What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-09 · 123 added, 49 removed, 409 unchanged (30% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands, except per share amounts) 2022 2021 2022 2021

15 unchanged sentences

Interest income ( 313 ) ( 334 ) ( 588 ) ( 631 )

Loss on investments in equity securities 9,806 —

Gain on investments in equity securities, net ( 24,095 ) ( 20,191 ) ( 14,289 ) ( 20,191 )

Other 126 54 199 96

Total other expense (income) ( 22,495 ) ( 19,770 ) ( 11,452 ) ( 19,187 )

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands) 2022 2021 2022 2021

3 unchanged sentences

Change in fair value of interest rate swaps, net of tax 1,283 360 4,914 1,663

Other comprehensive income (loss) 4,784 ( 265 )

Other comprehensive income 1,236 2,225 6,020 1,960

Comprehensive income 74,845 74,257 134,664 120,484

4 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share amounts) March 31,

(In thousands, except share amounts) June 30,

2022 December 31,

17 unchanged sentences

Current liabilities:

Checks issued in excess of cash balances $ 6,032 $ —

Accounts payable 126,178 93,987

27 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands) 2022 2021

8 unchanged sentences

Other ( 4,142 ) 842

Loss on investments in equity securities 9,806 —

Gain on investments in equity securities, net ( 14,289 ) ( 20,191 )

Changes in certain working capital items:

13 unchanged sentences

Repayments of short-term debt ( 2,500 ) ( 25,000 )

Proceeds from issuance of short-term debt — 5,000

Repayments of long-term debt ( 100,000 ) —

Proceeds from issuance of long-term debt 120,000 120,000

Change in checks issued in excess of cash balances 6,032 —

Dividends on common stock ( 15,702 ) ( 12,906 )

1 unchanged sentence

Tax withholding related to net share settlements of restricted stock awards ( 3,658 ) ( 3,740 )

Net cash used in financing activities ( 48,983 ) ( 40,361 )

Net cash provided by (used in) financing activities ( 97,941 ) 77,847

Effect of exchange rate fluctuations on cash 322 88

15 unchanged sentences

TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTEREST

Three Months Ended June 30, 2022

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

6 unchanged sentences

Equity Temporary Equity - Redeemable Noncontrolling Interest

BALANCE, December 31, 2021 $ 805 $ 121,904 $ 1,667,104 $ ( 20,604 ) $ ( 441,659 ) $ 1,327,550 $ 35,947

BALANCE, March 31, 2022 $ 805 $ 121,157 $ 1,713,046 $ ( 15,820 ) $ ( 477,724 ) $ 1,341,464 $ 37,233

Net income attributable to Werner — — 72,290 — — 72,290 —

8 unchanged sentences

Non-cash equity compensation expense — 3,059 — — — 3,059 —

BALANCE, June 30, 2022 $ 805 $ 124,065 $ 1,777,092 $ ( 14,584 ) $ ( 543,506 ) $ 1,343,872 $ 38,552

Three Months Ended June 30, 2021

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

Stock Paid-In

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stockholders’

Equity Temporary Equity - Redeemable Noncontrolling Interest

BALANCE, March 31, 2021 $ 805 $ 114,588 $ 1,478,616 $ ( 23,098 ) $ ( 343,181 ) $ 1,227,730 $ —

Net income attributable to Werner — — 72,032 — — 72,032 —

Other comprehensive income — — — 2,225 — 2,225 —

Dividends on common stock ($ 0.12 per share)

— — ( 8,151 ) — — ( 8,151 ) —

Equity compensation activity, 13,725 shares

— ( 266 ) — — 266 — —

Non-cash equity compensation expense — 2,747 — — — 2,747 —

BALANCE, June 30, 2021 $ 805 $ 117,069 $ 1,542,497 $ ( 20,873 ) $ ( 342,915 ) $ 1,296,583 $ —

See Notes to Consolidated Financial Statements (Unaudited).

WERNER ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND

TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTEREST (CONTINUED)

Six Months Ended June 30, 2022

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

Stock Paid-In

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stockholders’

Equity Temporary Equity - Redeemable Noncontrolling Interest

BALANCE, December 31, 2021 $ 805 $ 121,904 $ 1,667,104 $ ( 20,604 ) $ ( 441,659 ) $ 1,327,550 $ 35,947

Net income attributable to Werner — — 126,039 — — 126,039 —

Other comprehensive loss — — — ( 265 ) — ( 265 ) —

Net income attributable to noncontrolling interest — — — — — — 2,605

Other comprehensive income — — — 6,020 — 6,020 —

Purchases of 2,495,100 shares of common stock

5 unchanged sentences

Non-cash equity compensation expense — 6,085 — — — 6,085 —

BALANCE, March 31, 2021 $ 805 $ 114,588 $ 1,478,616 $ ( 23,098 ) $ ( 343,181 ) $ 1,227,730 $ —

BALANCE, June 30, 2022 $ 805 $ 124,065 $ 1,777,092 $ ( 14,584 ) $ ( 543,506 ) $ 1,343,872 $ 38,552

Six Months Ended June 30, 2021

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

Stock Paid-In

Capital Retained

Earnings Accumulated

Comprehensive

Loss Treasury

Stockholders’

Equity Temporary Equity - Redeemable Noncontrolling Interest

BALANCE, December 31, 2020 $ 805 $ 116,039 $ 1,438,916 $ ( 22,833 ) $ ( 337,887 ) $ 1,195,040 $ —

Net income attributable to Werner — — 118,524 — — 118,524 —

Other comprehensive income — — — 1,960 — 1,960 —

Purchases of 130,446 shares of common stock

— — — — ( 5,507 ) ( 5,507 ) —

Dividends on common stock ($ 0.22 per share)

— — ( 14,943 ) — — ( 14,943 ) —

Equity compensation activity, 130,593 shares

— ( 4,219 ) — — 479 ( 3,740 ) —

Non-cash equity compensation expense — 5,249 — — — 5,249 —

BALANCE, June 30, 2021 $ 805 $ 117,069 $ 1,542,497 $ ( 20,873 ) $ ( 342,915 ) $ 1,296,583 $ —

See Notes to Consolidated Financial Statements (Unaudited).

14 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, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31 , 2022.

Operating results for the three-month and six-month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31 , 2022.

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.

14 unchanged sentences

The results of operations for NEHDS are included in our consolidated financial statements beginning November 22, 2021.

Amortization expense on intangible assets was $ 1.4 million for the three months ended March 31, 2022.

Amortization expense on intangible assets was $ 1.4 million and $ 2.7 million for the three and six months ended June 30, 2022 .

Revenue Recognition

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Truckload Transportation Services $ 613,616 $ 491,200 $ 1,172,033 $ 954,149

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

United States $ 770,849 $ 602,146 $ 1,481,753 $ 1,157,385

4 unchanged sentences

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, 2022 and December 31, 2021, the accounts receivable, trade, net, balance was $ 449.6 million and $ 460.5 million, respectively.

At June 30, 2022 and December 31, 2021, the accounts receivable, trade, net, balance was $ 482.0 million and $ 460.5 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, 2022 and December 31, 2021, the balance of contract assets was $ 10.9 million and $ 9.0 million, respectively.

At June 30, 2022 and December 31, 2021, the balance of contract assets was $ 10.2 million and $ 9.0 million, respectively.

We have recognized contract assets within the other current assets financial statement caption on the consolidated condensed balance sheets.

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 $ 1.2 million at both March 31, 2022 and December 31, 2021 .

The amount of revenues recognized in the three months ended March 31, 2022 that was included in the December 31, 2021 contract liability balance was $ 1.2 million.

The balance of contract liabilities was $ 1.5 million and $ 1.2 million at June 30, 2022 and December 31, 2021, respectively .

The amount of revenues recognized in the six months ended June 30, 2022 that was included in the December 31, 2021 contract liability balance was $ 1.2 million.

