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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Werner Enterprises Inc | NASDAQ:WERN | NASDAQ | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.09 | -0.31% | 29.25 | 28.90 | 29.67 | 29.66 | 29.02 | 29.06 | 724,643 | 20:18:36 |
From Mar 2024 to Mar 2025
Second Quarter 2024 Highlights (all metrics compared to second quarter 2023)
Werner Enterprises, Inc. (Nasdaq: WERN), a premier transportation and logistics provider, today reported results for the second quarter ended June 30, 2024.
“While industry-wide headwinds remain, second quarter earnings improved sequentially, and we made progress on controlling the controllables. One-Way Truckload production increased for the fifth consecutive quarter. Mexico and cross-border related business is growing double-digits. Dedicated revenue per truck was up, and Logistics segment returned to positive operating income,” said Derek Leathers, Chairman and CEO. “We continue to make structural changes to reduce operating cost and advance our technology strategy, and we opportunistically repurchased 1.6 million shares during the quarter. We are positioning Werner for strength when the market turns and remain focused on creating long-term value for our shareholders.”
Total revenues for the quarter were $760.8 million, a decrease of $50.3 million compared to the prior year quarter, due to a $33.1 million, or 6%, decrease in Truckload Transportation Services (“TTS”) revenues and a decline in Logistics revenues of $15.6 million, or 7%. A portion of the TTS revenue decline was due to $6.7 million lower fuel surcharge revenues. Net of trucking fuel surcharge revenues, consolidated total revenues decreased $43.6 million, or 6%, during the quarter.
Operating income of $19.6 million decreased $27.6 million, or 58%, while operating margin of 2.6% decreased 320 basis points. On a non-GAAP basis, adjusted operating income of $21.3 million decreased $29.8 million, or 58%. Adjusted operating margin of 2.8% declined 350 basis points from 6.3% for the same quarter last year.
TTS operating income decreased $24.2 million, and TTS adjusted operating income decreased $24.6 million. Logistics had operating income of $0.5 million, a decrease of $3.8 million, and Logistics had adjusted operating income of $1.7 million, a decrease of $3.8 million. Corporate and Other (including driving schools) operating loss improved $0.4 million, which included a net $1.8 million gain on the sale of two parcels of real estate in second quarter 2024.
Net interest expense of $7.3 million increased $1.0 million primarily due to higher interest rates for variable-rate debt and the impact of replacing lower-cost debt and interest rate swaps with higher-cost debt and interest rate swaps upon maturity. These increases were partially offset by a decrease in average debt outstanding. The effective income tax rate during the quarter decreased to 24.2%, compared to 25.2% in second quarter 2023 due to differences in discrete income tax items.
Net income attributable to Werner of $9.5 million decreased 68%. On a non-GAAP basis, adjusted net income attributable to Werner of $10.7 million decreased 68%. Diluted EPS of $0.15 decreased 68%. On a non-GAAP basis, adjusted diluted EPS of $0.17 decreased 67%.
Key Consolidated Financial Metrics
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands, except per share amounts)
2024
2023
Y/Y
Change
2024
2023
Y/Y
Change
Total revenues
$
760,798
$
811,096
(6
)%
$
1,529,878
$
1,643,810
(7
)%
Truckload Transportation Services revenues
$
537,069
$
570,192
(6
)%
$
1,088,195
$
1,158,522
(6
)%
Werner Logistics revenues
$
208,912
$
224,549
(7
)%
$
411,394
$
453,218
(9
)%
Operating income
$
19,611
$
47,198
(58
)%
$
35,199
$
100,584
(65
)%
Operating margin
2.6
%
5.8
%
(320) bps
2.3
%
6.1
%
(380) bps
Net income attributable to Werner
$
9,465
$
29,881
(68
)%
$
15,777
$
65,105
(76
)%
Diluted earnings per share
$
0.15
$
0.47
(68
)%
$
0.25
$
1.02
(76
)%
Adjusted operating income (1)
$
21,269
$
51,103
(58
)%
$
39,860
$
108,648
(63
)%
Adjusted operating margin (1)
2.8
%
6.3
%
(350) bps
2.6
%
6.6
%
(400) bps
Adjusted net income attributable to Werner (1)
$
10,716
$
33,221
(68
)%
$
19,339
$
71,465
(73
)%
Adjusted diluted earnings per share (1)
$
0.17
$
0.52
(67
)%
$
0.31
$
1.12
(73
)%
(1) See attached Reconciliation of Non-GAAP Financial Measures - Consolidated.
