860
$
4,548
6.9
%
$
4,763
$
4,460
6.8
%
Average % change YOY in revenues per total
mile (1)
0.3
%
(4.8
)%
(1.2
)%
(4.4
)%
Average % change YOY in total miles per
truck per week
6.6
%
3.3
%
5.9
%
0.1
%
Average completed trip length in miles
(loaded)
578
564
2.5
%
586
595
(1.5
)%
Dedicated
Trucking revenues, net of fuel surcharge
(in 000’s)
$
285,287
$
306,479
(6.9
)%
$
875,186
$
926,393
(5.5
)%
Average trucks in service
4,809
5,254
(8.5
)%
4,953
5,300
(6.5
)%
Total trucks (at quarter end)
4,905
5,260
(6.7
)%
4,905
5,260
(6.7
)%
Average revenues per truck per week
(1)
$
4,563
$
4,488
1.7
%
$
4,531
$
4,482
1.1
%
Werner Logistics
segment
Average trucks in service
20
37
(45.9
)%
22
36
(38.9
)%
Total trucks (at quarter end)
20
41
(51.2
)%
20
41
(51.2
)%
Total trailers (at quarter end)
3,475
2,865
21.3
%
3,475
2,865
21.3
%
(1) Net of fuel surcharge revenues
Non-GAAP Financial Measures and Reconciliations
To supplement our financial results presented in accordance with
generally accepted accounting principles in the United States of
America (“GAAP”), we provide certain non-GAAP financial measures as
defined by the SEC Regulation G, including non-GAAP adjusted
operating income; non-GAAP adjusted operating margin; non-GAAP
adjusted operating margin, net of fuel surcharge; non-GAAP adjusted
net income attributable to Werner; non-GAAP adjusted diluted
earnings per share; non-GAAP adjusted operating revenues, net of
fuel surcharge; non-GAAP adjusted operating revenues, less
purchased transportation expense; non-GAAP adjusted operating
expenses; non-GAAP adjusted operating expenses, net of fuel
surcharge; non-GAAP adjusted operating ratio; and non-GAAP adjusted
operating ratio, net of fuel surcharge. We believe these non-GAAP
financial measures provide a more useful comparison of our
performance from period to period because they exclude the effect
of items that, in our opinion, do not reflect our core operating
performance. Our non-GAAP financial measures are not meant to be
considered in isolation or as substitutes for their comparable GAAP
measures and should be read only in conjunction with our
consolidated financial statements prepared in accordance with GAAP.
There are limitations to using non-GAAP financial measures.
Although we believe that they improve comparability in analyzing
our period to period performance, they could limit comparability to
other companies in our industry if those companies define these
measures differently. Because of these limitations, our non-GAAP
financial measures should not be considered measures of income
generated by our business. Management compensates for these
limitations by primarily relying on GAAP results and using non-GAAP
financial measures on a supplemental basis.
The following tables present reconciliations of each non-GAAP
financial measure to its most directly comparable GAAP financial
measure as required by SEC Regulation G. In addition, information
regarding each of the excluded items as well as our reasons for
excluding them from our non-GAAP results is provided below.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES – CONSOLIDATED
(unaudited)
(In thousands, except per share
amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Non-GAAP Adjusted Operating Income
and Non-GAAP Adjusted Operating
Margin (1)
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
Operating income and operating margin –
(GAAP)
$
17,595
2.4
%
$
37,900
4.6
%
$
52,794
2.3
%
$
138,484
5.6
%
Non-GAAP adjustments:
Insurance and claims (2)
1,493
0.2
%
1,433
0.2
%
2,949
0.1
%
4,207
0.2
%
Amortization of intangible assets (3)
2,518
0.3
%
2,518
0.3
%
7,553
0.4
%
7,808
0.3
%
Gain on sale of real estate (4)
—
—
%
—
—
%
(1,830
)
(0.1
)%
—
—
%
Non-GAAP adjusted operating income
and non-GAAP adjusted operating margin
$
21,606
2.9
%
$
41,851
5.1
%
$
61,466
2.7
%
$
150,499
6.1
%
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Non-GAAP Adjusted Net Income
Attributable to Werner and Non-GAAP Adjusted Diluted EPS (1)
$
Diluted EPS
$
Diluted EPS
$
Diluted EPS
$
Diluted EPS
Net income attributable to Werner and
diluted EPS – (GAAP)
$
6,565
$
0.11
$
23,704
$
0.37
$
22,342
$
0.36
$
88,809
$
1.39
Non-GAAP adjustments:
Insurance and claims (2)
1,493
0.02
1,433
0.02
2,949
0.04
4,207
0.07
Amortization of intangible assets, net of
amount attributable to noncontrolling interest (3)
2,346
0.04
2,346
