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0000793074false00007930742023-05-032023-05-03

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 3, 2023
WERNER ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)

Nebraska 0-14690 47-0648386
(State or other jurisdiction of
incorporation)
(Commission File Number) (I.R.S. Employer
Identification No.)
14507 Frontier Road  
Post Office Box 45308
Omaha , Nebraska 68145-0308
(Address of principal executive offices)   (Zip Code)
(402) 895-6640
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR40.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
 Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 Par Value WERN The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



ITEM 2.02.    RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On May 3, 2023, the registrant issued a press release regarding, among other things, its financial results for the first quarter ended March 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

In accordance with General Instruction B.2 to the Form 8-K, the information under this Item 2.02 and the press release furnished as Exhibit 99.1 to this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section 18, nor shall such information and exhibit deemed incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), unless the registrant expressly states that such information and exhibit are to be considered “filed” under the Exchange Act or incorporates such information and exhibit by specific reference in an Exchange Act or Securities Act filing.

The press release furnished as Exhibit 99.1 to this Form 8-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act 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 registrant’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 registrant’s Annual Report on Form 10-K for the year ended December 31, 2022. For those reasons, undue reliance should not be placed on any forward-looking statement. The registrant assumes no duty or obligation to update or revise any forward-looking statement, although it may do so from time to time as management believes is warranted or as may be required by applicable securities law. Any such updates or revisions may be made by filing reports with the U.S. Securities and Exchange Commission, through the issuance of press releases or by other methods of public disclosure.

ITEM 9.01.     FINANCIAL STATEMENTS AND EXHIBITS.

    (d)    Exhibits.

104 Cover Page Interactive Data File (embedded within the Inline XBRL document).










SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


WERNER ENTERPRISES, INC.
Date: May 3, 2023
By:   /s/ Christopher D. Wikoff
  Christopher D. Wikoff
  Executive Vice President, Treasurer and
Chief Financial Officer
Date: May 3, 2023
By:   /s/ James L. Johnson
  James L. Johnson
  Executive Vice President, Chief Accounting
Officer and Corporate Secretary



EX-99.1 2 wern-2023x331xex991.htm EX-99.1 Document

Exhibit 99.1


werner-20200331a15.jpg

Werner Enterprises Reports First Quarter 2023 Results

First Quarter 2023 Highlights (all metrics compared to first quarter 2022)

•Total revenues of $832.7 million, up 9%
•Operating income of $53.4 million, down 36%; non-GAAP adjusted operating income of $57.5 million, down 33%
•Operating margin of 6.4%, down 450 basis points; non-GAAP adjusted operating margin of 6.9%, down 440 basis points
•Diluted EPS of $0.55, down 32%; non-GAAP adjusted diluted EPS of $0.60, down 37%

OMAHA, Neb., May 3, 2023 -- Werner Enterprises, Inc. (Nasdaq: WERN), a premier transportation and logistics provider, today reported results for the first quarter ended March 31, 2023.

“While macroeconomic conditions and continued softness in the freight market were increasingly challenging in the first quarter, we achieved our third highest revenue quarter driven by revenue per truck increases in our Dedicated business and our growing Logistics business,” said Derek J. Leathers, Chairman, President and CEO. “We are seeing a more direct impact from inflation on multiple cost categories, which has constrained margins. However, we remain confident in the durability and resilience of our diversified business model, combined with our operational scale, reputation for service excellence, innovation and the efforts of our determined and talented team.”

Total revenues for the quarter were $832.7 million, an increase of $68.1 million compared to the prior year quarter, due to Truckload Transportation Services (“TTS”) revenues growth of $29.9 million and Logistics revenues growth of $39.7 million.

Operating income of $53.4 million decreased $30.1 million, or 36%, while operating margin of 6.4% decreased 450 basis points. On a non-GAAP basis, adjusted operating income of $57.5 million decreased $28.6 million, or 33%. Adjusted operating margin of 6.9% declined 440 basis points from 11.3% for the same quarter last year.

TTS operating income decreased by $25.1 million and adjusted operating income decreased by $24.5 million. Logistics operating income decreased $3.7 million and adjusted operating income decreased by $2.8 million. Corporate and Other (including driving schools) operating income decreased by $1.3 million.

