Werner Enterprises, Inc. · NASDAQ:WERN
Werner Enterprises — Q3 2023 Earnings Presentation
29 slides from Werner Enterprises's earnings presentation, Nov 1, 2023
Slide 1: 3Q23 Earnings Presentation
3Q23 EARNINGS PRESENTATION NOVEMBER 1, 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: Third Quarter 2023 Overview
THIRD QUARTER 2023 OVERVIEW DEREK LEATHERS Chairman, President and Chief Executive Officer
Slide 4: Werner Overview (WERN)
WERNER OVERVIEW (WERN) 6TH 67 2,180 TOTAL DRIVERS IN COMPANY YEARS IN OMAHA, NE LARGEST HISTORY WITH ONE MILLION OR MORE SAFE DRIVING BUSINESS 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 5: 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 6: 3Q 2023 Highlights
3Q 2023 HIGHLIGHTS 3Q23 3Q23 Highlights YoY Change $818M Revenues (1)% • Dedicated segment performed as expected; slightly lower revenue per truck YoY, negatively impacted by one fewer $0.37 business day GAAP EPS (57)% • Optimization of the One-Way fleet resulted in mid single-digit RPTM degradation
Slide 7: Investing in Innovation to Drive Growth
INVESTING IN INNOVATION TO DRIVE GROWTH CLOUD FIRST, CLOUD NOW NEAR-TERM Multiyear innovation investment leveraging technology towards ASSOCIATED COSTS growth and operational effectiveness Launched Werner EDGE TMS in 2021 20% Truckload brokerage and Intermodal migration to be completed by year end;
Slide 8: Near-Term Market Outlook
NEAR-TERM MARKET OUTLOOK • Freight demand steady in Dedicated, stable in One-Way and Logistics in Q4 with muted peak activity • Consumers value conscious on household and discretionary spending • Carriers increasingly exiting the market with very low spot freight rates combined with high operating c
Slide 9: Third Quarter 2023 Financial Results
THIRD QUARTER 2023 FINANCIAL RESULTS CHRIS WIKOFF Executive Vice President, Treasurer and Chief Financial Officer
Slide 10: 3Q 2023 Results
3Q 2023 RESULTS TOTAL REVENUES ($M) ADJUSTED OPERATING INCOME1 ($M) ADJUSTED EPS1 AND ADJUSTED OPERATING MARGIN1 25. 0% $12 0.0 $828 $11 0.0 $818 $10 0.0 20. 0% $703 $90 .0 $79.5 $80 .0 $73.9 $0.90 $70 .0 15. 0% $0.79 $60 .0 $50 .0 $41.9 10. 0% $40 .0 $0.42 $30 .0 10.5% 9.6% 5.0 % $20 .0 $10 .0 5.1%
Slide 11: 3Q 2023 Truckload Transportation Services (TTS) Results
3Q 2023 TRUCKLOAD TRANSPORTATION SERVICES (TTS) RESULTS 3Q21 3Q22 3Q23 3Q23 vs. 3Q22 Revenues ($M) $527.7 $621.9 $572.2 (8)% Revenues, net of fuel surcharges ($M) $466.9 $510.7 $489.5 (4)% Adjusted Operating Income1 ($M) $65.4 $76.3 $41.6 (45)% Adjusted Operating Margin1, 2 14.0% 14.9% 8.5% (640) bp
Slide 12: TTS Fleet Metrics Update
TTS1 FLEET METRICS UPDATE TRUCKING REVENUES2 ($M) AVERAGE TRUCKS REVENUES / TRUCK / WEEK2 DEDICATED TRUCKLOAD $314 $306 5,359 $4,508 $4,488 $271 5,051 5,254 $4,129 3Q21 3Q22 3Q23 3Q21 3Q22 3Q23 3Q21 3Q22 3Q23 ONE-WAY TRUCKLOAD $25 0 $190 $190 $4,708 $4,624 $4,548 $20 0 $176 3,110 3,154 2,972 $15 0 $
Slide 13: 3Q 2023 Werner Logistics Results
3Q 2023 WERNER LOGISTICS RESULTS 3Q21 3Q22 3Q23 3Q23 vs. 3Q22 Revenues ($M) $158.0 $187.1 $230.3 23% Revenues, less purchased $23.0 $32.2 $35.3 9.6% transportation expense ($M) Adjusted Operating Income ($M)1 $7.6 $5.6 $3.2 (44)% Adjusted Operating Margin1 4.8% 3.0% 1.4% (160) bps YoY COMMENTARY (3Q
