27.01.2010 21:13:00

Werner Enterprises Reports Fourth Quarter and Annual 2009 Revenues and Earnings

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, 2009.

Revenues decreased 10% to $439.6 million in fourth quarter 2009 compared to $490.6 million in fourth quarter 2008. Trucking revenues, excluding fuel surcharges, declined 8% to $319.0 million in fourth quarter 2009 compared to $346.2 million in fourth quarter 2008. Value Added Services ("VAS”) revenues increased 1% and were $62.3 million in fourth quarter 2009 compared to $61.9 million in fourth quarter 2008. Earnings per share decreased 4% to 25 cents per share in fourth quarter 2009 compared to 26 cents per share in fourth quarter 2008.

For the full year, revenues decreased 23% to $1.666 billion in 2009 compared to $2.166 billion in 2008. Trucking revenues, excluding fuel surcharges, declined 12% to $1.256 billion in 2009 compared to $1.431 billion in 2008. VAS revenues declined 18% and were $217.9 million in 2009 compared to $265.3 million in 2008. Earnings per share declined 17% to 79 cents per share in 2009 compared to 94 cents per share in 2008.

Freight shipment volumes continued to firm in fourth quarter 2009. The daily pre-books (ratio of loads to trucks) for the One-Way truckload fleets in fourth quarter 2009 held steady from levels achieved in September 2009. On a year-over-year basis, pre-books were meaningfully stronger in fourth quarter 2009 compared to decelerating pre-books during fourth quarter 2008. Management continues to believe a portion of the Company’s strengthening freight demand is caused by shippers acknowledging and adjusting to the increased risk of relying on highly leveraged carriers.

Pricing remained competitive, due primarily to the high level of customer bid activity that occurred during the first half of 2009. Much of our pricing on committed business is available for review with customers in the first half of 2010. The Company is planning for a better relative freight pricing market and more freight opportunities in 2010 compared to what transpired in the first half of 2009. Management is cautiously optimistic that the Company will experience gradual improvement in the freight market during 2010.

Strong operational achievements and cost control execution mitigated the impact of volume declines on operating results. These include:

  • Loaded miles per truck grew 2.5% in fourth quarter 2009 compared to fourth quarter 2008.
  • Empty miles per trip declined 25% to 62 miles in fourth quarter 2009 compared to 82 miles in fourth quarter 2008.
  • The tractor-to-non-driver ratio, a primary measure of employee productivity, improved 14% to 4.10 in fourth quarter 2009 compared to 3.59 in fourth quarter 2008.
  • Fuel miles per gallon ("mpg”) improved on a year-over-year basis for the eleventh consecutive quarter, rising 2.8% in fourth quarter 2009 compared to fourth quarter 2008.
  • Insurance and claims costs continued to improve, responding to the safety initiatives implemented in June 2009. Insurance cost per mile declined 23% to 8.7 cents per mile in fourth quarter 2009 compared to 11.3 cents per mile in fourth quarter 2008.
  • Cost control initiatives throughout the Company helped lower the trucking cost per mile, excluding fuel, in fourth quarter 2009 compared to fourth quarter 2008 by nearly 6 cents a mile.
  • The Company’s VAS division improved its operating income sequentially in each quarter of 2009.

The Company would like to thank all of its employees for their hard work and dedication as it faced the challenges of 2009 and positioned Werner Enterprises for the opportunities of 2010.

Management believes that excess capacity in the truckload sector continues to be supported by lender leniency that is not ultimately sustainable. There are early signs that trucking company failures are beginning to accelerate.

Werner continues to diversify its business model with the goal of a balanced portfolio of One-Way Truckload (which includes the Regional, medium-to-long-haul Van, and Expedited fleets), Dedicated, and Logistics. Within One-Way Truckload, the Company continues to reduce its medium-to-long-haul Van fleet and grow its Regional fleets. The Company’s specialized services division, primarily Dedicated, held nearly steady during the quarter in a challenging market at 3,300 trucks.

