Werner Enterprises Reports First Quarter 2013 Revenues and Earnings

  Werner Enterprises Reports First Quarter 2013 Revenues and Earnings

Business Wire

OMAHA, Neb. -- April 18, 2013

Werner Enterprises, Inc. (NASDAQ: WERN), one of the nation's largest
transportation and logistics companies, reported revenues and earnings for the
first quarter ended March 31, 2013.

Summarized financial results for first quarter 2013 compared to first quarter
2012 are as follows (dollars in thousands, except per share data):

                                                                 
                                        Three Months Ended
                                        March 31,
                                        2013         2012           % Change
Total revenues                          $ 492,887      $ 498,376      (1   )%
Trucking revenues, net of fuel          313,400        321,226        (2   )%
surcharge
Value Added Services (“VAS”)            82,510         77,517         6    %
revenues
Operating income                        28,693         35,402         (19  )%
Net income                              17,511         21,245         (18  )%
Earnings per diluted share              0.24           0.29           (18  )%
                                                                           

Werner Enterprises had an 18% decrease in earnings per diluted share in first
quarter 2013 compared to first quarter 2012. Year-over-year earnings
improvement in first quarter 2012 compared to first quarter 2011 was 30%, and
in first quarter 2011 compared to first quarter 2010 was 49%.

First quarter 2013 freight demand (as measured by our daily morning ratio of
loads to trucks in our One-Way Truckload network) followed typical seasonal
patterns and was similar to first quarter 2012. As we noted a year ago in our
first quarter 2012 earnings release, unusually mild winter weather in first
quarter 2012 had a modest positive impact on that quarter's operational
efficiency and certain operating costs. We experienced more severe winter
weather in first quarter 2013, which had a modest negative impact on truck
productivity and caused operating expenses in the current quarter to be
somewhat higher. We also had startup costs for new business added during first
quarter 2013 in our Logistics, Dedicated and One-Way Truckload business units.
To date in April 2013, we are experiencing softer freight demand trends
compared to the same period in April 2012.

Average revenues per total mile, net of fuel surcharge, rose 1.3% in first
quarter 2013 compared to first quarter 2012. There was a minimal amount of
base freight rate increases in first quarter 2013, as many customer bids were
in process during first quarter 2013. We currently expect bid activity to
remain high, as it normally does, into second quarter 2013. Spot market rates
were lower year-over-year in January and February 2013 and strengthened to
slightly positive on a year-over-year basis in March 2013. 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.

Average monthly miles per truck declined by 3.2% in first quarter 2013
compared to first quarter 2012. We attribute this decrease to (i) more severe
winter weather in 2013, (ii) one less business day in first quarter 2013 (due
to leap year in first quarter 2012) and (iii) the Easter holiday falling on
the last day of first quarter 2013 compared to the second week of April in
2012.

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. In first quarter 2013, we averaged 7,157 trucks
in service and we ended the quarter with 7,090 trucks (a decrease of 60 from
the end of fourth quarter 2012). Our Specialized Services unit, primarily
Dedicated, ended the quarter with 3,495 trucks (or 49% of our total fleet).
During first quarter 2013, we shifted 200 trucks from One-Way Truckload to
Dedicated due to new business awards.

Diesel fuel prices were 4 cents per gallon lower in first quarter 2013 than in
first quarter 2012 and were 4 cents per gallon lower than in fourth quarter
2012. For the first 18 days of April 2013, the average diesel fuel price per
gallon was 24 cents lower than the average diesel fuel price per gallon in the
same period of 2012 and 2 cents higher than in second 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 and safety regulatory
factors. Following the 2008 recession, class 8 truck builds have been low,
resulting in an industry average truck age that remains historically high at
6.6 years. It is very difficult for many smaller and medium size private
carriers to replace their older, lower-value trucks with much higher cost,
EPA-compliant new trucks, which significantly reduces the risk of trucks being
added to the market. We reduced the average age of our much younger truck
fleet by half a year during 2011 and 2012, with net capital expenditures
totaling $457 million during that two-year period. The significantly higher
cost of new trucks and resulting higher depreciation expense and related
diesel exhaust fluid costs is not being recovered through a single year
customer rate review cycle. We continue to invest in equipment solutions such
as more aerodynamic truck features, idle reduction systems, tire inflation
systems and trailer skirts to improve the mile per gallon efficiency of our
fleet. Net capital expenditures of $21.3 million in first quarter 2013 were
low as planned, and the majority of our 2013 capital expenditures are expected
to occur in the last three calendar quarters of the year. We expect our net
capital expenditures for the full year 2013 to be in a range of $100 million
to $150 million. The average age our truck fleet as of March 31, 2013 was 2.4
years, and our goal is to maintain our average truck age at approximately this
level during 2013. 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 both
appealed these changes before the court in March 2013. The court has not yet
issued a ruling. Assuming the rules are adopted without change, we currently
believe the new rules will result in a decrease in truck productivity and
could tighten up supply relative to demand in the freight market.

