What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-06 compared with 2020-05-07 · 121 added, 54 removed, 350 unchanged (33% of the section changed)

5 unchanged sentences

although in management’s opinion, the disclosures are adequate so that the information presented is not misleading.

Operating results for the three-month period ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 .

Operating results for the three-month and six-month periods ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

In the opinion of management, the information set forth in the accompanying consolidated condensed balance sheets is fairly stated in all material respects in relation to the consolidated balance sheets from which it has been derived.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands, except per share amounts) 2020 2019 2020 2019

2 unchanged sentences

Salaries, wages and benefits 194,981 206,001 400,978 408,800

Fuel 30,677 61,064 79,448 117,202

Supplies and maintenance 43,343 44,371 89,064 90,056

1 unchanged sentence

Insurance and claims 25,789 20,992 61,853 43,701

Depreciation 67,670 61,437 136,507 122,196

Rent and purchased transportation 120,704 146,176 247,146 279,012

Communications and utilities 3,536 3,903 7,344 7,914

Other 5,488 1,504 8,635 1,764

Total operating expenses 516,141 569,091 1,077,778 1,117,189

3 unchanged sentences

Interest income ( 377 ) ( 989 ) ( 1,003 ) ( 1,892 )

Other 23 58 68 ( 58 )

Total other expense (income) 807 498 1,817 337

Income before income taxes 52,011 57,944 82,067 106,124

Income taxes 12,879 14,626 19,877 26,720

Net income $ 39,132 $ 43,318 $ 62,190 $ 79,404

Earnings per share:

Basic $ 0.57 $ 0.62 $ 0.90 $ 1.14

Diluted $ 0.56 $ 0.62 $ 0.89 $ 1.13

Weighted-average common shares outstanding:

Basic 69,093 69,593 69,173 69,932

Diluted 69,435 69,893 69,531 70,229

See Notes to Consolidated Financial Statements (Unaudited).

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands) 2020 2019 2020 2019

Net income $ 39,132 $ 43,318 $ 62,190 $ 79,404

Other comprehensive income (loss):

6 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share amounts)

(In thousands, except share amounts) June 30,

2020 December 31,

Current assets:

1 unchanged sentence

Accounts receivable, trade, less allowance of $8,720 and $7,921, respectively

299,383 322,846

Other receivables 24,060 52,221

7 unchanged sentences

Other non-current assets 147,962 151,254

Total assets $ 2,079,713 $ 2,143,864

LIABILITIES AND STOCKHOLDERS’ EQUITY

4 unchanged sentences

Accrued payroll 42,199 38,347

Income taxes payable 15,706 —

Other current liabilities 26,598 31,049

19 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands) 2020 2019

Cash flows from operating activities:

Net income $ 62,190 $ 79,404

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 136,507 122,196

Deferred income taxes ( 2,896 ) 1,088

2 unchanged sentences

Insurance and claims accruals, net of current portion 6,601 11,967

Other 11,036 ( 3,365 )

Changes in certain working capital items:

10 unchanged sentences

Cash flows from financing activities:

Repayments of short-term debt ( 75,000 ) —

Repayments of long-term debt ( 50,000 ) —

Proceeds from issuance of long-term debt — 265,000

Dividends on common stock ( 12,450 ) ( 273,734 )

15 unchanged sentences

Dividends accrued but not yet paid at end of period 6,219 6,227

(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash to amounts reported within the Consolidated Balance Sheets

Reconciliation of cash, cash equivalents and restricted cash:

Cash and cash equivalents

Restricted cash included in other current assets

Total cash, cash equivalents and restricted cash

See Notes to Consolidated Financial Statements (Unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share amounts)

(In thousands, except share and per share amounts) Common

Stock Paid-In

Capital Retained

Earnings Accumulated

Comprehensive

Income (Loss)

Income (Loss) Treasury

Stockholders’

6 unchanged sentences

BALANCE, March 31, 2020 805 110,695 1,311,448 ( 30,218 ) ( 290,694 ) 1,102,036

Comprehensive income — — 39,132 306 — 39,438

Dividends on common stock ($0.09 per share) — — ( 6,219 ) — — ( 6,219 )

Equity compensation activity, 10,297 shares — ( 199 ) — — 194 ( 5 )

Non-cash equity compensation expense — 1,138 — — — 1,138

BALANCE, June 30, 2020 $ 805 $ 111,634 $ 1,344,361 $ ( 29,912 ) $ ( 290,500 ) $ 1,136,388

