Werner Enterprises, Inc. (NASDAQ:WERN) Q2 2023 Earnings Conference Call August 3, 2023 5:00 PM ET Company Participants Chris Neil – Senior Vice President-Pricing and Strategic Planning Derek Leathers – Chairman, President and Chief Executive Officer Chris Wikoff – Executive Vice President, Treasurer and Chief Financial Officer Conference Call Participants Ravi Shanker – Morgan Stanley Bascome Majors – Susquehanna Elliot Alper – TD Cowen Jack Atkins – Stephens Jeff Kauffman – Vertical Research Partners Eric ...

Q2 2023 Financial Highlights - Revenues decreased by 3% year-over-year to $811 million[10] - GAAP EPS decreased by 58% year-over-year to $047[10] - Adjusted EPS decreased by 40% year-over-year to $052[10] - Adjusted Operating Income decreased by 34% year-over-year to $511 million[10] - Adjusted TTS Operating Margin decreased by 370 bps year-over-year to 97%[10] Truckload Transportation Services (TTS) Results - TTS revenues decreased by 7% year-over-year to $5702 million[21] - TTS revenues, net of fuel surcharges, decreased by 03% year-over-year to $4935 million[21] - Adjusted Operating Income for TTS decreased by 28% year-over-year to $479 million[21] - Adjusted Operating Margin for TTS decreased by 370 bps year-over-year to 97%[21] Werner Logistics Results - Werner Logistics revenues increased by 10% year-over-year to $2245 million[25] - Adjusted Operating Income for Werner Logistics decreased by 58% year-over-year to $55 million[25] - Adjusted Operating Margin for Werner Logistics decreased by 400 bps year-over-year to 24%[25]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ 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 organizatio ...

Financial Data and Key Metrics Changes - In Q1 2023, revenues increased by 9% year-over-year, while adjusted EPS decreased by 37% to $0.60. The adjusted TTS operating margin for the quarter was 10.7%, compared to 13.8% for the last 12 months [19][19][19] - The dedicated freight demand was solid and steady, with a sequential decline of 105 trucks in the dedicated fleet [19][20] - Despite a nearly 40% year-over-year decline in spot freight rates, the revenue per mile only decreased by 3%, which was at the upper end of the guidance range [22][22] Business Line Data and Key Metrics Changes - Truckload Transportation Services (TTS) revenues increased by 5%, but adjusted operating income decreased by 31%, with a decline in adjusted operating margin of 570 basis points year-over-year due to increased operating expenses [33][33] - Dedicated revenues net of fuel increased by 9%, with average trucks up by 4% and revenue per truck increasing by 5% [39][39] - Logistics revenues grew by 21%, driven by the acquisition of ReedTMS Logistics, which contributed to a significant increase in refrigerated Truckload Logistics business [40][40] Market Data and Key Metrics Changes - The freight market in Q1 2023 was challenging, with a significant decline in spot rates and overall freight demand [54][56] - Retail inventory destocking is nearing completion, with large retailers reporting a reduction in inventory dollars per store, indicating a potential increase in freight shipments [92][92] Company Strategy and Development Direction - The company is focused on operational execution and maintaining a resilient portfolio through its dedicated fleet and diversified logistics segment [10][10] - The strategy includes reinvesting in the truck and trailer fleet, enhancing technology, and capturing synergies from recent acquisitions [45][46] - The company aims to build a premier Final Mile solution and continues to prioritize investments in technology and sustainability [62][62] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued challenges in the freight market for the second and potentially third quarters, with expectations for improvement in the second half of the year [56][56] - The company is optimistic about its ability to maintain long-term operating margin guidance of 12% to 17%, despite current market pressures [68][68] Other Important Information - The company ended Q1 with over $500 million in liquidity and a low net debt-to-EBITDA ratio of 0.9x, indicating a strong financial position [43][43] - The integration of ReedTMS and Werner Brokerage is on track, with significant progress in systems integration and cost savings [31][31] Q&A Session Summary Question: Current market conditions and outlook - Management noted that April showed signs of improvement in freight flows, particularly in the food and beverage sector, but remained cautious about the overall market outlook [66][66] Question: Maintaining TTS margin range - Management emphasized a focus on cost control and operational efficiency to stay within the long-term margin guidance, despite challenges faced in Q1 [68][68] Question: Performance of Dedicated and One-Way margins - Management confirmed that Dedicated margins remain intact, but One-Way margins faced more significant pressure due to increased costs [74][74] Question: Revenue per mile guidance - Management indicated that negative rate renewals would pressure One-Way trucking metrics, but there are opportunities for improvement as the market stabilizes [88][88] Question: Demand outlook from retail customers - Management reported that large retailers are nearing the end of their inventory destocking phase, which could lead to increased freight shipments [92][92]

WERNER 1Q23 EARNINGS PRESENTATION MAY 3, 2023 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 manageme ...

Financial Performance - Operating revenues for 2022 were $3,289,978, an increase of 20.4% from $2,734,372 in 2021[179] - Operating income for 2022 was $323,076, compared to $309,146 in 2021, reflecting a growth of 4.5%[179] - Net income attributable to Werner for 2022 was $241,256, a decrease of 6.8% from $259,052 in 2021[179] - Total operating expenses for 2022 were $2,966,902, up 22.3% from $2,425,226 in 2021[179] - Net income for 2022 was $245,580, a decrease of 6% compared to $261,478 in 2021[187] - Total revenues for the year ended December 31, 2022, reached $3,289.978 million, a 20.3% increase from $2,734.372 million in 2021[232] - Truckload Transportation Services revenue increased to $2,428.686 million in 2022 from $2,045.073 million in 2021, representing a growth of 18.7%[232] - Revenues for the Werner Logistics segment in 2022 reached $793.5 million, compared to $622.5 million in 2021 and $469.8 million in 2020[306] Expenses and Costs - Salaries, wages, and benefits increased to $1,020,609 in 2022, up 14.0% from $895,012 in 2021[179] - Fuel expenses rose significantly to $437,299 in 2022, compared to $245,866 in 2021, marking a 77.5% increase[179] - Depreciation expense for the year ended December 31, 2022, was $273.8 million, compared to $265.8 million in 2021[198] - Operating lease expense increased to $22.1 million in 2022 from $15.7 million in 2021, reflecting a year-over-year growth of 40.8%[253] Assets and Liabilities - Total assets increased to $3,097,255, up from $2,603,713 in 2021, representing a growth of 19%[185] - Total current assets increased to $762,615, up 21% from $631,213 in 2021[185] - Long-term debt increased to $687,500, a significant rise from $422,500 in 2021, reflecting a 63% increase[185] - The company had $150.0 million of variable interest rate debt with an effective fixed interest rate of 2.78% through May 2024[164] - As of December 31, 2022, total outstanding debt was $693.8 million, an increase from $427.5 million in 2021, reflecting a growth of 62.2%[273] Equity and Stockholder Information - Total stockholders' equity grew to $1,443,635, up from $1,327,550 in 2021, indicating a 9% increase[185] - Dividends on common stock increased to $32,162, up from $29,083 in 2021, reflecting a growth of 7%[187] - The company purchased 2,710,304 shares of common stock in 2022, totaling $110.4 million[192] - Dividends on common stock for 2022 were $0.51 per share, totaling $32.5 million[192] Acquisitions and Investments - The company acquired ReedTMS for a total purchase price of $109.2 million, with pro forma operating revenues of $368.5 million for 2022, up from $339.8 million in 2021[217] - The acquisition of Baylor was completed for $89.0 million, with a potential contingent earnout payment of up to $15.0 million based on performance goals[219] - The company invested $507,252 in property and equipment, compared to $370,850 in 2021, representing a 37% increase[187] Customer and Revenue Concentration - For the year ended December 31, 2022, the top ten customers accounted for 46% of total revenues, with Dollar General representing 14% of total revenues[192] - Revenues from the United States were $3,051,788,000, accounting for approximately 92.8% of total revenues in 2022[308] - Revenues from foreign countries totaled $238,190,000 in 2022, up from $201,652,000 in 2021, representing an 18.1% increase[308] Tax and Compliance - The company recognized a total income tax expense of $79.206 million in 2022, down from $84.537 million in 2021[277] - Deferred income tax liabilities increased to $397.843 million in 2022 from $348.570 million in 2021, resulting in a net deferred income tax liability of $313.278 million[278] - The company has not reported any changes or disagreements with accountants on accounting and financial disclosure in the last two fiscal years[310]

Financial Data and Key Metrics Changes - In Q4 2022, revenues increased by 13% to $861 million, while adjusted EPS decreased by 13% to $0.99 [11] - For the full year, revenues rose by 20% to $3.3 billion, and adjusted EPS increased by 7% to a record $3.70 [11] - Adjusted TTS operating margin for Q4 was 15.8%, while for the year it was 15.1% [11] Business Line Data and Key Metrics Changes - Dedicated freight demand in Q4 was solid, with revenues net of fuel increasing by 9% and average trucks up by 4% [25] - One-Way Truckload revenues net of fuel increased by 2%, with average trucks increasing by 7% due to the Baylor acquisition [25] - Logistics revenues grew by 15% in Q4, driven by the acquisition of ReedTMS, with truckload logistics revenues increasing by 20% [26] Market Data and Key Metrics Changes - The freight market in Q4 was seasonally soft compared to the previous year, impacting One-Way Truckload and Logistics [12][20] - The company expects the freight market to be challenging in the first half of 2023, with gradual improvement anticipated in the second half [7] - Retail and food and beverage sectors accounted for 75% of the revenue base in the past year [19] Company Strategy and Development Direction - The company has built a resilient business model that performs well in both strong and challenging freight markets [8] - The introduction of the "Drive" strategy focuses on sustainability, capital allocation, and innovation [16] - The company aims to enhance shareholder value through dividends and share repurchases while maintaining a strong financial position [36] Management's Comments on Operating Environment and Future Outlook - Management anticipates a challenging freight market in early 2023, with expectations for improvement in the latter half of the year [7][42] - The company is focused on integrating recent acquisitions and capitalizing on synergies [37] - Management expressed confidence in the ability to navigate economic challenges due to a diversified business portfolio [8][42] Other Important Information - The company achieved the lowest DOT preventable accident rate per million miles in the last 10 years, reflecting a strong focus on safety [9][31] - The company ended the year with net debt of $587 million and equity of over $1.4 billion, maintaining a net debt-to-EBITDA ratio within its long-term target [33] - The company plans to invest in fleet modernization and technology to enhance operational efficiency [35] Q&A Session Summary Question: Thoughts on earnings power entering 2023 - Management acknowledged headwinds affecting EPS but emphasized ongoing integration efforts and improvements in safety metrics to mitigate these challenges [48][50] Question: Outlook on retail customer inventories - Management noted that while retail inventories are being rightsized, they are optimistic about working with successful retailers who are nearing the end of their inventory adjustments [56][58] Question: Impact of acquisitions on length of haul and margins - Management indicated that acquisitions have contributed to a shorter length of haul but expect this trend to stabilize moving forward [62][64] Question: Thoughts on acquisitions in a downturn - Management expressed openness to future acquisitions but emphasized the importance of focusing on integration and execution of recent acquisitions first [86] Question: Pricing dynamics in the current market - Management indicated a willingness to engage in shorter contract durations if beneficial, while maintaining a focus on long-term contracts for stability [88][91]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [Mark one] ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ 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 inc ...

3Q 2022 EARNINGS PRESENTATION November 2, 2022 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 management and are current only ...

Financial Data and Key Metrics Changes - Revenues increased by 18% year-over-year to $828 million, adjusted operating income rose by 8% to $79.5 million, and adjusted EPS increased by 14% to $0.90 per share [9][12][30] - Adjusted operating income by segment showed TTS grew by $11 million, while logistics declined by $2 million and corporate and other declined by $3.8 million [12][19] Business Line Data and Key Metrics Changes - Dedicated segment ended the quarter with 5,430 trucks, adding 110 during the quarter and 310 year-over-year, with strong demand from long-term customers [9][10] - One-Way Truckload had 3,150 trucks, up 50% year-over-year, but faced fewer project and surge freight opportunities [10][14] - TTS revenues increased by 18% due to 4% more trucks and 8% higher rates, while One-Way Truckload revenues net of fuel declined slightly [13][14] Market Data and Key Metrics Changes - The freight market is experiencing a softening, with fewer premium pop-up freight opportunities and a decline in project and surge freight [10][31] - The logistics segment saw a significant decline in premium pricing opportunities, expected to be down 60% to 70% in the fourth quarter compared to the previous year [50][81] Company Strategy and Development Direction - The company is focused on maintaining a strong and flexible financial position, with a net debt-to-EBITDA ratio of 0.7x and ongoing evaluations for acquisitions in North America [21][26] - The strategy includes careful acquisition processes, emphasizing complementary businesses and strong management teams [23][26] Management's Comments on Operating Environment and Future Outlook - Management noted rising macroeconomic headwinds but achieved year-over-year growth in adjusted earnings per share for the ninth consecutive quarter [6][30] - The company anticipates a subdued peak season in the fourth quarter compared to the previous year, with ongoing inflationary pressures expected to continue [31][30] Other Important Information - The company has made significant investments in its driver training schools, expanding from 13 to 22 locations, although some temporary issues affected performance this quarter [12][60] - The company is committed to ESG initiatives, including partnerships for autonomous truck technology and hydrogen engine purchases [27] Q&A Session Summary Question: Outlook on smaller carriers and spot rates - Management noted a significant increase in deactivations of small carriers, with 3,500 to 4,000 trucks exiting the market weekly, indicating a potential bottoming out of the market [40] Question: Performance of Dedicated segment - Management expressed confidence in the Dedicated segment's resilience, highlighting long-term relationships with customers and the ability to manage inflationary pressures [42] Question: Update on long-term agreements in One-Way business - Management reported that approximately 25% of One-Way business is now tied to long-term agreements, providing stability in a slowing economy [47] Question: Logistics operating margins and future expectations - Management acknowledged that logistics margins were impacted by a lack of project opportunities and startup costs, but expressed optimism for stabilization in the future [81] Question: Capacity exiting the market and brokerage side - Management indicated that while some carriers are exiting, the overall number of carriers in the network is still growing due to recruitment efforts [70] Question: Inflationary cost increases and contract renewals - Management emphasized the importance of discipline in contract renewals and the ability to pass on cost increases to customers [56][78]