Truckload Transportation Services (TTS) Segment
During second quarter 2024, Dedicated experienced net reduction in average trucks, down 7.1% year over year and down 4.8% sequentially. Dedicated average revenues per truck per week, net of fuel surcharge, increased 0.4% year over year. Despite a highly competitive environment and isolated fleet losses, pipeline opportunities remain healthy, and client retention is over 90%. One-Way Truckload volume during second quarter 2024 was steady and seasonally consistent, but ongoing excess capacity in the freight market continues to reflect ongoing rate pressure. One-Way revenues per total mile was down 2.7%, although a lesser degree of year-over-year decline compared to prior quarters. One-Way fleet size was smaller year over year (down 11.2%), offset with the fifth consecutive quarter of higher total miles per truck per week (up 10.8%). As a result, One-Way Truckload miles were down only 1.6%.
Key Truckload Transportation Services Segment Financial Metrics
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)
2024
2023
Y/Y
Change
2024
2023
Y/Y
Change
Trucking revenues, net of fuel surcharge
$
458,140
$
486,626
(6
)%
$
928,019
$
979,868
(5
)%
Trucking fuel surcharge revenues
69,966
76,677
(9
)%
142,949
164,978
(13
)%
Non-trucking and other revenues
8,963
6,889
30
%
17,227
13,676
26
%
Total revenues
$
537,069
$
570,192
(6
)%
$
1,088,195
$
1,158,522
(6
)%
Operating income
$
20,998
$
45,159
(54
)%
$
41,838
$
96,145
(56
)%
Operating margin
3.9
%
7.9
%
(400) bps
3.8
%
8.3
%
(450) bps
Operating ratio
96.1
%
92.1
%
400 bps
96.2
%
91.7
%
450 bps
Adjusted operating income (1)
$
23,338
$
47,915
(51
)%
$
46,032
$
101,640
(55
)%
Adjusted operating margin (1)
4.3
%
8.4
%
(410) bps
4.2
%
8.8
%
(460) bps
Adjusted operating margin, net of fuel surcharge (1)
5.0
%
9.7
%
(470) bps
4.9
%
10.2
%
(530) bps
Adjusted operating ratio (1)
95.7
%
91.6
%
410 bps
95.8
%
91.2
%
460 bps
Adjusted operating ratio, net of fuel surcharge (1)
95.0
%
90.3
%
470 bps
95.1
%
89.8
%
530 bps
(1) See attached Reconciliation of Non-GAAP Financial Measures - Truckload Transportation Services (TTS) Segment.
Werner Logistics Segment
Truckload Logistics revenues (75% of Logistics revenues) decreased $17.3 million, or 10%, driven by a decline in revenue per shipment and a decrease in shipments. Brokerage volumes decreased year over year while Power Only volume was up over 30%, marking the sixth consecutive sequential quarter of Power Only volume growth.
Intermodal revenues (13% of Logistics revenues) increased $4.1 million, or 17%, due to an increase in shipments, partially offset by lower revenue per shipment year over year.
Final Mile revenues (12% of Logistics revenues) decreased $2.5 million, or 9%.
Logistics operating income and adjusted operating income decreased $3.8 million year over year in second quarter 2024 but improved $2.9 million sequentially. We are focused on revenue quality and managing yield, evidenced by achieving a consistent 15% margin for four consecutive quarters of revenues less purchased transportation expense, and achieving operating expense reductions, including an 11% year-over-year decrease in salaries, wages and benefits.
Key Werner Logistics Segment Financial Metrics
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)
2024
2023
Y/Y
Change
2024
2023
Y/Y
Change
Total revenues
$
208,912
$
224,549
(7
)%
$
411,394
$
453,218
(9
)%
Operating expenses:
Purchased transportation expense
177,066
185,397
(4
)%
349,553
373,895
(7
)%
Other operating expenses
31,296
34,797
(10
)%
63,620
70,031
(9
)%
Total operating expenses
208,362
220,194
(5
)%
413,173
443,926
(7
)%
Operating income (loss)
$
550
$
4,355
(87
)%
$
(1,779
)
$
9,292
(119
)%
Operating margin
0.3
%
1.9
%
(160) bps
(0.4
%)
2.1
%
(250) bps
Adjusted operating income (1)
$
1,698
$
5,504
(69
)%
$
518
$
11,861
(96
)%
Adjusted operating margin (1)
0.8
%
2.4
%
(160) bps
0.1
%
2.6
%
(250) bps
(1) See attached Reconciliation of Non-GAAP Financial Measures - Werner Logistics Segment.
