Werner Enterprises Reports Fourth Quarter and Annual 2012 Revenues and Earnings

  Werner Enterprises Reports Fourth Quarter and Annual 2012 Revenues and
  Earnings

Business Wire

OMAHA, Neb. -- January 28, 2013

Werner Enterprises, Inc. (NASDAQ: WERN), one of the nation's largest
transportation and logistics companies, reported revenues and earnings for the
fourth quarter and year ended December 31, 2012.

Summarized financial results for fourth quarter and year 2012 compared to
fourth quarter and year 2011 are as follows (dollars in thousands, except per
share data):

                                                                            
              Three Months Ended                     Year Ended
              December 31,                           December 31,
              2012        2011          %          2012          2011            %
                                          Change                                     Change
Total         $ 509,694    $ 507,937     0   %      $ 2,036,386    $ 2,002,850     2   %
revenues
Trucking
revenues,
net of
fuel
surcharge     $ 330,081     $ 329,110     0   %      $ 1,309,503     $ 1,310,612     0   %
Value
Added
Services
(“VAS”)
revenues      $ 77,665      $ 79,674      (3  )%     $ 320,933       $ 291,109       10  %
Operating     $ 43,124      $ 49,399      (13 )%     $ 171,444       $ 173,674       (1  )%
income
Net           $ 25,981      $ 29,368      (12 )%     $ 103,034       $ 102,757       0   %
income
Earnings
per           $ 0.35        $ 0.40        (12 )%     $ 1.40          $ 1.40          0   %
diluted
share
                                                                                         

Werner Enterprises achieved annual earnings of $103 million in 2012. We
sincerely value and appreciate the support of our customers and the
dedication, commitment, creativity and work ethic of our Werner associates who
enabled us to achieve these results.

Freight demand in the first three weeks of fourth quarter 2012 was steady but
did not show typical seasonal improvement, and was consistent with the
sluggish freight trend experienced in the latter half of third quarter 2012.
Freight demand began to show seasonal improvement in the latter part of
October 2012. This seasonal demand trend continued into early December, before
the typical seasonal decline in the last few weeks of December. Freight demand
was softer in fourth quarter 2012 compared to relatively strong demand
experienced in fourth quarter 2011. In fourth quarter 2012, customers were
generally more cautious with their shipping volumes and tightly managed
inventories during this period of economic and fiscal policy uncertainty.
Freight trends thus far in 2013 have followed typical seasonal patterns. The
pre-booked percentage of loads to trucks for the One-Way Truckload fleets to
date in 2013 is similar to the same period in 2012.

Average revenues per total mile, net of fuel surcharge, rose 1.0% in fourth
quarter 2012 compared to fourth quarter 2011 and rose 0.8% sequentially from
third quarter 2012. Fourth quarter 2011 rates were aided by several larger
sized seasonal projects and higher surge pricing, compared to fourth quarter
2012. We believe there are several truckload capacity constraints including an
older industry truck fleet, the higher cost of new trucks and trailers,
significant safety regulatory changes and a challenging driver market. We
continue to work jointly with our customers to secure sustainable
transportation solutions across all modes and to offset increased rates
through enhanced optimization and transportation solutions whenever possible.

Several initiatives designed to improve truck and driver productivity were
successful in fourth quarter 2012. Average monthly miles per truck declined
only slightly by 0.2% in fourth quarter 2012 compared to fourth quarter 2011,
compared to year-over-year declines of 3.4% in second quarter 2012 and 3.1% in
third quarter 2012. Average monthly miles per truck improved 1.3% sequentially
from third quarter 2012 to fourth quarter 2012.

In fourth quarter 2012, we averaged 7,156 trucks in service and we ended the
quarter with 7,150 trucks. This is a 40 truck increase from the end of third
quarter 2012, which followed a 215 truck decline during third quarter 2012 due
primarily to our decision to exit certain less profitable customer business.
Through new business awards, our truck count continues to increase in 2013,
further narrowing the gap to meet our 7,300 truck goal. For 2012, our
truckload operating margin percentage was 9.0%. We do not intend to consider
growing our truck fleet beyond 7,300 trucks until our truckload operating
margin percentage has reached 11% on an annualized basis.