BALANCE, December 31, 2018 $ 805 $ 107,455 $ 1,413,746 $ ( 16,073 ) $ ( 241,180 ) $ 1,264,753

5 unchanged sentences

BALANCE, March 31, 2019 805 107,928 1,443,542 ( 15,560 ) ( 261,326 ) 1,275,389

Comprehensive income — — 43,318 420 — 43,738

Purchases of 700,000 shares of common stock — — — — ( 21,756 ) ( 21,756 )

Dividends on common stock ($3.84 per share)

— — ( 267,331 ) — — ( 267,331 )

Equity compensation activity, 6,901 shares

— ( 140 ) — — 130 ( 10 )

Non-cash equity compensation expense

— 2,314 — — — 2,314

BALANCE, June 30, 2019 $ 805 $ 110,102 $ 1,219,529 $ ( 15,140 ) $ ( 282,952 ) $ 1,032,344

See Notes to Consolidated Financial Statements (Unaudited).

34 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Truckload Transportation Services $ 445,053 $ 479,959 $ 909,916 $ 942,850

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

United States $ 516,425 $ 554,261 $ 1,046,496 $ 1,080,853

Mexico 31,045 51,958 74,466 104,772

Other 21,489 21,314 40,700 38,025

Total revenues $ 568,959 $ 627,533 $ 1,161,662 $ 1,223,650

1 unchanged sentence

A receivable is an unconditional right to consideration and is recognized when shipments have been completed and the related performance obligation has been fully satisfied.

At March 31, 2020 and December 31, 2019 , the accounts receivable, net, balance was $ 310.9 million and $ 322.8 million , respectively.

At June 30, 2020 and December 31, 2019, the accounts receivable, net, balance was $ 299.4 million and $ 322.8 million, respectively.

Contract assets represent a conditional right to consideration in exchange for goods or services and are transferred to receivables when the rights become unconditional.

At March 31, 2020 and December 31, 2019 , the balance of contract assets was $ 7.3 million and $ 5.9 million , respectively.

At June 30, 2020 and December 31, 2019, the balance of contract assets was $ 7.1 million and $ 5.9 million, respectively.

We have recognized contract assets within the other current assets financial statement caption on the balance sheet.

1 unchanged sentence

Contract liabilities represent advance consideration received from customers and are recognized as revenues over time as the related performance obligation is satisfied.

The balance of contract liabilities was $ 1.3 million as of March 31, 2020 and December 31, 2019 .

The amount of revenues recognized in the three months ended March 31, 2020 that was included in the December 31, 2019 contract liability balance was $ 1.3 million .

The balance of contract liabilities was $ 1.3 million as of June 30, 2020 and December 31, 2019.

The amount of revenues recognized in the six months ended June 30, 2020 that was included in the December 31, 2019 contract liability balance was $ 1.3 million.

We have recognized contract liabilities within the accounts payable and other current liabilities financial statement captions on the balance sheet.

4 unchanged sentences

transit times generally average approximately 3 days.

During the three months ended March 31, 2020 and March 31, 2019 , revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material.

During the six months ended June 30, 2020 and June 30, 2019, revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material.

We have entered into operating leases primarily for real estate.

7 unchanged sentences

Lease expense is reported in rent and purchased transportation on the consolidated statements of income.

The following table presents information about the amount, timing and uncertainty of cash flows arising from our operating leases as of March 31, 2020 .

(In thousands)

March 31, 2020

The following table presents information about the amount, timing and uncertainty of cash flows arising from our operating leases as of June 30, 2020.

(In thousands) June 30, 2020

Maturity of Lease Liabilities

2020 (remaining) $ 1,752

Thereafter 1,442

Total undiscounted operating lease payments $ 11,638

7 unchanged sentences

Other Information

Weighted-average remaining lease term for operating leases

Weighted-average remaining lease term for operating leases 4.26 years

Weighted-average discount rate for operating leases 3.45 %

An initial right-of-use asset of $ 8.7 million was recognized as a non-cash asset addition with the adoption of the new lease accounting standard.

During the three months ended March 31, 2020 and March 31, 2019 , additional right-of-use assets of $ 0.9 million and $ 0.1 million , respectively, were recognized as non-cash asset additions that resulted from new operating lease liabilities.

Cash paid for amounts included in the present value of operating lease liabilities was $ 1.0 million and $ 0.9 million during the three months ended March 31, 2020 and March 31, 2019 , respectively, and is included in operating cash flows.

During the six months ended June 30, 2020 and June 30, 2019, additional right-of-use assets of $ 1.5 million and $ 0.8 million, respectively, were recognized as non-cash asset additions that resulted from new operating lease liabilities.

