Werner Enterprises, Inc. · NASDAQ:WERN
Werner Enterprises — Investor Presentation (November 2023)
45 slides from Werner Enterprises's investor presentation, November 2023
Slide 1: Investor Presentation November 2023
INVESTOR PRESENTATION NOVEMBER 2023 1
Slide 2: Disclosure Statement
DISCLOSURE STATEMENT This presentation 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 Lit
Slide 3: Our Key Differentiators
OUR KEY DIFFERENTIATORS EXPERIENCED OPERATIONAL DURABLE & INVESTING IN STRONG & REPUTABLE SCALE & DIVERSIFIED INNOVATION & CAPITAL BRAND CAPABILITY PORTFOLIO TECHNOLOGY STRUCTURE 67-year history Built for and trusted Combined strength of Innovation focus; Strong balance sheet rooted in our values an
Slide 4: Leader in Truckload Transportation and Logistics Driven by Our Core Values
LEADER IN TRUCKLOAD TRANSPORTATION AND LOGISTICS DRIVEN BY OUR CORE VALUES INTEGRITY SAFETY & SERVICE • Provide creative capacity solutions and superior on-time service for our customers • Operate premium, modern trucks and trailers that are equipped with the latest safety technology, which inherent
Slide 5: Business Overview
BUSINESS OVERVIEW
Slide 6: Werner Overview (WERN)
WERNER OVERVIEW (WERN) 6TH 67 2,180 TOTAL DRIVERS IN COMPANY YEARS IN BUSINESS OMAHA, NE LARGEST HISTORY WITH ONE MILLION OR MORE SAFE DRIVING HEADQUARTERS DEDICATED CARRIER IN U.S.3 MILES WITH WERNER 5,2604 DEDICATED > 95% DEDICATED CUSTOMER 2,9104 ONE-WAY TRUCKLOAD $2.3B1 1.5%1 14,1112 8,1704 TTS
Slide 7: Highly Attractive Lines of Business in Two Segments
HIGHLY ATTRACTIVE LINES OF BUSINESS IN TWO SEGMENTS TRUCKLOAD TRANSPORTATION SERVICES (TTS) • Consistent and durable revenue stream through economic upturns and downturns 5,260 trucks1 • Strong, tenured relationships with large, complex customers winning in their respective verticals 64% of TTS flee
Slide 8: YTD 3Q23 Revenues Snapshot
YTD 3Q23 REVENUES SNAPSHOT BY SEGMENT BY VERTICAL BY CUSTOMER Top 50 Customers 2% Retail 61% Top 5 33% 28% $2.5B Manufacturing & 17% Top 10 46% TOTAL Industrial REVENUES 70% Food & Beverage 14% Top 25 61% Truckload Transportation Services (TTS) Logistics & Other 8% Top 50 77% Werner Logistics Driver
Slide 9: Competitive Advantages Across All Business Conditions
COMPETITIVE ADVANTAGES ACROSS ALL BUSINESS CONDITIONS CORE OPERATIONAL STRENGTHS BREADTH DIVERSIFIED NORTH AMERICA TECHNOLOGY TOP CUSTOMER SCALE FOOTPRINT & INNOVATION TALENT PORTFOLIO • 8,170 trucks1 • Top 5 U.S. public • Comprehensive North • Accelerate Werner • Access to top talent • Diversified
Slide 10: Werner Footprint
WERNER FOOTPRINT WERNER TERMINALS, REGIONAL 48 STATE COVERAGE + MEXICO AND CANADA LOGISTICS OFFICES AND DRIVER CROSS-BORDER SERVICE TRAINING SCHOOLS NETWORK • Tremendous scale among the top 5 U.S. public truckload carriers* as measured by revenue • Over 90% of U.S. population is within 150 miles of
Slide 11: Trucks and Trailers
TRUCKS AND TRAILERS TRUCKS Modern truck fleet with GPS tracking from top-quality OEMs with average age of 2.01 years (vs. industry average of > 5.0 years2) • Well-equipped with latest technology and driver amenities to enhance operations and safety: • ~100% collision mitigation • ~100% auto manual t
