Slide 1: 1Q 2019 Earnings Presentation
1Q 2019 EARNINGS PRESENTATION April 25, 2019
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: Werner Overview, 1Q 2019 Highlights
WERNER OVERVIEW, 1Q 2019 HIGHLIGHTS Derek Leathers President and Chief Executive Officer
Slide 4: Werner Overview
WERNER OVERVIEW Premium Truckload Transportation & Logistics Services Provider 2018 Revenues by Segment Headquarters Omaha, NE 2% Truckload Transportation Services (TTS) 21% Market Cap1 $2.5B Werner Logistics Schools/Other 77% Dedicated 4,560 Fleet Size1 One-Way 2018 Revenues by Vertical 2018 Revenu
Slide 5: We Are Transforming Werner Into a Stronger Performing and Better Positioned Company
WE ARE TRANSFORMING WERNER INTO A STRONGER PERFORMING AND BETTER POSITIONED COMPANY Jun Jun Launched Launched 55T’s T’sStrategy Strategy Aug Apr C.L. Werner, founder, Aug Apr reassumed CEO role Announced newAnnounced new metrics- Reduction in C.L. Werner, May metrics-basedbased management Increased
Slide 6: 1Q 2019 Highlights
1Q 2019 HIGHLIGHTS ▪ Revenues increased 6% to $596M 1Q19 ▪ GAAP EPS increased 34% to $0.51 Financial ▪ Adj. EPS increased 37% to $0.52 Highlights ▪ Adj. operating income increased 40% to $49.2M ▪ Adj. operating margin improved ~200 bps to 8.2% ▪ Freight demand for our One-Way Truckload fleet was sea
Slide 7: Total Company and Segment Financial Results
TOTAL COMPANY AND SEGMENT FINANCIAL RESULTS John Steele Executive Vice President, Treasurer and Chief Financial Officer
Slide 8: 1Q 2019 Financial Performance
1Q 2019 FINANCIAL PERFORMANCE ($M) Total Revenues Adjusted Operating Income Adjusted EPS and Operating Margin $80 0 20. 0% $79 0 $78 0 $77 0 $76 0 $75 0 $70 .0 $74 0 $73 0 $72 0 18. 0% $71 0 $70 0 $69 0 $68 0 $596 $67 0 $66 0 $65 0 $563 $64 0 $60 .0 16. 0% $63 0 $62 0 $61 0 $49.2 $60 0 $59 0 $58 0 $
Slide 9: Truckload Transportation Services (TTS) Results
TRUCKLOAD TRANSPORTATION SERVICES (TTS) RESULTS 1Q18 1Q19 Change YoY ▪ TTS RPTPW 1 +2.8%. One-Way TL RPTPW 1 +2.8%, Revenues ($M) $431.6 $462.9 7% including 6.5% higher One-Way TL RPTM1 Adj. Op. Income ($M) $33.4 $44.1 32% ▪ TTS RPTPW 1 increases and operating margin expansion led to $10.7M Adj. ope
Slide 10: TTS Fleet Metrics
TTS 2 FLEET METRICS Dedicated Truckload Trucking Revenues1 ($M) Average Tractors Revenues / Tractor / Week1 $25 0 $218 4,530 4,019 $3,564 $3,694 $20 0 $186 $15 0 $10 0 $50 $- 1Q18 1Q19 1Q18 1Q19 1Q18 1Q19 One-Way Truckload Trucking Revenues1 ($M) Average Tractors Revenues / Tractor / Week1 $25 0 $4,
Slide 11: Werner Logistics Results
WERNER LOGISTICS RESULTS 1Q18 1Q19 Change YoY Revenues ($M) $117.4 $117.4 0% ▪ A good, but less robust freight market led to fewer project freight opportunities, lower spot rates and winter weather challenges, which kept revenues flat YOY Gross Margin 14.6% 17.3% 270 bps ▪ Continued investments in l
Slide 12: Business Update and Financial Outlook
BUSINESS UPDATE AND FINANCIAL OUTLOOK Derek Leathers President and Chief Executive Officer
Slide 13: Five T's Strategy Execution
FIVE T’S STRATEGY EXECUTION ▪ Reduced tractor age to 1.8 years; maintain at or near this level 01 Tractors going forward 02 Trailers ▪ Reduced trailer age to 4.1 years, lowest level since the year 2000 ▪ Despite an extremely competitive driver market, reduced driver 03 Talent turnover to the second-
Slide 14: Modern, Driver-Preferred Fleet
MODERN, DRIVER-PREFERRED FLEET TRACTORS TRAILERS ▪ New, modern, well-equipped, aerodynamic, driver-preferred ▪ Newer, modern trailers; average age of 4.1 years fleet from top-quality OEMs ▪ 93% dry van, 6% temp controlled, 1% specialized ▪ 1.8 average age; industry average 5.8 years ▪ Transitioning
Slide 15: Our Driver Strategy Is Working in a Very Competitive Labor Market
OUR DRIVER STRATEGY IS WORKING IN A VERY COMPETITIVE LABOR MARKET Werner Programs are Attracting and Retaining Talent Photo Caption: CEO Derek Leathers meets with drivers at April 2019 Driver Appreciation Event For 1Q19, 2nd Lowest 1Q Driver Turnover % in the Last 20 Years Advanced truck fleet with
Slide 16: Capex Moderating in 2019; Strong FCF Generation Forthcoming
CAPEX MODERATING IN 2019; STRONG FCF GENERATION FORTHCOMING Net CapEx and Cash Flow Commentary ▪ 2019 Net CapEx expected to ($M) normalize in the range of $275M to $430 $300M; over the long term, targeting $418 Net CapEx at 11-13% of gross $370 2019 revenues $351 $349 Net CapEx: $310 ▪ Net CapEx exp
Slide 17: Werner Operational Excellence
WERNER OPERATIONAL EXCELLENCE OUR BUSINESS MODEL ENABLES STRONG EXECUTION LT INDUSTRY QUALITY NETWORK EXECUTION SERVICE RELATIONSHIPS OPTIMIZATION TECHNOLOGY- PREDICTIVE FORWARD ANALYTICS Powered by Our People Case Studies Demonstrating the Strength of Our Business Model this Quarter Strong Executio
Slide 18: Capital Allocation Strategy
CAPITAL ALLOCATION STRATEGY ▪ First priority remains continued investment in the business across cycles; operational Continue to and commercial excellence initiatives in place Invest in Growth ▪ 2019 Net CapEx spend lower than 2018 and more normalized and Productivity ▪ Fleet and terminal network im
Slide 19: Updating Full Year 2019 Outlook
UPDATING FULL YEAR 2019 OUTLOOK One-Way Truckload Freight Demand Assumptions ▪ Freight demand has moderated in April to date ▪ Truck growth from year-end 2018 of 3% to 5% and is lower than the unusually strong freight expected to be primarily in Dedicated and occur in demand during the same period i
Slide 20: Q&A
WERNER WE KEEP AMERICA MOvinge Q&A
Slide 21: Summary – Invest With Us
SUMMARY – INVEST WITH US Focused effort Heavy capex Our new, Long-term We are a over the past period to technologically- margin and stronger, better several years to transform our advanced fleet, return positioned balance the company is updated terminal expectations company than we portfolio toward
Slide 22: Appendix
WERNER WE KEEP AMERICA MOvinge APPENDIX
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three Months Ended March 31, 2019 2018 Operating revenues $ 596,117 $ 562,684 Operating expenses 548,098 527,569 Adjusted for: Insurance and claims (1) (1,150 ) 0 Adjusted operating expenses 546,948 527,569 Adjusted
Slide 24: Werner Well-Positioned for Potential Economic Outcomes
WERNER WELL-POSITIONED FOR POTENTIAL ECONOMIC OUTCOMES Bullish case (domestic GDP growth > 2.5%, driver supply tight, freight demand solid) ▪ Werner continues to provide outstanding customer service with new fleet, more experienced drivers, enhanced IT, strong operational execution ▪ One-Way Trucklo
Slide 25: For more information visit Werner.com
WERNE WE KEEP AMERICA MOvinge For more information visit Werner.com | LY fin} S|