Cash paid for amounts included in the present value of operating lease liabilities was $ 2.1 million and $ 1.8 million during the six months ended June 30, 2020 and June 30, 2019, respectively, and is included in operating cash flows.

Operating Lease Expense

Operating lease expense was $ 2.0 million and $ 2.2 million for the three months ended March 31, 2020 and March 31, 2019 , respectively.

This expense included $ 1.0 million and $ 0.9 million for the three months ended March 31, 2020 and March 31, 2019 , respectively, for long-term operating leases, with the remainder for variable and short-term lease expense .

Operating lease expense was $ 2.1 million and $ 4.1 million for the three and six months ended June 30, 2020, respectively, and $ 2.0 million and $ 4.3 million for the three and six months ended June 30, 2019, respectively.

This expense included $ 0.9 million and $ 1.9 million for the three and six months ended June 30, 2020, respectively, and $ 0.9 million and $ 1.8 million for the three and six months ended June 30, 2019, respectively, for long-term operating leases, with the remainder for variable and short-term lease expense .

Lessor Operating Leases

We are the lessor of tractors and trailers under operating leases with initial terms of 2 to 10 years.

We recognize revenue for such leases on a straight-line basis over the term of the lease, and revenues were $ 3.3 million for the three months ended March 31, 2020 and March 31, 2019 .

The following table presents information about the maturities of these operating leases as of March 31, 2020 .

(In thousands)

March 31, 2020

We recognize revenue for such leases on a straight-line basis over the term of the lease.

Revenues were $ 3.0 million and $ 6.3 million for the three and six months ended June 30, 2020, respectively, and $ 3.5 million and $ 6.8 million for the three and six months ended June 30, 2019, respectively.

The following table presents information about the maturities of these operating leases as of June 30, 2020.

(In thousands) June 30, 2020

2020 (remaining) $ 5,275

Total $ 10,100

(4) Credit Facilities

As of March 31, 2020 , we had unsecured committed credit facilities with three banks.

As of June 30, 2020, we had unsecured committed credit facilities with three banks.

We had with Wells Fargo Bank, N.A.

3 unchanged sentences

We also had an unsecured line of credit of $ 75.0 million with U.S.

Bank, N.A., which will expire on July 13, 2020 .

Bank, N.A., with an expiration date of July 13, 2020 , and we repaid the outstanding balance in June 2020 prior to the expiration date.

Borrowings under these credit facilities bear variable interest based on the London Interbank Offered Rate (“LIBOR”).

As of March 31, 2020 and December 31, 2019 , our outstanding debt totaled $ 250.0 million and $ 300.0 million , respectively.

We had $ 100.0 million outstanding under the credit facilities at a weighted average variable interest rate of 1.50 % as of March 31, 2020 .

As of June 30, 2020 and December 31, 2019, our outstanding debt totaled $ 175.0 million and $ 300.0 million, respectively.

We had $ 25.0 million outstanding under the credit facilities at a variable interest rate of 0.86 % as of June 30, 2020.

We had (i) an additional $ 75.0 million outstanding under the Wells Fargo Bank, N.A.

credit facility at a variable rate of 1.68 % as of March 31, 2020 , which is effectively fixed at 2.32 % with an interest rate swap agreement through May 14, 2024 and (ii) an additional $ 75.0 million outstanding under the BMO Harris Bank N.A.

credit facility at a variable rate of 2.22 % as of March 31, 2020, which is effectively fixed at 2.36 % with an interest rate swap agreement through May 14, 2024 .

The $ 575.0 million of borrowing capacity under our credit facilities at March 31, 2020 , is further reduced by $ 44.6 million in stand-by letters of credit under which we are obligated.

credit facility at a variable rate of 0.85 % as of June 30, 2020, which is effectively fixed at 2.32 % with an interest rate swap agreement through May 14, 2024 and (ii) an additional $ 75.0 million outstanding under the BMO Harris Bank N.A.

credit facility at a variable rate of 0.88 % as of June 30, 2020, which is effectively fixed at 2.36 % with an interest rate swap agreement through May 14, 2024 .

The $ 575.0 million of borrowing capacity under our credit facilities at June 30, 2020, is further reduced b y $ 44.6 million in stand-by letters of credit under which we are obligated.

Each of the debt agreements includes, among other things, financial covenants requiring us (i) to exceed a minimum ratio of earnings before interest, income taxes, depreciation and amortization to interest expense and/or (ii) not to exceed a maximum ratio of total funded debt to earnings before interest, income taxes, depreciation and amortization (as such terms are defined in each credit facility).