Net interest expense of $6.4 million increased $5.2 million primarily due to higher interest rates for variable rate debt and an increase in average debt outstanding. The effective income tax rate during the quarter was 24.3%, compared to 24.1% in first quarter 2022.

During first quarter 2023, our strategic minority equity investments had market valuation changes causing an unrealized loss on equity securities of $0.1 million, compared to an unrealized loss of $9.8 million, or $0.11 per share, in first quarter 2022. Consistent with prior reporting, market value increases or decreases for these strategic minority investments are adjusted out for determining non-GAAP adjusted net income and non-GAAP adjusted earnings per share.


Werner Enterprises, Inc. - Release of May 3, 2023
Page 2
Net income attributable to Werner of $35.2 million decreased 34%. On a non-GAAP basis, adjusted net income attributable to Werner of $38.3 million decreased 39%. Diluted EPS of $0.55 decreased 32%. On a non-GAAP basis, adjusted diluted EPS of $0.60 decreased 37%.

Key Consolidated Financial Metrics
Three Months Ended
March 31,
(In thousands, except per share amounts) 2023 2022 Y/Y
Change
Total revenues $ 832,714  $ 764,605  %
Truckload Transportation Services revenues 588,330  558,417  %
Werner Logistics revenues 228,669  189,008  21  %
Operating income 53,386  83,511  (36) %
Operating margin 6.4  % 10.9  % (450) bps
Net income attributable to Werner 35,224  53,749  (34) %
Diluted earnings per share 0.55  0.82  (32) %

Adjusted operating income (1)
57,545  86,191  (33) %
Adjusted operating margin (1)
6.9  % 11.3  % (440) bps
Adjusted net income attributable to Werner (1)
38,265  62,966  (39) %
Adjusted diluted earnings per share (1)
0.60  0.96  (37) %
(1) See attached Reconciliation of Non-GAAP Financial Measures - Consolidated.

Truckload Transportation Services (TTS) Segment

•Revenues of $588.3 million increased $29.9 million
•Operating income of $51.0 million decreased $25.1 million; non-GAAP adjusted operating income of $53.7 million decreased $24.5 million due to a much softer freight market, higher operating expenses for supplies and maintenance and insurance and claims
•Operating margin of 8.7% decreased 490 basis points from 13.6%; non-GAAP adjusted operating margin of 9.1% decreased 490 basis points from 14.0%
•Non-GAAP adjusted operating margin, net of fuel, of 10.7% decreased 570 basis points from 16.4%
•Average segment trucks in service totaled 8,561, an increase of 323 trucks year over year, or 3.9%
•Dedicated unit trucks at quarter end totaled 5,345, or 63% of the total TTS segment fleet, compared to 5,185 trucks, or 63%, a year ago
•0.5% increase in TTS average revenues per truck per week

During first quarter 2023, Dedicated experienced solid and steady freight demand from our customers. One-Way Truckload customer freight demand during first quarter 2023 was seasonally weaker than normal compared to a seasonally strong freight market in first quarter 2022.





Werner Enterprises, Inc. - Release of May 3, 2023
Page 3
Key Truckload Transportation Services Segment Financial Metrics
Three Months Ended
March 31,
(In thousands) 2023 2022 Y/Y
Change
Trucking revenues, net of fuel surcharge $ 493,242  $ 472,361  %
Trucking fuel surcharge revenues 88,301  79,815  11  %
Non-trucking and other revenues 6,787  6,241  %
Total revenues $ 588,330  $ 558,417  %
Operating income $ 50,986  $ 76,093  (33) %
Operating margin 8.7  % 13.6  % (490) bps
Operating ratio 91.3  % 86.4  % 490 bps

Adjusted operating income (1)
$ 53,725  $ 78,273  (31) %
Adjusted operating margin (1)
9.1  % 14.0  % (490) bps
Adjusted operating margin, net of fuel surcharge (1)
10.7  % 16.4  % (570) bps
Adjusted operating ratio (1)
90.9  % 86.0  % 490 bps
Adjusted operating ratio, net of fuel surcharge (1)
89.3  % 83.6  % 570 bps
(1) See attached Reconciliation of Non-GAAP Financial Measures - Truckload Transportation Services (TTS) Segment.


