Slide 1: 4Q18 and Full Year 2018 Earnings Presentation
4Q18 AND FULL YEAR 2018 EARNINGS PRESENTATION February 6, 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, 4Q18 and Full Year 2018 Highlights
WERNER OVERVIEW, 4Q18 AND FULL YEAR 2018 HIGHLIGHTS Derek Leathers President and Chief Executive Officer
Slide 4: Werner Overview
WERNER OVERVIEW Premium Truckload Transportation & Logistics Services 2018 Revenues by Segment Provider 2% Headquarters Omaha Truckload Transportation Services (TTS) 21% Werner Logistics Schools/Other 77% Market Cap1 $2.3B Dedicated 4,500 Fleet Size1 2018 Revenues by Vertical 2018 Revenues by Custom
Slide 5: 4Q18 and Full Year 2018 Highlights
4Q18 AND FULL YEAR 2018 HIGHLIGHTS ▪ Revenues increased 14% to $646M ▪ GAAP EPS decreased 61% to $0.77; GAAP EPS for 4Q17 included a $110.5M favorable income 4Q18 tax adjustment, or $1.52/share, due to Tax Reform Financial Highlights ▪ Adj. EPS increased 79% to $0.75 ▪ Adj. operating income increase
Slide 6: Total Company and Segment Financial Results
TOTAL COMPANY AND SEGMENT FINANCIAL RESULTS John Steele Executive Vice President, Treasurer and Chief Financial Officer
Slide 7: 4Q18 Financial Performance
4Q18 FINANCIAL PERFORMANCE ($M) Total Revenues Adjusted Operating Income Adjusted EPS and Operating Margin $80 0 $73.6 20. 0% $79 0 $78 0 $77 0 $76 0 $0.75 $75 0 $70 .0 $74 0 $73 0 $646 $72 0 18. 0% $71 0 $70 0 $69 0 $68 0 $67 0 $66 0 $65 0 $567 $64 0 $60 .0 16. 0% $63 0 $62 0 $61 0 $60 0 $59 0 $58
Slide 8: Full Year 2018 Financial Performance
FULL YEAR 2018 FINANCIAL PERFORMANCE ($M) Total Revenues Adjusted Operating Income Adjusted EPS and Operating Margin $3, 000 $2, 990 $2, 980 $2, 970 $2, 960 $2, 950 $25 0.0 $24 0.0 $228.6 20. 0% $2.38 $2, 940 $2, 930 $2, 920 $23 0.0 $2, 910 $2, 900 $2, 890 $2, 880 $2, 870 $2, 860 18. 0% $2, 850 $2,
Slide 9: Truckload Transportation Services (TTS) Results
TRUCKLOAD TRANSPORTATION SERVICES (TTS) RESULTS 4Q18 4Q17 Change YoY Revenues ($M) $494.7 $439.2 13% ▪ TTS RPTPW* +6.9%; led by One-Way TL RPTPW* +9.8%, including 10.5% higher One-Way TL RPTM* Adj. Op. Income ($M) $68.0 $44.5 53% ▪ TTS RPTPW* increases and operating margin expansion led to $23.4M Ad
Slide 10: TTS Fleet Metrics Update
TTS* FLEET METRICS UPDATE Dedicated Truckload Trucking Revenues** ($M) Average Tractors Revenues / Tractor / Week** $90 0 $817 4,277 4,472 $80 0 $695 3,822 4,009 $3,673 $3,703 $70 0 $3,496 $3,502 $60 0 $50 0 $40 0 $30 0 $183 $215 $20 0 $10 0 $- 2017 2018 4Q17 4Q18 2017 2018 4Q17 4Q18 2017 2018 4Q17
Slide 11: Werner Logistics Results
WERNER LOGISTICS RESULTS 4Q18 4Q17 Change YoY Revenues ($M) $137.2 $112.4 22% ▪ Brokerage led the way with 23% revenues growth ▪ All 5 Logistics units increased revenues (Brokerage, Freight Gross Margin 16.8% 14.4% 240 bps Management, Intermodal, International and Final Mile) ▪ Strong peak season an
Slide 12: Business Update and Financial Outlook
BUSINESS UPDATE AND FINANCIAL OUTLOOK Derek Leathers President and Chief Executive Officer
Slide 13: We Are Transforming Werner Into a Stronger Performing and Better Positioned Company
WE ARE TRANSFORMING WERNER INTO A STRONGER PERFORMING AND BETTER POSITIONED COMPANY Jun Launched 5 T’s Strategy Aug C.L. Werner, founder, Apr reassumed CEO role Announced new metrics- May based management Increased CapEx to: Derek Leathers, President Derek Leathers named performance pay program • Lo
Slide 14: Five T's Strategy Execution
FIVE T’S STRATEGY EXECUTION ▪ Reduced tractor age to 1.8 years; maintain at or near this level 01 Tractors going forward 02 Trailers ▪ Reduced trailer age to 4.1 years, lowest level since the year 2000 ▪ Despite an extremely competitive driver market, reduced driver 03 Talent turnover to one of the
Slide 15: Our Driver Strategy Is Working
OUR DRIVER STRATEGY IS WORKING IN A VERY COMPETITIVE LABOR MARKET Werner Programs Are Attracting and Retaining Professional Drivers Advanced truck fleet New, modern and with nearly 100% auto- Top tier driver pay Nearly 60% of driving operationally efficient manual transmissions packages for multiple
Slide 16: Capex Moderating in 2019; Strong FCF Generation Forthcoming
CAPEX MODERATING IN 2019; STRONG FCF GENERATION FORTHCOMING ($M) $430 $418 ▪ 2019 Net CapEx expected to $370 2019 normalize in the range of $275M to $351 $349 $300M; over the long term, targeting Net CapEx: $310 $275 - $300 Net CapEx at 11-13% of gross $283 revenues ▪ Investment in 2019 focused on $
Slide 17: Capital Allocation Strategy
CAPITAL ALLOCATION STRATEGY ▪ Our first priority remains continued investment in the business across cycles; Continue to operational and commercial excellence initiatives in place Invest in Growth ▪ 2018 was a higher than average Net CapEx spend year to invest in the 5 T’s ▪ Fleet and terminal netwo
Slide 18: Full Year 2019 Outlook
FULL YEAR 2019 OUTLOOK Assumptions One-Way Truckload Freight Demand ▪ Truck growth of 3% to 5% in our TTS truck fleet ▪ QTD 2019 has been tracking slightly better than in Dedicated in 1H19; minimal to no truck growth normal for this time of year, but lower than the planned for 2H19 unusually strong
Slide 19: 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 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 Year Ended December 31, December 31, 2018 2017 2018 2017 Operating revenues $ 646,365 $ 567,365 $ 2,457,914 $ 2,116,737 Operating expenses 571,434 522,304 2,233,699 1,972,917 Adjusted for: Insuran
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to NON-GAAP RECONCILIATION (Unaudited) (In thousands, except per share amounts) (1) During 2Q18, we accrued $11,250 of pre-tax insurance and claims expense (including interest of $1,300) related to a previously disclosed excess adverse jury verdict rendered on May 17, 2018 in a lawsuit arising
Slide 25: For More Information Visit Werner.com
WERNE WE KEEP AMERICA MOvinge For more information visit Werner.com | LY fin} S|