Werner Enterprises, Inc. · NASDAQ:WERN
Werner Enterprises — Wells Fargo Industrial & Construction Conference 2014
29 slides from Werner Enterprises's conference presentation, May 8, 2014
Slide 1: 2014 Industrial and Construction Conference
2014 INDUSTRIAL AND CONSTRUCTION CONFERENCE MAY 8, 2014
Slide 2: Disclosure Statement
DISCLOSURE STATEMENT This presentation includes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on Werner Enterprises’ current plans, and are not guarantees of future performance. They are subject to risk and uncertai
Slide 3: About Werner Enterprises
ABOUT WERNER ENTERPRISES H Premium Truckload Transportation and Logistics Services Provider 2013 Revenue: $2.0B 2013 Net Income: $87M NASDAQ: WERN Market Cap: $1.8B Avg Daily Trading Volume (3 mo. 3/14) 638k 2013 Quest for Quality Repeat Award Winner 2
Slide 4: The Path of Werner Progress
THE PATH OF WERNER PROGRESS 2003 2009 • Brokerage and • Safety improvement initiative begins Intermodal expansion • Australia launch 1998 2007 1956 • First to install • LH fleet reduction • Founded by electronic logging C.L. Werner devices (ELD’s) 1986 2014 • IPO • Goal: Make progress to 11% OI marg
Slide 5: Revenue Sources
REVENUE SOURCES Vertical: 60% 51% 50% 50% 47% % of Revenues* 40% Retail/CP 30% 27% Grocery Products 24% 24% 16% 14% Manuf./Industrial 20% 14% 9% 12% 12% Logistics/Other 10% 0% 2011 2012 2013 * Top 50 customers Customers: 100% 80% 74% 73% 74% % of Revenues 60% 61% 61% Top 5 60% 40% 40% Top 10 40% 40%
Slide 6: Domestic Freight Market: Market Share & Growth Opportunities
DOMESTIC FREIGHT MARKET: MARKET SHARE & GROWTH OPPORTUNITIES U.S. Freight Market Revenues in billions of $* Other (Pipeline, Werner Enterprises Air, Water) Growth Opportunities $73B 9% Parcel $300 $280B $277B $45B Truckload 6% $280B Rail Intermodal 36% $250 $15B Revenue in billions 2% $200 Rail Carl
Slide 7: Revenue Profile
REVENUE PROFILE • Freight Management LOGISTICS/CB - % of Revenues 30% • Brokerage 29% 28% • Intermodal 27% • Cross Border 26% • Global Logistics 25% Goal 1Q14 Asset-Light 24% 23% LOGISTICS 22% 21% 20% 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 1/3 28%* Van DEDICATED Flatbed Temperature 1/3 37% Controlled As
Slide 8: Freight Market Update
FREIGHT MARKET UPDATE ONE-WAY TRUCKLOAD 7
Slide 9: Comprehensive Solutions
COMPREHENSIVE SOLUTIONS Freight Management Freight Movement Global Implementation Technological Advantages Werner provides With an asset-backed Providing door-to-door Sophisticated complete 3PL supply network of over 7,000 services for technology tools chain solutions across trucks, 11,000 alliance
Slide 10: Werner & Mexico Growing Strength in Numbers
WERNER & MEXICO GROWING STRENGTH IN NUMBERS Werner Mexico: Top 3 Mexico CB TL carrier 15 years in market >12% of consolidated revenues Strong relationships with top Mexican carriers 31% revenue growth 2011 to 2013 vs. Manufacturing: MX MFG wages (adjusted for productivity) to be 30% lowe
Slide 11: Green Initiatives
GREEN INITIATIVES Current Fuel Efficiency Initiatives Werner’s Impact From 2007 to 2013 we reduced: Aerodynamic trucks & trailers Weight reduction strategies 77 860,000 Million Automated tire inflation systems Tons Gallons Newest diesel engine technology Computerized truck idling program
Slide 12: Safety Trends
SAFETY TRENDS INS/CLAIMS % of REVENUES* ACCIDENTS PER MM 8% 7.3% 15 7% 6.6% 14 6.3% 13 11.9 % of Tkg Revs (net of FSC) 6% 12 11.1 5.4% 5.2% 5.5% 11 10.1 5.0% 9.8 5% 10 9.0 9.0 9 8.3 4% 8 7 3% 6 5 2% 4 3 1% 2 1 0% 0 2007 2008 2009 2010 2011 2012 2013 2007 2009 2011 2013 * Trucking revenues, less fuel
Slide 13: Regulatory - CSA
REGULATORY - CSA March 2014 Def. Alert CSA BASIC WERN Threshold CSA SMS Summary Data Unsafe Driving 53 65 Fatigued Driving (HOS) 20 65 Total Carriers 786,345 Driver Fitness 59 80 Controlled Sub/Alcohol 43 80 Inspected Carriers 42% 329,718 Vehicle Maintenance 56 80 HAZMAT (Non‐Public) WERN below the
Slide 14: Regulatory - HOS
REGULATORY - HOS Implementation Date: July 1, 2013 July 2013 Primary rule changes: 34-hour restarts, must include two periods between 1 a.m. and 5 a.m., and 1 week (168 hrs.) between 34-hour restarts New - requires a 30 minute break after 8 hours of driving 2-3% Estimated decrease to mileage pro
Slide 15: Regulatory - Electronic Logging Devices (ELD's)
REGULATORY – ELECTRONIC LOGGING DEVICES (ELD’S) 5/27/14 60-day comment period ends 2014 2015 2016 3/28/14 2H - 2014 2H - 2016 U.S. DOT proposed Final ruling expected - Expected rule making 2 year implementation timing when period all motor carriers must From 3/31/14 FMCSA News Release: have E
Slide 16: Supply - Capacity
SUPPLY - CAPACITY Total Public Truckload Fleet Capacity 54,000 49,000 Including owner 44,000 operators, capacity at public fleets is 39,000 13% below peak 4Q06 34,000 levels 29,000 24,000 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q
Slide 17: Supply - Aging Fleets
SUPPLY – AGING FLEETS U.S. Class 8 Trucks Average Age 7 6.5 Age in Years 6 5.5 5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Class 8 Tractor Maintenance Expense Current Average Age of a U.S. Class 8 Truck Fleet 6.5 yrs 16 Sources: ACT Research Co. a
Slide 18: Supply - Industry Driver Shortage Macro Trucking Capacity Constraints
SUPPLY-INDUSTRY DRIVER SHORTAGE MACRO TRUCKING CAPACITY CONSTRAINTS Declining Unemployment Rate Reduced Government Funding Assistance for New Drivers 35% % of new Werner drivers receiving government assistance 25% 12% 15% Increased Labor Competition 2010 2011 2012 2013 Growing home construction jo
Slide 19: Cash Flow and Cap Ex
CASH FLOW AND CAP EX $300 $250 Millions of Dollars $200 $200M $150 $150M $100 $50 $0 00 01 02 03 04 05 06 07 08 09 10 11 12 20 13 t. es 20 20 20 20 20 20 20 20 20 20 20 20 20 20 14 Cash Flow from Operations Cap Ex, Net 18
Slide 20: Returning Value to Shareholders
RETURNING VALUE TO SHAREHOLDERS $900 Cumulative Amount Returned $800 $700 $600 $840M Millions of $ $500 returned over $400 the last 7 yrs. (>$11/share) $300 $200 $100 $0 2006 2007 2008 2009 2010 2011 2012 2013 Share Repurchases Quarterly Dividends Special Dividends 19
Slide 21: Trucks
TRUCKS 9,200 10% 9,000 Keep fleet count flat, focused on reaching 8% TL OI% target of 11% 8,800 6% Average # of Trucks In Service 8,600 4% 8,400 2% % Change YOY 8,200 0% 8,000 -2% 7,800 -4% 7,600 7,400 -6% 7,200 -8% 7,000 -10% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Ave
Slide 22: Improving Rate Metrics
IMPROVING RATE METRICS RPTM Trends 5% RPTM YOY % CHG 4% 3% 2% 1% 0% 1Q13 2Q13 3Q13 4Q13 1Q14 RPTM – Revenue Per Total Mile RPTPW Trends Empty Mile Trends 3% 150 DH% - YOY CHG in BP RPTPW YOY % CHG 2% 100 50 1% 0 0% -50 -1% -100 -2% -150 1Q13 2Q13 3Q13 4Q13 1Q14 1Q13 2Q13 3Q13 4Q13 1Q14 RPTPW – Reven
Slide 23: Operating Margin Trends
OPERATING MARGIN TRENDS* 11 OP INC - % OF REVENUES 10 9 8 7 6 5 4 3 2 1Q 2Q 3Q 4Q 2011 2012 2013 2014 EPS TRENDS $0.45 $0.42 $0.40 $0.40 $0.40 $0.38 $0.34 $0.35 $0.35 $0.35 $0.29 $0.29 $0.30 $0.30 $0.24 $0.25 $0.22 EPS $0.20 $0.20 $0.15 $0.10 $0.05 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q $0.
Slide 24: EPS Trends
EPS TRENDS $1.60 $1.40 $1.40 $1.40 $1.25 $1.22 $1.18 $1.20 $1.10 $1.08 $1.02 $1.00 $0.94 $0.90 $0.79 $0.80 $0.76 $0.76 $0.72 $0.61 $0.61 $0.60 $0.60 $0.51 $0.46 $0.46 $0.41 $0.40 $0.34 $0.27 $0.25 $0.22 $0.22 $0.17 $0.20 $0.13 $0.00 23
Slide 25: WERN Targeting an Annualized 11% Truckload Operating Margin
WERN TARGETING AN ANNUALIZED 11% TRUCKLOAD *OPERATING MARGIN 11.0% 9.3% 9.0% 9.0% 8.7% 7.9% 7.2% 6.8% 5.9% 5.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 Target * Truckload Transportation Services (includes One-Way TL and Dedicated). Above percentages include fuel (fuel surcharge revenues and fue
Slide 26: WERN Targeting a 15% ROE & 9% ROA
WERN TARGETING A 15% ROE & 9% ROA ROE 14.5% 13.6% 15.0% 11.3% 11.1% 11.7% 8.8% 8.1% 7.5% 2006 2007 2008 2009 2010 2011 2012 2013 Target ROA 8.4% 9.0% 6.9% 7.7% 6.6% 6.5% 5.4% 5.2% 4.6% 2006 2007 2008 2009 2010 2011 2012 2013 Target 25
Slide 27: Return on Invested Capital vs. Share Price Growth
RETURN ON INVESTED CAPITAL (ROIC*) VS. SHARE PRICE GROWTH $30 16% 14% $25 Return on Invested Capital 12% Share Price (year-end) $20 10% $15 8% 6% $10 4% $5 2% $0 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Share Price (year-end) ROIC* *ROIC is a non-GAAP measure. Net income p
Slide 28: Global, Award-Winning Comprehensive Customer Portfolio
Global, Award-Winning Comprehensive Customer Portfolio Service Customizable Consistent, Logistics Credible and Strategies Conservative Technology Driven
Slide 29: Thank You
THANK YOU For more information visit: www.werner.com Follow us on Facebook and Twitter
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