Werner Enterprises Reports Fourth Quarter and Annual 2024 Results

Fourth Quarter 2024 Highlights (all metrics compared to fourth quarter 2023)

• Total revenues of $754.7 million, down 8%
• Operating income of $13.4 million, down 65%; non-GAAP adjusted operating income of $12.2 million, down 69%
• Operating margin of 1.8%, down 280 basis points; non-GAAP adjusted operating margin of 1.6%, down 320 basis points
• Diluted EPS of $0.19, down 48%; non-GAAP adjusted diluted EPS of $0.08, down 80%

2024 Highlights (all metrics compared to 2023)

• Total revenues of $3.03 billion, down 8%
• Operating income of $66.1 million, down 63%; non-GAAP adjusted operating income of $73.7 million, down 61%
• Operating margin of 2.2%, down 320 basis points; non-GAAP adjusted operating margin of 2.4%, down 340 basis points
• Diluted EPS of $0.55, down 69%; non-GAAP adjusted diluted EPS of $0.53, down 73%

Werner Enterprises, Inc. (Nasdaq: WERN), a premier transportation and logistics provider, today reported results for the fourth quarter and year ended December 31, 2024.

“The fourth quarter included several puts and takes that are more one-time in nature. While the freight market continues to present challenges, fourth quarter provided early signs of an improving environment. One-Way revenue per total mile increased year-over-year for the second consecutive quarter. Peak season was better than expected with peak volumes that were two times last year at higher rates. Dedicated average fleet size grew sequentially, and we are proud of the numerous Carrier of the Year awards during 2024 from Dedicated customers. Our Logistics division reported adjusted operating income that improved sequentially and represented the best quarter of the year,” said Derek Leathers, Chairman and CEO. “While our fourth quarter insurance expense was elevated due to unfavorable development on large dollar claims, our safety metrics remain near record low levels. During this downturn, we have focused on controlling what we can by investing in ourselves and making strategic decisions that position us favorably for creating long-term value for our shareholders as conditions improve.”

Total revenues for the quarter were $754.7 million, a decrease of $67.3 million compared to the prior-year quarter, due to a $52.8 million, or 9%, decrease in Truckload Transportation Services (“TTS”) revenues and a decline in Logistics revenues of $13.8 million, or 6%. A portion of the TTS revenue decline was due to $27.1 million lower fuel surcharge revenues. Net of trucking fuel surcharge revenues, consolidated total revenues decreased $40.2 million, or 5%, during the quarter.

Operating income of $13.4 million decreased $24.6 million, or 65%, while operating margin of 1.8% decreased 280 basis points. On a non-GAAP basis, adjusted operating income of $12.2 million decreased $27.0 million, or 69%. Adjusted operating margin of 1.6% declined 320 basis points from 4.8% for the same quarter last year.

During the quarter, we incurred $49.5 million of insurance and claims expense, of which $19 million resulted from unfavorable development on large dollar claims, contributing 250 basis points of the year-over-year decrease in adjusted operating margin, and $0.22 of negative impact to non-GAAP adjusted diluted EPS. This is a reflection of the ongoing unprecedented rise in verdicts and litigation settlements across the industry, particularly for larger carriers. In contrast to these trends, in 2024 we produced near 20-year record lows in U.S. Department of Transportation preventable accidents per million miles, trailing only 2023.

TTS operating income and adjusted operating income both decreased $22.6 million, largely driven by the $19 million of unfavorable claims development during the fourth quarter. Logistics operating income decreased $3.3 million and adjusted operating income decreased $0.6 million. Corporate and Other (including driving schools) operating income was $0.4 million compared to $1.0 million operating loss in prior year.

Net interest expense of $9.5 million increased $2.2 million primarily due to the impact of replacing lower-cost debt and interest rate swaps with higher-cost debt and interest rate swaps upon certain maturities in the second quarter. The effective income tax rate during the quarter decreased to 7.3%, compared to 23.1% in fourth quarter 2023 driven by certain discrete return-to-provision adjustments for a prior year.

During fourth quarter 2024, we had gains on our strategic investments of $8.7 million, or $0.10 per share, compared to losses of $0.3 million in fourth quarter 2023. Consistent with prior reporting, increases or decreases to the values of these strategic investments are adjusted out for determining non-GAAP adjusted net income and non-GAAP adjusted earnings per share.

Net income attributable to Werner of $11.9 million decreased 50%. On a non-GAAP basis, adjusted net income attributable to Werner of $4.7 million decreased 81%. Diluted EPS of $0.19 decreased 48%. On a non-GAAP basis, adjusted diluted EPS of $0.08 decreased 80%, including $19 million of unfavorable claims development during the quarter.