Cash Flow and Capital Allocation
Cash flow from operations in second quarter 2024 was $109.1 million compared to $114.9 million in second quarter 2023, a decrease of 5%.
Net capital expenditures in second quarter 2024 were $99.2 million compared to $151.4 million in second quarter 2023, a decrease of 35%. 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 2.1 years and 4.9 years, respectively, as of June 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 second quarter 2024 were $2.7 million, or $0.03 per share, compared to $11.9 million, or $0.14 per share, in second quarter 2023. Year over year, we sold 24% fewer trucks and 132% more trailers and realized lower average gains per truck and trailer. In second quarter 2024, we also sold two parcels of real estate for a net $1.8 million gain, which is adjusted out of income for purposes of the non-GAAP measures. Gains on sales of property and equipment are reflected as a reduction of Other Operating Expenses in our income statement.
During the quarter, we repurchased 1.6 million shares of common stock for a total cost of $60.0 million, excluding excise taxes, or an average price of $37.04 per share. As of June 30, 2024, we had 3.9 million shares remaining under our new share repurchase authorization approved by the Board of Directors in May 2024.
As of June 30, 2024, we had $70 million of cash and cash equivalents and nearly $1.5 billion of stockholders’ equity. Total debt outstanding was $670 million at June 30, 2024. After considering letters of credit issued, we had available liquidity consisting of cash and cash equivalents and available borrowing capacity as of June 30, 2024 of $470 million.
2024 Guidance Metrics and Assumptions
The following table summarizes our updated 2024 guidance assumptions:
Prior
(as of 4/30/24)
Actual
(as of 6/30/24)
New
(as of 7/30/24)
TTS truck count from BoY to EoY
(6)% to (3)%
(annual)
(7)%
(YTD24)
(6)% to (3)%
(annual)
Net capital expenditures
$250M to $300M
(annual)
$118M
(YTD24)
$225M to $275M
(annual)
TTS Guidance
Dedicated RPTPW* growth
0% to 3%
(annual)
0.8%
(1H24 vs. 1H23)
0% to 3%
(annual)
One-Way Truckload RPTM* growth
(6)% to (3)%
(1H24 vs. 1H23)
(4.0)%
(1H24 vs. 1H23)
(3)% to 0%
(3Q24 vs. 3Q23)
* Net of fuel surcharge revenues
Assumptions
Call Information
Werner Enterprises, Inc. will conduct a conference call to discuss second 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 July 30, 2024 at approximately 6:00 p.m. CT through August 31, 2024 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and using the access code 5388433. 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
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
$
%
$
%
$
%
$
%
Operating revenues
$
760,798
100.0
$
811,096
100.0
$
1,529,878
100.0
$
1,643,810
100.0
Operating expenses:
Salaries, wages and benefits
259,754
34.1
266,373
32.9
525,157
34.3
534,688
32.5
Fuel
71,998
9.5
77,740
9.6
149,620
9.8
169,154
10.3
Supplies and maintenance
61,988
8.1
64,964
8.0
123,763
8.1
133,189
8.1
Taxes and licenses
25,494
3.3
25,408
3.1
50,658
3.3
50,833
3.1
Insurance and claims
31,897
4.2
36,806
4.5
68,259
4.4
73,291
4.4
Depreciation and amortization
72,672
9.6
74,898
9.2
146,942
9.6
149,211
9.1
Rent and purchased transportation
210,417
27.7
217,086
26.8
414,342
27.1
437,310
26.6
Communications and utilities
4,127
0.5
4,669
0.6
8,833
0.6
9,402
0.6
Other
2,840
0.4
(4,046
)
(0.5
)
7,105
0.5
(13,852
)
(0.8
)
Total operating expenses
741,187
97.4
763,898
94.2
1,494,679
97.7
1,543,226
93.9
Operating income
19,611
2.6
47,198
5.8
35,199
