Werner Enterprises Reports Second Quarter 2024 Results

Rhea-AI Summary

Werner Enterprises reported second quarter 2024 results with total revenues of $760.8 million, down 6% year-over-year. Operating income decreased 58% to $19.6 million, while operating margin fell 320 basis points to 2.6%. Diluted EPS dropped 68% to $0.15. The company faced industry-wide headwinds but saw improvements in One-Way Truckload production and Mexico cross-border business. Werner implemented cost reduction measures and advanced its technology strategy. The Truckload Transportation Services segment saw a 6% revenue decline, while the Logistics segment experienced a 7% decrease. Despite challenges, Werner remains focused on positioning for market recovery and creating long-term shareholder value.

Positive

• One-Way Truckload production increased for the fifth consecutive quarter
• Mexico and cross-border related business grew double-digits
• Dedicated revenue per truck increased
• Logistics segment returned to positive operating income
• Company repurchased 1.6 million shares during the quarter

Negative

• Total revenues decreased 6% to $760.8 million
• Operating income declined 58% to $19.6 million
• Operating margin fell 320 basis points to 2.6%
• Diluted EPS dropped 68% to $0.15
• Truckload Transportation Services revenues decreased 6%
• Logistics revenues declined 7%
• Average segment trucks in service decreased by 721 trucks (9%)

Insights

Financial Analyst

Werner Enterprises' Q2 2024 results reveal significant challenges in the transportation sector. The company reported total revenues of $760.8 million, down 6% year-over-year, with declines in both Truckload Transportation Services (TTS) and Logistics segments. More concerning is the sharp 58% drop in operating income to $19.6 million, with operating margin shrinking by 320 basis points to 2.6%.

The TTS segment, Werner's core business, saw a 6% revenue decline and a substantial 54% decrease in operating income. This was driven by lower fleet size in Dedicated (down 7.1%) and reduced One-Way revenue per total mile. The Logistics segment also struggled, with revenue down 7% and operating income plummeting 87%.

On a positive note, the company is making efforts to control costs and improve efficiency. One-Way Truckload production increased for the fifth consecutive quarter and Mexico and cross-border business is growing double-digits. The company also repurchased 1.6 million shares, demonstrating confidence in its long-term prospects.

However, the overall financial picture remains challenging. With diluted EPS down 68% to $0.15, Werner is clearly feeling the impact of industry-wide headwinds. Investors should closely monitor the company's cost-control measures and strategic initiatives in the coming quarters for signs of a turnaround.

Market Research Analyst

The Q2 2024 results from Werner Enterprises offer valuable insights into the current state of the transportation and logistics industry. The company's performance reflects broader market trends, including:

• Persistent overcapacity in the freight market, leading to pricing pressures
• Shift in demand patterns, with One-Way Truckload volumes remaining steady but at lower rates
• Growing importance of specialized services, as evidenced by the double-digit growth in Mexico and cross-border business

Werner's strategic focus on "controlling the controllables" is noteworthy. The company's efforts to increase One-Way Truckload production, grow specialized services and reduce operating costs demonstrate adaptability in a challenging environment. However, the significant decline in operating income and margins suggests that these efforts are not yet sufficient to offset market headwinds.

The logistics segment's performance, particularly the 30% growth in Power Only volume, indicates evolving customer preferences and potential areas for future growth. This trend aligns with the industry's move towards more flexible and asset-light transportation solutions.

Looking ahead, Werner's guidance for the rest of 2024 suggests cautious optimism. The company expects Dedicated revenue per truck per week to grow 0% to 3% annually and projects a less severe decline in One-Way Truckload revenue per total mile for Q3. These projections, combined with planned reductions in capital expenditures, indicate that Werner anticipates a gradual market improvement but is preparing for continued challenges.

Second Quarter 2024 Highlights (all metrics compared to second quarter 2023)

• Total revenues of $760.8 million, down 6%
• Operating income of $19.6 million, down 58%; non-GAAP adjusted operating income of $21.3 million, down 58%
• Operating margin of 2.6%, down 320 basis points; non-GAAP adjusted operating margin of 2.8%, down 350 basis points
• Diluted EPS of $0.15, down 68%; non-GAAP adjusted diluted EPS of $0.17, down 67%

OMAHA, Neb.--(BUSINESS WIRE)-- Werner Enterprises, Inc. (Nasdaq: WERN), a premier transportation and logistics provider, today reported results for the second quarter ended June 30, 2024.

“While industry-wide headwinds remain, second quarter earnings improved sequentially, and we made progress on controlling the controllables. One-Way Truckload production increased for the fifth consecutive quarter. Mexico and cross-border related business is growing double-digits. Dedicated revenue per truck was up, and Logistics segment returned to positive operating income,” said Derek Leathers, Chairman and CEO. “We continue to make structural changes to reduce operating cost and advance our technology strategy, and we opportunistically repurchased 1.6 million shares during the quarter. We are positioning Werner for strength when the market turns and remain focused on creating long-term value for our shareholders.”

Total revenues for the quarter were $760.8 million, a decrease of $50.3 million compared to the prior year quarter, due to a $33.1 million, or 6%, decrease in Truckload Transportation Services (“TTS”) revenues and a decline in Logistics revenues of $15.6 million, or 7%. A portion of the TTS revenue decline was due to $6.7 million lower fuel surcharge revenues. Net of trucking fuel surcharge revenues, consolidated total revenues decreased $43.6 million, or 6%, during the quarter.