Our primary objectives continue to be improving our operating margin
percentage and our returns on assets, equity and invested capital, while
staying true to our broad transportation services portfolio. Only through
enhanced returns can we continue our commitment to reinvest in our fleet and
our expanded portfolio of services.

We continue to diversify our business model with the goal of achieving a
balanced portfolio of revenues comprised of One-Way Truckload (which includes
the short-haul Regional, medium-to-long-haul Van and Expedited fleets),
Specialized Services and VAS. Our Specialized Services unit, primarily
Dedicated, ended the quarter with 3,295 trucks (or 46% of our total fleet).

Diesel fuel prices were 13 cents per gallon higher in fourth quarter 2012 than
in fourth quarter 2011 and were 4 cents per gallon higher than in third
quarter 2012. For the first 28 days of January 2013, the average diesel fuel
price per gallon was 2 cents higher than the average diesel fuel price per
gallon in the same period of 2012 and 14 cents lower than in first quarter
2012. The components of the Company's total fuel cost consist of and are
recorded in our income statement as follows: (i) Fuel (fuel expense for
company trucks excluding federal and state fuel taxes); (ii) Taxes and
Licenses (federal and state fuel taxes); and (iii) Rent and Purchased
Transportation (fuel component of our independent contractor costs, including
the base cost of fuel and additional fuel surcharge reimbursement for costs
exceeding the fuel base).

Capacity in our industry remains constrained by economic, safety and
regulatory factors. From 2007 to 2010, the number of new class 8 trucks built
was well below historical replacement levels for our industry. This led to the
oldest average industry truck age in 40 years. Carriers were compelled to
begin upgrading their aging truck fleets, which led to increased replacement
purchases of new and later-model used trucks during 2011. Orders for new class
8 trucks slowed during 2012. We believe these orders slowed as current freight
rate relief is not keeping pace with the increased costs and capital
requirements for new and much more expensive EPA-compliant trucks. The
significantly higher costs of new equipment and related diesel exhaust fluid
will not be recovered through a single year rate review cycle; however, we
remain committed to investing in a best in class fleet for the benefit of our
customers, our drivers and the Werner brand.

The Federal Motor Carrier Safety Administration (“FMCSA") published final
driver hours of service rules in December 2011, to be effective July 1, 2013.
Among the changes are more restrictive requirements covering driver use of the
34-hour restart rule and a new mandatory 30-minute rest period after 8 hours
on duty. The trucking industry association and consumer advocate groups have
both appealed these changes for varying reasons. The court is expected to rule
on these appeals in the spring of 2013. Assuming the rules are adopted without
change, we currently believe the new rules will result in a modest decrease in
truck productivity.

In July, Congress passed the federal transportation bill which requires the
U.S. Department of Transportation to promulgate rules and regulations
mandating the use of electronic on-board recorders (“EOBRs”) by July 2013 with
full adoption for all trucking companies by no later than July 2015. We are
the recognized industry leader for electronic logging of driver hours as we
proactively adopted a paperless log system in 1996 that was subsequently
approved for our use by the FMCSA in 1998. We believe that as EOBRs become the
industry standard and industry requirement, EOBR use will help to level the
competitive field for transit times, driver recruiting, driver retention and
rates.

The driver recruiting and retention market remained challenging in fourth
quarter 2012. Driver pay increases by our competitors, a slightly lower number
of and increased competition for truck driving school graduates in the
industry and an improved housing construction market were all factors. During
fourth quarter 2012, driver retention improved as several initiatives were
successful in lowering driver turnover. While we are not immune to
fluctuations in the driver market, we continue to believe we are in a better
position in the current market than many competitors because approximately 70%
of our driving jobs are in more attractive, shorter-haul Regional and
Dedicated fleet operations that enable us to return these drivers to their
homes on a more frequent and consistent basis.

Gains on sales of assets were $4.7 million in fourth quarter 2012 compared to
$4.8 million in fourth quarter 2011 and $5.4 million in third quarter 2012. We
sold fewer trucks and trailers in fourth quarter 2012 which resulted in
slightly lower gains. We expect to sell fewer trucks and trailers in 2013
compared to 2012. Gains on sales are reflected as a reduction of Other
Operating Expenses in our income statement.

The higher cost of new equipment results in higher depreciation expense. As of
December 31, 2012, approximately 57% of our company tractors consisted of
environmentally friendly but higher cost trucks with engines that comply with
the 2010 emissions standards. We continue to invest in equipment solutions
such as more aerodynamic truck features, idle reduction systems, tire
inflation systems and trailer skirts which improve the mile per gallon
efficiency of our fleet. Our net capital expenditures in fourth quarter 2012
were $45 million, resulting in full year 2012 net capital expenditures of $225
million. We expect our net capital expenditures for 2013 to be lower, in a
range of $100 million to $150 million. Capital expenditures in first quarter
2013 will likely be low, with the majority of 2013 capital expenditures
expected to occur in the last three calendar quarters of the year. The average
age our truck fleet as of December 31, 2012 was 2.3 years, and we expect to
maintain our average truck age at approximately this level during 2013.

To provide shippers with additional sources of managed capacity and network
analysis, we continue to develop our non-asset-based VAS segment. VAS includes
Brokerage, Freight Management, Intermodal and Werner Global Logistics
(International).

                                                                                  
                   Three Months Ended                            Year Ended
                   December 31,                                  December 31,
                   2012                 2011                   2012                    2011
Value Added
Services                                                                                      
(amounts in
thousands)         $            %         $            %         $             %         $             %
Operating          $ 77,665     100.0     $ 79,674     100.0     $ 320,933     100.0     $ 291,109     100.0
revenues
Rent and
purchased
transportation     64,799       83.4      65,829       82.6      271,104       84.5      244,194       83.9
expense
Gross margin       12,866       16.6      13,845       17.4      49,829        15.5      46,915        16.1
Other
operating          8,934        11.5      8,012        10.1      33,830        10.5      29,879        10.2
expenses
Operating          $ 3,932      5.1       $ 5,833      7.3       $ 15,999      5.0       $ 17,036      5.9
income
                                                                                                       

The following table shows the change in shipment volume and average revenue
(excluding logistics fee revenue) per shipment for all VAS shipments.

                                                                                              
                  Three Months Ended                                Year Ended
                  December 31,                                      December 31,
                  2012      2011        Difference     %          2012      2011        Difference    %
                                                         Change                                            Change
Total VAS         64,226      67,666      (3,440   )     (5  )%     265,411    256,116     9,295          4   %
shipments
Less:
Non-committed
shipments to
Truckload
segment           20,587      20,337      250           1   %      79,025      78,842      183            0   %
Net VAS           43,639      47,329      (3,690   )     (8  )%     186,386     177,274     9,112          5   %
shipments
Average
revenue per
shipment          $ 1,643     $ 1,554     $    89       6   %      $ 1,602     $ 1,529     $    73        5   %
                                                                                                               

In fourth quarter 2012, VAS revenues decreased $2.0 million or 3%, gross
margin dollars decreased $1.0 million or 7% and operating income dollars
decreased $1.9 million or 33%, compared to fourth quarter 2011. A softer
freight market, less project business and lower than planned new customer
business caused the revenues, gross margin and operating income declines. VAS
received a new customer award involving all four VAS operating units and began
managing shipments in January 2013. We continue to focus on expanding this
area of our business.

Brokerage revenues in fourth quarter 2012 decreased 5% compared to fourth
quarter 2011 due to an 8% decrease in shipment volume, partially offset by an
increase in average revenue per shipment. Brokerage gross margin percentage
decreased 100 basis points due to lower special project business, and
Brokerage operating income in fourth quarter 2012 was lower than in fourth
quarter 2011. Intermodal revenues decreased 1%, and Intermodal operating
income was lower comparing fourth quarter 2012 to fourth quarter 2011. Werner
Global Logistics revenues increased in fourth quarter 2012 compared to fourth
quarter 2011 while operating income declined.

Comparisons of the operating ratios (net of fuel surcharge revenues) for the
Truckload segment and VAS segment for fourth quarters 2012 and 2011 and the
full year 2012 and 2011 are shown below.

                                                                     
                   Three Months
                   Ended                                Year Ended
                   December 31,                         December 31,
Operating          2012     2011       Difference     2012     2011       Difference
Ratios
                                                                                     
Truckload
Transportation     88.0 %     87.1 %     0.9    %       88.4 %     88.1 %     0.3    %
Services
Value Added        94.9 %     92.7 %     2.2    %       95.0 %     94.1 %     0.9    %
Services
                                                                                     

Fluctuating fuel prices and fuel surcharge collections impact the total
company operating ratio and the Truckload segment's operating ratio when fuel
surcharges are reported on a gross basis as revenues versus netting against
fuel expenses. Eliminating fuel surcharge revenues, which are generally a more
volatile source of revenue, provides a more consistent basis for comparing the
results of operations from period to period. The Truckload segment's operating
ratios for fourth quarter 2012 and fourth quarter 2011 are 90.7% and 89.9%,
respectively, and for 2012 and 2011 are 91.0% and 90.7%, respectively, when
fuel surcharge revenues are reported as revenues instead of a reduction of
operating expenses.

Our financial position remains strong. As of December 31, 2012, we had $90.0
million of debt outstanding and $714.9 million of stockholders' equity. We
paid a $109.8 million special dividend to shareholders in December 2012. After
reducing our $250.0 million of available credit by the $90.0 million of
outstanding debt and the $33.8 million in stand-by letters of credit, we had
$126.2 million of available borrowing capacity as of December 31, 2012. In
January 2013, we repaid $20.0 million of debt.

                    
                       INCOME STATEMENT DATA
                       (Unaudited)
                       (In thousands, except per share amounts)
                       
                       Quarter       % of        Quarter       % of
                       Ended           Operating     Ended           Operating
                       12/31/2012      Revenues      12/31/2011      Revenues
Operating revenues     $ 509,694      100.0        $ 507,937      100.0  
                                                                            
Operating
expenses:
Salaries, wages        137,039         26.9          136,253         26.8
and benefits
Fuel                   100,353         19.7          100,695         19.8
Supplies and           41,338          8.1           40,778          8.0
maintenance
Taxes and licenses     22,252          4.3           22,545          4.5
Insurance and          16,797          3.3           17,329          3.4
claims
Depreciation           42,879          8.4           39,473          7.8
Rent and purchased     103,979         20.4          100,289         19.8
transportation
Communications and     3,200           0.6           3,569           0.7
utilities
Other                  (1,267    )     (0.2   )      (2,393    )     (0.5   )
Total operating        466,570        91.5         458,538        90.3   
expenses
Operating income       43,124         8.5          49,399         9.7    
                                              
Other expense
(income):
Interest expense       63              —             42              —
Interest income        (521      )     (0.1   )      (421      )     (0.1   )
Other                  (83       )     —            (210      )     —      
Total other            (541      )     (0.1   )      (589      )     (0.1   )
expense (income)
                                                                            
Income before          43,665          8.6           49,988          9.8
income taxes
Income taxes           17,684         3.5          20,620         4.0    
Net income             $ 25,981       5.1          $ 29,368       5.8    
                                                                            
Diluted shares         73,584                       73,289    
outstanding
Diluted earnings       $ 0.35                       $ 0.40    
per share
                                                                            

                               
                                  OPERATING STATISTICS
                                  Quarter Ended              Quarter Ended
                                  12/31/2012        % Change     12/31/2011
Trucking revenues, net of         $  330,081        0.3   %      $  329,110
fuel surcharge (1)
Trucking fuel surcharge           95,365            3.0   %      92,598
revenues (1)
Non-trucking revenues,            81,154            (1.1  )%     82,047
including VAS (1)
Other operating revenues (1)      3,094            (26.0 )%     4,182       
Operating revenues (1)            $  509,694       0.3   %      $  507,937  
                                                                 
Average percentage of empty       12.56       %     6.2   %      11.83       %
miles
Average trip length in miles      482               (1.0  )%     487
(loaded) (3)
Average tractors in service       7,156             (0.5  )%     7,194
Average revenues per tractor      $  3,548          0.8   %      $  3,519
per week (2)
Capital expenditures, net (1)     $  44,680                      $  78,598
Cash flow from operations (1)     $  56,381                      $  64,141
Return on assets (annualized)     7.6         %                  9.1         %
Total tractors (at quarter
end)
Company                           6,505                          6,600
Independent contractor            645                           600         
Total tractors                    7,150                          7,200
                                                                 
Total trailers (truck and         23,380                         23,045
intermodal, quarter end)
                                                                             

(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
(3) Quarter ended 12/31/2011 trip length corrected. See www.werner.com
(“Investors tab” under “Featured Documents”) for correction of prior quarterly
and annual trip length data.

                
                   INCOME STATEMENT DATA
                   (In thousands, except per share amounts)
                   
                   Year            % of        Year            % of
                   Ended             Operating     Ended             Operating
                   12/31/2012        Revenues      12/31/2011        Revenues
Operating          $ 2,036,386      100.0        $ 2,002,850      100.0  
revenues
                                                                            
Operating
expenses:
Salaries,
wages and          544,322           26.7          536,509           26.8
benefits
Fuel               401,417           19.7          412,905           20.6
Supplies and       172,505           8.5           169,386           8.5
maintenance
Taxes and          90,002            4.4           92,917            4.6
licenses
Insurance and      65,593            3.2           67,523            3.4
claims
Depreciation       166,957           8.2           158,634           7.9
Rent and
purchased          420,480           20.7          387,472           19.3
transportation
Communications     13,745            0.7           15,181            0.8
and utilities
Other              (10,079     )     (0.5   )      (11,351     )     (0.6   )
Total
operating          1,864,942        91.6         1,829,176        91.3   
expenses
Operating          171,444          8.4          173,674          8.7    
income
                                            
Other expense
(income):
Interest           288               —             85                —
expense
Interest           (1,837      )     (0.1   )      (1,448      )     —
income
Other              (173        )     —            131              —      
Total other
expense            (1,722      )     (0.1   )      (1,232      )     —      
(income)
                                                                            
Income before      173,166           8.5           174,906           8.7
income taxes
Income taxes       70,132           3.4          72,149           3.6    
Net income         $ 103,034        5.1          $ 102,757        5.1    
                                                                            
Diluted shares     73,453                         73,225      
outstanding
Diluted
earnings per       $ 1.40                         $ 1.40      
share
                                                                            

                               
                                  OPERATING STATISTICS
                                  Year                       Year
                                  Ended                          Ended
                                  12/31/2012        % Change     12/31/2011
Trucking revenues, net of         $ 1,309,503       (0.1  )%     $ 1,310,612
fuel surcharge (1)
Trucking fuel surcharge           376,104           0.7   %      373,384
revenues (1)
Non-trucking revenues,            334,534           10.9  %      301,772
including VAS (1)
Other operating revenues (1)      16,245           (4.9  )%     17,082      
Operating revenues (1)            $ 2,036,386      1.7   %      $ 2,002,850 
                                                                 
Average percentage of empty       12.29       %     5.0   %      11.71       %
miles
Average trip length in miles      481               (2.4  )%     493
(loaded) (3)
Average tractors in service       7,225             (0.2  )%     7,242
Average revenues per tractor      $ 3,486           0.2   %      $ 3,480
per week (2)
Capital expenditures, net (1)     $ 224,927                      $ 232,198
Cash flow from operations (1)     $ 255,096                      $ 264,480
Return on assets (annualized)     7.7         %                  8.3         %
Total tractors (at quarter
end)
Company                           6,505                          6,600
Independent contractor            645                           600         
Total tractors                    7,150                          7,200
                                                                 
Total trailers (truck and         23,380                         23,045
intermodal, quarter end)
                                                                             

(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.
(3) Year ended 12/31/2011 trip length corrected. See www.werner.com
(“Investors tab” under “Featured Documents”) for correction of prior quarterly
and annual trip length data.

                                         
                                         BALANCE SHEET DATA
                                         (In thousands, except share amounts)
                                                           
                                             12/31/2012          12/31/2011
                                                                 
ASSETS
                                                                 
Current assets:
Cash and cash equivalents                    $ 15,428            $ 12,412
Accounts receivable, trade, less
allowance
of $10,528 and $10,154, respectively         211,133             218,712
Other receivables                            8,004               9,213
Inventories and supplies                     23,260              30,212
Prepaid taxes, licenses and permits          14,893              15,094
Current deferred income taxes                25,139              25,805
Other current assets                         21,330             29,883      
Total current assets                         319,187            341,331     
                                                                 
Property and equipment                       1,690,490           1,625,008
Less – accumulated depreciation              696,647            682,872     
Property and equipment, net                  993,843            942,136     
                                                                 
Other non-current assets                     21,870             18,949      
                                             $ 1,334,900        $ 1,302,416 
                                                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                 
Current liabilities:
Checks issued in excess of cash balances     $ —                 $ 6,671
Accounts payable                             56,397              93,486
Current portion of long-term debt            20,000              —
Insurance and claims accruals                57,679              62,681
Accrued payroll                              21,134              19,483
Other current liabilities                    20,983             16,504      
Total current liabilities                    176,193            198,825     
                                                                 
Long-term debt, net of current portion       70,000              —
                                                                 
Other long-term liabilities                  15,779              14,194
                                                                 
Insurance and claims accruals, net of        125,500             121,250
current portion
                                                                 
Deferred income taxes                        232,531             243,000
                                                                 
Stockholders’ equity:
Common stock, $.01 par value,
200,000,000 shares
authorized; 80,533,536 shares issued;
73,246,598
and 72,847,576 shares outstanding,           805                 805
respectively
Paid-in capital                              97,457              94,396
Retained earnings                            758,617             779,994
Accumulated other comprehensive loss         (4,156      )       (5,170      )
Treasury stock, at cost; 7,286,938 and
7,685,960
shares, respectively                         (137,826    )       (144,878    )
Total stockholders’ equity                   714,897            725,147     
                                             $ 1,334,900        $ 1,302,416 

Werner Enterprises, Inc. was founded in 1956 and is a premier transportation
and logistics company, with coverage throughout North America, Asia, Europe,
South America, Africa and Australia. Werner maintains its global headquarters
in Omaha, Nebraska and maintains offices in the United States, Canada, Mexico,
China and Australia. Werner is among the five largest truckload carriers in
the United States, with a diversified portfolio of transportation services
that includes dedicated van, temperature-controlled and flatbed;
medium-to-long-haul, regional and local van; and expedited services. Werner's
Value Added Services portfolio includes freight management, truck brokerage,
intermodal, and international services. International services are provided
through Werner’s domestic and global subsidiary companies and include ocean,
air and ground transportation; freight forwarding; and customs brokerage.

Werner Enterprises, Inc.’s common stock trades on The NASDAQ Global Select
Market^SM under the symbol “WERN”. For further information about Werner, visit
the Company’s website at www.werner.com.

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 December31,
2011. 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, through the issuance of
press releases or by other methods of public disclosure.

Contact:

Werner Enterprises, Inc.
John J. Steele, 402-894-3036
Executive Vice President, Treasurer and
Chief Financial Officer
 
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