At March 31, 2020 , we were in compliance with these covenants.

At March 31, 2020 , the aggregate future maturities of long-term debt by year are as follows (in thousands):

At June 30, 2020, we were in compliance with these covenants.

At June 30, 2020, the aggregate future maturities of long-term debt by year are as follows (in thousands):

Total $ 175,000

The carrying amounts of our long-term debt approximate fair value due to the duration of the notes and the variable interest rates.

(5) Commitments and Contingencies

As of March 31, 2020 , we have committed to property and equipment purchases of approximately $ 187.9 million .

As of June 30, 2020, we have committed to property and equipment purchases of approximately $ 214.7 million .

We are involved in certain claims and pending litigation, including those described herein, arising in the ordinary course of business.

The majority of these claims relate to bodily injury, property damage, cargo and workers’ compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters.

We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Based on the knowledge of the facts, management believes the resolution of

claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our consolidated financial statements.

We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has

been incurred and the amount of the loss can be reasonably estimated.

Based on the knowledge of the facts, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our consolidated financial statements.

Moreover, the results of complex legal proceedings are difficult to predict, and our view of these matters may change in the future as the litigation and related events unfold.

4 unchanged sentences

Under the Company’s insurance policies in effect on the date of this accident, the Company’s maximum liability for this accident is $ 10.0 million (plus pre-judgment and post-judgment interest) with premium-based coverage that exceeds the jury verdict amount.

As a result of this jury verdict, the Company had recorded a liability of $ 20.0 million as of March 31, 2020, and $ 18.8 million as of December 31, 2019.

Under the terms of the Company’s insurance policies, the Company is the primary obligor of the verdict, and as such, the Company has also recorded a $ 79.2 million receivable from its third-party insurance providers in other non-current assets and a corresponding liability of the same amount in the long-term portion of insurance and claims accruals in the consolidated balance sheets as of March 31, 2020 and December 31, 2019.

As a result of this jury verdict, the Company had recorded a liability of $ 21.2 million as of June 30, 2020, and $ 18.8 million as of December 31, 2019.

The Company is pursuing an appeal of this verdict.

No assurances can be given regarding the outcome of any such appeal.

We are involved in class action litigation in the U.S.

We have been involved in class action litigation in the U.S.

District Court for the District of Nebraska, in which the plaintiffs allege that we owe drivers for unpaid wages under the Fair Labor Standards Act (“FLSA”) and the Nebraska Wage Payment and Collection Act and that we failed to pay minimum wage per hour for drivers in our Career Track Program, related to short break time and sleeper berth time.

1 unchanged sentence

The case was tried to a jury in May 2017, resulting in a verdict of $ 0.8 million in plaintiffs’ favor on the short break matter and a verdict in our favor on the sleeper berth matter.

As a result of various post-trial motions, the court has awarded $ 0.5 million to the plaintiffs for attorney fees and costs.

As of March 31, 2020 , we had accrued for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter.

As a result of various post-trial motions, the court awarded $ 0.5 million to the plaintiffs for attorney fees and costs.

As of June 30, 2020, we had accrued for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter.

Plaintiffs appealed the post-verdict amounts awarded by the trial court for fees, costs and liquidated damages, and the Company filed a cross appeal on the verdict that was in plaintiffs’ favor.

The United States Court of Appeals for the Eighth Circuit denied Plantiffs’ appeal and granted Werner’s appeal, vacating the judgment in favor of the plaintiffs.

The United States Court of Appeals for the Eighth Circuit denied Plaintiffs’ appeal and granted Werner’s appeal, vacating the judgment in favor of the plaintiffs.

The appellate court sent the case back to the trial court for proceedings consistent with the appellate court’s opinion.

The litigation of this matter will continue in the trial court.

On June 22, 2020, the trial court denied Plaintiffs’ request for a new trial and entered judgment in favor of the Company, dismissing the case with prejudice.

On July 21, 2020, Plaintiffs’ counsel filed a notice of appeal of that dismissal.

We are also involved in certain class action litigation in which the plaintiffs allege claims for failure to provide meal and rest breaks, unpaid wages, unauthorized deductions and other items.

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Net income $ 39,132 $ 43,318 $ 62,190 $ 79,404

Weighted average common shares outstanding 69,093 69,593 69,173 69,932

12 unchanged sentences

The maximum aggregate number of shares that may be awarded to any one person in any one calendar year under the Equity Plan is 500,000 .