Werner Logistics Segment

•Revenues of $228.7 million increased $39.7 million, or 21%
•Operating income of $4.9 million decreased $3.7 million
•Operating margin of 2.2% decreased 240 basis points from 4.6%
•Adjusted operating income of $6.4 million decreased $2.8 million
•Adjusted operating margin of 2.8% decreased 210 basis points from 4.9%

Truckload Logistics revenues (78% of Logistics revenues) increased 41%, driven by an increase in shipments due to the ReedTMS acquisition and growth in our organic volumes, partially offset by a decline in revenues per shipment.
Intermodal revenues (12% of Logistics revenues) decreased 33%, due primarily to a decline in shipments.

Final Mile revenues (10% of Logistics revenues) increased $2.4 million.

Logistics operating income decreased $3.7 million and adjusted operating income decreased $2.8 million in first quarter 2023, due to a seasonally soft freight market in first quarter 2023 compared to a seasonally strong freight market in first quarter 2022.










Werner Enterprises, Inc. - Release of May 3, 2023
Page 4
Key Werner Logistics Segment Financial Metrics

Three Months Ended
March 31,
(In thousands) 2023 2022 Y/Y
Change
Total revenues $ 228,669  $ 189,008  21  %
Operating expenses:
  Purchased transportation expense 188,498  157,521  20  %
  Other operating expenses 35,234  22,806  54  %
    Total operating expenses 223,732  180,327  24  %
Operating income $ 4,937  $ 8,681  (43) %
Operating margin 2.2  % 4.6  % (240) bps
Adjusted operating income (1)
$ 6,357  $ 9,181  (31) %
Adjusted operating margin (1)
2.8  % 4.9  % (210) bps
(1) See attached Reconciliation of Non-GAAP Financial Measures - Werner Logistics Segment.



Cash Flow and Capital Allocation

Cash flow from operations in first quarter 2023 was $166.8 million compared to $155.0 million in first quarter 2022, an increase of 8%.

Net capital expenditures in first quarter 2023 were $102.7 million compared to $37.1 million in first quarter 2022, an increase of 177%. We plan to continue to invest in new trucks and trailers and our terminals to improve our driver experience, optimize operational efficiency and more effectively manage our maintenance, safety and fuel costs. The average ages of our truck and trailer fleets were 2.2 years and 5.1 years, respectively, as of March 31, 2023.

Gains on sales of property and equipment in first quarter 2023 were $18.3 million, or $0.22 per share, compared to $20.5 million, or $0.23 per share, in first quarter 2022. Year over year, we sold significantly more trucks and trailers and realized substantially 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 first quarter 2023. As of March 31, 2023, we had 2.3 million shares remaining under our share repurchase authorization.

As of March 31, 2023, we had $130 million of cash and cash equivalents and over $1.4 billion of stockholders’ equity. Total debt outstanding was $691 million at March 31, 2023. After considering letters of credit issued, we had available liquidity consisting of cash and cash equivalents and available borrowing capacity as of March 31, 2023 of $544 million.













Werner Enterprises, Inc. - Release of May 3, 2023
Page 5
2023 Guidance Metrics and Assumptions

The following table summarizes our updated 2023 guidance and assumptions:
Prior
(as of 2/7/23)
Actual
(as of 3/31/23)
New
(as of 5/3/23)
Commentary
TTS truck growth from BoY to EoY 1% to 4%
(annual)
(1)%
(1Q23)
(2)% to 1%
(annual)
•Adjusting fleet size to adapt to softer freight market
Net capital expenditures $350M to $400M
(annual)
$103M
(1Q23)
$350M to $400M
(annual)

TTS Guidance
Dedicated RPTPW* growth 0% to 3%
(annual)
4.6%
(1Q23 vs 1Q22)


0% to 3%
(annual)

•Expect low single-digit increase YoY with difficult comparisons
One-Way Truckload RPTM* growth (3)% to (6)%
(1H23 vs. 1H22)
(3.2)%
(1Q23 vs 1Q22)
(3)% to (6)%
(1H23 vs. 1H22)
•Expect weak OWT freight conditions in 2Q and 3Q, then improving in 4Q
* Net of fuel surcharge revenues
Assumptions

•Effective income tax rate of 24.3% in 1Q23 compared to 1Q22 of 24.1%. Expect annual effective tax rate in the range of 24.0% to 25.0%.
•Average truck age of 2.2 years and average trailer age of 5.1 years as of 3/31/23. Expect average truck and trailer ages of 2.2 years and 5.0 years, respectively, as of 12/31/23.






