0.04
7,037
0.11
7,292
0.11
Gain on sale of real estate (4)
—
—
—
—
(1,830
)
(0.03
)
—
—
Loss on investments in equity securities,
net (5)
37
—
34
—
227
—
36
—
Loss (earnings) from equity method
investment (6)
(295
)
—
110
—
(21
)
—
954
0.02
Income tax effect of above adjustments
(7)
(913
)
(0.02
)
(1,010
)
(0.01
)
(2,132
)
(0.03
)
(3,216
)
(0.05
)
Non-GAAP adjusted net income attributable
to Werner and non-GAAP adjusted diluted EPS
$
9,233
$
0.15
$
26,617
$
0.42
$
28,572
$
0.45
$
98,082
$
1.54
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Non-GAAP Adjusted
Operating Revenues, Net of Fuel Surcharge (1)
$
$
$
$
Operating revenues – (GAAP)
$
745,701
$
817,744
$
2,275,579
$
2,461,554
Non-GAAP adjustment:
Trucking fuel surcharge (8)
(62,749
)
(82,735
)
(205,698
)
(247,713
)
Non-GAAP Operating revenues, net of fuel
surcharge
$
682,952
$
735,009
$
2,069,881
$
2,213,841
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES – TRUCKLOAD TRANSPORTATION SERVICES (TTS)
SEGMENT
(unaudited)
(In thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Non-GAAP Adjusted Operating Income
and Non-GAAP Adjusted Operating
Margin (1)
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
Operating income and operating margin –
(GAAP)
$
21,607
4.1
%
$
38,846
6.8
%
$
63,445
3.9
%
$
134,991
7.8
%
Non-GAAP adjustments:
Insurance and claims (2)
1,493
0.3
%
1,433
0.3
%
2,949
0.2
%
4,207
0.3
%
Amortization of intangible assets (3)
1,369
0.3
%
1,369
0.2
%
4,107
0.3
%
4,090
0.2
%
Non-GAAP adjusted operating income and
non-GAAP adjusted operating margin
$
24,469
4.7
%
$
41,648
7.3
%
$
70,501
4.4
%
$
143,288
8.3
%
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Non-GAAP Adjusted Operating Expenses
and Non-GAAP Adjusted Operating
Ratio (1)
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
Operating expenses and operating ratio –
(GAAP)
$
501,196
95.9
%
$
533,349
93.2
%
$
1,547,553
96.1
%
$
1,595,726
92.2
%
Non-GAAP adjustments:
Insurance and claims (2)
(1,493
)
(0.3
)%
(1,433
)
(0.3
)%
(2,949
)
(0.2
)%
(4,207
)
(0.3
)%
Amortization of intangible assets (3)
(1,369
)
(0.3
)%
(1,369
)
(0.2
)%
(4,107
)
(0.3
)%
(4,090
)
(0.2
)%
Non-GAAP adjusted operating expenses and
non-GAAP adjusted operating ratio
$
498,334
95.3
%
$
530,547
92.7
%
$
1,540,497
95.6
%
$
1,587,429
91.7
%
Three Months Ended September
30,
Nine Months Ended September
30,
Non-GAAP Adjusted Operating Revenues,
Net of Fuel Surcharge; Non-GAAP Adjusted Operating Expenses,
Net of Fuel Surcharge; Non-GAAP Adjusted Operating Margin,
Net of Fuel Surcharge; and Non-GAAP
Adjusted Operating Ratio, Net of Fuel Surcharge (1)
2024
2023
2024
2023
$
$
$
$
Operating revenues – (GAAP)
$
522,803
$
572,195
$
1,610,998
$
1,730,717
Less: Trucking fuel surcharge (8)
(62,749
)
(82,735
)
(205,698
)
(247,713
)
Operating revenues, net of fuel surcharge
– (Non-GAAP)
460,054
489,460
1,405,300
1,483,004
Operating expenses – (GAAP)
501,196
533,349
1,547,553
1,595,726
Non-GAAP adjustments:
Trucking fuel surcharge (8)
(62,749
)
(82,735
)
(205,698
)
(247,713
)
Insurance and claims (2)
(1,493
)
(1,433
)
(2,949
)
(4,207
)
Amortization of intangible assets (3)
(1,369
)
(1,369
)
(4,107
)
(4,090
)
Non-GAAP adjusted operating expenses, net
of fuel surcharge
435,585
447,812
1,334,799
1,339,716
Non-GAAP adjusted operating income
$
24,469
$
41,648
$
70,501
$
143,288
Non-GAAP adjusted operating margin, net of
fuel surcharge
5.3
%
8.5
%
5.0
%
9.7
%
Non-GAAP adjusted operating ratio, net of
fuel surcharge
94.7
%
91.5
%
95.0
%
90.3
%
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES – WERNER LOGISTICS SEGMENT
(unaudited)
(In thousands)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Non-GAAP Adjusted Operating
Revenues, Less Purchased
Transportation Expense (1)
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
Operating revenues – (GAAP)
$
206,774
100.0
%
$
230,252
100.0
%
$
618,168
100.0
%
$
683,470
100.0
%
Non-GAAP adjustment:
Purchased transportation expense (9)
(176,205
)
(85.2
)%
(194,921
)
(84.7
)%
(525,758
)
(85.1
)%
(568,816
)
(83.2
)%
Non-GAAP adjusted operating revenues, less
purchased transportation expense
$
30,569
14.8
%
$
35,331
15.3
%
$
92,410
14.9
%
$
114,654
16.8
%
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Non-GAAP Adjusted Operating Income
(Loss) and Non-GAAP Adjusted Operating
Margin (1)
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
$
% of Op. Rev.
