Werner Enterprises, Inc. · NASDAQ:WERN
Werner Enterprises — Robert W. Baird 2013 Industrial Conference
26 slides from Werner Enterprises's conference presentation, Nov 5, 2013
Slide 1: Werner Enterprises 2013 Industrial Conference
Werner Enterprises 2013 Industrial Conference November 5, 2013
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 2012 Revenue: $2.0 Billion 2012 Net Income: $103 Million NASDAQ: WERN Market Cap: $1.7 Billion Avg Daily Trading Volume (3 mo. 9/13) 575K 2013 Quest for Quality Repeat Award Winner 2 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 device (ELD) 1986 • IPO 2012 • $103M earnings (record high to date)
Slide 5: Revenue Sources
REVENUE SOURCES Vertical: 60% 49% 51% 50% % of Revenues* 50% 40% Retail/CP 30% 26% 24% 24% Grocery Products 17% 16% Manuf./Industrial 20% 14% 8% 9% 12% Logistics/Other 10% 0% 2010 2011 2012 * Top 50 customers Customers: 100% 80% 74% 74% 73% % of Revenues 60% 60% 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 $* Werner Enterprises Other (Pipeline, Air, Water) Growth Opportunities $73B Rail intermodal 10% $300 $280B $15B $277B 2% Truckload $280B $250 Rail carload 37% $56B Revenue in billions 8% $200 $1
Slide 7: Revenue Profile
REVENUE PROFILE • Freight Management • Brokerage Goal 3Q13 • Intermodal • Cross Border Asset-Light • Global Logistics LOGISTICS 1/3 29%* Van DEDICATED Temperature Flatbed Controlled 1/3 39% Asset Medium / Long Haul Regional Fleets ONE-WAY TRUCKLOAD Network Temperature Optimization Controlled Team We
Slide 8: Freight Market Update
FREIGHT MARKET UPDATE ONE-WAY TRUCKLOAD 8 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 7,295 services for technology tools chain solutions across trucks, 10,000 alliance compa
Slide 10: Fuel Price Trends
FUEL PRICE TRENDS 1Q 2Q 3Q 4Q $5.00 $4.80 $4.60 $4.40 $4.20 $4.00 Price Per Gallon (in $) $3.80 $3.60 $3.40 $3.20 $3.00 $2.80 $2.60 $2.40 $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 2009 2010 2011 2012 2013 * Dept. of Energy (DOE) fuel price survey (Nat'l avg.) of truck stops used by shippers/carriers for b
Slide 11: Green Initiatives
GREEN INITIATIVES Werner Enterprises is a SmartWaySM Transport partner. SmartWay is a collaboration between the EPA and the freight industry, to increase energy efficiency and reduce air pollution. Werner has earned a Shipper Index Factor score (SIF) of 1.25, the highest possible score. Fuel Efficie
Slide 12: WERN Safety Improvements
WERN SAFETY IMPROVEMENTS INS/CLAIMS % of REVENUES* ACCIDENTS PER MM 8% 7.3% 15 27% reduction 2007 to 2012 7% 6.6% 14 6.3% 13 11.9 6% 12 11.1 % of Tkg Revs (net of FSC) 5.4% 5.2% 11 10.1 5.0% 5% 10 9.0 8.7 9 8.4 4% 8 7 3% 6 5 2% 4 3 1% 2 1 0% 0 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2
Slide 13: Regulatory - CSA
REGULATORY - CSA September 2013 Def. Alert CSA BASIC WERN Threshold CSA SMS Summary Data Unsafe Driving 39 65 Fatigued Driving (HOS) 20 65 Total Carriers 786,345 Driver Fitness 50 80 Controlled Sub/Alcohol 30 80 Inspected Carriers 42% 329,718 Vehicle Maintenance 52 80 HAZMAT (Non‐Public) WERN well b
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: Supply - Capacity
SUPPLY - CAPACITY Total Public Truckload Fleet Capacity 54,000 49,000 44,000 Including owner operators, capacity at public fleets is 39,000 nearly 20 percent below peak 4Q06 levels 34,000 29,000 24,000 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q0
Slide 16: Supply - Aging Fleets
SUPPLY – AGING FLEETS 7 U.S. Class 8 Trucks Average Age 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 Class 8 Tractor Maintenance Expense Current Average Age of a U.S. Class 8 Truck Fleet 6.6 yrs Sources: ACT Research Co. and Wards
Slide 17: Driver Market
DRIVER MARKET September 2013 2010 U.S. Census Driver Age Profiles +148,000 Jobs created in the U.S. economy, in line with LTM avg. +1,000 Jobs added in the “For-Hire Trucking” sector, in Sept. 2013 Headwinds • Increased regulatory requirements • Work/home balance • Shrinking employment pool • Career
Slide 18: Cash Flow and Cap Ex
CASH FLOW AND CAP EX $300 * $250 * ** ** Millions of Dollars $200 $175M $150 $150M $100 $50 $0 al 00 01 02 03 04 05 06 07 08 09 10 11 20 12 go 20 20 20 20 20 20 20 20 20 20 20 20 20 13 Cash Flow from Operations Cap Ex, Net * Increased cap ex in 2006 and 2007 prior to 2007 EPA engine emission change.