In July 2012, 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 September 2013
with full adoption for all trucking companies by no later than September 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 became more challenging during
first quarter 2013. Significant factors included a declining number of and
increased competition for driver training school graduates, a gradually
declining national unemployment rate and a strengthening housing construction
market. 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 $3.5 million in first quarter 2013 compared to
$4.7 million in first quarter 2012 and $4.7 million in fourth quarter 2012. We
sold fewer trucks and trailers in first quarter 2013 and had slightly lower
average gains per truck and trailer. 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.

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
                                March 31,
                                2013                    2012
Value Added Services            $            %          $            %
(amounts in thousands)
Operating revenues              $ 82,510       100.0      $ 77,517       100.0
Rent and purchased              69,197        83.9       66,026        85.2
transportation expense
Gross margin                    13,313         16.1       11,491         14.8
Other operating expenses        9,700         11.7       7,505         9.7
Operating income                $ 3,613       4.4        $ 3,986       5.1
                                                                         

In first quarter 2013, VAS revenues increased $5.0 million or 6%, and
operating income dollars decreased $0.4 million or 9%, compared to first
quarter 2012. For the same periods, VAS gross margin dollars increased $1.8
million or 16%, and other operating expenses increased $2.2 million or 29%;
these changes are partially attributed to Intermodal's development of its own
drayage fleet, which had the effect of lowering rent and purchased
transportation expense and increasing other operating expenses. During first
quarter 2013, VAS implemented a new customer business award involving all four
VAS operating units and began managing shipments. We continue to focus on
expanding this area of our business. Brokerage revenues in first quarter 2013
increased 3% compared to first quarter 2012 due to an increase in average
revenue per shipment, partially offset by a 2% decrease in shipment volume.
Brokerage gross margin percentage decreased 64 basis points due to rising
capacity costs, and Brokerage operating income in first quarter 2013 was lower
than in first quarter 2012. Intermodal revenues increased 8%, and Intermodal
operating income was lower comparing first quarter 2013 to first quarter 2012.
Werner Global Logistics revenues and operating income increased in first
quarter 2013 compared to first quarter 2012.

Comparisons of the operating ratios for the Truckload segment (net of fuel
surcharge revenues of $91.6 million in first quarter 2013 and $93.2 million in
first quarter 2012) and the VAS segment are shown below.

                                                       
                                      Three Months
                                      Ended
                                      March 31,
Operating Ratios                      2013     2012       Difference
Truckload Transportation Services     92.6 %     90.3 %     2.3    %
Value Added Services                  95.6 %     94.9 %     0.7    %
                                                                   

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 first quarter 2013 and first quarter 2012 are 94.2% and 92.5%,
respectively, when fuel surcharge revenues are reported as revenues instead of
a reduction of operating expenses.

Our financial position remains strong. During first quarter 2013, we repaid
$50.0 million of debt, and as of March 31, 2013, we had $40.0 million of debt
outstanding and $731.1 million of stockholders' equity.

                    
                       INCOME STATEMENT
                       (Unaudited)
                       (In thousands, except per share amounts)
                       
                       Quarter       % of        Quarter       % of
                       Ended           Operating     Ended           Operating
                       3/31/2013       Revenues      3/31/2012       Revenues
                                                                            
Operating revenues     $ 492,887      100.0        $ 498,376      100.0  
                                                                            
Operating
expenses:
Salaries, wages        133,105         27.0          133,848         26.9
and benefits
Fuel                   96,793          19.6          102,937         20.6
Supplies and           43,128          8.8           41,837          8.4
maintenance
Taxes and licenses     21,624          4.4           22,532          4.5
Insurance and          19,801          4.0           19,224          3.9
claims
Depreciation           42,331          8.6           40,671          8.1
Rent and purchased     106,318         21.6          100,510         20.2
transportation
Communications and     3,142           0.6           3,819           0.8
utilities
Other                  (2,048    )     (0.4   )      (2,404    )     (0.5   )
Total operating        464,194        94.2         462,974        92.9   
expenses
Operating income       28,693         5.8          35,402         7.1    
                       
Other expense
(income):
Interest expense       144             —             142             —
Interest income        (505      )     (0.1   )      (422      )     (0.1   )
Other                  (10       )     —            (24       )     —      
Total other            (371      )     (0.1   )      (304      )     (0.1   )
expense (income)
                                                                            
Income before          29,064          5.9           35,706          7.2
income taxes
Income taxes           11,553         2.3          14,461         2.9    
Net income             $ 17,511       3.6          $ 21,245       4.3    
                                                                            
Diluted shares         73,782                       73,390    
outstanding
Diluted earnings       $ 0.24                       $ 0.29    
per share
                                                                            