Diesel fuel prices were 5 cents a gallon higher in fourth quarter 2009 than fourth quarter 2008, and were 17 cents a gallon higher than third quarter 2009. Rapidly declining fuel prices in fourth quarter 2008 had a temporary favorable impact on net fuel costs (fuel expense, less fuel surcharge revenues) and earnings. For the first 27 days of January 2010, the average diesel fuel price per gallon was 59 cents higher than the average diesel fuel price per gallon in the same period of 2009 and 72 cents higher than in first quarter 2009. Continued lower fuel prices in the first half of 2009 resulted in a similar temporary favorable impact on net fuel costs and earnings.

The Company’s fuel mpg program continued to yield positive results. Due strictly to mpg improvements from its fuel management programs, Werner purchased 1.0 million fewer gallons of diesel fuel in fourth quarter 2009 compared to fourth quarter 2008 and 5.5 million fewer gallons in 2009 compared to 2008. This fuel savings alone reduced the Company’s carbon emissions by nearly 61,050 tons.

The Company realized gains on sales of assets of $1.3 million in fourth quarter 2009 compared to $1.1 million in fourth quarter 2008, primarily from trucks and trailers sold by Werner’s wholly-owned subsidiary, Fleet Truck Sales. Buyer demand for used trucks remains low, but seems to have stabilized. Gains on sales are reflected as a reduction of Other Operating Expenses in the Company’s income statement.

To provide shippers with additional sources of managed capacity and network analysis, Werner continues to develop its non-asset-based VAS segment. VAS includes Brokerage, Freight Management, Intermodal and Werner Global Logistics.

Value Added Services   4Q09   4Q08   2009   2008

(amounts in 000’s)

$   % $   % $   % $   %
Revenues $ 62,315   100.0 $ 61,861   100.0 $ 217,942   100.0 $ 265,262   100.0
Rent and purchased transportation

expense

 

52,096

83.6

 

52,140

84.3

 

181,215

83.1

 

225,498

85.0

Gross margin 10,219 16.4 9,721 15.7 36,727 16.9 39,764 15.0
Other operating expenses   6,198 9.9   6,821 11.0   24,377 11.2   25,194 9.5
Operating income $ 4,021 6.5 $ 2,900 4.7 $ 12,350 5.7 $ 14,570 5.5

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

        %         %
4Q09 4Q08 Difference Change 2009 2008 Difference Change

Total VAS shipments

65,249

59,557

5,692

10

%

243,286

231,754

11,532

5

%

Less: Non-committed

shipments to Truckload

segment

  (26,190 )  

 

(20,555

 

)

(5,635 ) 27 %  

 

(93,825

 

)

 

 

(71,299

 

)

 

(22,526

 

)

 

32

 

%

Net VAS shipments   39,059     39,002   57   0 %  

149,461

   

160,455

 

(10,994

)

(7

)%

 
Average revenue per shipment $ 1,373   $ 1,448   ($75 ) (5 )%

$

1,321

 

$

1,576

 

($255

)

(16

)%

VAS revenues, gross margin and operating income rose sequentially for the third consecutive quarter. On a year-over-year basis, Brokerage revenues for fourth quarter 2009 were essentially flat and operating income increased due primarily to a 100 basis point improvement in the gross margin percentage. Intermodal revenues and operating income declined due to an extremely competitive pricing market which reduced gross margins. Werner Global Logistics once again achieved meaningful revenue and operating income improvement.

Comparisons of the operating ratios (net of fuel surcharge revenues) for the Truckload segment and VAS segment for fourth quarters and full years 2009 and 2008 are shown below.

Operating Ratios

    4Q09       4Q08     Difference     2009       2008     Difference
Truckload Transportation Services   91.7 %     92.3 %   (0.6 )%   93.3 %     93.4 %   (0.1 )%
Value Added Services 93.5 95.3 (1.8 ) 94.3 94.5 (0.2 )

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 2009 and fourth quarter 2008 are 92.9% and 93.7%, respectively, and for the full year 2009 and 2008 are 94.1% and 95.0%, respectively, when fuel surcharge revenues are reported as revenues instead of a reduction of operating expenses.

The Company’s financial position remains strong. The Company ended the year with no debt and $18.4 million of cash, after paying an $89.9 million special dividend to shareholders in December 2009.

  INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)
     
Quarter % of Quarter % of
Ended Operating Ended Operating
12/31/09 Revenues 12/31/08 Revenues

 

Operating revenues $439,638   100.0   $490,574   100.0  
 
Operating expenses:
Salaries, wages and benefits 129,506 29.4 143,644 29.3
Fuel 72,863 16.6 84,515 17.2
Supplies and maintenance 35,775 8.1 40,188 8.2
Taxes and licenses 24,384 5.5 26,559 5.4
Insurance and claims 19,186 4.4 26,983 5.5
Depreciation 38,299 8.7 42,303 8.6
Rent and purchased transportation 85,578 19.5 90,256 18.4
Communications and utilities 3,624 0.8 4,751 1.0
Other (197 ) 0.0   748   0.2  
Total operating expenses 409,018   93.0   459,947   93.8  
Operating income 30,620   7.0   30,627   6.2  
 
Other expense (income):
Interest expense 17 0.0 74 0.0
Interest income (435 ) (0.1 ) (923 ) (0.2 )
Other (114 ) 0.0   (277 ) (0.1 )
Total other expense (income) (532 ) (0.1 ) (1,126 ) (0.3 )
 
Income before income taxes 31,152 7.1 31,753 6.5
Income taxes 13,148   3.0   13,106   2.7  
Net income $18,004   4.1   $18,647   3.8  
 
Diluted shares outstanding 72,335   71,836  
Diluted earnings per share $.25   $.26  
 
OPERATING STATISTICS
Quarter Ended Quarter Ended
12/31/09 % Change 12/31/08
Trucking revenues, net of fuel surcharge (1) $319,022 -7.8 % $346,158
Trucking fuel surcharge revenues (1) 54,108 -29.2 % 76,391
Non-trucking revenues, including VAS (1) 63,545 -1.0 % 64,197
Other operating revenues (1) 2,963   -22.6 % 3,828  
Operating revenues (1) $439,638   -10.4 % $490,574  
 
Average monthly miles per tractor 10,145 0.6 % 10,089
Average revenues per total mile (2) $1.440 -0.3 % $1.444
Average revenues per loaded mile (2) $1.632 -2.2 % $1.669
Average percentage of empty miles 11.82 % -12.1 % 13.45 %
Average trip length in miles (loaded) 463 -12.6 % 530
Total miles (loaded and empty) (1) 221,599 -7.5 % 239,640
Average tractors in service 7,281 -8.0 % 7,917
Average revenues per tractor per week (2) $3,370 0.2 % $3,363
Capital expenditures, net (1) $22,097 $34,587
Cash flow from operations (1) $25,134 $69,918
Return on assets (annualized) 5.7 % 5.4 %
Total tractors (at quarter end)
Company 6,575 7,000
Owner-operator 675   700  
Total tractors 7,250 7,700
 
Total trailers (truck and intermodal, quarter end) 23,880 24,940

(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.

  INCOME STATEMENT DATA
(In thousands, except per share amounts)
     
Year % of Year % of
Ended Operating Ended Operating
12/31/09 Revenues 12/31/08 Revenues

 

Operating revenues $1,666,470   100.0   $2,165,599   100.0  
 
Operating expenses:
Salaries, wages and benefits 522,962 31.4 586,035 27.1
Fuel 247,640 14.9 508,594 23.5
Supplies and maintenance 141,402 8.5 163,524 7.6
Taxes and licenses 96,406 5.8 109,443 5.0
Insurance and claims 83,458 5.0 104,349 4.8
Depreciation 155,315 9.3 167,435 7.7
Rent and purchased transportation 305,854 18.4 397,887 18.4
Communications and utilities 15,856 0.9 19,579 0.9
Other 886   0.0   (4,182 ) (0.2 )
Total operating expenses 1,569,779   94.2   2,052,664   94.8  
Operating income 96,691   5.8   112,935   5.2  
 
Other expense (income):
Interest expense 99 0.0 83 0.0
Interest income (1,779 ) (0.1 ) (3,972 ) (0.2 )
Other (466 ) 0.0   (198 ) 0.0  
Total other expense (income) (2,146 ) (0.1 ) (4,087 ) (0.2 )
 
