Werner Enterprises Reports Third Quarter 2009 Revenues and Earnings

http://www.businesswire.com/news/home/20091019006490/en

OMAHA, Neb.--(Business Wire)--
Werner Enterprises, Inc. (NASDAQ: WERN), one of the nation`s largest
transportation and logistics companies, reported revenues and earnings for the
third quarter ended September 30, 2009.

Revenues decreased 27% to $429.3 million in third quarter 2009 compared to
$584.1 million in third quarter 2008. Trucking revenues, excluding fuel
surcharges, declined 13% to $319.3 million in third quarter 2009 compared to
$367.4 million in third quarter 2008. Value Added Services ("VAS") revenues
declined 22% for the reasons explained later in this earnings release and were
$57.7 million in third quarter 2009 compared to $73.6 million in third quarter
2008. VAS revenues increased 14% from second quarter 2009 to third quarter 2009.
Earnings per diluted share decreased 16% to 26 cents in third quarter 2009
compared to 31 cents in third quarter 2008. Earnings per diluted share increased
from 10 cents in first quarter 2009 to 18 cents in second quarter 2009 to 26
cents in third quarter 2009.

The freight market continued to be challenging in third quarter 2009, however
freight volumes showed some encouraging seasonal improvement as the quarter
progressed. Shipper destocking of inventory that occurred earlier this year has
slowed and stabilized inventory levels, which had a sequentially positive impact
on freight shipments. Also, management believes a portion of the Company`s
improving freight demand is caused by shippers acknowledging and adjusting to
the increasing risk of relying on highly leveraged carriers. Freight shipment
trends in fourth quarter 2009 will depend on the strength of consumer demand
during the holiday season. Pricing remains extremely competitive, due
principally to the high level of customer bid programs that occurred in the
first half of 2009.

Werner proactively adapted to the softer freight market conditions by reducing
its average fleet size by 10% when comparing third quarter 2009 to third quarter
2008. Fewer trucks and 1% lower miles per truck reduced the Company`s total
miles by 11% over this same period. Having fewer trucks in service also lowered
the Company`s freight requirements and thereby reduced the Company`s need to
book less attractive and less profitable freight to keep its trucks and drivers
productive. Management believes that excess capacity in the trucking industry
continues to be supported by lender leniency that is not ultimately sustainable.
Based on current market conditions and as a commitment to its customer base, the
Company does not plan to make further reductions to its fleet, unless there is a
significant decline in the freight market or a loss of customer business.

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 fleet. The Company`s specialized services division, primarily
Dedicated, increased its fleet in a difficult market to over 3,350 trucks.

Diesel fuel prices were lower by about $1.60 per gallon in third quarter 2009
compared to third quarter 2008. Diesel fuel prices rose during second quarter
2008 and into July 2008, before declining rapidly during the last five months of
2008. Lower diesel fuel prices in third quarter 2009 helped to reduce the cost
of non-billable gallons used for truck idle time, empty miles, and out-of-route
miles. In addition, the Company continued to achieve meaningful fuel miles per
gallon ("mpg") improvements through its ongoing fuel management programs, which
also helped reduce the Company`s fuel costs. Due strictly to mpg improvements
from these fuel management programs, which began in March 2008, Werner purchased
1.2 million fewer gallons of diesel fuel in third quarter 2009 compared to third
quarter 2008. This fuel savings alone reduced the Company`s carbon emissions by
nearly 13,000 tons.

For the first 19 days of October 2009 fuel prices have increased 29 cents per
gallon and averaged 81 cents per gallon less than the same period of 2008.
During periods of rising fuel prices, a lag occurs between the timing of the
fuel cost increases and the delayed recovery of fuel surcharge revenues. As
noted in the Company`s prior earnings releases, the large decline in diesel fuel
prices in the second half of 2008 had a temporary favorable impact on net fuel
costs (fuel expense, less fuel surcharge revenues) in third quarter 2008 and
fourth quarter 2008.

In the latter months of 2008, the Company intensified its efforts to
aggressively manage controllable costs and adapt to a smaller fleet. In addition
to raising fuel mpg, during the first nine months of 2009 Werner improved its
trucking tractor-to-non-driver ratio by 14% and reduced numerous other operating
expenses. Superior service to customers, both external and internal, was not
compromised. In addition, a broad-based, company-wide safety campaign was
implemented in June 2009 with the objective of reducing the frequency and
severity of accidents and lowering insurance and claims expense. Initial results
from this safety initiative, while in the early stages of development, are
encouraging.

Werner`s wholly owned subsidiary, Fleet Truck Sales, realized lower gains on
sales of assets, primarily trucks and trailers, of $0.9 million in third quarter
2009 compared to $2.8 million in third quarter 2008. Buyer demand for used
trucks and trailers remains low due to the weak freight market and recessionary
economy. As a result, the average gains per truck and trailer sold decreased in
third quarter 2009 compared to third quarter 2008. 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 (amounts in 000`s) 3Q09 3Q08
Revenues $ 57,685 100.0 % $ 73,586 100.0 %
Rent and purchased transportation expense 47,840 82.9 62,838 85.4
Gross margin 9,845 17.1 10,748 14.6
Other operating expenses 6,040 10.5 6,429 8.7
Operating income $ 3,805 6.6 $ 4,319 5.9

YTD09 YTD08
Revenues $ 155,627 100.0 % $ 203,401 100.0 %
Rent and purchased transportation expense 129,119 83.0 173,358 85.2
Gross margin 26,508 17.0 30,043 14.8
Other operating expenses 18,179 11.7 18,373 9.1
Operating income $ 8,329 5.3 $ 11,670 5.7

VAS revenues, gross margins, and operating income declined in third quarter 2009
compared to third quarter 2008 due to three factors: (1) a reduction in the
average revenue per shipment of 19% due to lower fuel prices and lower customer
rates, (2) shifting significantly more shipments not committed to third-party
capacity providers to the Truckload Transportation Services ("Truckload")
segment to help cushion the impact of a soft freight market, which resulted in
lower revenues and gross margin in the VAS segment and (3) a reduction in the
number of industry freight shipments because of the weaker freight market and
recessionary economy. The following table shows the change in shipment volume
and average revenue (excluding logistics fee revenue) per shipment for all VAS
shipments:

3Q09 3Q08 Difference % Change
Total VAS shipments 64,679 60,950 3,729 6 %
Less: Non-committed shipments to (25,290 ) (17,655 ) (7,635 ) 43 %
Truckload segment
Net VAS shipments 39,389 43,295 (3,906 ) -9 %

Average revenue per shipment $ 1,325 $ 1,642 ($317 ) -19 %

Brokerage revenues declined due to the factors described in the paragraph above,
however its gross margin percentage improved by 160 basis points. Freight
Management revenues declined due to reduced shipments with existing customers.
Intermodal revenues and gross margins declined due to an extremely weak and
competitive intermodal market in third quarter 2009. Werner Global Logistics
achieved meaningful revenue and profit improvement.

Comparisons of the operating ratios (net of fuel surcharge revenues) for the
Truckload segment and VAS segment for third quarters 2009 and 2008 and
year-to-date 2009 and 2008 are shown below.

Operating Ratios 3Q09 3Q08 Difference
Truckload Transportation Services 90.5 % 91.0 % (0.5 )%
Value Added Services 93.4 94.1 (0.7 )

YTD09 YTD08 Difference
Truckload Transportation Services 93.8 % 93.8 % 0.0 %
Value Added Services 94.7 94.3 0.4

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
third quarter 2009 and third quarter 2008 are 91.8% and 93.4%, respectively, and
for year-to-date 2009 and 2008 are 94.5% and 95.3%, 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 third quarter
2009 with no debt and $105.8 million of cash. Stockholder`s equity was $776.4
million.

INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)

Quarter % of Quarter % of
Ended Operating Ended Operating
9/30/09 Revenues 9/30/08 Revenues

Operating revenues $ 429,273 100.0 $ 584,057 100.0

Operating expenses:
Salaries, wages and benefits 130,885 30.5 150,616 25.8
Fuel 66,001 15.4 145,280 24.9
Supplies and maintenance 34,403 8.0 41,566 7.1
Taxes and licenses 23,665 5.5 26,733 4.6
Insurance and claims 20,016 4.7 28,727 4.9
Depreciation 37,708 8.8 41,653 7.1
Rent and purchased transportation 79,948 18.6 107,948 18.5
Communications and utilities 3,841 0.9 4,769 0.8
Other 1 0.0 (1,257 ) (0.2 )
Total operating expenses 396,468 92.4 546,035 93.5
Operating income 32,805 7.6 38,022 6.5

Other expense (income):
Interest expense 3 0.0 3 0.0
Interest income (418 ) (0.1 ) (1,012 ) (0.2 )
Other (100 ) 0.0 27 0.0
Total other expense (income) (515 ) (0.1 ) (982 ) (0.2 )
Income before income taxes 33,320 7.7 39,004 6.7
Income taxes 14,328 3.3 16,558 2.9
Net income $ 18,992 4.4 $ 22,446 3.8

Diluted shares outstanding 72,110 71,825
Diluted earnings per share $ .26 $ .31

OPERATING STATISTICS
Quarter Ended Quarter Ended
9/30/09 % Change 9/30/08
Trucking revenues, net of fuel surcharge (1) $ 319,291 -13.1 % $ 367,401
Trucking fuel surcharge revenues (1) 49,477 -63.5 % 135,525
Non-trucking revenues, including VAS (1) 58,499 -23.1 % 76,070
Other operating revenues (1) 2,006 -60.4 % 5,061
Operating revenues (1) $ 429,273 -26.5 % $ 584,057

Average monthly miles per tractor 10,184 -1.2 % 10,306
Average revenues per total mile (2) $ 1.440 -2.7 % $ 1.480
Average revenues per loaded mile (2) $ 1.637 -3.6 % $ 1.699
Average percentage of empty miles 12.01 % -6.8 % 12.88 %
Average trip length in miles (loaded) 463 -14.1 % 539
Total miles (loaded and empty) (1) 221,675 -10.7 % 248,197
Average tractors in service 7,256 -9.6 % 8,028
Average revenues per tractor per week (2) $ 3,385 -3.9 % $ 3,521
Capital expenditures, net (1) $ 50,004 $ 14,421
Cash flow from operations (1) $ 68,956 $ 69,002
Return on assets (annualized) 6.0 % 6.5 %
Total tractors (at quarter end)
Company 6,635 7,335
Owner-operator 690 705
Total tractors 7,325 8,040

Total trailers (truck and intermodal, quarter end) 24,310 24,140

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

INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share amounts)

Nine Months % of Nine Months % of
Ended Operating Ended Operating
9/30/09 Revenues 9/30/08 Revenues

Operating revenues $ 1,226,832 100.0 $ 1,675,025 100.0

Operating expenses:
Salaries, wages and benefits 393,456 32.1 442,391 26.4
Fuel 174,777 14.2 424,079 25.3
Supplies and maintenance 105,627 8.6 123,336 7.4
Taxes and licenses 72,022 5.9 82,884 4.9
Insurance and claims 64,272 5.2 77,366 4.6
Depreciation 117,016 9.5 125,132 7.5
Rent and purchased transportation 220,276 18.0 307,631 18.4
Communications and utilities 12,232 1.0 14,828 0.9
Other 1,083 0.1 (4,930 ) (0.3 )
Total operating expenses 1,160,761 94.6 1,592,717 95.1
Operating income 66,071 5.4 82,308 4.9