Slide 19: Returning Value to Shareholders
RETURNING VALUE TO SHAREHOLDERS Cumulative Amount Returned $800 $700 $800M $600 returned over the last 7 yrs. $500 (>$11/share) Millions of $ $400 $300 Dividend Yield $200 7.7% (last 5 yr. avg.) $100 $0 2006 2007 2008 2009 2010 2011 2012 Share Repurchases Quarterly Dividends Special Dividends 18
Slide 20: Trucks
TRUCKS 9,200 10% Keep fleet count flat, focused on reaching TL 9,000 OI% target of 11% 8% 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 Average
Slide 21: Operating Margin Trends
OPERATING MARGIN TRENDS* 11 OP INC - % OF REVENUES 10 9 8 7 6 5 4 3 2 1Q 2Q 3Q 4Q 2010 2011 2012 2013 EPS TRENDS $0.45 $.42 $0.40 $.38 $.40 $.40 $0.35 $.33 $.33 $.34 $.35 $.35 $0.30 $.29 $.29 $.29 $0.25 $.22 $.24 EPS $0.20 $.15 $0.15 $0.10 $0.05 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q $0.00
Slide 22: EPS Trends
EPS TRENDS $1.60 $1.40 $1.40 $1.40 $1.25 $1.22 $1.20 $1.08 $1.10 $1.02 $1.00 $0.94 $0.90 $0.76 $0.76 $0.79 $0.80 $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 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 1
Slide 23: WERN Targeting an Annualized 11% TL Operating Margin
WERN TARGETING AN ANNUALIZED 11% TL*OPERATING MARGIN 11.0% 9.3% 9.0% 9.0% 8.7% 7.9% 6.8% 5.9% 5.0% 2005 2006 2007 2008 2009 2010 2011 2012 Target * Truckload Transportation Services (includes One-Way TL and Dedicated). Above percentages include fuel (fuel surcharge revenues and fuel expense). 25 22
Slide 24: 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% 8.8% 8.1% 7.5% 2006 2007 2008 2009 2010 2011 2012 Target ROA 8.4% 9.0% 6.9% 6.6% 7.7% 5.4% 5.2% 4.6% 2006 2007 2008 2009 2010 2011 2012 Target 26 23
Slide 25: Return on Invested Capital (ROIC) vs. Share Price Growth
RETURN ON INVESTED CAPITAL (ROIC*) VS. SHARE PRICE GROWTH 16% $25 15% 14% 13% Return on Invested Capital 12% $20 Share Price (year-end) 11% 10% 9% $15 8% 7% 6% 5% $10 4% 3% 2% 1% $5 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Share Price (year-end) ROIC** *ROIC is a non-GAAP measure.
Slide 26: Global, Comprehensive Portfolio
Global, Comprehensive Portfolio Award-Winning Customer Service Technology Driven Customizable Logistics Strategies Consistent, Credible and Conservative
Werner Enterprises — Robert W. Baird 2013 Industrial Conference on 6ix