Truckload Transportation Services (TTS) Segment

• Revenues of $527.3 million decreased $52.8 million; trucking revenues, net of fuel surcharge, decreased 6% year over year
• Operating income of $11.7 million decreased $22.6 million; non-GAAP adjusted operating income of $14.6 million decreased $22.6 million due largely to $19 million of unfavorable claims development in the quarter, a smaller fleet size, and lower gains on the sale of property and equipment (down 55%)
• Operating margin of 2.2% decreased 370 basis points from 5.9%; non-GAAP adjusted operating margin, net of fuel surcharge, of 3.1% decreased 440 basis points from 7.5%
• Average segment trucks in service totaled 7,495, a decrease of 673 trucks year over year, or 8.2%
• Dedicated unit trucks at quarter end totaled 4,840, or 65% of the total TTS segment fleet, compared to 5,265 trucks, or 66%, a year ago
• Average revenues per truck per week, net of fuel surcharge, increased 2.5% for TTS

During fourth quarter 2024, Dedicated experienced net reduction in average trucks, down 7.7% year over year and up 27 trucks, or 0.1%, sequentially. Quarter-end fleet size was down 8.1% year over year and down 1.3% sequentially. Dedicated average revenues per truck per week, net of fuel surcharge, increased 1.1% year over year. Despite a highly competitive environment, pipeline opportunities are strong and customer retention is over 90%. One-Way Truckload volume was seasonally stronger than prior year with more than double the number of premium-rated peak shipments along with year-over-year improvement in rate. One-Way revenues per total mile, net of fuel surcharge, increased 3.3% year over year. Despite a 9.2% decline in One-Way average trucks, One-Way Truckload miles were only down 7.6%, due to the impact of a 1.7% increase in miles per truck per week, the seventh consecutive quarter of improvement.

Werner Logistics Segment

• Revenues of $213.2 million decreased $13.8 million, or 6%
• Operating income of $1.2 million decreased $3.3 million; non-GAAP adjusted operating income of $2.4 million decreased $0.6 million
• Operating margin of 0.6% decreased 140 basis points from 2.0%; non-GAAP adjusted operating margin of 1.1% decreased 20 basis points from 1.3%

Truckload Logistics revenues (76% of Logistics revenues) decreased $11.0 million, or 6%, driven by a decline in revenue per shipment and a decrease in shipments. Brokerage volumes decreased year over year while Power Only volume increased over 21%, marking the eighth consecutive quarter of Power Only volume growth.

Intermodal revenues (13% of Logistics revenues) increased $0.5 million, or 2%, due to an increase in shipments, partially offset by lower revenue per shipment year over year.

Final Mile revenues (11% of Logistics revenues) decreased $3.3 million, or 12%, due to lower volumes in furniture and appliance vertical.

Logistics operating income decreased $3.3 million and adjusted operating income decreased $0.6 million year over year in fourth quarter 2024. While Truckload Logistics continues to operate in an ongoing competitive environment, fourth quarter was our highest operating income and operating margin quarter since 2023 driven by sequentially higher revenue combined with further cost savings actions taken during the quarter.

Cash Flow and Capital Allocation

Cash flow from operations in fourth quarter 2024 was $71.0 million compared to $118.3 million in fourth quarter 2023, a decrease of 40%.

Net capital expenditures in fourth quarter 2024 were $28.8 million compared to $34.5 million in fourth quarter 2023, a decrease of 17%. 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 5.3 years, respectively, as of December 31, 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 fourth quarter 2024 were $6.5 million, or $0.07 per share, compared to $3.1 million, or $0.04 per share, in fourth quarter 2023. Gains in fourth quarter 2024 included $5.1 million gain from selling a parcel of real estate, which is adjusted out of income for purposes of the non-GAAP measures. Excluding the gain on real estate, gains on sale of used equipment were down year-over-year by $1.7 million, or 55%, driven by a change in the mix of equipment sold. We sold fewer trucks compared to prior year, but at modestly improved average unit gains. Gains on sales of property and equipment are reflected as a reduction of other operating expenses in our income statement.

We did not repurchase shares of our common stock in fourth quarter 2024. As of December 31, 2024, we had 3.9 million shares remaining under our share repurchase authorization.

As of December 31, 2024, we had $41 million of cash and cash equivalents and $1.5 billion of stockholders’ equity. Total debt outstanding was $650 million at December 31, 2024, flat year over year. After considering letters of credit issued, we had available liquidity consisting of cash and cash equivalents and available borrowing capacity as of December 31, 2024 of $460 million.

Call Information

Werner Enterprises, Inc. will conduct a conference call to discuss fourth 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 February 6, 2025 at approximately 6:00 p.m. CT through March 6, 2025 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and using the access code 6993511. 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 2024 revenues of $3.0 billion, an industry-leading modern truck and trailer fleet, nearly 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. Werner embraces inclusion as a core value and manages key risks and opportunities through a balanced sustainability strategy.

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.

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.