Slide 14: Strong Capital & Cash Flow Generation
STRONG CAPITAL & CASH FLOW GENERATION CASH FLOW LIQUIDITY1 ($ millions) ($ millions) Cash, $43 $446 $449 $418 $427 $374 $349 $356 $333 $318 $284 $266 $143 $180 $140 $193 $452 $131 Total Liquidity $69 $(18) 2018 2019 2020 2021 2022 YTD 2023 Available Credit, Oper CF Net CapEx FCF2 $409 SOLID CASH FLO
Slide 15: Flexible Debt and Low Leverage
FLEXIBLE DEBT AND LOW LEVERAGE DEBT MATURITY SCHEDULE NET DEBT TO LTM EBITDA ($ 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 16: 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 17: 2023 Guidance Metrics and Assumptions
2023 GUIDANCE METRICS AND ASSUMPTIONS PRIOR GUIDANCE ACTUAL 2023 GUIDANCE COMMENTARY (As of 8/3/23) (As of 9/30/23) (As of 11/1/23) 2023 GUIDANCE (4)% to (2)% (5)% (5)% to (3)% Adjusting One-Way fleet TTS truck count from BoY to EoY (annual) (YTD23) (annual) size to adapt to a softer freight market
Slide 18: 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 19: Appendix
APPENDIX
Slide 20: Revenues Snapshot
REVENUES SNAPSHOT YTD 3Q23 REVENUES YTD 3Q23 REVENUES YTD 3Q23 REVENUES BY SEGMENT BY VERTICAL BY CUSTOMER Top 50 Customers 2% Retail 61% Top 5 33% 28% $2.5B Manufacturing & 17% Top 10 46% TOTAL 70% Industrial REVENUES Food & 14% Top 25 61% Beverage Truckload Transportation Services (TTS) Logistics
Slide 21: 2023 Modeling Assumptions
2023 MODELING ASSUMPTIONS • Annual net interest expense increase by $20-25M in 2023 with higher debt and interest rates YoY. Increased effectively-fixed rate debt to >50% in Q3 • Gains on sale of used equipment gradually declines throughout 2023 as the used truck and trailer market moderates, result
Slide 22: Reconciliation of Non-GAAP Financial Measures – Consolidated
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – CONSOLIDATED (Unaudited) (In thousands, except per share amounts) 22
Slide 23: Reconciliation of Non-GAAP Financial Measures – Consolidated
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – CONSOLIDATED (Unaudited) (In thousands, except per share amounts) 23
Slide 24: Reconciliation of Non-GAAP Financial Measures – Consolidated
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – CONSOLIDATED (Unaudited) (In thousands, except per share amounts) 24
Slide 25: Reconciliation of Non-GAAP Financial Measures – TTS Segment
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – TRUCKLOAD TRANSPORTATION SERVICES (TTS) SEGMENT (Unaudited) (In thousands) 25
Slide 26: Reconciliation of Non-GAAP Financial Measures – TTS Segment (continued)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – TRUCKLOAD TRANSPORTATION SERVICES (TTS) SEGMENT (continued) (Unaudited) (In thousands) 26
Slide 27: Reconciliation of Non-GAAP Financial Measures – Werner Logistics Segment
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – WERNER LOGISTICS SEGMENT (Unaudited) (In thousands) 27
Slide 28: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 28
Slide 29: Thank You
THANK YOU FOR MORE INFORMATION, VISIT WERNER.COM