2.3
100,584
6.1
Other expense (income):
Interest expense
9,043
1.2
8,139
1.0
16,991
1.1
16,055
1.0
Interest income
(1,786
)
(0.2
)
(1,899
)
(0.2
)
(3,471
)
(0.2
)
(3,451
)
(0.2
)
Loss (gain) on investments in equity securities, net
52
—
(79
)
—
190
—
2
—
Loss from equity method investment
141
—
844
0.1
274
—
844
—
Other
30
—
86
—
(231
)
—
93
—
Total other expense, net
7,480
1.0
7,091
0.9
13,753
0.9
13,543
0.8
Income before income taxes
12,131
1.6
40,107
4.9
21,446
1.4
87,041
5.3
Income tax expense
2,931
0.4
10,087
1.2
5,998
0.4
21,487
1.3
Net income
9,200
1.2
30,020
3.7
15,448
1.0
65,554
4.0
Net loss (income) attributable to noncontrolling interest
265
—
(139
)
—
329
—
(449
)
—
Net income attributable to Werner
$
9,465
1.2
$
29,881
3.7
$
15,777
1.0
$
65,105
4.0
Diluted shares outstanding
62,860
63,687
63,291
63,689
Diluted earnings per share
$
0.15
$
0.47
$
0.25
$
1.02
CONDENSED BALANCE SHEET
(In thousands, except share amounts)
June 30, 2024
December 31, 2023
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
70,448
$
61,723
Accounts receivable, trade, less allowance of $8,022 and $9,337, respectively
409,986
444,944
Other receivables
28,092
25,479
Inventories and supplies
16,286
18,077
Prepaid taxes, licenses and permits
7,895
16,505
Other current assets
44,959
67,900
Total current assets
577,666
634,628
Property and equipment
2,952,295
2,951,654
Less – accumulated depreciation
992,128
978,698
Property and equipment, net
1,960,167
1,972,956
Goodwill
129,104
129,104
Intangible assets, net
81,442
86,477
Other non-current assets (1)
345,191
334,771
Total assets
$
3,093,570
$
3,157,936
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
142,161
$
135,990
Current portion of long-term debt
10,000
2,500
Insurance and claims accruals
85,224
81,794
Accrued payroll
52,453
50,549
Accrued expenses
22,506
30,282
Other current liabilities
30,115
29,470
Total current liabilities
342,459
330,585
Long-term debt, net of current portion
660,000
646,250
Other long-term liabilities
62,355
54,275
Insurance and claims accruals, net of current portion (1)
227,115
239,700
Deferred income taxes
308,136
320,180
Total liabilities
1,600,065
1,590,990
Temporary equity - redeemable noncontrolling interest
38,278
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
134,769
134,894
Retained earnings
1,951,631
1,953,385
Accumulated other comprehensive loss
(14,405
)
(9,684
)
Treasury stock, at cost; 18,725,733 and 17,088,855 shares, respectively
(617,573
)
(551,061
)
Total stockholders’ equity
1,455,227
1,528,339
Total liabilities, temporary equity and stockholders’ equity
$
3,093,570
$
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 June 30, 2024 and December 31, 2023.
SUPPLEMENTAL INFORMATION
(Unaudited)
(In thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Capital expenditures, net
$
99,161
$
151,448
$
118,196
$
254,191
Cash flow from operations
$
109,072
$
114,943
$
197,657
$
281,790
Return on assets (annualized)
1.2
%
3.9
%
1.0
%
4.2
%
Return on equity (annualized)
2.4
%
7.9
%
2.0
%
8.7
%
Segment Financial and Operating Statistics Information
SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Revenues
Truckload Transportation Services
$
537,069
$
570,192
$
1,088,195
$
1,158,522
Werner Logistics
208,912
224,549
411,394
453,218
Other (1)
17,467
19,376
36,420
39,877
Corporate
613
501
1,203
976
Subtotal
764,061
814,618
1,537,212
1,652,593
Inter-segment eliminations (2)
(3,263
)
(3,522
)
(7,334
)
(8,783
)
Total
$
760,798
$
811,096
$
1,529,878
$
1,643,810
Operating Income (Loss)
Truckload Transportation Services