Operating income of $19.6 million decreased $27.6 million, or 58%, while operating margin of 2.6% decreased 320 basis points. On a non-GAAP basis, adjusted operating income of $21.3 million decreased $29.8 million, or 58%. Adjusted operating margin of 2.8% declined 350 basis points from 6.3% for the same quarter last year.

TTS operating income decreased $24.2 million, and TTS adjusted operating income decreased $24.6 million. Logistics had operating income of $0.5 million, a decrease of $3.8 million, and Logistics had adjusted operating income of $1.7 million, a decrease of $3.8 million. Corporate and Other (including driving schools) operating loss improved $0.4 million, which included a net $1.8 million gain on the sale of two parcels of real estate in second quarter 2024.

Net interest expense of $7.3 million increased $1.0 million primarily due to higher interest rates for variable-rate debt and the impact of replacing lower-cost debt and interest rate swaps with higher-cost debt and interest rate swaps upon maturity. These increases were partially offset by a decrease in average debt outstanding. The effective income tax rate during the quarter decreased to 24.2%, compared to 25.2% in second quarter 2023 due to differences in discrete income tax items.

Net income attributable to Werner of $9.5 million decreased 68%. On a non-GAAP basis, adjusted net income attributable to Werner of $10.7 million decreased 68%. Diluted EPS of $0.15 decreased 68%. On a non-GAAP basis, adjusted diluted EPS of $0.17 decreased 67%.

Key Consolidated Financial Metrics

	Three Months Ended June 30,											Six Months Ended June 30,
(In thousands, except per share amounts)	2024				2023				Y/Y Change			2024				2023				Y/Y Change
Total revenues	$	760,798			$	811,096			(6	)%		$	1,529,878			$	1,643,810			(7	)%
Truckload Transportation Services revenues	$	537,069			$	570,192			(6	)%		$	1,088,195			$	1,158,522			(6	)%
Werner Logistics revenues	$	208,912			$	224,549			(7	)%		$	411,394			$	453,218			(9	)%
Operating income	$	19,611			$	47,198			(58	)%		$	35,199			$	100,584			(65	)%
Operating margin		2.6	%			5.8	%		(320) bps				2.3	%			6.1	%		(380) bps
Net income attributable to Werner	$	9,465			$	29,881			(68	)%		$	15,777			$	65,105			(76	)%
Diluted earnings per share	$	0.15			$	0.47			(68	)%		$	0.25			$	1.02			(76	)%
Adjusted operating income (1)	$	21,269			$	51,103			(58	)%		$	39,860			$	108,648			(63	)%
Adjusted operating margin (1)		2.8	%			6.3	%		(350) bps				2.6	%			6.6	%		(400) bps
Adjusted net income attributable to Werner (1)	$	10,716			$	33,221			(68	)%		$	19,339			$	71,465			(73	)%
Adjusted diluted earnings per share (1)	$	0.17			$	0.52			(67	)%		$	0.31			$	1.12			(73	)%
(1) See attached Reconciliation of Non-GAAP Financial Measures - Consolidated.

Truckload Transportation Services (TTS) Segment

• Revenues of $537.1 million decreased $33.1 million; trucking revenues, net of fuel surcharge, decreased 6% year over year
• Operating income of $21.0 million decreased $24.2 million; non-GAAP adjusted operating income of $23.3 million decreased $24.6 million due largely to lower gains on the sale of property and equipment (down 89%), lower fleet size in Dedicated (down 7.1%) and lower One-Way revenue per total mile, net of fuel surcharge (down 2.7%). While One-Way fleet size is smaller (down 11.2%), this is offset by higher One-Way average total miles per truck per week (up 10.8%) and One-Way average revenues per truck per week, net of fuel surcharge (up 7.8%)
• Operating margin of 3.9% decreased 400 basis points from 7.9%; non-GAAP adjusted operating margin, net of fuel surcharge, of 5.0% decreased 470 basis points from 9.7%
• Average segment trucks in service totaled 7,630, a decrease of 721 trucks year over year, or 9%
• Dedicated unit trucks at quarter end totaled 4,825, or 65% of the total TTS segment fleet, compared to 5,260 trucks, or 63%, a year ago
• Average revenues per truck per week, net of fuel surcharge, increased 3.0% for TTS and increased 0.4% for Dedicated

During second quarter 2024, Dedicated experienced net reduction in average trucks, down 7.1% year over year and down 4.8% sequentially. Dedicated average revenues per truck per week, net of fuel surcharge, increased 0.4% year over year. Despite a highly competitive environment and isolated fleet losses, pipeline opportunities remain healthy, and client retention is over 90%. One-Way Truckload volume during second quarter 2024 was steady and seasonally consistent, but ongoing excess capacity in the freight market continues to reflect ongoing rate pressure. One-Way revenues per total mile was down 2.7%, although a lesser degree of year-over-year decline compared to prior quarters. One-Way fleet size was smaller year over year (down 11.2%), offset with the fifth consecutive quarter of higher total miles per truck per week (up 10.8%). As a result, One-Way Truckload miles were down only 1.6%.