Werner Enterprises, Inc. - Release of May 3, 2023
Page 6
Call Information

Werner Enterprises, Inc. will conduct a conference call to discuss first quarter 2023 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 May 3, 2023 at approximately 6:00 p.m. CT through June 3, 2023 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and using the access code 4255949. 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 2022 revenues of $3.3 billion, an industry-leading modern truck and trailer fleet, over 14,000 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 Annual Report on Form 10-K for the year ended December 31, 2022.

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.



Contact:
Christopher D. Wikoff
Executive Vice President, Treasurer
and Chief Financial Officer
(402) 894-3700

Source: Werner Enterprises, Inc.






Werner Enterprises, Inc. - Release of May 3, 2023
Page 7
Consolidated Financial Information

INCOME STATEMENT
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended
March 31,
2023 2022
$ % $ %
Operating revenues $ 832,714  100.0  $ 764,605  100.0 
Operating expenses:
Salaries, wages and benefits
268,315  32.2  241,996  31.6 
Fuel
91,414  11.0  88,421  11.6 
Supplies and maintenance
68,225  8.2  57,025  7.5 
Taxes and licenses
25,425  3.1  23,833  3.1 
Insurance and claims
36,485  4.4  27,492  3.6 
Depreciation and amortization 74,313  8.9  67,229  8.8 
Rent and purchased transportation
220,224  26.4  185,237  24.2 
Communications and utilities
4,733  0.6  3,926  0.5 
Other
(9,806) (1.2) (14,065) (1.8)
Total operating expenses
779,328  93.6  681,094  89.1 
Operating income 53,386  6.4  83,511  10.9 
Other expense (income):
Interest expense
7,916  1.0  1,439  0.2 
Interest income
(1,552) (0.2) (275) (0.1)
 Loss on investments in equity securities 81  —  9,806  1.3 
Other
—  73  — 
Total other expense, net 6,452  0.8  11,043  1.4 
Income before income taxes 46,934  5.6  72,468  9.5 
Income tax expense 11,400  1.3  17,433  2.3 
   Net income 35,534  4.3  55,035  7.2 
Net income attributable to noncontrolling interest (310) (0.1) (1,286) (0.2)
   Net income attributable to Werner $ 35,224  4.2  $ 53,749  7.0 
Diluted shares outstanding 63,695    65,878 
Diluted earnings per share $ 0.55  $ 0.82 




Werner Enterprises, Inc. - Release of May 3, 2023
Page 8
CONDENSED BALANCE SHEET
(In thousands, except share amounts)
March 31,
2023
December 31,
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$ 129,591  $ 107,240 
Accounts receivable, trade, less allowance of $10,240 and $10,271, respectively 460,999  518,815 
Other receivables 29,400  29,875 
Inventories and supplies
14,926  14,527 
Prepaid taxes, licenses and permits
13,956  17,699 
   Other current assets 60,904  74,459 
Total current assets
709,776  762,615 
Property and equipment 2,875,063  2,885,641 
Less – accumulated depreciation 1,020,469  1,060,365 
Property and equipment, net
1,854,594  1,825,276 
Goodwill 129,104  132,717 
Intangible assets, net 94,030  81,502 
Other non-current assets (1)
328,812  295,145 
Total assets $ 3,116,316  $ 3,097,255 
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$ 128,955  $ 124,483 
Current portion of long-term debt
5,000  6,250 
Insurance and claims accruals 80,738  78,620 
Accrued payroll
43,541  49,793 
Accrued expenses 20,057  20,358 
Other current liabilities
25,038  30,016 
Total current liabilities
303,329  309,520 
Long-term debt, net of current portion 686,250  687,500 
Other long-term liabilities 58,567  59,677 
Insurance and claims accruals, net of current portion (1)
245,900  244,946 
Deferred income taxes 312,724  313,278 
Total liabilities 1,606,770  1,614,921 
Temporary equity - redeemable noncontrolling interest 39,009  38,699 
Stockholders’ equity:
Common stock, $.01 par value, 200,000,000 shares authorized; 80,533,536
shares issued; 63,376,934 and 63,223,003 shares outstanding, respectively 805  805 
Paid-in capital
128,050  129,837 
Retained earnings
1,902,858  1,875,873 
Accumulated other comprehensive loss
(9,264) (11,292)
Treasury stock, at cost; 17,156,602 and 17,310,533 shares, respectively (551,912) (551,588)
Total stockholders’ equity 1,470,537  1,443,635 
Total liabilities, temporary equity and stockholders’ equity $ 3,116,316  $ 3,097,255 
(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 March 31, 2023 and December 31, 2022.