Operating income (loss) and operating
margin – (GAAP)
$
(345
)
(0.2
)%
$
2,012
0.9
%
$
(2,124
)
(0.3
)%
$
11,304
1.7
%
Non-GAAP adjustments:
Amortization of intangible assets (3)
1,149
0.6
%
1,149
0.5
%
3,446
0.5
%
3,718
0.5
%
Non-GAAP adjusted operating income
and non-GAAP adjusted operating margin
$
804
0.4
%
$
3,161
1.4
%
$
1,322
0.2
%
$
15,022
2.2
%
(1) Non-GAAP adjusted operating income;
non-GAAP adjusted operating margin; non-GAAP adjusted operating
margin, net of fuel surcharge; non-GAAP adjusted net income
attributable to Werner; non-GAAP adjusted diluted earnings per
share; non-GAAP adjusted operating revenues, net of fuel surcharge;
non-GAAP adjusted operating revenues, less purchased transportation
expense; non-GAAP adjusted operating expenses; non-GAAP adjusted
operating expenses, net of fuel surcharge; non-GAAP adjusted
operating ratio; and non-GAAP adjusted operating ratio, net of fuel
surcharge should be considered in addition to, rather than as
substitutes for, GAAP operating income; GAAP operating margin; GAAP
net income attributable to Werner; GAAP diluted earnings per share;
GAAP operating revenues; GAAP operating expenses; and GAAP
operating ratio, which are their most directly comparable GAAP
financial measures.
(2) 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. We
continue to accrue pre-tax insurance and claims expense for
interest at $0.5 million per month until such time as the outcome
of our appeal is finalized, excluding months where the plaintiffs
requested an extension of time to respond to our petition for
review. 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 our Truckload Transportation
Services segment in our Segment Information table.
(3) Amortization expense related to
intangible assets acquired in our business acquisitions is excluded
because management does not believe it is indicative of our core
operating performance. This item is included in our Truckload
Transportation Services and Werner Logistics segments.
(4) During second quarter 2024, we sold
two parcels of real estate which resulted in a $1.8 million net
pre-tax gain on sale. Management believes excluding the effect of
these unusual and infrequent items provides a more useful
comparison of our performance from period to period. These items
are included in our Corporate segment.
(5) Represents non-operating
mark-to-market adjustments for gains/losses on our minority equity
investments, which we account for under Accounting Standards
Codification (“ASC”) 321, Investments – Equity Securities.
Management believes excluding the effect of gains/losses on our
investments in equity securities provides a more useful comparison
of our performance from period to period. We record changes in the
value of our investments in equity securities in other expense
(income) in our Income Statement.
(6) Represents earnings/losses from our
equity method investment, which we account for under ASC 323,
Investments - Equity Method and Joint Ventures. Management believes
excluding the effect of earnings/losses from our equity method
investment provides a more useful comparison of our performance
from period to period. We record earnings/losses from our equity
method investment in other expense (income) in our Income
Statement.
(7) The income tax effect of the non-GAAP
adjustments is calculated using the incremental income tax rate
excluding discrete items, and the income tax effect for 2023 has
been updated to reflect the annual incremental income tax rate.
(8) Fluctuating fuel prices and fuel
surcharge revenues impact the total company operating ratio and the
TTS segment operating ratio when fuel surcharges are reported on a
gross basis as revenues versus netting the fuel surcharges against
fuel expenses. Management believes netting fuel surcharge revenues,
which are generally a more volatile source of revenue, against fuel
expenses provides a more consistent basis for comparing the results
of operations from period to period.
(9) Management believes excluding
purchased transportation expense from Werner Logistics operating
revenues provides a useful measurement of our ability to source and
sell services provided by third parties.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241029143341/en/
Christopher D. Wikoff Executive Vice President, Treasurer and
Chief Financial Officer (402) 894-3700
Werner Enterprises (NASDAQ:WERN)
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