Key Truckload Transportation Services Segment Financial Metrics

	Three Months Ended June 30,											Six Months Ended June 30,
(In thousands)	2024				2023				Y/Y Change			2024				2023				Y/Y Change
Trucking revenues, net of fuel surcharge	$	458,140			$	486,626			(6	)%		$	928,019			$	979,868			(5	)%
Trucking fuel surcharge revenues		69,966				76,677			(9	)%			142,949				164,978			(13	)%
Non-trucking and other revenues		8,963				6,889			30	%			17,227				13,676			26	%
Total revenues	$	537,069			$	570,192			(6	)%		$	1,088,195			$	1,158,522			(6	)%
Operating income	$	20,998			$	45,159			(54	)%		$	41,838			$	96,145			(56	)%
Operating margin		3.9	%			7.9	%		(400) bps				3.8	%			8.3	%		(450) bps
Operating ratio		96.1	%			92.1	%		400 bps				96.2	%			91.7	%		450 bps
Adjusted operating income (1)	$	23,338			$	47,915			(51	)%		$	46,032			$	101,640			(55	)%
Adjusted operating margin (1)		4.3	%			8.4	%		(410) bps				4.2	%			8.8	%		(460) bps
Adjusted operating margin, net of fuel surcharge (1)		5.0	%			9.7	%		(470) bps				4.9	%			10.2	%		(530) bps
Adjusted operating ratio (1)		95.7	%			91.6	%		410 bps				95.8	%			91.2	%		460 bps
Adjusted operating ratio, net of fuel surcharge (1)		95.0	%			90.3	%		470 bps				95.1	%			89.8	%		530 bps
(1) See attached Reconciliation of Non-GAAP Financial Measures - Truckload Transportation Services (TTS) Segment.

Werner Logistics Segment

• Revenues of $208.9 million decreased $15.6 million, or 7%
• Operating income of $0.5 million decreased $3.8 million; non-GAAP adjusted operating income of $1.7 million decreased $3.8 million
• Operating margin of 0.3% decreased 160 basis points from 1.9%; non-GAAP adjusted operating margin of 0.8% decreased 160 basis points from 2.4%

Truckload Logistics revenues (75% of Logistics revenues) decreased $17.3 million, or 10%, driven by a decline in revenue per shipment and a decrease in shipments. Brokerage volumes decreased year over year while Power Only volume was up over 30%, marking the sixth consecutive sequential quarter of Power Only volume growth.

Intermodal revenues (13% of Logistics revenues) increased $4.1 million, or 17%, due to an increase in shipments, partially offset by lower revenue per shipment year over year.

Final Mile revenues (12% of Logistics revenues) decreased $2.5 million, or 9%.

Logistics operating income and adjusted operating income decreased $3.8 million year over year in second quarter 2024 but improved $2.9 million sequentially. We are focused on revenue quality and managing yield, evidenced by achieving a consistent 15% margin for four consecutive quarters of revenues less purchased transportation expense, and achieving operating expense reductions, including an 11% year-over-year decrease in salaries, wages and benefits.

Key Werner Logistics Segment Financial Metrics

	Three Months Ended June 30,											Six Months Ended June 30,
(In thousands)	2024				2023				Y/Y Change			2024				2023				Y/Y Change
Total revenues	$	208,912			$	224,549			(7	)%		$	411,394			$	453,218			(9	)%
Operating expenses:
Purchased transportation expense		177,066				185,397			(4	)%			349,553				373,895			(7	)%
Other operating expenses		31,296				34,797			(10	)%			63,620				70,031			(9	)%
Total operating expenses		208,362				220,194			(5	)%			413,173				443,926			(7	)%
Operating income (loss)	$	550			$	4,355			(87	)%		$	(1,779	)		$	9,292			(119	)%
Operating margin		0.3	%			1.9	%		(160) bps				(0.4	%)			2.1	%		(250) bps
Adjusted operating income (1)	$	1,698			$	5,504			(69	)%		$	518			$	11,861			(96	)%
Adjusted operating margin (1)		0.8	%			2.4	%		(160) bps				0.1	%			2.6	%		(250) bps
(1) See attached Reconciliation of Non-GAAP Financial Measures - Werner Logistics Segment.

Cash Flow and Capital Allocation

Cash flow from operations in second quarter 2024 was $109.1 million compared to $114.9 million in second quarter 2023, a decrease of 5%.

Net capital expenditures in second quarter 2024 were $99.2 million compared to $151.4 million in second quarter 2023, a decrease of 35%. We continue to prioritize business reinvestment in safe and modern equipment, including trucks and trailers, as well as in technology, our terminal network and our talent. The average ages of our truck and trailer fleets were 2.1 years and 4.9 years, respectively, as of June 30, 2024. Maintaining an industry-leading low-age, modern fleet improves our driver experience and results in more effective equipment maintenance, safety and fuel efficiency.

Gains on sales of property and equipment in second quarter 2024 were $2.7 million, or $0.03 per share, compared to $11.9 million, or $0.14 per share, in second quarter 2023. Year over year, we sold 24% fewer trucks and 132% more trailers and realized lower average gains per truck and trailer. In second quarter 2024, we also sold two parcels of real estate for a net $1.8 million gain, which is adjusted out of income for purposes of the non-GAAP measures. Gains on sales of property and equipment are reflected as a reduction of Other Operating Expenses in our income statement.

During the quarter, we repurchased 1.6 million shares of common stock for a total cost of $60.0 million, excluding excise taxes, or an average price of $37.04 per share. As of June 30, 2024, we had 3.9 million shares remaining under our new share repurchase authorization approved by the Board of Directors in May 2024.

As of June 30, 2024, we had $70 million of cash and cash equivalents and nearly $1.5 billion of stockholders’ equity. Total debt outstanding was $670 million at June 30, 2024. After considering letters of credit issued, we had available liquidity consisting of cash and cash equivalents and available borrowing capacity as of June 30, 2024 of $470 million.

2024 Guidance Metrics and Assumptions

The following table summarizes our updated 2024 guidance assumptions:

	Prior (as of 4/30/24)	Actual (as of 6/30/24)	New (as of 7/30/24)
TTS truck count from BoY to EoY	(6)% to (3)% (annual)	(7)% (YTD24)	(6)% to (3)% (annual)
Net capital expenditures	$250M to $300M (annual)	$118M (YTD24)	$225M to $275M (annual)
TTS Guidance
Dedicated RPTPW* growth	0% to 3% (annual)	0.8% (1H24 vs. 1H23)	0% to 3% (annual)
One-Way Truckload RPTM* growth	(6)% to (3)% (1H24 vs. 1H23)	(4.0)% (1H24 vs. 1H23)	(3)% to 0% (3Q24 vs. 3Q23)
* Net of fuel surcharge revenues

Assumptions

• Effective income tax rate of 24.2% in 2Q24 compared to 25.2% in 2Q23. Expect annual effective tax rate in the range of 24.5% to 25.5%.
• Average truck age of 2.1 years and average trailer age of 4.9 years as of 6/30/24. Expect average truck and trailer ages of 2.0 years and 5.0 years, respectively, as of 12/31/24.

Call Information

Werner Enterprises, Inc. will conduct a conference call to discuss second quarter 2024 earnings today beginning at 4:00 p.m. CT. The news release, live webcast of the earnings conference call, and accompanying slide presentation will be available at werner.com in the “Investors” section under “News & Events” and then “Events Calendar.” To participate in the conference call, please dial (844) 701-1165 (domestic) or (412) 317-5498 (international). Please mention to the operator that you are dialing in for the Werner Enterprises call.

A replay of the conference call will be available on July 30, 2024 at approximately 6:00 p.m. CT through August 31, 2024 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and using the access code 5388433. A replay of the webcast will also be available at werner.com in the “Investors” section under “News & Events” and then “Events Calendar.”

About Werner Enterprises

Werner Enterprises, Inc. (Nasdaq: WERN) delivers superior truckload transportation and logistics services to customers across the United States, Mexico and Canada. With 2023 revenues of $3.3 billion, an industry-leading modern truck and trailer fleet, over 13,000 talented associates and our innovative Werner EDGE^® technology, we are an essential solutions provider for customers who value the integrity of their supply chain and require safe and exceptional on-time service. Werner® provides Dedicated and One-Way Truckload services as well as Logistics services that include truckload brokerage, freight management, intermodal and final mile. As an industry leader, Werner is deeply committed to promoting sustainability and supporting diversity, equity and inclusion.

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are based on information presently available to the Company’s management and are current only as of the date made. Actual results could also differ materially from those anticipated as a result of a number of factors, including, but not limited to, those discussed in the Company’s latest available Annual Report on Form 10-K and any subsequently filed Quarterly Reports on Form 10-Q.

For those reasons, undue reliance should not be placed on any forward-looking statement. The Company assumes no duty or obligation to update or revise any forward-looking statement, although it may do so from time to time as management believes is warranted or as may be required by applicable securities law. Any such updates or revisions may be made by filing reports with the U.S. Securities and Exchange Commission (“SEC”), through the issuance of press releases or by other methods of public disclosure.

Consolidated Financial Information

INCOME STATEMENT
(Unaudited)
(In thousands, except per share amounts)
	Three Months Ended June 30,														Six Months Ended June 30,
	2024							2023							2024							2023
	$				%			$				%			$				%			$				%
Operating revenues	$	760,798			100.0			$	811,096			100.0			$	1,529,878			100.0			$	1,643,810			100.0
Operating expenses:
Salaries, wages and benefits		259,754			34.1				266,373			32.9				525,157			34.3				534,688			32.5
Fuel		71,998			9.5				77,740			9.6				149,620			9.8				169,154			10.3
Supplies and maintenance		61,988			8.1				64,964			8.0				123,763			8.1				133,189			8.1
Taxes and licenses		25,494			3.3				25,408			3.1				50,658			3.3				50,833			3.1
Insurance and claims		31,897			4.2				36,806			4.5				68,259			4.4				73,291			4.4
Depreciation and amortization		72,672			9.6				74,898			9.2				146,942			9.6				149,211			9.1
Rent and purchased transportation		210,417			27.7				217,086			26.8				414,342			27.1				437,310			26.6
Communications and utilities		4,127			0.5				4,669			0.6				8,833			0.6				9,402			0.6
Other		2,840			0.4				(4,046	)		(0.5	)			7,105			0.5				(13,852	)		(0.8	)
Total operating expenses		741,187			97.4				763,898			94.2				1,494,679			97.7				1,543,226			93.9
Operating income		19,611			2.6				47,198			5.8				35,199			2.3				100,584			6.1
Other expense (income):
Interest expense		9,043			1.2				8,139			1.0				16,991			1.1				16,055			1.0
Interest income		(1,786	)		(0.2	)			(1,899	)		(0.2	)			(3,471	)		(0.2	)			(3,451	)		(0.2	)
Loss (gain) on investments in equity securities, net		52			—				(79	)		—				190			—				2			—
Loss from equity method investment		141			—				844			0.1				274			—				844			—
Other		30			—				86			—				(231	)		—				93			—
Total other expense, net		7,480			1.0				7,091			0.9				13,753			0.9				13,543			0.8
Income before income taxes		12,131			1.6				40,107			4.9				21,446			1.4				87,041			5.3
Income tax expense		2,931			0.4				10,087			1.2				5,998			0.4				21,487			1.3
Net income		9,200			1.2				30,020			3.7				15,448			1.0				65,554			4.0
Net loss (income) attributable to noncontrolling interest		265			—				(139	)		—				329			—				(449	)		—
Net income attributable to Werner	$	9,465			1.2			$	29,881			3.7			$	15,777			1.0			$	65,105			4.0
Diluted shares outstanding		62,860							63,687							63,291							63,689
Diluted earnings per share	$	0.15						$	0.47						$	0.25						$	1.02

CONDENSED BALANCE SHEET
(In thousands, except share amounts)
	June 30, 2024				December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	70,448			$	61,723
Accounts receivable, trade, less allowance of $8,022 and $9,337, respectively		409,986				444,944
Other receivables		28,092				25,479
Inventories and supplies		16,286				18,077
Prepaid taxes, licenses and permits		7,895				16,505
Other current assets		44,959				67,900
Total current assets		577,666				634,628
Property and equipment		2,952,295				2,951,654
Less – accumulated depreciation		992,128				978,698
Property and equipment, net		1,960,167				1,972,956
Goodwill		129,104				129,104
Intangible assets, net		81,442				86,477
Other non-current assets (1)		345,191				334,771
Total assets	$	3,093,570			$	3,157,936
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	142,161			$	135,990
Current portion of long-term debt		10,000				2,500
Insurance and claims accruals		85,224				81,794
Accrued payroll		52,453				50,549
Accrued expenses		22,506				30,282
Other current liabilities		30,115				29,470
Total current liabilities		342,459				330,585
Long-term debt, net of current portion		660,000				646,250
Other long-term liabilities		62,355				54,275
Insurance and claims accruals, net of current portion (1)		227,115				239,700
Deferred income taxes		308,136				320,180
Total liabilities		1,600,065				1,590,990
Temporary equity - redeemable noncontrolling interest		38,278				38,607
Stockholders’ equity:
Common stock, $.01 par value, 200,000,000 shares authorized; 80,533,536 shares issued; 61,807,803 and 63,444,681 shares outstanding, respectively		805				805
Paid-in capital		134,769				134,894
Retained earnings		1,951,631				1,953,385
Accumulated other comprehensive loss		(14,405	)			(9,684	)
Treasury stock, at cost; 18,725,733 and 17,088,855 shares, respectively		(617,573	)			(551,061	)
Total stockholders’ equity		1,455,227				1,528,339
Total liabilities, temporary equity and stockholders’ equity	$	3,093,570			$	3,157,936
(1) Under the terms of our insurance policies, we are the primary obligor of the damage award in a previously disclosed adverse jury verdict, and as such, we have recorded a $79.2 million receivable from our third-party insurance providers in other non-current assets and a corresponding liability of the same amount in the long-term portion of insurance and claims accruals in the unaudited condensed balance sheets as of June 30, 2024 and December 31, 2023.

SUPPLEMENTAL INFORMATION
(Unaudited)
(In thousands)
	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
Capital expenditures, net	$	99,161			$	151,448			$	118,196			$	254,191
Cash flow from operations	$	109,072			$	114,943			$	197,657			$	281,790
Return on assets (annualized)		1.2	%			3.9	%			1.0	%			4.2	%
Return on equity (annualized)		2.4	%			7.9	%			2.0	%			8.7	%

Segment Financial and Operating Statistics Information

SEGMENT INFORMATION
(Unaudited)
(In thousands)
	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
Revenues
Truckload Transportation Services	$	537,069			$	570,192			$	1,088,195			$	1,158,522
Werner Logistics		208,912				224,549				411,394				453,218
Other (1)		17,467				19,376				36,420				39,877
Corporate		613				501				1,203				976
Subtotal		764,061				814,618				1,537,212				1,652,593
Inter-segment eliminations (2)		(3,263	)			(3,522	)			(7,334	)			(8,783	)
Total	$	760,798			$	811,096			$	1,529,878			$	1,643,810
Operating Income (Loss)
Truckload Transportation Services	$	20,998			$	45,159			$	41,838			$	96,145
Werner Logistics		550				4,355				(1,779	)			9,292
Other (1)		(966	)			(86	)			(1,175	)			463
Corporate		(971	)			(2,230	)			(3,685	)			(5,316	)
Total	$	19,611			$	47,198			$	35,199			$	100,584
(1) Other includes our driver training schools, transportation-related activities such as third-party equipment maintenance and equipment leasing, and other business activities.
(2) Inter-segment eliminations represent transactions between reporting segments that are eliminated in consolidation.

OPERATING STATISTICS BY SEGMENT
(Unaudited)
	Three Months Ended June 30,											Six Months Ended June 30,
	2024				2023				% Chg			2024				2023				% Chg
Truckload Transportation Services segment
Average trucks in service		7,630				8,351			(8.6	)%			7,783				8,456			(8.0	)%
Average revenues per truck per week (1)	$	4,619			$	4,483			3.0	%		$	4,586			$	4,457			2.9	%
Total trucks (at quarter end)
Company		7,180				8,000			(10.3	)%			7,180				8,000			(10.3	)%
Independent contractor		280				285			(1.8	)%			280				285			(1.8	)%
Total trucks		7,460				8,285			(10.0	)%			7,460				8,285			(10.0	)%
Total trailers (at quarter end)		26,965				27,110			(0.5	)%			26,965				27,110			(0.5	)%
One-Way Truckload
Trucking revenues, net of fuel surcharge (in 000’s)	$	169,283			$	176,824			(4.3	)%		$	338,120			$	359,954			(6.1	)%
Average trucks in service		2,730				3,075			(11.2	)%			2,758				3,133			(12.0	)%
Total trucks (at quarter end)		2,635				3,025			(12.9	)%			2,635				3,025			(12.9	)%
Average percentage of empty miles		14.70	%			14.01	%		4.9	%			14.80	%			14.05	%		5.3	%
Average revenues per truck per week (1)	$	4,770			$	4,423			7.8	%		$	4,716			$	4,419			6.7	%
Average % change YOY in revenues per total mile (1)		(2.7	)%			(5.2	)%						(4.0	)%			(4.2	)%
Average % change YOY in total miles per truck per week		10.8	%			0.1	%						11.1	%			(1.3	)%
Average completed trip length in miles (loaded)		589				604			(2.5	)%			590				612			(3.6	)%
Dedicated
Trucking revenues, net of fuel surcharge (in 000’s)	$	288,857			$	309,802			(6.8	)%		$	589,899			$	619,914			(4.8	)%
Average trucks in service		4,901				5,276			(7.1	)%			5,025				5,323			(5.6	)%
Total trucks (at quarter end)		4,825				5,260			(8.3	)%			4,825				5,260			(8.3	)%
Average revenues per truck per week (1)	$	4,534			$	4,517			0.4	%		$	4,516			$	4,479			0.8	%
Werner Logistics segment
Average trucks in service		22				33			(33.3	)%			24				36			(33.3	)%
Total trucks (at quarter end)		21				32			(34.4	)%			21				32			(34.4	)%
Total trailers (at quarter end)		3,350				2,885			16.1	%			3,350				2,885			16.1	%
(1) Net of fuel surcharge revenues

Non-GAAP Financial Measures and Reconciliations

To supplement our financial results presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), we provide certain non-GAAP financial measures as defined by the SEC Regulation G, including non-GAAP adjusted operating income; non-GAAP adjusted operating margin; non-GAAP adjusted operating margin, net of fuel surcharge; non-GAAP adjusted net income attributable to Werner; non-GAAP adjusted diluted earnings per share; non-GAAP adjusted operating revenues, net of fuel surcharge; non-GAAP adjusted operating revenues, less purchased transportation expense; non-GAAP adjusted operating expenses; non-GAAP adjusted operating expenses, net of fuel surcharge; non-GAAP adjusted operating ratio; and non-GAAP adjusted operating ratio, net of fuel surcharge. We believe these non-GAAP financial measures provide a more useful comparison of our performance from period to period because they exclude the effect of items that, in our opinion, do not reflect our core operating performance. Our non-GAAP financial measures are not meant to be considered in isolation or as substitutes for their comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. There are limitations to using non-GAAP financial measures. Although we believe that they improve comparability in analyzing our period to period performance, they could limit comparability to other companies in our industry if those companies define these measures differently. Because of these limitations, our non-GAAP financial measures should not be considered measures of income generated by our business. Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis.

The following tables present reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure as required by SEC Regulation G. In addition, information regarding each of the excluded items as well as our reasons for excluding them from our non-GAAP results is provided below.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – CONSOLIDATED
(unaudited)
(In thousands, except per share amounts)
		Three Months Ended June 30,													Six Months Ended June 30,
		2024							2023						2024							2023
Non-GAAP Adjusted Operating Income and Non-GAAP Adjusted Operating Margin (1)		$				% of Op. Rev.			$			% of Op. Rev.			$				% of Op. Rev.			$			% of Op. Rev.
Operating income and operating margin – (GAAP)		$	19,611			2.6	%		$	47,198		5.8	%		$	35,199			2.3	%		$	100,584		6.1	%
Non-GAAP adjustments:
Insurance and claims (2)			971			0.1	%			1,387		0.2	%			1,456			0.1	%			2,774		0.2	%
Amortization of intangible assets (3)			2,517			0.3	%			2,518		0.3	%			5,035			0.3	%			5,290		0.3	%
Gain on sale of real estate (4)			(1,830	)		(0.2	)%			—		—	%			(1,830	)		(0.1	)%			—		—	%
Non-GAAP adjusted operating income and non-GAAP adjusted operating margin		$	21,269			2.8	%		$	51,103		6.3	%		$	39,860			2.6	%		$	108,648		6.6	%

		Three Months Ended June 30,																Six Months Ended June 30,
		2024								2023								2024								2023
Non-GAAP Adjusted Net Income Attributable to Werner and Non-GAAP Adjusted Diluted EPS (1)		$				Diluted EPS				$				Diluted EPS				$				Diluted EPS				$				Diluted EPS
Net income attributable to Werner and diluted EPS – (GAAP)		$	9,465			$	0.15			$	29,881			$	0.47			$	15,777			$	0.25			$	65,105			$	1.02
Non-GAAP adjustments:
Insurance and claims (2)			971				0.02				1,387				0.02				1,456				0.02				2,774				0.04
Amortization of intangible assets, net of amount attributable to noncontrolling interest (3)			2,345				0.04				2,346				0.04				4,691				0.08				4,946				0.08
Gain on sale of real estate (4)			(1,830	)			(0.03	)			—				—				(1,830	)			(0.03	)			—				—
Loss (gain) on investments in equity securities, net (5)			52				—				(79	)			—				190				—				2				—
Loss from equity method investment (6)			141				—				844				0.01				274				0.01				844				0.01
Income tax effect of above adjustments (7)			(428	)			(0.01	)			(1,158	)			(0.02	)			(1,219	)			(0.02	)			(2,206	)			(0.03	)
Non-GAAP adjusted net income attributable to Werner and non-GAAP adjusted diluted EPS		$	10,716			$	0.17			$	33,221			$	0.52			$	19,339			$	0.31			$	71,465			$	1.12

		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Non-GAAP Adjusted Operating Revenues, Net of Fuel Surcharge (1)		$				$				$				$
Operating revenues – (GAAP)		$	760,798			$	811,096			$	1,529,878			$	1,643,810
Non-GAAP adjustment:
Trucking fuel surcharge (8)			(69,966	)			(76,677	)			(142,949	)			(164,978	)
Non-GAAP Operating revenues, net of fuel surcharge		$	690,832			$	734,419			$	1,386,929			$	1,478,832

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – TRUCKLOAD TRANSPORTATION SERVICES (TTS) SEGMENT
(unaudited)
(In thousands)
		Three Months Ended June 30,												Six Months Ended June 30,
		2024						2023						2024						2023
Non-GAAP Adjusted Operating Income and Non-GAAP Adjusted Operating Margin (1)		$			% of Op. Rev.			$			% of Op. Rev.			$			% of Op. Rev.			$			% of Op. Rev.
Operating income and operating margin – (GAAP)		$	20,998		3.9	%		$	45,159		7.9	%		$	41,838		3.8	%		$	96,145		8.3	%
Non-GAAP adjustments:
Insurance and claims (2)			971		0.2	%			1,387		0.3	%			1,456		0.1	%			2,774		0.3	%
Amortization of intangible assets (3)			1,369		0.2	%			1,369		0.2	%			2,738		0.3	%			2,721		0.2	%
Non-GAAP adjusted operating income and non-GAAP adjusted operating margin		$	23,338		4.3	%		$	47,915		8.4	%		$	46,032		4.2	%		$	101,640		8.8	%

		Three Months Ended June 30,														Six Months Ended June 30,
		2024							2023							2024							2023
Non-GAAP Adjusted Operating Expenses and Non-GAAP Adjusted Operating Ratio (1)		$				% of Op. Rev.			$				% of Op. Rev.			$				% of Op. Rev.			$				% of Op. Rev.
Operating expenses and operating ratio – (GAAP)		$	516,071			96.1	%		$	525,033			92.1	%		$	1,046,357			96.2	%		$	1,062,377			91.7	%
Non-GAAP adjustments:
Insurance and claims (2)			(971	)		(0.2	)%			(1,387	)		(0.3	)%			(1,456	)		(0.1	)%			(2,774	)		(0.3	)%
Amortization of intangible assets (3)			(1,369	)		(0.2	)%			(1,369	)		(0.2	)%			(2,738	)		(0.3	)%			(2,721	)		(0.2	)%
Non-GAAP adjusted operating expenses and non-GAAP adjusted operating ratio		$	513,731			95.7	%		$	522,277			91.6	%		$	1,042,163			95.8	%		$	1,056,882			91.2	%

		Three Months Ended June 30,								Six Months Ended June 30,
Non-GAAP Adjusted Operating Revenues, Net of Fuel Surcharge; Non-GAAP Adjusted Operating Expenses, Net of Fuel Surcharge; Non-GAAP Adjusted Operating Margin, Net of Fuel Surcharge; and Non-GAAP Adjusted Operating Ratio, Net of Fuel Surcharge (1)		2024				2023				2024				2023
		$				$				$				$
Operating revenues – (GAAP)		$	537,069			$	570,192			$	1,088,195			$	1,158,522
Less: Trucking fuel surcharge (8)			(69,966	)			(76,677	)			(142,949	)			(164,978	)
Operating revenues, net of fuel surcharge – (Non-GAAP)			467,103				493,515				945,246				993,544
Operating expenses – (GAAP)			516,071				525,033				1,046,357				1,062,377
Non-GAAP adjustments:
Trucking fuel surcharge (8)			(69,966	)			(76,677	)			(142,949	)			(164,978	)
Insurance and claims (2)			(971	)			(1,387	)			(1,456	)			(2,774	)
Amortization of intangible assets (3)			(1,369	)			(1,369	)			(2,738	)			(2,721	)
Non-GAAP adjusted operating expenses, net of fuel surcharge			443,765				445,600				899,214				891,904
Non-GAAP adjusted operating income		$	23,338			$	47,915			$	46,032			$	101,640
Non-GAAP adjusted operating margin, net of fuel surcharge			5.0	%			9.7	%			4.9	%			10.2	%
Non-GAAP adjusted operating ratio, net of fuel surcharge			95.0	%			90.3	%			95.1	%			89.8	%

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – WERNER LOGISTICS SEGMENT
(unaudited)
(In thousands)
		Three Months Ended June 30,														Six Months Ended June 30,
		2024							2023							2024							2023
Non-GAAP Adjusted Operating Revenues, Less Purchased Transportation Expense (1)		$				% of Op. Rev.			$				% of Op. Rev.			$				% of Op. Rev.			$				% of Op. Rev.
Operating revenues – (GAAP)		$	208,912			100.0	%		$	224,549			100.0	%		$	411,394			100.0	%		$	453,218			100.0	%
Non-GAAP adjustment:
Purchased transportation expense (9)			(177,066	)		(84.8	)%			(185,397	)		(82.6	)%			(349,553	)		(85.0	)%			(373,895	)		(82.5	)%
Non-GAAP adjusted operating revenues, less purchased transportation expense		$	31,846			15.2	%		$	39,152			17.4	%		$	61,841			15.0	%		$	79,323			17.5	%

		Three Months Ended June 30,												Six Months Ended June 30,
		2024						2023						2024							2023
Non-GAAP Adjusted Operating Income (Loss) and Non-GAAP Adjusted Operating Margin (1)		$			% of Op. Rev.			$			% of Op. Rev.			$				% of Op. Rev.			$			% of Op. Rev.
Operating income (loss) and operating margin – (GAAP)		$	550		0.3	%		$	4,355		1.9	%		$	(1,779	)		(0.4	)%		$	9,292		2.1	%
Non-GAAP adjustments:
Amortization of intangible assets (3)			1,148		0.5	%			1,149		0.5	%			2,297			0.5	%			2,569		0.5	%
Non-GAAP adjusted operating income and non-GAAP adjusted operating margin		$	1,698		0.8	%		$	5,504		2.4	%		$	518			0.1	%		$	11,861		2.6	%

(1) Non-GAAP adjusted operating income; non-GAAP adjusted operating margin; non-GAAP adjusted operating margin, net of fuel surcharge; non-GAAP adjusted net income attributable to Werner; non-GAAP adjusted diluted earnings per share; non-GAAP adjusted operating revenues, net of fuel surcharge; non-GAAP adjusted operating revenues, less purchased transportation expense; non-GAAP adjusted operating expenses; non-GAAP adjusted operating expenses, net of fuel surcharge; non-GAAP adjusted operating ratio; and non-GAAP adjusted operating ratio, net of fuel surcharge should be considered in addition to, rather than as substitutes for, GAAP operating income; GAAP operating margin; GAAP net income attributable to Werner; GAAP diluted earnings per share; GAAP operating revenues; GAAP operating expenses; and GAAP operating ratio, which are their most directly comparable GAAP financial measures.

(2) We accrued pre-tax insurance and claims expense for interest related to a previously disclosed excess adverse jury verdict rendered on May 17, 2018 in a lawsuit arising from a December 2014 accident. The Company is appealing this verdict. Additional information about the accident was included in our Current Report on Form 8-K dated May 17, 2018. Under our insurance policies in effect on the date of this accident, our maximum liability for this accident is $10.0 million (plus pre-judgment and post-judgment interest) with premium-based insurance coverage that exceeds the jury verdict amount. We continue to accrue pre-tax insurance and claims expense for interest at $0.5 million per month until such time as the outcome of our appeal is finalized, excluding months where the plaintiffs requested an extension of time to respond to our petition for review. Management believes excluding the effect of this item provides a more useful comparison of our performance from period to period. This item is included in our Truckload Transportation Services segment in our Segment Information table.

(3) Amortization expense related to intangible assets acquired in our business acquisitions is excluded because management does not believe it is indicative of our core operating performance. This item is included in our Truckload Transportation Services and Werner Logistics segments.

(4) During second quarter 2024, we sold two parcels of real estate which resulted in a $1.8 million net pre-tax gain on sale. Management believes excluding the effect of these unusual and infrequent items provides a more useful comparison of our performance from period to period. These items are included in our Corporate segment.

(5) Represents non-operating mark-to-market adjustments for gains/losses on our minority equity investments, which we account for under Accounting Standards Codification (“ASC”) 321, Investments – Equity Securities. Management believes excluding the effect of gains/losses on our investments in equity securities provides a more useful comparison of our performance from period to period. We record changes in the value of our investments in equity securities in other expense (income) in our Income Statement.

(6) Represents earnings/losses from our equity method investment, which we account for under ASC 323, Investments - Equity Method and Joint Ventures. Management believes excluding the effect of earnings/losses from our equity method investment provides a more useful comparison of our performance from period to period. We record earnings/losses from our equity method investment in other expense (income) in our Income Statement.

(7) The income tax effect of the non-GAAP adjustments is calculated using the incremental income tax rate excluding discrete items, and the income tax effect for 2023 has been updated to reflect the annual incremental income tax rate.

(8) Fluctuating fuel prices and fuel surcharge revenues impact the total company operating ratio and the TTS segment operating ratio when fuel surcharges are reported on a gross basis as revenues versus netting the fuel surcharges against fuel expenses. Management believes netting fuel surcharge revenues, which are generally a more volatile source of revenue, against fuel expenses provides a more consistent basis for comparing the results of operations from period to period.

(9) Management believes excluding purchased transportation expense from Werner Logistics operating revenues provides a useful measurement of our ability to source and sell services provided by third parties.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240730934805/en/

Christopher D. Wikoff

Executive Vice President, Treasurer

and Chief Financial Officer

(402) 894-3700

Source: Werner Enterprises, Inc.

FAQ

What were Werner Enterprises' (WERN) key financial results for Q2 2024?

Werner Enterprises reported total revenues of $760.8 million (down 6%), operating income of $19.6 million (down 58%), and diluted EPS of $0.15 (down 68%) for Q2 2024 compared to Q2 2023.

How did Werner's Truckload Transportation Services (TTS) segment perform in Q2 2024?

The TTS segment saw revenues decrease by $33.1 million to $537.1 million. Operating income for the segment fell by $24.2 million, with the operating margin decreasing 400 basis points to 3.9%.

What was Werner's (WERN) performance in the Logistics segment for Q2 2024?

Werner's Logistics segment revenues decreased by $15.6 million (7%) to $208.9 million. Operating income for the segment fell by $3.8 million, with the operating margin decreasing 160 basis points to 0.3%.

How many shares did Werner (WERN) repurchase in Q2 2024?

Werner repurchased 1.6 million shares of common stock for a total cost of $60.0 million, at an average price of $37.04 per share during Q2 2024.