Werner Enterprises, Inc. - Release of May 3, 2023
Page 9
SUPPLEMENTAL INFORMATION
(Unaudited)
(In thousands)
Three Months Ended
March 31,
2023 2022
Capital expenditures, net $ 102,743  $ 37,074 
Cash flow from operations 166,847  154,957 
Return on assets (annualized) 4.5  % 8.4  %
Return on equity (annualized) 9.4  % 16.0  %


Segment Financial and Operating Statistics Information

SEGMENT INFORMATION
(Unaudited)
(In thousands)
Three Months Ended
March 31,
2023 2022
Revenues
Truckload Transportation Services $ 588,330  $ 558,417 
Werner Logistics 228,669  189,008 
Other (1)
20,501  17,513 
Corporate 475  389 
    Subtotal 837,975  765,327 
Inter-segment eliminations (2)
(5,261) (722)
     Total $ 832,714  $ 764,605 
Operating Income
Truckload Transportation Services $ 50,986  $ 76,093 
Werner Logistics 4,937  8,681 
Other (1)
549  445 
Corporate (3,086) (1,708)
     Total $ 53,386  $ 83,511 

(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.


Werner Enterprises, Inc. - Release of May 3, 2023
Page 10
OPERATING STATISTICS BY SEGMENT
(Unaudited)
Three Months Ended
March 31,
2023 2022 % Chg
Truckload Transportation Services segment
Average trucks in service 8,561  8,238  3.9  %
Average revenues per truck per week (1)
$ 4,432  $ 4,411  0.5  %
Total trucks (at quarter end)
Company 8,170  7,960  2.6  %
Independent contractor 305  265  15.1  %
Total trucks 8,475  8,225  3.0  %
Total trailers (at quarter end) 27,440  26,185  4.8  %
One-Way Truckload
Trucking revenues, net of fuel surcharge (in 000’s) $ 183,130  $ 186,760  (1.9) %
Average trucks in service 3,191  3,064  4.1  %
Total trucks (at quarter end) 3,130  3,040  3.0  %
Average percentage of empty miles 14.09  % 11.75  % 19.9  %
Average revenues per truck per week (1)
$ 4,414  $ 4,690  (5.9) %
Average % change YOY in revenues per total mile (1)
(3.2) % 20.8  %
Average % change YOY in total miles per truck per week (2.8) % (8.1) %
Average completed trip length in miles (loaded) 620  716  (13.4) %
Dedicated
Trucking revenues, net of fuel surcharge (in 000’s) $ 310,112  $ 285,601  8.6  %
Average trucks in service 5,370  5,174  3.8  %
Total trucks (at quarter end) 5,345  5,185  3.1  %
Average revenues per truck per week (1)
$ 4,441  $ 4,247  4.6  %
Werner Logistics segment
Average trucks in service 39  53  (26.4) %
Total trucks (at quarter end) 32  54  (40.7) %
Total trailers (at quarter end) 2,580  1,605  60.7  %
(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 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.



Werner Enterprises, Inc. - Release of May 3, 2023
Page 11
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 March 31,
2023 2022
Non-GAAP Adjusted Operating Income and
Non-GAAP Adjusted Operating Margin (1)
$ % of Op. Rev. $ % of Op. Rev.
Operating income and operating margin – (GAAP) $ 53,386  6.4  % $ 83,511  10.9  %
Non-GAAP adjustments:
Insurance and claims (2)
1,387  0.2  % 1,321  0.2  %
Amortization of intangible assets (3)
2,772  0.3  % 1,359  0.2  %
Non-GAAP adjusted operating income and
  non-GAAP adjusted operating margin
$ 57,545  6.9  %   $ 86,191  11.3  %