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

4 unchanged sentences

transit times generally average approximately 3 days.

During the three months ended March 31, 2022 and 2021, 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, 2022 and 2021, 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.

8 unchanged sentences

The following table presents balance sheet and other operating lease information (dollars in thousands):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Balance Sheet Classification

6 unchanged sentences

Weighted-average discount rate for operating leases 2.6 % 2.7 %

The following table presents the maturities of operating lease liabilities as of March 31, 2022 (in thousands):

The following table presents the maturities of operating lease liabilities as of June 30, 2022 (in thousands):

Maturity of Lease Liabilities

4 unchanged sentences

Present value of operating lease liabilities $ 35,233

During the three months ended March 31, 2022 and 2021, right-of-use assets of $ 10.2 million and $ 0.5 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 $ 1.8 million and $ 0.9 million for the three months ended March 31, 2022 and 2021, respectively, and are included in operating cash flows.

During the six months ended June 30, 2022 and 2021, right-of-use assets of $ 11.2 million and $ 2.1 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 $ 3.8 million and $ 1.9 million for the six months ended June 30, 2022 and 2021, respectively, and are included in operating cash flows.

Operating Lease Expense

Operating lease expense was $ 5.1 million and $ 3.6 million for the three months ended March 31, 2022 and 2021, respectively.

This expense included $ 2.1 million and $ 1.0 million for the three months ended March 31, 2022 and 2021, respectively, for long-term operating leases, with the remainder for variable and short-term lease expense .

Operating lease expense was $ 5.3 million and $ 10.4 million for the three and six months ended June 30, 2022, respectively, and $ 3.5 million and $ 7.1 million for the three and six months ended June 30, 2021, respectively.

This expense included $ 2.3 million and $ 4.4 million for the three and six months ended June 30, 2022, respectively, and $ 1.0 million and $ 2.0 million for the three and six months ended June 30, 2021, respectively, for long-term operating leases, with the remainder for variable and short-term lease expense .

Lessor Operating Leases

1 unchanged sentence

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

Revenues were $ 3.2 million and $ 3.1 million for the three months

ended March 31, 2022 and 2021, respectively.

The following table presents information about the maturities of these operating leases as of March 31, 2022 (in thousands):

Revenues were $ 3.1 million and $ 6.3 million for the three and six months ended June 30, 2022, respectively, and $ 3.0 million and $ 6.1 million for the three and six months ended June 30, 2021, respectively.

The following table presents information about the maturities of these operating leases as of June 30, 2022 (in thousands):

2022 (remaining) $ 4,267

17 unchanged sentences

Hierarchy Fair Value

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Other non-current assets:

8 unchanged sentences

Fair Value of Financial Instruments Not Recorded at Fair Value

Cash, accounts receivable trade, and accounts payable are short-term in nature and accordingly are carried at amounts that approximate fair value.

Cash and cash equivalents, accounts receivable trade, and accounts payable are short-term in nature and accordingly are carried at amounts that approximate fair value.

These financial instruments are recorded at or near their respective transaction prices and historically have been settled or converted to cash at approximately that value (categorized as Level 2 of the fair value hierarchy).

4 unchanged sentences

We are collaborating with MLSI to develop a cloud-based transportation management system using MLSI's SaaS technology which we have agreed to license.

In June 2022, we paid MLSI $ 20.0 million for additional shares of its preferred stock.

This minority equity investment is being accounted for under ASC 321 using the measurement alternative, and is recorded in other noncurrent assets on the consolidated condensed balance sheets.

As of March 31, 2022 and December 31, 2021, the value of our investment was $ 38.2 million.

As of June 30, 2022 and December 31, 2021, the value of our investment was $ 86.8 million and $ 38.2 million, respectively.

We record changes in the value of this investment, based on events that occur that would indicate the value of our investment in MLSI has changed, in gain or loss on investments in equity securities on the consolidated statements of income.

No gains or losses were recorded in the three months ended March 31, 2022 and 2021.

At March 31, 2022, cumulative unrealized gains on our investment in MLSI totaled $ 28.2 million.

During second quarter 2022, investments by third-parties resulted in the remeasurement of our investment in MLSI, and in the three and six months ended June 30, 2022, we recognized an unrealized gain of $ 28.6 million.

No gains or losses were recorded in the three and six months ended June 30, 2021.

At June 30, 2022, cumulative unrealized gains on our investment in MLSI totaled $ 56.8 million.

Equity Investments with Readily Determinable Fair Values

1 unchanged sentence

We record changes in the value of these investments, based on the share prices reported by Nasdaq, in gain or loss on investments in equity securities on the consolidated statements of income.

In the three months ended March 31, 2022, we recognized a $ 9.8 million unrealized loss on these investments.

No gains or losses were recorded in the three months ended March 31, 2021.

We recognized an unrealized loss of $ 4.5 million and $ 14.3 million on these investments for the three and six months ended June 30, 2022, respectively, and an unrealized gain of $ 20.2 million for the three and six months ended June 30, 2021.

For additional information regarding the fair value of these equity investments, see Note 5 – Fair Value.

10 unchanged sentences

(“BMO Harris”), expiring May 14, 2024 (“BMO Line of Credit”).

The second amendment increased our BMO Line of Credit from $ 200.0 million to $ 300.0 million and changed the variable interest rate calculation by replacing the LIBOR with the SOFR .

second amendment increased our BMO Line of Credit from $ 200.0 million to $ 300.0 million and changed the variable interest rate calculation by replacing the LIBOR with the SOFR .

Amounts drawn under the BMO Line of Credit bear interest, for a selected interest period, at a variable rate based on the SOFR plus 0.10 % and a margin ranging between 0.70 % and 1.50 %, based on our ratio of total funded debt to EBITDA, payable at the end of the applicable interest period.

No changes were made to the annualized letter of credit fee, nonrefundable commitment fee, and financial covenants as a result of the second amendment.

We also have a $ 100.0 million unsecured fixed-rate term loan commitment with BMO Harris, with quarterly principal payments of $ 1.25 million, which began on September 30, 2021, and a final payment of principal and interest due and

payable on May 14, 2024 ("BMO Term Loan").

The outstanding principal balance of the BMO Term Loan bears interest at a fixed rate of 1.28 %, payable quarterly in arrears.

As of March 31, 2022 and December 31, 2021, our outstanding debt totaled $ 426.3 million and $ 427.5 million, respectively.

As of March 31, 2022, we had a total of $ 230.0 million outstanding under our revolving lines of credit, including (i) $ 80.0 million at a weighted average variable interest rate of 1.02 %;

As of June 30, 2022 and December 31, 2021, our outstanding debt totaled $ 445.0 million and $ 427.5 million, respectively.

As of June 30, 2022, we had a total of $ 250.0 million outstanding under our revolving lines of credit, including (i) $ 100.0 million at a weighted average variable interest rate of 2.10 %;

(ii) $ 75.0 million at a variable interest rate of 1.93 %, which is effectively fixed at 2.29 % with an interest rate swap agreement through May 14, 2024 ;

and (iii) $ 75.0 million at a variable interest rate of 1.96 %, which is effectively fixed at 2.34 % with an interest rate swap agreement through May 14, 2024 .

The total borrowing capacity of $ 600.0 million under our revolving lines of credit at March 31, 2022, is further reduced by $ 53.9 million in stand-by letters of credit under which we are obligated.

In addition, as of March 31, 2022, we had $ 100.0 million outstanding under the Wells Term Loan at a variable interest rate of 1.05 % and $ 96.3 million outstanding under the BMO Term Loan at a fixed interest rate of 1.28 %.

The total borrowing capacity of $ 600.0 million under our revolving lines of credit at June 30, 2022, is further reduced by $ 58.4 million in stand-by letters of credit under which we are obligated.

In addition, as of June 30, 2022, we had $ 100.0 million outstanding under the Wells Term Loan at a variable interest rate of 2.23 % and $ 95.0 million outstanding under the BMO Term Loan at a fixed interest rate of 1.28 %.

Availability of such funds under the debt agreements is conditional upon various customary terms and covenants.

Such covenants include, 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).

As of March 31, 2022 we were in compliance with these covenants.

At March 31, 2022, the aggregate future maturities of long-term debt by year are as follows (in thousands):

As of June 30, 2022 we were in compliance with these covenants.

At June 30, 2022, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2022 (remaining) $ 2,500

1 unchanged sentence

(8) Commitments and Contingencies

We have committed to property and equipment purchases of approximately $ 182.3 million at March 31, 2022 .

We have committed to property and equipment purchases of approximately $ 182.4 million at June 30, 2022 .

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

7 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 $ 30.1 million as of March 31, 2022, and $ 28.8 million as of December 31, 2021.

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 condensed balance sheets as of March 31, 2022 and December 31, 2021.

As a result of this jury verdict, the Company had recorded a liability of $ 31.4 million as of June 30, 2022, and $ 28.8 million as of December 31, 2021.

The Company is pursuing an appeal of this verdict.

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

In July 2022, the Hopkins County District Court in Sulphur Springs, Texas approved a $ 150.0 million settlement, voluntarily agreed to by the Company and its insurers, of a motor vehicle accident lawsuit in Texas arising from a May 24, 2020 accident between a Werner tractor-trailer and a passenger vehicle.

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 with premium-based coverage for the remainder of the settlement amount.

As a result of this settlement, the Company recognized $ 9.5 million of insurance and claims expense for the three and six months ended June 30, 2022, and had recorded a liability of $ 10.0 million and $ 0.5 million as of June 30, 2022 and December 31, 2021, respectively.

Under the terms of the Company’s insurance policies, the Company is the primary obligor of the settlement, and as such, the Company has also recorded a $ 140.0 million receivable from its third-party insurance providers in other current assets and a corresponding liability of the same amount in the current portion of insurance and claims accruals in the consolidated condensed balance sheets as of June 30, 2022.

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

2 unchanged sentences

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 awarded $ 0.5 million to the plaintiffs

for attorney fees and costs.

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

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.

3 unchanged sentences

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

As of March 31, 2022, we have an accrual for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter.

As of June 30, 2022, we have an accrual for the jury’s award, attorney fees and costs in the short break matter and had not accrued for the sleeper berth matter.

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.

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net income attributable to Werner $ 72,290 $ 72,032 $ 126,039 $ 118,524

8 unchanged sentences

These units are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting.

Dedicated provides truckload services dedicated to a specific customer, generally for a retail distribution center or manufacturing facility, utilizing either dry van or specialized trailers.

Dedicated provides truckload services dedicated to a specific customer, generally for a retail distribution center or

manufacturing facility, utilizing either dry van or specialized trailers.

One-Way Truckload is comprised of the following operating fleets:

9 unchanged sentences

and (iii) Werner Final Mile (“Final Mile”), including NEHDS, offers residential and commercial deliveries of large or heavy items using third-party agents, independent contractors, and Company employees with two-person delivery teams operating a liftgate straight truck.

first quarter 2021, we completed the sale of the Werner Global Logistics (“WGL”) freight forwarding services for international ocean and air shipments to Scan Global Logistics Group, and we realized a $ 1.0 million gain when the transaction closed on February 26, 2021.

In first quarter 2021, we completed the sale of the Werner Global Logistics (“WGL”) freight forwarding services for international ocean and air shipments to Scan Global Logistics Group, and we realized a $ 1.0 million gain when the transaction closed on February 26, 2021.

Werner Logistics continues to provide North American truck brokerage, freight management, intermodal and final mile services.

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Revenues by Segment

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Operating Income (Loss) by Segment

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Depreciation and Amortization by Segment

5 unchanged sentences

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