                                   
                                      SEGMENT INFORMATION
                                      (Unaudited)
                                      (In thousands)
                                      
                                      Quarter Ended   Quarter Ended
                                      3/31/2013         3/31/2012
Revenues
Truckload Transportation Services     $  408,900        $  417,490
Value Added Services                  82,510            77,517
Other                                 2,044             3,057
Corporate                             650              1,075       
Subtotal                              494,104           499,139
Inter-segment eliminations (1)        (1,217      )     (763        )
Total                                 $  492,887       $  498,376  
                                                        
Operating Income
Truckload Transportation Services     $  23,615         $  31,364
Value Added Services                  3,613             3,986
Other                                 905               504
Corporate                             560              (452        )
Total                                 $  28,693        $  35,402   
                                                                    

(1) Inter-segment eliminations represent transactions between reporting
segments that are eliminated in consolidation. 2012 VAS segment revenues have
been revised to conform with the current presentation.

                               
                                  OPERATING STATISTICS BY SEGMENT
                                  (Unaudited)
                                                                 
                                  Quarter Ended     Quarter Ended
                                  3/31/2013         3/31/2012         % Change
Truckload Transportation
Services segment
Average percentage of empty       13.03      %      11.88      %      9.7   %
miles
Average trip length in miles      465               491               (5.3  )%
(loaded) (1)
Average tractors in service       7,157             7,195             (0.5  )%
Average revenues per tractor      $   3,368         $   3,434         (1.9  )%
per week (2)
Total tractors (at quarter
end)
Company                           6,425             6,685
Independent contractor            665              615        
Total tractors                    7,090             7,300
                                                                      
Total trailers (truck and         23,680            23,165
intermodal, quarter end)
                                                                      
Value Added Services segment
Total VAS shipments               64,366            66,820            (3.7  )%
Less: Non-committed shipments     19,946           19,157           4.1   %
to truckload segment
Net VAS shipments                 44,420           47,663           (6.8  )%
Average revenue per shipment      $   1,677        $   1,523        10.1  %
                                                                            

(1) Quarter ended 3/31/2012 trip length corrected. See www.werner.com
(“Investors tab” under “Featured Documents”) for correction of prior quarterly
and annual trip length data.
(2) Net of fuel surcharge revenues.

                               
                                  SUPPLEMENTAL INFORMATION
                                  (Unaudited)
                                  (In thousands)
                                  
                                  Quarter Ended   Quarter Ended
                                  3/31/2013         3/31/2012
Capital expenditures, net         $  21,306         $  82,549
Cash flow from operations         76,606            83,999
Return on assets (annualized)     5.3        %      6.4        %
                                                               

                                       
                                         CONDENSED BALANCE SHEET
                                         (In thousands, except share amounts)
                                                             
                                          3/31/2013             12/31/2012
                                          (Unaudited)
ASSETS
                                                                 
Current assets:
Cash and cash equivalents                 $  19,529              $ 15,428
Accounts receivable, trade, less
allowance
of $10,592 and $10,528, respectively      219,010                211,133     
Other receivables                         9,621                  8,004       
Inventories and supplies                  22,528                 23,260      
Prepaid taxes, licenses and permits       11,088                 14,893      
Current deferred income taxes             24,869                 25,139      
Other current assets                      21,229                21,330      
Total current assets                      327,874               319,187     
                                                                 
Property and equipment                    1,688,715              1,690,490
Less – accumulated depreciation           715,878               696,647     
Property and equipment, net               972,837               993,843     
                                                                 
Other non-current assets                  22,263                21,870      
                                          $  1,322,974          $ 1,334,900 
                                                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                 
Current liabilities:
Accounts payable                          $  62,724              $ 56,397
Current portion of long-term debt         —                      20,000
Insurance and claims accruals             61,155                 57,679
Accrued payroll                           23,556                 21,134
Income taxes payable                      14,491                 1,544
Other current liabilities                 18,849                19,439      
Total current liabilities                 180,775               176,193     
                                                                 
Long-term debt, net of current            40,000                 70,000
portion
                                                                 
Other long-term liabilities               16,341                 15,779
                                                                 
Insurance and claims accruals, net of     127,950                125,500
current portion
                                                                 
Deferred income taxes                     226,833                232,531
                                                                 
Stockholders’ equity:
Common stock, $.01 par value,
200,000,000 shares
authorized; 80,533,536 shares issued;
73,272,124
and 73,246,598 shares outstanding,        805                    805
respectively
Paid-in capital                           98,403                 97,457
Retained earnings                         772,464                758,617
Accumulated other comprehensive loss      (3,193        )        (4,156      )
Treasury stock, at cost; 7,261,412
and 7,286,938
shares, respectively                      (137,404      )        (137,826    )
Total stockholders’ equity                731,075                714,897   
                                          $  1,322,974          $ 1,334,900 
                                                                             

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,
2012.

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