Three Months Ended March 31,
2023 2022
Non-GAAP Adjusted Net Income
Attributable to Werner and Non-GAAP
Adjusted Diluted EPS (1)
$ Diluted EPS $ Diluted EPS
Net income attributable to Werner and diluted EPS – (GAAP) $ 35,224  $ 0.55  $ 53,749  $ 0.82 
Non-GAAP adjustments:
Insurance and claims (2)
1,387  0.02  1,321  0.02 
Amortization of intangible assets, net of amount attributable to noncontrolling interest (3)
2,600  0.04  1,187  0.02 
Loss on investments in equity securities (4)
81  —  9,806  0.15 
Income tax effect of above adjustments (5)
(1,027) (0.01) (3,097) (0.05)
Non-GAAP adjusted net income attributable to
   Werner and non-GAAP adjusted diluted EPS
$ 38,265  $ 0.60    $ 62,966  $ 0.96 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – TRUCKLOAD TRANSPORTATION SERVICES (TTS) SEGMENT
(unaudited)
(In thousands)
Three Months Ended March 31,
2023 2022
Non-GAAP Adjusted Operating Income and
Non-GAAP Adjusted Operating Margin (1)
$ % of Op. Rev. $ % of Op. Rev.
Operating income and operating margin – (GAAP) $ 50,986  8.7  % $ 76,093  13.6  %
Non-GAAP adjustments:
Insurance and claims (2)
1,387  0.2  % 1,321  0.2  %
Amortization of intangible assets (3)
1,352  0.2  % 859  0.2  %
Non-GAAP adjusted operating income and
  non-GAAP adjusted operating margin
$ 53,725  9.1  %   $ 78,273  14.0  %



Werner Enterprises, Inc. - Release of May 3, 2023
Page 12
Three Months Ended March 31,
2023 2022
Non-GAAP Adjusted Operating Expenses and
Non-GAAP Adjusted Operating Ratio (1)
$ % of Op. Rev. $ % of Op. Rev.
Operating expenses and operating ratio – (GAAP) $ 537,344  91.3  % $ 482,324  86.4  %
Non-GAAP adjustments:
Insurance and claims (2)
(1,387) (0.2) % (1,321) (0.2) %
Amortization of intangible assets (3)
(1,352) (0.2) % (859) (0.2) %
Non-GAAP adjusted operating expenses and
  non-GAAP adjusted operating ratio
$ 534,605  90.9  %   $ 480,144  86.0  %

Three Months Ended
March 31,
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)
2023 2022
$ $
Operating revenues – (GAAP) $ 588,330  $ 558,417 
Less: Trucking fuel surcharge (6)
(88,301) (79,815)
Operating revenues, net of fuel surcharge – (Non-GAAP) 500,029  478,602 
Operating expenses – (GAAP) 537,344  482,324 
Non-GAAP adjustments:
Trucking fuel surcharge (6)
(88,301) (79,815)
Insurance and claims (2)
(1,387) (1,321)
Amortization of intangible assets (3)
(1,352) (859)
Non-GAAP adjusted operating expenses, net of fuel surcharge 446,304    400,329 
Non-GAAP adjusted operating income $ 53,725  $ 78,273 
Non-GAAP adjusted operating margin, net of fuel surcharge 10.7  % 16.4  %
Non-GAAP adjusted operating ratio, net of fuel surcharge 89.3  % 83.6  %

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – WERNER LOGISTICS SEGMENT
(unaudited)
(In thousands)
Three Months Ended March 31,
2023 2022
Non-GAAP Adjusted Operating Income and
Non-GAAP Adjusted Operating Margin (1)
$ % of Op. Rev. $ % of Op. Rev.
Operating income and operating margin – (GAAP) $ 4,937  2.2  % $ 8,681  4.6  %
Non-GAAP adjustments:
Amortization of intangible assets (3)
1,420  0.6  % 500  0.3  %
Non-GAAP adjusted operating income and
  non-GAAP adjusted operating margin
$ 6,357  2.8  %   $ 9,181  4.9  %

(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 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. 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) Represents non-operating mark-to-market adjustments for unrealized gains/losses on our minority equity investments, which we account for under Accounting Standards Codification 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.

(5) 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 2022 has been updated to reflect the annual incremental income tax rate.



Werner Enterprises, Inc. - Release of May 3, 2023
Page 13
(6) 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.