Other expense (income):
Interest expense 82 0.0 9 0.0
Interest income (1,344 ) (0.1 ) (3,049 ) (0.2 )
Other (352 ) 0.0 79 0.0
Total other expense (income) (1,614 ) (0.1 ) (2,961 ) (0.2 )
Income before income taxes 67,685 5.5 85,269 5.1
Income taxes 29,105 2.4 36,336 2.2
Net income $ 38,580 3.1 $ 48,933 2.9

Diluted shares outstanding 72,027 71,575
Diluted earnings per share $ .54 $ .68

OPERATING STATISTICS
YTD 09 % Change YTD 08
Trucking revenues, net of fuel surcharge (1) $ 937,333 -13.6 % $ 1,084,402
Trucking fuel surcharge revenues (1) 122,636 -66.5 % 366,223
Non-trucking revenues, including VAS (1) 158,614 -24.4 % 209,699
Other operating revenues (1) 8,249 -43.9 % 14,701
Operating revenues (1) $ 1,226,832 -26.8 % $ 1,675,025

Average monthly miles per tractor 9,866 -3.2 % 10,189
Average revenues per total mile (2) $ 1.439 -1.8 % $ 1.466
Average revenues per loaded mile (2) $ 1.650 -2.4 % $ 1.691
Average percentage of empty miles 12.76 % -4.1 % 13.31 %
Average trip length in miles (loaded) 463 -14.3 % 540
Total miles (loaded and empty) (1) 651,257 -11.9 % 739,571
Average tractors in service 7,334 -9.1 % 8,065
Average revenues per tractor per week (2) $ 3,277 -5.0 % $ 3,448
Capital expenditures, net (1) $ 76,749 $ 80,391
Cash flow from operations (1) $ 169,306 $ 189,212
Return on assets (annualized) 4.1 % 4.8 %
Total tractors (at quarter end)
Company 6,635 7,335
Owner-operator 690 705
Total tractors 7,325 8,040

Total trailers (truck and intermodal, quarter end) 24,310 24,140

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

BALANCE SHEET DATA
(In thousands, except share amounts)

9/30/09 12/31/08
(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents $ 105,750 $ 48,624
Accounts receivable, trade, less allowance
of $9,438 and $9,555, respectively 180,390 185,936
Other receivables 11,514 18,739
Inventories and supplies 12,486 10,644
Prepaid taxes, licenses and permits 6,544 16,493
Current deferred income taxes 33,343 30,789
Other current assets 18,730 20,659
Total current assets 368,757 331,884

Property and equipment 1,579,769 1,613,102
Less - accumulated depreciation 687,993 686,463
Property and equipment, net 891,776 926,639

Other non-current assets 16,167 16,795

$ 1,276,700 $ 1,275,318

LIABILITIES AND STOCKHOLDERS` EQUITY

Current liabilities:
Accounts payable $ 48,122 $ 46,684
Current portion of long-term debt - 30,000
Insurance and claims accruals 76,297 79,830
Accrued payroll 27,838 25,850
Other current liabilities 22,603 19,006
Total current liabilities 174,860 201,370

Other long-term liabilities 8,199 7,406

Insurance and claims accruals, net of current portion 120,500 120,500

Deferred income taxes 196,739 200,512

Stockholders` equity:
Common stock, $.01 par value, 200,000,000 shares
authorized; 80,533,536 shares issued; 71,755,881
and 71,576,267 shares outstanding, respectively 805 805
Paid-in capital 92,897 93,343
Retained earnings 854,345 826,511
Accumulated other comprehensive loss (7,149 ) (7,146 )
Treasury stock, at cost; 8,777,655 and 8,957,269
shares, respectively (164,496 ) (167,983 )
Total stockholders` equity 776,402 745,530
$ 1,276,700 $ 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.

Werner Enterprises, Inc.
John J. Steele, 402-894-3036
Executive Vice President, Treasurer and
Chief Financial Officer
or
Robert E. Synowicki, Jr., 402-894-3350
Executive Vice President and
Chief Information Officer

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