Slide 12: Fleet Sales Strategy
FLEET SALES STRATEGY • More than 30 years in the remarketing business of our premium, pre-owned trucks and trailers • Experienced and knowledgeable fleet sales team • Re engineered sales platform, along with efficient processes and workflows resulting in faster sales cycle and improved profitability
Slide 13: Market Trends
MARKET TRENDS
Slide 14: Truckload Transportation Trends
TRUCKLOAD TRANSPORTATION TRENDS SUPPLY BLS TRUCKING EMPLOYMENT1 • U.S. trucking employment has surpassed pre-pandemic levels in total. However, local General Freight Trucking, Long Distance January 2010 - September 2023 (SA) trucking employment (TL & LTL) has grown at a faster rate than long distanc
Slide 15: Tailwinds Supporting Growth
TAILWINDS SUPPORTING GROWTH HIGHER VELOCITY SUPPLY CHAIN CUSTOMER ALIGNMENT LOWER COST BASE GREATER DEMAND FOR ENHANCED ALIGNMENT WITH REDUCED COSTS AND WERNER’S E-COMMERCE HAS INCREASED CUSTOMERS SUPPLYING DRIVER STRATEGY IMPROVING SUPPLY CHAIN VELOCITY ESSENTIAL PRODUCTS COMPETITIVENESS • E-Commer
Slide 16: Nearshoring Focus Gaining Momentum
NEARSHORING FOCUS GAINING MOMENTUM MACRO NEARSHORING TRENDS WERNER U.S. / MEXICO BORDER LOCATIONS • Shorter supply chains and lower labor costs in Mexico result in faster goods delivery and lower inventory carrying costs • Most goods from Mexico are duty-free under USMCA and not impacted by tariffs
Slide 17: The Road Ahead
THE ROAD AHEAD
Slide 18: Werner Drive Supports Execution of Strategic Priorities
WERNER DRIVESM SUPPORTS EXECUTION OF STRATEGIC PRIORITIES WERNER DRIVESM EXPERIENCED & 67-year history rooted in our values and BUILDING ON 5Ts AND SHAPING OUR FUTURE REPUTABLE BRAND recognized for superior safety and service OPERATIONAL OPERATIONAL Built for and trusted to solve the most complex en
Slide 19: Durable
DURABLE • Deliberately designed and durable portfolio of asset-heavy and asset-light solutions, calibrated to deliver market-leading earnings and cash flow in any business environment • Highly diversified client base of large enterprise industry leaders in select verticals with emphasis on necessity
Slide 20: Durable, Resilient Revenues and Customer Mix
DURABLE, RESILIENT REVENUES AND CUSTOMER MIX STRUCTURED TO PRODUCE STRONG EARNINGS AND FREE CASH FLOW RESILIENT, CONSUMER-ORIENTED FREIGHT BASE IMPROVED REVENUE MIX LEADING TO GREATER DURABILITY 3% Top 50 Customers* 8% 19% 46% Logistics TTS TTS 2015 Revenues 81% 33% Discount Retail 19% 54% 79% Logis
Slide 21: Growing Logistics Segment Adding to Improved Business Resiliency and Vertical Mix
GROWING LOGISTICS SEGMENT ADDING TO IMPROVED BUSINESS RESILIENCY AND VERTICAL MIX LOGISTICS REVENUES COMPOSITION GROWING LOGISTICS SEGMENT • 28% of 3Q23 revenues, up from 24% in 2022 12% 21% 11% 12% • Produced over $925M of LTM pro-forma revenues, inclusive of recent acquisitions* 7% • ReedTMS acqui
Slide 22: Long-Term Goal Range for TTS Annual Adjusted Operating Margin
LONG-TERM GOAL RANGE FOR TTS ANNUAL ADJUSTED OPERATING MARGIN1 15.9% TTS adjusted long-term 5Ts STRATEGY BEGINS 15.1% operating margin goal range1,2,3 : 14.0% 12% to 17% 13.3% 13.2% 12.3% 11.9% 11.6% 11.3% 9.7% 9.4% 9.2% 7.8% 6.7% 6.6% 60% 63% 63% 58% 49% 50% 50% 51% 52% 56% 47% 47% 47% 39% 43% 2008
