wern-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


[Mark			one]
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 0-14690

WERNER ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

Nebraska

47-0648386

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

14507 Frontier Road

Post Office Box 45308

Omaha

Nebraska

68145-0308

(Address of principal executive offices)

(Zip Code)

(402) 895-6640

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 Par Value

WERN

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 5, 2023, 63,376,934 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.

Table of Contents

WERNER ENTERPRISES, INC.

INDEX


		PAGE
PART I – FINANCIAL INFORMATION
	Cautionary Note Regarding Forward-Looking Statements	3
Item 1.	Financial Statements:	4
	Consolidated Statements of Income for the Three Months Ended March 3 1 , 202 3 and 202 2	4
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 3 1 , 202 3 and 202 2	5
	Consolidated Condensed Balance Sheets as of March 3 1 , 202 3 and December 31, 202 2	6
	Consolidated Statements of Cash Flows for the Three Months Ended March 3 1 , 202 3 and 202 2	7
	Consolidated Statements of Stockholders’ Equity and Temporary Equity - Redeemable Noncontrolling Interest for the Three Months Ended March 3 1 , 202 3 and 202 2	8
	Notes to Consolidated Financial Statements (Unaudited) as of March 3 1 , 202 3	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 6.	Exhibits	30

Table of Contents

PART I

FINANCIAL INFORMATION

Cautionary Note Regarding Forward-Looking Statements:

This Quarterly Report on Form 10-Q contains historical information and forward-looking statements based on information currently available to our management. The forward-looking statements in this report, including those made in Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of Part I, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These safe harbor provisions encourage reporting companies to provide prospective information to investors. Forward-looking statements can be identified by the use of certain words, such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project” and other similar terms and language. We believe the forward-looking statements are reasonable based on currently available information. However, forward-looking statements involve risks, uncertainties and assumptions, whether known or unknown, that could cause our actual results, business, financial condition and cash flows to differ materially from those anticipated in the forward-looking statements. A discussion of important factors relating to forward-looking statements is included in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 Form 10-K”). Readers should not unduly rely on the forward-looking statements included in this Form 10-Q because such statements speak only to the date they were made. Unless otherwise required by applicable securities laws, we undertake no obligation or duty to update or revise any forward-looking statements contained herein to reflect subsequent events or circumstances or the occurrence of unanticipated events.

Table of Contents

Item 1. Financial Statements.

WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended March 31,
(In thousands, except per share amounts)	2023		2022
Operating revenues	$	832,714	$	764,605
Operating expenses:
Salaries, wages and benefits	268,315		241,996
Fuel	91,414		88,421
Supplies and maintenance	68,225		57,025
Taxes and licenses	25,425		23,833
Insurance and claims	36,485		27,492
Depreciation and amortization	74,313		67,229
Rent and purchased transportation	220,224		185,237
Communications and utilities	4,733		3,926
Other	(9,806)		(14,065)
Total operating expenses	779,328		681,094
Operating income	53,386		83,511
Other expense (income):
Interest expense	7,916		1,439
Interest income	(1,552)		(275)
Loss on investments in equity securities	81		9,806
Other	7		73
Total other expense, net	6,452		11,043
Income before income taxes	46,934		72,468
Income tax expense	11,400		17,433
Net income	35,534		55,035
Net income attributable to noncontrolling interest	(310)		(1,286)
Net income attributable to Werner	$	35,224	$	53,749
Earnings per share:
Basic	$	0.56	$	0.82
Diluted	$	0.55	$	0.82
Weighted-average common shares outstanding:
Basic	63,306		65,543
Diluted	63,695		65,878

See Notes to Consolidated Financial Statements (Unaudited).

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WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
(In thousands)	2023		2022
Net income	$	35,534	$	55,035
Other comprehensive income (loss):
Foreign currency translation adjustments	3,001		1,153
Change in fair value of interest rate swaps, net of tax	(973)		3,631
Other comprehensive income, net	2,028		4,784
Comprehensive income	37,562		59,819
Comprehensive income attributable to noncontrolling interest	(310)		(1,286)
Comprehensive income attributable to Werner	$	37,252	$	58,533

See Notes to Consolidated Financial Statements (Unaudited).

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WERNER ENTERPRISES, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS


(In thousands, except share amounts)	March 31, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	129,591	$	107,240
Accounts receivable, trade, less allowance of $10,240 and $10,271, respectively	460,999		518,815
Other receivables	29,400		29,875
Inventories and supplies	14,926		14,527
Prepaid taxes, licenses and permits	13,956		17,699
Other current assets	60,904		74,459
Total current assets	709,776		762,615
Property and equipment	2,875,063		2,885,641
Less – accumulated depreciation	1,020,469		1,060,365
Property and equipment, net	1,854,594		1,825,276
Goodwill	129,104		132,717
Intangible assets, net	94,030		81,502
Other non-current assets	328,812		295,145
Total assets	$	3,116,316	$	3,097,255
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable	$	128,955	$	124,483
Current portion of long-term debt	5,000		6,250
Insurance and claims accruals	80,738		78,620
Accrued payroll	43,541		49,793

Accrued expenses	20,057		20,358
Other current liabilities	25,038		30,016
Total current liabilities	303,329		309,520
Long-term debt, net of current portion	686,250		687,500
Other long-term liabilities	58,567		59,677
Insurance and claims accruals, net of current portion	245,900		244,946

Deferred income taxes	312,724		313,278
Total liabilities	1,606,770		1,614,921
Commitments and contingencies
Temporary equity - redeemable noncontrolling interest	39,009		38,699
Stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized; 80,533,536 shares
issued; 63,376,934 and 63,223,003 shares outstanding, respectively	805		805
Paid-in capital	128,050		129,837
Retained earnings	1,902,858		1,875,873
Accumulated other comprehensive loss	(9,264)		(11,292)
Treasury stock, at cost; 17,156,602 and 17,310,533 shares, respectively	(551,912)		(551,588)
Total stockholders’ equity	1,470,537		1,443,635
Total liabilities, temporary equity and stockholders’ equity	$	3,116,316	$	3,097,255

See Notes to Consolidated Financial Statements (Unaudited).

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WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In thousands)	2023		2022
Cash flows from operating activities:
Net income	$	35,534	$	55,035
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	74,313		67,229
Deferred income taxes	(111)		(254)
Gain on disposal of property and equipment	(18,339)		(20,458)
Non-cash equity compensation	3,403		3,026
Insurance and claims accruals, net of current portion	954		4,470
Loss on investments in equity securities	81		9,806
Other	(417)		(2,080)
Changes in certain working capital items:
Accounts receivable, net	57,866		11,279
Other current assets	17,336		13,152
Accounts payable	6,484

SEC Form 10-Q filed by Werner Enterprises Inc.