$
20,998
$
45,159
$
41,838
$
96,145
Werner Logistics
550
4,355
(1,779
)
9,292
Other (1)
(966
)
(86
)
(1,175
)
463
Corporate
(971
)
(2,230
)
(3,685
)
(5,316
)
Total
$
19,611
$
47,198
$
35,199
$
100,584
(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,
2024
2023
% Chg
2024
2023
% Chg
Truckload Transportation Services segment
Average trucks in service
7,630
8,351
(8.6
)%
7,783
8,456
(8.0
)%
Average revenues per truck per week (1)
$
4,619
$
4,483
3.0
%
$
4,586
$
4,457
2.9
%
Total trucks (at quarter end)
Company
7,180
8,000
(10.3
)%
7,180
8,000
(10.3
)%
Independent contractor
280
285
(1.8
)%
280
285
(1.8
)%
Total trucks
7,460
8,285
(10.0
)%
7,460
8,285
(10.0
)%
Total trailers (at quarter end)
26,965
27,110
(0.5
)%
26,965
27,110
(0.5
)%
One-Way Truckload
Trucking revenues, net of fuel surcharge (in 000’s)
$
169,283
$
176,824
(4.3
)%
$
338,120
$
359,954
(6.1
)%
Average trucks in service
2,730
3,075
(11.2
)%
2,758
3,133
(12.0
)%
Total trucks (at quarter end)
2,635
3,025
(12.9
)%
2,635
3,025
(12.9
)%
Average percentage of empty miles
14.70
%
14.01
%
4.9
%
14.80
%
14.05
%
5.3
%
Average revenues per truck per week (1)
$
4,770
$
4,423
7.8
%
$
4,716
$
4,419
6.7
%
Average % change YOY in revenues per total mile (1)
(2.7
)%
(5.2
)%
(4.0
)%
(4.2
)%
Average % change YOY in total miles per truck per week
10.8
%
0.1
%
11.1
%
(1.3
)%
Average completed trip length in miles (loaded)
589
604
(2.5
)%
590
612
(3.6
)%
Dedicated
Trucking revenues, net of fuel surcharge (in 000’s)
$
288,857
$
309,802
(6.8
)%
$
589,899
$
619,914
(4.8
)%
Average trucks in service
4,901
5,276
(7.1
)%
5,025
5,323
(5.6
)%
Total trucks (at quarter end)
4,825
5,260
(8.3
)%
4,825
5,260
(8.3
)%
Average revenues per truck per week (1)
$
4,534
$
4,517
0.4
%
$
4,516
$
4,479
0.8
%
Werner Logistics segment
Average trucks in service
22
33
(33.3
)%
24
36
(33.3
)%
Total trucks (at quarter end)
21
32
(34.4
)%
21
32
(34.4
)%
Total trailers (at quarter end)
3,350
2,885
16.1
%
3,350
2,885
16.1
%
(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 June 30,
Six Months Ended June 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)
$
19,611
2.6
%
$
47,198
5.8
%
$
35,199
2.3
%
$
100,584
6.1
%
Non-GAAP adjustments:
Insurance and claims (2)
971
0.1
%
1,387
0.2
%
1,456
0.1
%
2,774
0.2
%
Amortization of intangible assets (3)
2,517
0.3
%
2,518
0.3
%
5,035
0.3
%
5,290
0.3
%
Gain on sale of real estate (4)
(1,830
)
(0.2
)%
—
—
%
(1,830
)
(0.1
)%
—
—
%
Non-GAAP adjusted operating income and non-GAAP adjusted operating margin
$
21,269
2.8
%
$
51,103
6.3
%
$
39,860
2.6
%
$
108,648
6.6
%
Three Months Ended June 30,
Six Months Ended June 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)
$
9,465
$
0.15
$
29,881
$
0.47
$
15,777
$
0.25
$
65,105
$
1.02
Non-GAAP adjustments:
Insurance and claims (2)
971
0.02
1,387
0.02
1,456
0.02
2,774
0.04
Amortization of intangible assets, net of amount attributable to noncontrolling interest (3)
2,345
0.04
2,346
0.04
4,691
0.08
4,946
0.08
Gain on sale of real estate (4)
(1,830
)
(0.03
)
—
—
(1,830
)
(0.03
)
—
—
Loss (gain) on investments in equity securities, net (5)
52
—
(79
)
—
190
—
2
—
Loss from equity method investment (6)
141
—
844
0.01
274
0.01
844
0.01
Income tax effect of above adjustments (7)
(428
)
(0.01
)
(1,158
)
(0.02
)
(1,219
)
(0.02
)
(2,206
)
(0.03
)
Non-GAAP adjusted net income attributable to Werner and non-GAAP adjusted diluted EPS
$
10,716
$
0.17
$
33,221
$
0.52
$
19,339
$
0.31
$
71,465
$
1.12
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Non-GAAP Adjusted Operating Revenues, Net of Fuel Surcharge (1)
$
$
$
$
Operating revenues – (GAAP)
$
760,798
$
811,096
$
1,529,878
$
1,643,810
Non-GAAP adjustment:
Trucking fuel surcharge (8)
(69,966
)
(76,677
)
(142,949
)
(164,978
)
Non-GAAP Operating revenues, net of fuel surcharge
$
690,832
$
734,419
$
1,386,929
$
1,478,832
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – TRUCKLOAD TRANSPORTATION SERVICES (TTS) SEGMENT
(unaudited)
(In thousands)
Three Months Ended June 30,
Six Months Ended June 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)
$
20,998
3.9
%
$
45,159
7.9
%
$
41,838
3.8
%
$
96,145
8.3
%
Non-GAAP adjustments:
Insurance and claims (2)
971
0.2
%
1,387
0.3
%
1,456
0.1
%
2,774
0.3
%
Amortization of intangible assets (3)
1,369
0.2
%
1,369
0.2
%
2,738
0.3
%
2,721
0.2
%
Non-GAAP adjusted operating income and non-GAAP adjusted operating margin
$
23,338
4.3
%
$
47,915
8.4
%
$
46,032
4.2
%
$
101,640
8.8
%
Three Months Ended June 30,
Six Months Ended June 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)
$
516,071
96.1
%
$
525,033
92.1
%
$
1,046,357
96.2
%
$
1,062,377
91.7
%
Non-GAAP adjustments:
Insurance and claims (2)
(971
)
(0.2
)%
(1,387
)
(0.3
)%
(1,456
)
(0.1
)%
(2,774
)
(0.3
)%
Amortization of intangible assets (3)
(1,369
)
(0.2
)%
(1,369
)
(0.2
)%
(2,738
)
(0.3
)%
(2,721
)
(0.2
)%
Non-GAAP adjusted operating expenses and non-GAAP adjusted operating ratio
$
513,731
95.7
%
$
522,277
91.6
%
$
1,042,163
95.8
%
$
1,056,882
91.2
%
Three Months Ended
June 30,
Six Months Ended
June 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)
$
537,069
$
570,192
$
1,088,195
$
1,158,522
Less: Trucking fuel surcharge (8)
(69,966
)
(76,677
)
(142,949
)
(164,978
)
Operating revenues, net of fuel surcharge – (Non-GAAP)
467,103
493,515
945,246
993,544
Operating expenses – (GAAP)
516,071
525,033
1,046,357
1,062,377
Non-GAAP adjustments:
Trucking fuel surcharge (8)
(69,966
)
(76,677
)
(142,949
)
(164,978
)
Insurance and claims (2)
(971
)
(1,387
)
(1,456
)
(2,774
)
Amortization of intangible assets (3)
(1,369
)
(1,369
)
(2,738
)
(2,721
)
Non-GAAP adjusted operating expenses, net of fuel surcharge
443,765
445,600
899,214
891,904
Non-GAAP adjusted operating income
$
23,338
$
47,915
$
46,032
$
101,640
Non-GAAP adjusted operating margin, net of fuel surcharge
5.0
%
9.7
%
4.9
%
10.2
%
Non-GAAP adjusted operating ratio, net of fuel surcharge
95.0
%
90.3
%
95.1
%
89.8
%
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – WERNER LOGISTICS SEGMENT
(unaudited)
(In thousands)
Three Months Ended June 30,
Six Months Ended June 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)
$
208,912
100.0
%
$
224,549
100.0
%
$
411,394
100.0
%
$
453,218
100.0
%
Non-GAAP adjustment:
Purchased transportation expense (9)
(177,066
)
(84.8
)%
(185,397
)
(82.6
)%
(349,553
)
(85.0
)%
(373,895
)
(82.5
)%
Non-GAAP adjusted operating revenues, less purchased transportation expense
$
31,846
15.2
%
$
39,152
17.4
%
$
61,841
15.0
%
$
79,323
17.5
%
Three Months Ended June 30,
Six Months Ended June 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)
$
550
0.3
%
$
4,355
1.9
%
$
(1,779
)
(0.4
)%
$
9,292
2.1
%
Non-GAAP adjustments:
Amortization of intangible assets (3)
1,148
0.5
%
1,149
0.5
%
2,297
0.5
%
2,569
0.5
%
Non-GAAP adjusted operating income and non-GAAP adjusted operating margin
$
1,698
0.8
%
$
5,504
2.4
%
$
518
0.1
%
$
11,861
2.6
%
(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/20240730934805/en/
Christopher D. Wikoff Executive Vice President, Treasurer and Chief Financial Officer (402) 894-3700
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