What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2023-02-27 compared with 2022-02-28 · 71 added, 51 removed, 190 unchanged (39% of the section changed)

7 unchanged sentences

At the end of 2022, our Truckload Transportation Services (“TTS”) segment had a fleet of 8,600 trucks, of which 8,305 were company-operated and 295 were owned and operated by independent contractors.

Our Werner Logistics division operated an additional 55 intermodal drayage trucks at the end of 2021.

We acquired ECM Associated, LLC (“ECM”) in July 2021 and NEHDS Logistics, LLC (“NEHDS”) in November 2021.

ECM, through its ECM Transport, LLC (“ECM Transport”) and Motor Carrier Service (“MCS”) subsidiaries, provides regional truckload carrier services in the Mid-Atlantic, Ohio, and Northeast regions of the U.S.

and operates nearly 500 trucks and 2,000 trailers in its network of eight operational facilities and 18 drop yards.

ECM achieved revenues of $108 million in 2020.

NEHDS is a final mile residential delivery provider with access to a network of 400 final mile delivery trucks serving customers primarily in the Northeast and Midwest U.S.

NEHDS delivers primarily big and bulky products (primarily furniture and appliances) using 2-person delivery teams performing residential and commercial deliveries through a network of 19 cross dock, warehouse and customer facilities.

We are rebranding NEHDS with our existing final mile business as Werner Final Mile.

NEHDS achieved revenues of $71 million for the 12-month period ended September 2021.

These acquisitions expanded our fleet size, geographic market presence, and network of operational facilities.

Additional information regarding these acquisitions is included in Note 2 in the Notes to Consolidated Financial Statements under Item 8 of Part II of this Form 10-K.

Our Werner Logistics division operated an additional 39 drayage company trucks and 101 company delivery trucks at the end of 2022.

We have historically grown through organic growth, and more recently through a combination of organic growth and four business acquisitions (discussed below).

Our business acquisitions expanded our fleet size, customer base, geographic market presence, and network of operational facilities.

We remain open to considering acquisitions in North America truckload and logistics companies that are both additive to our business and accretive to our earnings.

We have two reportable segments – TTS and Werner Logistics.

4 unchanged sentences

(ii) the expedited (“Expedited”) fleet provides time-sensitive truckload services utilizing driver teams;

(iii) the regional short-haul (“Regional”) fleet, including ECM, provides comparable truckload van service within geographic regions across the United States;

(iii) the regional short-haul (“Regional”) fleet provides comparable truckload van service within geographic regions across the United States;

and (iv) the Temperature Controlled fleet provides truckload services for temperature sensitive products over irregular routes utilizing temperature-controlled trailers.

5 unchanged sentences

We focus on transporting consumer nondurable products that generally ship more consistently throughout the year and whose volumes are generally more stable during a slowdown in the economy.

Our Werner Logistics segment is a non-asset-based transportation and logistics provider and generates the majority of our non-trucking revenues through three operating units.

Our Werner Logistics segment is a non-asset-based transportation and logistics provider.

Werner Logistics provides services throughout North America and generates the majority of our non-trucking revenues through three operating units.

These three Werner Logistics operating units are as follows:

1 unchanged sentence

(ii) the intermodal (“Intermodal”) unit offers rail transportation through alliances with rail and drayage providers as an alternative to truck transportation;

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.

In first quarter 2021, we completed the previously-announced sale of the Werner Global Logistics (“WGL”) freight forwarding services for international ocean and air shipments to Scan Global Logistics Group.

and (iii) Werner Final Mile (“Final Mile”) 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.

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.

WGL generated revenues of $53 million in 2020.

Prior to the sale of WGL, Werner Logistics provided international services throughout North America and Asia, with additional coverage throughout Australia, Europe, South America, and Africa.

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

Werner Logistics had transportation services contracts with 26,834 carriers as of December 31, 2021 .

Werner Logistics had over 70,000 qualified carrier logistics relationships as of December 31, 2022.

Business Acquisitions

2022 Acquisitions

On November 5, 2022, we acquired 100% of the equity interests in Reed Transport Services, Inc.

and RTS-TMS, Inc., doing business as ReedTMS Logistics (“ReedTMS”).

ReedTMS, based in Tampa, Florida, is an asset-light logistics provider and dedicated truckload carrier that offers a comprehensive suite of freight brokerage and truckload solutions to a diverse customer base.

Prior to the acquisition, ReedTMS achieved revenues of $372.0 million for the 12-month period ended September 30, 2022, 90% freight brokerage and 10% trucking.

Freight brokerage and truckload revenues generated by ReedTMS are reported in our Werner Logistics segment and in Dedicated within our TTS segment, respectively.

On October 1, 2022, we acquired 100% of the equity interests in FAB9, Inc., doing business as Baylor Trucking, Inc.

Baylor, based in Milan, Indiana, operates 200 trucks and 980 trailers in the east central and south central United States.

Prior to the acquisition, Baylor achieved revenues of $81.5 million for the 12-month period ended August 31, 2022.

Revenues generated by Baylor are reported in One-Way Truckload within our TTS segment.

2021 Acquisitions

On November 22, 2021, we acquired 100% of the equity interests in NEHDS Logistics, LLC (“NEHDS”).

NEHDS is a final mile residential delivery provider serving customers primarily in the Northeast and Midwest United States markets.

NEHDS delivers primarily big and bulky products (primarily furniture and appliances) using 2-person delivery teams performing residential and commercial deliveries.

Prior to the acquisition, NEHDS achieved revenues of $71 million for the 12-month period ended September 30, 2021.

Revenues generated by NEHDS are reported in Final Mile within our Werner Logistics segment.

On July 1, 2021, we acquired an 80% equity ownership interest in ECM Associated, LLC ("ECM”).

ECM provides regional truckload carrier services in the Mid-Atlantic, Ohio and Northeast regions of the United States.

Prior to the acquisition, ECM achieved revenues of $108 million in 2020.

Revenues generated by ECM are reported in One-Way Truckload within our TTS segment.

Additional information regarding these acquisitions is included in Note 2 in the Notes to Consolidated Financial Statements under Item 8 of Part II of this Form 10-K.

Marketing and Operations

17 unchanged sentences

Many of our One-Way Truckload customer contracts may be terminated upon 30 days’ notice, which is common in the truckload industry.

We are moving toward longer-term Dedicated customer contracts, most of which are two to five years in length (including some contracts with annual evergreen clauses) and generally may be terminated by either party typically upon a notice period following the expiration of the contract’s first year.

We have longer-term Dedicated customer contracts, most of which are two to five years in length (including some contracts with annual evergreen clauses) and generally may be terminated by either party typically upon a notice period following the

expiration of the contract’s first year.

We typically renegotiate rates with our customers for these Dedicated contracts on an annual basis.

All of our company and independent contractor tractors are equipped with communication devices.

Our company and independent contractor tractors are equipped with communication devices.

These devices enable us and our drivers to conduct two-way communication using standardized and freeform messages.

This technology also allows us to plan and monitor shipment progress.

We automatically monitor truck movement and obtain specific data on the location of all trucks in the fleet every five minutes.

We automatically monitor truck movement and obtain specific data on the location of trucks at fixed intervals.

Using the real-time global positioning data obtained from the devices, we have advanced application systems to improve customer and driver service.

5 unchanged sentences

We have used electronic logging devices (“ELDs”) to monitor and enforce drivers’ hours of service since 1996.

Since January 2021, we use an untethered, tablet-based telematics solution that provides an enhanced and more efficient driver experience.

Since January 2021, we have used an untethered, tablet-based telematics solution that provides an enhanced and more efficient driver experience.

In the trucking industry, revenues generally follow a seasonal pattern.

1 unchanged sentence

After the December holiday season and during the remaining winter months, our freight volumes are typically lower because some customers reduce shipment levels.

Our operating expenses have historically been higher in the winter months due primarily to decreased fuel efficiency, increased cold weather-related maintenance costs

of revenue equipment and increased insurance and claims costs attributed to adverse winter weather conditions.

Our operating expenses have historically been higher in the winter months due primarily to decreased fuel efficiency, increased cold weather-related maintenance costs of revenue equipment and increased insurance and claims costs attributed to adverse winter weather conditions.

We attempt to minimize the impact of seasonality through our marketing program by seeking additional freight from certain customers during traditionally slower shipping periods and focusing on transporting consumer nondurable products.

11 unchanged sentences

Werner maintains a safety culture that is based on the premise of eliminating workplace incidents, risks and hazards.

In 2021, we achieved our lowest work injury rate in 16 years.

In 2022, our trucking business achieved its lowest work injury rate in 17 years and we achieved the lowest DOT preventable accident rate per million miles in 10 years.

The Werner Safety Department is responsible for all compliance and training issues as it relates to drivers under DOT regulation and Werner policy.

2 unchanged sentences

Nearly all of our company-owned trucks have collision-mitigation safety systems, automated manual transmissions, and forward-facing cameras.

During the COVID-19 pandemic, the transportation industry has been designated by the U.S.

During the COVID-19 pandemic, the transportation industry was designated by the U.S.

government as an essential industry for keeping the U.S.

supply chain moving.

Our drivers and mechanics have been on the front lines to ensure the delivery of essential products, and we take this responsibility seriously.

Our drivers and mechanics were on the front lines to ensure the delivery of essential products, and we take this responsibility seriously.

Our primary focus will always be protecting the health and personal safety of our associates, their families and communities, and our customers.

Throughout our offices and terminal network, we are closely following the safety guidelines set forth by the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO).

Throughout our offices and terminal network, we follow the safety guidelines set forth by the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO).

Diversity & Inclusion:

2 unchanged sentences

We embrace these values as we move toward an increasingly inclusive culture where every associate feels empowered to bring their whole self to Werner.

In 2021, all management associates completed diversity training focusing on unconscious bias and inclusion and we formed the Inclusion, Diversity, Equity, Accountability & Learning (IDEAL) Council to lead the creation, direction, and growth of Associate Resource Groups (“ARGs”).

We currently have nine associate-led ARGs whose aim is to foster a diverse and inclusive workplace and provide support and help in personal and career development and create a safe space where associates can speak honestly and forthrightly.

In 2022, we intend to establish reasonable goals for the advancement and retention of, and to increase and elevate, women and diverse talent in the management pipeline.

In 2021, we were recognized among the Top Companies for Women to Work for in Transportation by the Women in Trucking Association for the fourth consecutive year.

Werner was recognized for our support of gender diversity, flexible hours and work requirements, competitive compensation and benefits, and professional development opportunities and career advancement opportunities.

At Werner, our female driver workforce is well over the national average, and approximately half of our driver associates are ethnically diverse.

Additionally, approximately half of our non-driver associates are female or ethnically diverse.

Werner was also honored to be the only trucking company recognized as a 2021 Military Friendly® Company by VIQTORY Media.

It is the fifth consecutive year Werner has received this designation.

Through our Inclusion, Diversity, Equity, Accountability & Learning (IDEAL) Council, we are proud to support ten Associate Resource Groups (“ARGs”).

These groups support our commitment to promoting and maintaining an inclusive culture for all associates by bringing together individuals from a wide range of backgrounds, experiences and perspectives.

The ARGs seek to foster a sense of shared community and empowerment for associates and allies who share and

support a common social identity, such as gender, ethnicity and sexual orientation.

During 2022, we created an advancement and retention plan, under which new programs are being implemented to increase and elevate women and diverse talent in the management pipeline.

In 2022, Werner, as well as our recently acquired business, ReedTMS, were both recognized among the Top Companies for Women to Work for in Transportation by the Women in Trucking Association.

This was Werner’s fifth consecutive year of being recognized.

Werner was recognized for our support of gender diversity, flexible hours and work requirements, competitive compensation and benefits, and professional development and career advancement opportunities.

We were also recognized by 50/50 Women on Boards TM as a “3+” company for having three or more women on our corporate board of directors.

At Werner, our female driver workforce is double the industry average, and over half of our driver associates are ethnically diverse.

Additionally, over half of our non-driver associates and our corporate board of directors are female or ethnically diverse.

In 2022, Werner was honored to be recognized as No.

1 on the Top 10 Company Military Friendly® Spouse Employer list and No.

4 on the Top 10 Military Friendly® Employer list by VIQTORY.

These serve as Werner’s highest rankings ever received in these categories.

Werner was awarded these designations for its commitment, effort and success in creating sustainable and meaningful career paths for the military community.

We are widely recognized as a transportation leader in military hiring with veterans and veteran spouses.

8 unchanged sentences

and (iii) individual drivers’ desire to be home more frequently.

We believe that a declining number of, and increased competition for, driver training school graduates, aging truck driver demographics and increased truck safety regulations are tightening driver supply.

At Werner, we continue to take actions to strengthen our driver recruiting and retention to make Werner a preferred choice for the best drivers.

6 unchanged sentences

We utilize recent driver training school graduates as a significant source of new drivers.

These drivers have completed a training program at a driver training school and hold a commercial driver’s license (“CDL”).

These drivers have completed a training program at a driver training school (including those owned and operated by Werner) and hold a commercial driver’s license (“CDL”).

They continue to gain industry experience through our career track program by partnering with a Werner-certified leader prior to that driver becoming a solo driver with their own truck.

1 unchanged sentence

The availability of these drivers has also been negatively impacted by the decreased availability of student loan financing for driver training schools.

At the end of 2021, we operated a total of 19 driver training locations to assist with the training and development of drivers for our company and the industry, and we expect to open three new driver training locations during first quarter 2022.

At the end of 2022, we operated a total of 23 driver training locations to assist with the training and development of drivers for our company and the industry, and we expect to open one new driver training location during the first half of 2023.

Independent Contractors:

8 unchanged sentences

Our Werner Logistics segment operated an additional 39 drayage company tractors and 101 company delivery trucks at the end of 2022.

The TTS segment company tractors were primarily manufactured by Freightliner (a Daimler company), Peterbilt and Kenworth (both divisions of PACCAR) and International (a Navistar company).

The Werner Final Mile company delivery trucks are manufactured by Hino.

The TTS segment company tractors were primarily manufactured by International (a Navistar company), Freightliner (a Daimler company), Kenworth and Peterbilt (both divisions of PACCAR).

The Werner Final Mile company delivery trucks are primarily manufactured by Hino.

We adhere to a comprehensive maintenance program for both company tractors and trailers.

4 unchanged sentences

The average age of our trailer fleet was 5.0 years at December 31, 2022, compared to 4.5 years at December 31, 2021.

All of our trucks are equipped with satellite tracking devices, and nearly all of our company-owned trucks have collision mitigation safety systems and automated manual transmissions.

We operated 27,225 company-owned trailers at December 31, 2021 , comprised of dry vans, flatbeds, temperature-controlled, and other specialized trailers.

Most of our trailers were manufactured by Wabash National Corporation and Great Dane.

Our trucks are equipped with satellite tracking devices, and nearly all of our company-owned trucks have collision mitigation safety systems and automated manual transmissions.

We operated 29,965 trailers at December 31, 2022, comprised of dry vans, flatbeds, temperature-controlled, and other specialized trailers.

Most of our company-owned trailers were manufactured by Wabash National Corporation and Great Dane.

Nearly all of our dry van trailer fleet consisted of 53-foot composite trailers, and we also provide other trailer lengths to meet the specialized needs of certain customers.

All of our trailers have satellite tracking devices.

Substantially all of our trailers have satellite tracking devices.

Our wholly-owned subsidiary, Werner Fleet Sales, sells our used trucks and trailers.

Werner Fleet Sales has been in business since 1992 and operates in 8 locations.

Werner Fleet Sales has been in business since 1992 and operates in seven locations.

At times, we may also trade used trucks to original equipment manufacturers when purchasing new trucks.

3 unchanged sentences

Our customer fuel surcharge reimbursement programs generally enable us to recover from our customers a majority, but not all, of higher fuel prices compared to normalized average fuel prices.

These fuel surcharges,

which automatically adjust depending on the U.S.

These fuel surcharges, which automatically adjust depending on the U.S.

Department of Energy (“DOE”) weekly retail on-highway diesel fuel prices, enable us to recoup much of the higher cost of fuel when prices increase and provide customers with the benefit of lower fuel costs when fuel prices decline.

5 unchanged sentences

The tanks are routinely inspected to help prevent and detect such problems.

We are committed to supporting global efforts to reduce carbon emissions and to continually evaluate and identify new environmental initiatives to support global sustainability efforts.

We are committed to supporting global efforts to reduce carbon emissions and to continually evaluate and identify new environmental initiatives to support global sustainability efforts, including testing of alternative fuels and investing in start-stop idle reduction technology for our trucks.

We currently maintain a late-model truck fleet to take advantage of latest technologies to reduce fuel consumption and emissions.

31 unchanged sentences

In August 2021, EPA announced plans to reduce greenhouse gas emissions from Heavy-Duty Trucks through a series of rulemakings over the next three years.

The first rulemaking, to be finalized in 2022, will apply to heavy-duty vehicles starting in model year 2027.

In December 2022, EPA adopted its first final rule, which sets stronger emissions standards to reduce air pollution, including pollutants that create ozone and particulate matter, from heavy-duty vehicles and engines starting in model year 2027.

California’s ongoing emissions reduction goals have significantly impacted the industry.

23 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-K

Item 1. Business