Slide 23: Results
RESULTS • Customers: Exceptional experience through superior, award-winning on-time service and solutions for complex freight challenges • Associates: Safety-first culture and industry-leading opportunities, training and modern equipment that attracts and retains elite drivers and associates • Share
Slide 24: Strong & Growing Financial Performance
STRONG & GROWING FINANCIAL PERFORMANCE ADJUSTED CONSOLIDATED OPERATING INCOME1 ($M) AND ADJUSTED TOTAL REVENUES ($M) CONSOLIDATED OPERATING MARGIN1 ADJUSTED EPS1 $3, 460.0 $3, 450.0 $3, 440.0 $3, 430.0 $3, 420.0 $3, 410.0 $3,290 $333.2 $3, 400.0 $3, 390.0 $3, 380.0 $3, 370.0 $3, 360.0 $3, 350.0 $3,
Slide 25: Innovation
INNOVATION • Accelerate Werner EDGE platform to customer-facing cloud-based solutions • Advance digitization and deepen technology capabilities to drive efficiency, accuracy and advantages • Secure and efficient API-driven IT infrastructure and data security through v “Cloud First, Cloud Now” strate
Slide 26: Driving Innovation for Growth
DRIVING INNOVATION FOR GROWTH BEST-OF-BREED BRANDED TECHNOLOGY COMPETITIVE TECHNOLOGY PARTNERS + SOLUTIONS = ADVANTAGE Equipment Driver Operating Lifecycle Connectivity Efficiency Management Automated Dynamic Superior Customer Brokerage Pricing Engine Experience • Logistics TMS Migration Status Logi
Slide 27: Values
VALUES • Live our Core Values of Safety, Service and Integrity through unwavering commitment to Inclusion, Community, Innovation and Leadership • Maintain strongest safety standards that go beyond numbers and statistics to keep our associates and the motoring public safe v • Invest in innovation to
Slide 28: Werner Values
WERNER VALUES • 10-year low DOT preventable accident rate per million miles at Werner in 2022 and 19-year low in 3Q23 • Record-low work injury rate YTD through 3Q, down 12% YoY • Drove leadership changes at the Board level over the last two years, resulting in a more diverse expertise in transportat
Slide 29: Quest for Quality
QUEST FOR QUALITY Quest for Quality is widely regarded as the most important measure of customer satisfaction and performance excellence in transportation and logistics. The research group received more than 3,500 total responses. X X X X X X Transportation Service Providers are rated on Logistic Ma
Slide 30: ESG
ESG • Embrace a sustainable world through executing aggressive carbon reduction plan and exploring alternative fuels, equipment and partnerships through WernerBlue, our sustainability initiative • Support and encourage diverse voices and perspectives through our DEI vision and plan, impacting associ
Slide 31: Progressing on Our ESG Initiatives
PROGRESSING ON OUR ESG INITIATIVES • Received the first 15L renewable natural gas truck in April 2023 as part of a partnership with Cummins • Placed the first two Freightliner eCascadia battery electric vehicles into service in Southern California in April 2023 • Installed auxiliary power units (APU
Slide 32: ESG Goals and Milestones
ESG GOALS AND MILESTONES 2022 / 2023 2024 / 2025 2026+ ENVIRONMENTAL • Disclosed Scope 1 absolute emissions • Aligned with Sustainability Accounting • Disclose Scope 1 and Scope 2 greenhouse gas emissions • Double intermodal usage (2030) • Achieve 55% reduction in greenhouse gas Build on Strong Foun
Slide 33: Financial Overview
FINANCIAL OVERVIEW
Slide 34: Strong Capital & Cash Flow Generation
STRONG CAPITAL & CASH FLOW GENERATION CASH FLOW LIQUIDITY1 ($ millions) ($ millions) Cash, $43 $446 $449 $418 $427 $349 $356 $374 $333 $318 $284 $266 $69 $143 $180 $140 $193 $131 $452 ($18) Total Liquidity 2018 2019 2020 2021 2022 YTD 2023 Available Credit, Oper CF Net CapEx FCF 2 $409 SOLID CASH FL
Slide 35: Flexible Debt and Low Leverage
FLEXIBLE DEBT AND LOW LEVERAGE DEBT MATURITY SCHEDULE NET DEBT TO LTM EBITDA ($ millions) 1.1x 1.2x 1.0x $600 0.9x 0.6x 0.3x $88 $2 2023 2024 2025 2026 2027 12/31/20 12/31/21 12/31/22 3/31/23 6/30/23 9/30/23 HEALTHY BALANCE SHEET • $690M Debt ($647M Net Debt) • 54% effectively-fixed rate debt • Long
Slide 36: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION PRIORITIES CAPITAL ALLOCATION HISTORY Strategic Reinvestment for Sustainable Competitive Advantages 2018-2022 & Long-Term Growth • Reinvestments in new, feature-rich trucks and trailers, including the latest safety technology, for customers and drivers Share • Technolo
Slide 37: Recent M&A Strengthens Portfolio Durability
RECENT M&A STRENGTHENS PORTFOLIO DURABILITY ANNUAL REVENUES ACQUISITION DATE (At Time of Acquisition) STRATEGIC BENEFITS • Expanded terminal, fleet, and driver footprint in strategic Mid-Atlantic and Ohio regions 7/1/21 $108M1 • Added over 500 skilled drivers, nearly 500 trucks, 2,000 trailers • Syn
Slide 38: Driving Shareholder Value
DRIVING SHAREHOLDER VALUE Balanced to navigate dynamic large freight market • Large, stable and growing Dedicated fleet with winning enterprise customers, superior on-time service and a passionate driver force • Diversified One-Way fleet with strategic focus on Mexico cross-border, engineered lanes,
Slide 39: Appendix
Appendix
Slide 40: Reconciliation of Non-GAAP Financial Measures – Consolidated
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – CONSOLIDATED (unaudited) (In thousands, except per share amounts) Non-GAAP Adjusted Operating Income and Non-GAAP Adjusted Operating Margin (1) Year Ended December 31, 2018 2019 2020 2021 2022 $ % of Op. Rev. $ % of Op. Rev. $ % of Op. Rev. $ % of Op.
Slide 41: Reconciliation of Non-GAAP Financial Measures – Consolidated
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – CONSOLIDATED (Unaudited) (In thousands, except per share amounts) Non-GAAP Free Cash Flow (1), (12) Year Ended Decem ber 31, YTD 2018 2019 2020 2021 2022 Sept. 30, 2023 $ $ $ $ $ $ Net cash provided by operating activities — (GAAP) $418,159 $426,644 $4
Slide 42: Reconciliation of Non-GAAP Financial Measures – TTS Segment
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – TRUCKLOAD TRANSPORTATION SERVICES (TTS) SEGMENT (unaudited) (In thousands) 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 Surcha
Slide 43: GAAP to Non-GAAP Reconciliation
GAAP to NON-GAAP RECONCILIATION 43
Slide 44: GAAP to Non-GAAP Reconciliation
GAAP to NON-GAAP RECONCILIATION 44
Slide 45: Thank You
THANK YOU FOR MORE INFORMATION, VISIT WERNER.COM
Werner Enterprises — Investor Presentation (November 2023) on 6ix