Income before income taxes 98,837 5.9 117,022 5.4
Income taxes 42,253   2.5   49,442   2.3  
Net income $56,584   3.4   $67,580   3.1  
 
Diluted shares outstanding 72,075   71,658  
Diluted earnings per share $.79   $.94  
 
OPERATING STATISTICS
Year Year
Ended Ended
12/31/09 % Change 12/31/08
Trucking revenues, net of fuel surcharge (1) $1,256,355 -12.2 % $1,430,560
Trucking fuel surcharge revenues (1) 176,744 -60.1 % 442,614
Non-trucking revenues, including VAS (1) 222,159 -18.9 % 273,896
Other operating revenues (1) 11,212   -39.5 % 18,529  
Operating revenues (1) $1,666,470   -23.0 % $2,165,599  
 
Average monthly miles per tractor 9,936 -2.3 % 10,165
Average revenues per total mile (2) $1.439 -1.5 % $1.461
Average revenues per loaded mile (2) $1.645 -2.4 % $1.686
Average percentage of empty miles 12.52 % -6.2 % 13.35 %
Average trip length in miles (loaded) 463 -13.9 % 538
Total miles (loaded and empty) (1) 872,856 -10.9 % 979,211
Average tractors in service 7,321 -8.8 % 8,028
Average revenues per tractor per week (2) $3,300 -3.7 % $3,427
Capital expenditures, net (1) $98,846 $114,978
Cash flow from operations (1) $194,440 $259,130
Return on assets (annualized) 4.5 % 5.0 %
Total tractors (at quarter end)
Company 6,575 7,000
Owner-operator 675   700  
Total tractors 7,250 7,700
 
Total trailers (truck and intermodal, quarter end) 23,880 24,940

(1) Amounts in thousands.
(2) Net of fuel surcharge revenues.

 

 

BALANCE SHEET DATA

(In thousands, except share amounts)
 
 
12/31/09 12/31/08
 
ASSETS
 
Current assets:
Cash and cash equivalents $18,430 $48,624
Accounts receivable, trade, less allowance
of $9,167 and $9,555, respectively 180,740 185,936
Other receivables 10,366 18,739
Inventories and supplies 12,725 10,644
Prepaid taxes, licenses and permits 14,628 16,493
Current deferred income taxes 24,808 30,789
Other current assets 22,807   20,659  
Total current assets 284,504   331,884  
 
Property and equipment 1,580,711 1,613,102
Less – accumulated depreciation 708,809   686,463  
Property and equipment, net 871,902   926,639  
 
Other non-current assets 16,603   16,795  
 
$1,173,009   $1,275,318  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $47,056 $46,684
Current portion of long-term debt - 30,000
Insurance and claims accruals 65,667 79,830
Accrued payroll 17,567 25,850
Other current liabilities 16,451   19,006  
Total current liabilities 146,741   201,370  
 
Other long-term liabilities 8,760 7,406
 
Insurance and claims accruals, net of current portion 113,500 120,500
 
Deferred income taxes 199,358 200,512
 
Stockholders’ equity:
Common stock, $.01 par value, 200,000,000 shares authorized;
80,533,536 shares issued; 71,896,512 and 71,576,267
shares outstanding, respectively 805 805
Paid-in capital 92,389 93,343
Retained earnings 778,890 826,511
Accumulated other comprehensive loss (5,556 ) (7,146 )
Treasury stock, at cost; 8,637,024 and 8,957,269
shares, respectively (161,878 ) (167,983 )
Total stockholders’ equity 704,650   745,530  
$1,173,009   $1,275,318  

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, medium-to-long-haul, regional and local van capacity, expedited, temperature-controlled and flatbed services. Werner's Value Added Services portfolio includes freight management, truck brokerage, intermodal, load/mode and network optimization and freight forwarding. Werner, through its subsidiary companies, is a licensed U.S. NVOCC, U.S. Customs Broker, Class A Freight Forwarder in China, licensed China NVOCC, TSA-approved Indirect Air Carrier, and IATA Accredited Cargo Agent.

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

Note: 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, 2008 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009. For those reasons, undue reliance should not be placed on any such 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.

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