Slide 1: 2Q 2019 Earnings Presentation
2Q 2019 EARNINGS PRESENTATION July 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, 2Q 2019 Highlights
WERNER OVERVIEW, 2Q 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 $2.3B Werner Logistics Schools/Other 77% Dedicated 4,580 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 Lower fleet age Jun achieved; 2019 Launched Launched 55T’s Ts Strategy capex normalized Strategy Aug Apr Balanced revenue C.L. Werner, founder, Aug Apr reassumed CEO role Announced newAnnounced new metrics- portf
Slide 6: 2Q 2019 and YTD 2019 Highlights
2Q 2019 AND YTD 2019 HIGHLIGHTS ▪ Revenues increased 1% to $628M 2Q19 ▪ GAAP EPS increased 17% to $0.62 Financial ▪ Adj. EPS increased 3% to $0.63 Highlights ▪ Adj. operating income increased 1% to $59.2M ▪ Adj. operating margin decreased ~10 bps to 9.4% ▪ Revenues increased 4% to $1,224M ▪ GAAP EPS
Slide 7: Total Company and Segment Financial Results
TOTAL COMPANY AND SEGMENT FINANCIAL RESULTS John Steele Executive Vice President, Treasurer and Chief Financial Officer
Slide 8: 2Q 2019 Financial Performance
2Q 2019 FINANCIAL PERFORMANCE ($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% $628 $59.2 $71 0 $619 $58.5 $70 0 $69 0 $68 0 $67 0 $66 0 $65 0 $0.63 $64 0 $60 .0 16. 0% $63 0 $0.61 $62 0 $61 0 $
Slide 9: Truckload Transportation Services (TTS) Results
TRUCKLOAD TRANSPORTATION SERVICES (TTS) RESULTS 2Q18 2Q19 Change YoY ▪ TTS RPTPW 1 (1.0%) Revenues ($M) $470.3 $480.0 2% ▪ One-Way TL RPTPW1 (6.0%), including (2.7%) lower Adj. Op. Income ($M) $54.7 $52.4 (4%) One-Way TL RPTM1. Below average freight market 2Q19 vs unusually strong freight market 2Q1
Slide 10: TTS 2Q Fleet Metrics
TTS 2 2Q FLEET METRICS Dedicated Truckload Trucking Revenues1 ($M) Average Tractors Revenues / Tractor / Week1 $25 0 $227 4,558 $202 4,219 $3,833 $3,683 $20 0 $15 0 $10 0 $50 $- 2Q18 2Q19 2Q18 2Q19 2Q18 2Q19 One-Way Truckload Trucking Revenues1 ($M) Average Tractors Revenues / Tractor / Week1 $25 0
Slide 11: Werner Logistics Results
WERNER LOGISTICS RESULTS 2Q18 2Q19 Change YoY Revenues ($M) $134.0 $130.9 (2%) ▪ A less robust freight market led to fewer project freight opportunities, significantly lower spot rates and lower volumes, which reduced revenues slightly by 2% YOY Gross Margin 15.7% 16.1% 40 bps ▪ Continued investment
Slide 12: Business Update and Financial Outlook
BUSINESS UPDATE AND FINANCIAL OUTLOOK Derek Leathers President and Chief Executive Officer
Slide 13: Five T's Strategy Execution
FIVE T’S STRATEGY EXECUTION ▪ Reduced tractor age to 1.8 years; maintain at or near this level 01 Tractors going forward 02 Trailers ▪ Reduced trailer age to 4.1 years, lowest level since 2000 ▪ Utilizing performance pay and metrics to drive performance and 03 Talent attract high performing talent ▪
Slide 14: Modern, Driver-Preferred Fleet
FIVE T’S EXECUTION STRATEGY MODERN, DRIVER-PREFERRED FLEET 01 Tractors 02 Trailers 03 Talent 04 Terminals 05 Technology TRACTORS TRAILERS ▪ New, modern, well-equipped, aerodynamic, driver-preferred ▪ Newer, modern trailers; average age of 4.1 years fleet from top-quality OEMs ▪ 93% dry van, 6% temp
Slide 15: Our Driver Strategy Is Working in a Very Competitive Labor Market
FIVE T’S EXECUTION STRATEGY OUR DRIVER STRATEGY IS WORKING 01 Tractors 02 Trailers 03 Talent 04 05 Terminals Technology IN A VERY COMPETITIVE LABOR MARKET Werner Programs are Attracting and Retaining Talent Photo Caption: CEO Derek Leathers meets with drivers at April 2019 Driver Appreciation Event
Slide 16: Transportation Transformation
FIVE T’S EXECUTION STRATEGY TRANSPORTATION TRANSFORMATION 01 Tractors 02 Trailers 03 Talent 04 Terminals 05 Technology 16
Slide 17: Thoughtful Investment in Technology & Innovation
FIVE T’S EXECUTION STRATEGY THOUGHTFUL INVESTMENT 01 Tractors 02 Trailers 03 Talent 04 05 Terminals Technology IN TECHNOLOGY & INNOVATION 17
Slide 18: CapEx Moderating in 2019; Strong FCF Generation Forthcoming
CAPEX MODERATING IN 2019; STRONG FCF GENERATION FORTHCOMING Net CapEx and Cash Commentary ▪ 2019 Net CapEx normalizes in the ($M) range of $275M to $300M; over the $430 long term, targeting Net CapEx of $418 11-13% of gross revenues $370 2019 $351 $349 ▪ Net CapEx expected to be at the Net CapEx: $3
Slide 19: 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 ▪ Fleet and terminal network improved; continuing upgrades to IT infrastructure, truck and Productivity tec
Slide 20: Updating Full Year 2019 Outlook
UPDATING FULL YEAR 2019 OUTLOOK ASSUMPTIONS Effective Tax Rate 25% to 26% Truck and Trailer Age Maintain at or near current levels of 1.8 years for trucks and 4.1 years for trailers CURRENT PRIOR UPDATED GUIDANCE RANGE RANGE BUSINESS DRIVERS • Freight demand so far in July is below average low end o
Slide 21: Q&A
WERNER WE KEEP AMERICA MOvinge Q&A
Slide 22: 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 23: Appendix
WERNER WE KEEP AMERICA MOvinge APPENDIX
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP TO NON-GAAP RECONCILIATION (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Operating revenues $ 627,533 $ 619,130 $ 1,223,650 $ 1,181,814 Operating expenses 569,091 568,347 1,117,189 1,095,916 Adjusted for: Insurance
Slide 25: 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 26: For more information visit Werner.com
WERNE WE KEEP AMERICA MOvinge For more information visit Werner.com | LY fin} S|