As of March 31, 2020 , there were 6,567,481 shares available for granting additional awards.

As of June 30, 2020, there were 6,683,155 shares available for granting additional awards.

Equity compensation expense is included in salaries, wages and benefits within the Consolidated Statements of Income.

As of March 31, 2020 , the total unrecognized compensation cost related to non-vested equity compensation awards was approximately $ 15.4 million and is expected to be recognized over a weighted average period of 2.0 years .

As of June 30, 2020, the total unrecognized compensation cost related to non-vested equity compensation awards was approximately $ 12.5 million and is expected to be recognized over a weighted average period of 1.9 years .

The following table summarizes the equity compensation expense and related income tax benefit recognized in the Consolidated Statements of Income (in thousands):

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Restricted awards:

Pre-tax compensation expense $ 1,090 $ 1,313 $ 2,488 $ 2,476

Tax benefit 278 334 634 631

Restricted stock expense, net of tax $ 812 $ 979 $ 1,854 $ 1,845

1 unchanged sentence

Pre-tax compensation expense $ 53 $ 1,001 $ 1,063 $ 1,897

Tax benefit 13 256 271 484

Performance award expense, net of tax $ 40 $ 745 $ 792 $ 1,413

6 unchanged sentences

Stock options are granted at prices equal to the market value of the common stock on the date the option award is granted.

No stock option awards were outstanding as of March 31, 2020 , and no stock option awards were granted or exercised in the three-month periods ended March 31, 2020 and March 31, 2019 .

No stock option awards were outstanding as of June 30, 2020, and no stock option awards were granted or exercised in the six-month periods ended June 30, 2020 and June 30, 2019.

Restricted Awards

4 unchanged sentences

The restricted awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions.

The following table summarizes restricted award activity for the three months ended March 31, 2020 :

The following table summarizes restricted award activity for the six months ended June 30, 2020:

thousands) Weighted

Average Grant

Nonvested at beginning of period 369 $ 32.83

Granted 147 38.30

Vested ( 86 ) 32.85

Forfeited ( 37 ) 35.94

Nonvested at end of period 393 34.57

2 unchanged sentences

Cash settled restricted stock units are recorded as a liability within the Consolidated Balance Sheets and are adjusted to fair value each reporting period.

The total fair value of previously granted restricted awards vested during the three -month periods ended March 31, 2020 and March 31, 2019 was $ 2.9 million and $ 1.6 million , respectively.

The total fair value of previously granted restricted awards vested during the six-month periods ended June 30, 2020 and June 30, 2019 was $ 3.4 million and $ 1.8 million, respectively.

We withheld shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes.

4 unchanged sentences

The performance awards do not confer any voting or dividend rights to recipients until such shares vest and do not have any post-vesting sales restrictions.

The following table summarizes performance award activity for the three months ended March 31, 2020 :

The following table summarizes performance award activity for the six months ended June 30, 2020:

thousands) Weighted

Average Grant

Nonvested at beginning of period 327 $ 28.75

Granted 100 37.65

Vested ( 151 ) 23.61

Forfeited ( 47 ) 34.44

Nonvested at end of period 229 34.68

6 unchanged sentences

Our estimate of future dividends is based on the most recent quarterly dividend rate at the time of grant, adjusted for any known future changes in the dividend rate.

The vesting date fair value of performance awards that vested during the three -month periods ended March 31, 2020 and March 31, 2019 was $ 5.8 million and $ 1.2 million , respectively.

The vesting date fair value of performance awards that vested during the six-month periods ended June 30, 2020 and June 30, 2019 was $ 5.8 million and $ 1.2 million, respectively.

We withheld shares based on the closing stock price on the vesting date to settle the employees’ statutory obligation for the applicable income and other employment taxes.

25 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Truckload Transportation Services $ 445,053 $ 479,959 $ 909,916 $ 942,850

Werner Logistics 110,163 130,883 222,327 248,253

Other 13,315 16,096 28,383 31,568

Corporate 442 629 1,061 1,218

Subtotal 568,973 627,567 1,161,687 1,223,889

Inter-segment eliminations ( 14 ) ( 34 ) ( 25 ) ( 239 )

Total $ 568,959 $ 627,533 $ 1,161,662 $ 1,223,650

Operating Income

1 unchanged sentence

Werner Logistics 3,139 5,182 4,224 9,893

Other ( 534 ) 2,293 2,366 3,472

Corporate ( 1,012 ) ( 698 ) ( 3,020 ) ( 1,522 )

Total $ 52,818 $ 58,442 $ 83,884 $ 106,461

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements