Werner Enterprises, Inc. (NASDAQ:WERN) Q2 2024 Earnings Conference Call July 30, 2024 5:00 PM ET Company Participants Chris Neil – Senior Vice President-Pricing and Strategic Planning Derek Leathers – Chairman and Chief Executive Officer Chris Wikoff – Executive Vice President, Treasurer and Chief Financial Officer Conference Call Participants Eric Morgan – Barclays Bruce Chan – Stifel Daniel Imbro – Stephens Inc. Scott Group – Wolfe Research Adam Roszkowski – Banc of America Jason Seidl – TD Cowen Tom Wad ...

Werner Enterprises (WERN) came out with quarterly earnings of $0.17 per share, missing the Zacks Consensus Estimate of $0.23 per share. This compares to earnings of $0.52 per share a year ago. These figures are adjusted for non-recurring items. Werner, which belongs to the Zacks Transportation - Truck industry, posted revenues of $760.8 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 1.77%. This compares to year-ago revenues of $811.1 million. The company has topped consensu ...

Werner Enterprises Reports Second Quarter 2024 Results • Total revenues of $760.8 million, down 6% • Operating income of $19.6 million, down 58%; non-GAAP adjusted operating income of $21.3 million, down 58% • Operating margin of 2.6%, down 320 basis points; non-GAAP adjusted operating margin of 2.8%, down 350 basis points • Diluted EPS of $0.15, down 68%; non-GAAP adjusted diluted EPS of $0.17, down 67% "While industry-wide headwinds remain, second quarter earnings improved sequentially, and we made progre ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [Mark one] (Registrant's telephone number, including area code) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 0-14690 WERNER ENTERPRISES, INC. (Exact name of registrant as specified in its charter) Nebraska 47-0648386 (State or other jurisdiction of incorporation or organization) 14507 Frontier Road Post Office Box 45308 Omaha , Nebraska 681 ...

Financial Data and Key Metrics Changes - Revenues for Q1 2024 totaled $769 million, down 8% year-over-year [27] - Adjusted operating income was $18.6 million, a decrease of 68% compared to the previous year [27] - Adjusted EPS was $0.14, down $0.46 from the prior year [27] - Adjusted operating margin was 2.4%, down 450 basis points year-over-year [27] Business Line Data and Key Metrics Changes - Truckload Transportation Services (TTS) revenue was $551 million, down 6% [28] - Dedicated revenue net of fuel was $301 million, down 3% [33] - One-Way Truckload revenue was $169 million, a decrease of 8% [35] - Logistics revenue declined by $26 million or 11%, representing 26% of total revenues [38] Market Data and Key Metrics Changes - The freight market remains challenging with ongoing rate pressure and competitive pricing [23] - Customer retention rate in Dedicated was maintained at 93% despite competitive pressures [24] - The One-Way operating environment remains competitive, leading to a mixed early bid season [25] Company Strategy and Development Direction - The company focuses on three overarching priorities: driving growth in core business, operational excellence, and capital efficiency [17] - The strategy includes maintaining price discipline in Dedicated and focusing on large enterprise customers [10] - The company aims to achieve a long-term TTS operating margin range of 12% to 17% [18] Management's Comments on Operating Environment and Future Outlook - Management expects a challenging freight market to continue through Q2 and into the second half of 2024 [23] - There are signs of life in demand, particularly related to spring projects, but capacity needs to continue to exit the market [54] - The company remains committed to executing its strategy and improving operations despite the macro challenges [51] Other Important Information - The company achieved a 20-year record low for preventable accidents in Q1 [14] - Werner was recognized on Forbes' list of America's Best Large Employers for 2024, ranking 10th in the transportation and logistics category [16] - The company expects to capture over $40 million in cost savings in 2024, with $12 million realized in Q1 [43] Q&A Session Summary Question: Outlook on supply over the next 12 months - Management indicated that while it's tough to predict a turn in supply, there are encouraging signs of life and demand uptick as they enter Q2 [54] Question: Improvement in operating ratio (OR) in Q2 - Management expects improvement in OR as they progress through Q2, with a focus on cost savings and long-term strategy [59] Question: Impact of productivity gains on business mix - Management noted that productivity gains are intentional and focused on optimizing operations, particularly in cross-border services [62] Question: Expectations for used equipment market - Management anticipates modest improvement in used equipment values as the year progresses, driven by market conditions [65] Question: Cost actions in response to the down cycle - Management believes in maintaining pricing discipline while prudently trimming costs without damaging long-term strategic initiatives [71] Question: Fleet guidance and CapEx relationship - Management explained that fleet guidance is for the full year, while CapEx is being carefully managed to prepare for potential growth opportunities in the back half of the year [83] Question: Dedicated market competition and customer dynamics - Management clarified that all discount retailers are increasing truck counts within Dedicated, indicating a strong market despite competitive pressures [102]

WERNER 1Q24 EARNINGS PRESENTATION April 30, 2024 WE KEEP AMERICA MOVING® DISCLOSURE STATEMENT This presentation 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 manag ...

Exhibit 99.1 Werner Enterprises Reports First Quarter 2024 Results First Quarter 2024 Highlights (all metrics compared to first quarter 2023) OMAHA, Neb., April 30, 2024 -- Werner Enterprises, Inc. (Nasdaq: WERN), a premier transportation and logistics provider, today reported results for the first quarter ended March 31, 2024. "Freight conditions remained challenging in the first quarter with persistent excess industry capacity driving broad pricing pressure combined with adverse weather and one-off expens ...

Part I [Business](index=3&type=section&id=Item%201.%20Business) Werner Enterprises is a major US transportation and logistics company operating through its TTS and Werner Logistics segments - The company operates through two reportable segments: Truckload Transportation Services (TTS) and Werner Logistics[20](index=20&type=chunk)[21](index=21&type=chunk) - As of December 31, 2023, the TTS segment had a fleet of **8,000 trucks** (7,740 company-operated, 260 independent contractors)[20](index=20&type=chunk)[21](index=21&type=chunk) 2023 Revenue and Customer Concentration | Metric | Value | | :--- | :--- | | **Segment Revenue Split** | | | TTS Segment | 70% of total operating revenues | | Werner Logistics | 28% of total operating revenues | | **Customer Concentration** | | | Top 5 Customers | 35% of revenues | | Top 10 Customers | 48% of revenues | | Largest Customer (Dollar General) | 10% of total revenues | - The company has expanded through four business acquisitions since 2021: ReedTMS and Baylor in 2022, and NEHDS and ECM in 2021[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - As of December 31, 2023, the company employed 13,809 associates, including 9,929 drivers[34](index=34&type=chunk) - The female driver workforce is **double the national industry average**, and over **60% of driver associates are ethnically diverse**[40](index=40&type=chunk) Revenue Equipment Fleet Age (as of Dec 31, 2023) | Equipment | Average Age (Years) | | :--- | :--- | | TTS Company Truck Fleet | 2.1 | | Trailer Fleet | 4.9 | [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from economic conditions, driver shortages, customer concentration, and cybersecurity threats - The business is sensitive to economic conditions that impact customer shipping volumes, freight demand, and truck capacity[71](index=71&type=chunk) - Difficulty in recruiting and retaining experienced drivers could negatively impact results of operations and limit growth[72](index=72&type=chunk)[73](index=73&type=chunk) - A significant portion of revenue is generated from key customers; in 2023, the **top 5 customers accounted for 35% of revenues**[79](index=79&type=chunk) - The company relies extensively on its information systems, and a disruption or breach could have a material adverse effect[85](index=85&type=chunk) - As a highly regulated entity, changes in transportation rules could adversely affect operations and capital expenditures[90](index=90&type=chunk) - The company is self-insured for a significant portion of liability claims, and an increase in claims could reduce earnings[96](index=96&type=chunk) [Unresolved Staff Comments](index=13&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - None[98](index=98&type=chunk) [Cybersecurity](index=13&type=section&id=Item%201C.%20Cybersecurity) The company manages cybersecurity through a dedicated team and has experienced no material breaches in the past three years - The company has **not experienced any material cybersecurity breaches** in the last three years[99](index=99&type=chunk) - A dedicated cybersecurity team, coordinated by the CIO, manages risks with oversight from the Board's Audit Committee[100](index=100&type=chunk)[101](index=101&type=chunk) - The cybersecurity strategy includes awareness, prevention, detection, response, and recovery components[102](index=102&type=chunk) [Properties](index=15&type=section&id=Item%202.%20Properties) The company owns and leases numerous terminals and facilities, with corporate headquarters in Omaha, Nebraska - The corporate headquarters are situated on a **147-acre property** in Omaha, Nebraska, with 63 acres undeveloped[106](index=106&type=chunk) - Werner owns and leases a network of terminals, maintenance facilities, and offices throughout the United States[106](index=106&type=chunk) [Legal Proceedings](index=16&type=section&id=Item%203.%20Legal%20Proceedings) The company is party to routine litigation incidental to its business, primarily involving liability claims - The company is subject to routine litigation, mainly related to claims from the transportation of freight[108](index=108&type=chunk) [Mine Safety Disclosures](index=16&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[109](index=109&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=16&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on NASDAQ, it pays a regular dividend, and maintains an active share repurchase program - The company has paid quarterly cash dividends since July 1987, with the current rate at **$0.14 per common share**[111](index=111&type=chunk) - As of December 31, 2023, **2,311,810 shares remained available** for repurchase under its 6,000,000 share program[117](index=117&type=chunk) - No shares of common stock were repurchased during the fourth quarter of 2023[118](index=118&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, flat revenues and a challenging freight market led to a significant decline in operating and net income [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Fiscal year 2023 saw a significant profitability decline due to pricing pressure and lower gains on equipment sales Consolidated Financial Performance (2023 vs 2022) | Metric (in thousands) | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Operating Revenues | $3,283,499 | $3,289,978 | (0.2)% | | Total Operating Expenses | $3,107,083 | $2,966,902 | 4.7% | | Operating Income | $176,416 | $323,076 | (45.4)% | | Net Income Attributable to Werner | $112,382 | $241,256 | (53.4)% | Segment Performance (2023 vs 2022) | Segment | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | :--- | | **TTS** | Operating Revenues | $2,310.8M | $2,428.7M | (4.9)% | | | Operating Income | $169.3M | $294.6M | (42.5)% | | **Werner Logistics** | Operating Revenues | $910.4M | $793.5M | 14.7% | | | Operating Income | $15.9M | $36.2M | (56.1)% | - Gains on sales of property and equipment **decreased significantly to $42.4 million** in 2023 from $88.6 million in 2022[161](index=161&type=chunk) - One-Way Truckload average revenues per total mile **decreased by 5.5%** in 2023 due to pricing pressure[138](index=138&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity with $526 million available and generated increased cash from operations in 2023 - The company had available liquidity of **$526 million** as of December 31, 2023, comprising cash and available borrowing capacity[167](index=167&type=chunk) Cash Flow Summary (in millions) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash from Operations | $474.4 | $448.7 | | Net Cash used in Investing | ($434.9) | ($514.3) | | Net Cash from (used in) Financing | ($87.1) | $118.0 | - Net capital expenditures for 2024 are projected to be **$260 million to $310 million**, a decrease from $408.7 million in 2023[171](index=171&type=chunk)[129](index=129&type=chunk) - Total outstanding debt was **reduced to $648.8 million** at the end of 2023 from $693.8 million at the end of 2022[172](index=172&type=chunk)[282](index=282&type=chunk) [Critical Accounting Estimates](index=27&type=section&id=Critical%20Accounting%20Estimates) The most significant accounting estimate relates to the accrual for insurance and claims for bodily injury and property damage - The most critical accounting estimate is for accrued liabilities for insurance and claims[176](index=176&type=chunk) - As of December 31, 2023, the total accrual for estimated insurance and claims was **$321.5 million**[176](index=176&type=chunk) - A **10% change** in the bodily injury and property damage portion of this estimate would alter the accrual by approximately **$24.8 million**[176](index=176&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to market risks from diesel fuel prices, foreign currency rates, and interest rate fluctuations - The company is exposed to commodity price risk from diesel fuel, managed through customer fuel surcharge programs[178](index=178&type=chunk) - The company faces foreign currency risk, primarily related to the Mexican Peso[179](index=179&type=chunk) - A hypothetical **one-percentage point increase** in the SOFR rate would increase annual interest expense by approximately **$4.3 million**[180](index=180&type=chunk) [Financial Statements and Supplementary Data](index=29&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements and accompanying notes for fiscal year 2023 Consolidated Statements of Income (Year Ended Dec 31, in thousands) | Line Item | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Operating Revenues | $3,283,499 | $3,289,978 | $2,734,372 | | Operating Income | $176,416 | $323,076 | $309,146 | | Net Income Attributable to Werner | $112,382 | $241,256 | $259,052 | | Diluted EPS | $1.76 | $3.74 | $3.82 | Consolidated Balance Sheets (As of Dec 31, in thousands) | Line Item | 2023 | 2022 | | :--- | :--- | :--- | | Total Current Assets | $634,628 | $762,615 | | Property and Equipment, net | $1,972,956 | $1,825,276 | | Total Assets | $3,157,936 | $3,097,255 | | Total Current Liabilities | $330,585 | $309,520 | | Long-term Debt | $646,250 | $687,500 | | Total Liabilities | $1,590,990 | $1,614,921 | | Total Stockholders' Equity | $1,528,339 | $1,443,635 | Consolidated Statements of Cash Flows (Year Ended Dec 31, in thousands) | Line Item | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $474,366 | $448,711 | $332,819 | | Net cash used in investing activities | ($434,944) | ($514,333) | ($397,301) | | Net cash provided by (used in) financing activities | ($87,067) | $118,034 | $89,668 | | Net increase (decrease) in cash | ($45,517) | $53,044 | $24,862 | - Note 12 discloses an adverse jury verdict from a 2014 accident with a **$92.0 million judgment**, with the case under appeal[305](index=305&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk) - The company's maximum liability for the verdict is **$10.0 million** plus interest, with the remainder covered by insurance[305](index=305&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk) - For 2023, Truckload Transportation Services generated **$169.3 million in operating income**, while Werner Logistics generated **$15.9 million**[316](index=316&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=57&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - No disagreements with accountants on accounting and financial disclosure were reported[320](index=320&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of December 31, 2023[321](index=321&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023[325](index=325&type=chunk) - KPMG LLP issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting[328](index=328&type=chunk) [Other Information](index=59&type=section&id=Item%209B.%20Other%20Information) No previously unreported Form 8-K information or new director/officer Rule 10b5-1 plans were noted in Q4 2023 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the fourth quarter of 2023[337](index=337&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=59&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Required information is incorporated by reference from the company's forthcoming definitive proxy statement - Information is incorporated by reference to the company's Proxy Statement[340](index=340&type=chunk) - The company's Code of Corporate Conduct is available on its website[341](index=341&type=chunk) [Executive Compensation](index=59&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement - Information is incorporated by reference to the company's Proxy Statement[342](index=342&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=59&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated by reference, with details provided on equity compensation plans Equity Compensation Plan Information (as of Dec 31, 2023) | Plan Category | Securities to be Issued upon Exercise/Vesting | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | | Equity compensation plans approved by stockholders | 687,932 | 3,791,411 | [Certain Relationships and Related Transactions, and Director Independence](index=60&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the proxy statement - Information is incorporated by reference to the company's Proxy Statement[346](index=346&type=chunk) [Principal Accountant Fees and Services](index=60&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees is incorporated by reference from the company's definitive proxy statement - The company's independent registered public accounting firm is KPMG LLP[347](index=347&type=chunk) - Information on fees and services is incorporated by reference to the company's Proxy Statement[347](index=347&type=chunk) Part IV [Exhibit and Financial Statement Schedules](index=60&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K - This section contains a list of all financial statements, schedules, and exhibits included in the Form 10-K[349](index=349&type=chunk)[354](index=354&type=chunk) [Form 10-K Summary](index=62&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - Not applicable[357](index=357&type=chunk)

WERNER 4Q23 AND FULL YEAR 2023 EARNINGS PRESENTATION WE KEEP AMERICA MOVING® DISCLOSURE STATEMENT This presentation 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 forwardlooking statements are based on information presently available to the Company's ma ...

Financial Data and Key Metrics Changes - In Q4 2023, total revenue was $822 million, down 5% year-over-year, while net revenue after fuel surcharges decreased by 2% [28] - Adjusted EPS was $0.39, down $0.60 year-over-year, primarily due to lower equipment gains and a challenging macro freight environment [29] - Adjusted operating margin was 4.8%, a decrease of 56% and 560 basis points compared to the prior year [28] Business Line Data and Key Metrics Changes - Truckload Transportation Services (TTS) total revenue for Q4 was $580 million, down 9%, with adjusted operating margin at 7.5%, a decrease of 55% year-over-year [30] - Dedicated revenue was $309 million, down 2%, but revenue per truck per week increased by 0.9% year-over-year [36] - Logistics segment revenue grew by over 6% year-over-year, marking 13 consecutive quarters of growth, with adjusted operating income at $3 million and a margin of 1.3% [38][40] Market Data and Key Metrics Changes - The freight market is expected to remain challenging through the first half of 2024, with excess supply and low spot freight rates [23] - Inventory levels have normalized, but broad restocking is not yet observed, with consumer demand trends being a focal point for future replenishment [24] - The Dedicated environment remains steady but increasingly competitive, with a client retention rate exceeding 93% [25] Company Strategy and Development Direction - The company aims to drive growth in core businesses, return TTS adjusted operating income margin to long-term targets, and expand the Dedicated fleet [55] - Operational excellence will be pursued through a focus on safety, technology advancements, and executing a cost savings program [56] - Capital efficiency will be emphasized through process optimization and disciplined capital expenditures [57] Management's Comments on Operating Environment and Future Outlook - The management acknowledged 2023 as a challenging year but highlighted structural improvements for future success as normalization returns [7] - There is cautious optimism regarding the freight market, with expectations for a more balanced supply-demand environment in the second half of 2024 [25][113] - The company is committed to executing its objectives and believes these actions will generate margin and earnings improvement [58] Other Important Information - The company achieved $43 million in cost savings in 2023, with a focus on structural and sustainable initiatives for 2024 [41][42] - The average age of the truck and trailer fleet at year-end 2023 was 2.1 years and 4.9 years, respectively, with expectations to maintain these levels through 2024 [53] - Nathan Meisgeier was appointed as the next President of Werner Enterprises, effective January 5, 2024 [17][18] Q&A Session Summary Question: Cost savings and Werner Bridge - Management discussed the potential for cost savings through the Werner Bridge digital platform, emphasizing that current savings are from tangible cost-cutting programs [60][63] Question: Renewals and pricing discipline - Management indicated that it is early in the bid season, with ongoing pricing pressure, particularly in the One-Way segment, but remains disciplined in pricing [65][68] Question: Fleet guidance and Dedicated growth - Management clarified that while the Dedicated fleet is expected to remain stable, the One-Way fleet will not grow until market conditions improve [72][74] Question: Insurance and claims trends - Management attributed the decrease in insurance and claims to improved safety metrics and a favorable trend, despite industry-wide inflationary pressures [76][78] Question: Capacity and market dynamics - Management noted that net deactivations in the industry are increasing, suggesting a potential capacity cliff as smaller fleets exit the market [81][82] Question: Cost savings details - Management provided insights into the $40 million cost savings program for 2024, highlighting that most initiatives are new and structural [88][89] Question: Trucking margins and future outlook - Management expects Q1 to be challenging but aims to return to a 12% margin by year-end through operational improvements and cost savings [101][103]