What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 161 added, 79 removed, 515 unchanged (32% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands, except per share amounts) 2023 2022 2023 2022

15 unchanged sentences

Interest income ( 1,899 ) ( 313 ) ( 3,451 ) ( 588 )

Loss on investments in equity securities 81 9,806

Total other expense, net 6,452 11,043

Loss (gain) on investments in equity securities, net ( 79 ) ( 24,095 ) 2 ( 14,289 )

Loss from equity method investment 844 — 844 —

Other 86 126 93 199

Total other expense (income) 7,091 ( 22,495 ) 13,543 ( 11,452 )

Income before income taxes 40,107 97,418 87,041 169,886

13 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(In thousands) 2023 2022 2023 2022

10 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share amounts) March 31,

(In thousands, except share amounts) June 30,

2023 December 31,

17 unchanged sentences

Current liabilities:

Checks issued in excess of cash balances $ 11,530 $ —

Accounts payable 119,744 124,483

27 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands) 2023 2022

7 unchanged sentences

Insurance and claims accruals, net of current portion ( 5,049 ) 4,874

Loss on investments in equity securities 81 9,806

Loss (gain) on investments in equity securities, net 2 ( 14,289 )

Loss from equity method investment 844 —

Other ( 2,445 ) ( 4,142 )

9 unchanged sentences

Net cash invested in acquisition ( 188 ) 705

Investment in equity securities — ( 20,250 )

Payment to acquire equity method investment ( 2,645 ) —

6 unchanged sentences

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

Change in checks issued in excess of cash balances 11,530 6,032

Dividends on common stock ( 16,459 ) ( 15,702 )

3 unchanged sentences

Effect of exchange rate fluctuations on cash 1,985 322

Net increase in cash and cash equivalents 22,351 71,753

Net increase (decrease) in cash and cash equivalents ( 60,738 ) 228

Cash and cash equivalents, beginning of period 107,240 54,196

14 unchanged sentences

TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTEREST

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

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

6 unchanged sentences

Equity Temporary Equity - Redeemable Noncontrolling Interest

BALANCE, December 31, 2022 $ 805 $ 129,837 $ 1,875,873 $ ( 11,292 ) $ ( 551,588 ) $ 1,443,635 $ 38,699

BALANCE, March 31, 2023 $ 805 $ 128,050 $ 1,902,858 $ ( 9,264 ) $ ( 551,912 ) $ 1,470,537 $ 39,009

Net income attributable to Werner — — 29,881 — — 29,881 —

6 unchanged sentences

Non-cash equity compensation expense — 2,888 — — — 2,888 —

BALANCE, June 30, 2023 $ 805 $ 130,694 $ 1,923,865 $ ( 6,623 ) $ ( 551,671 ) $ 1,497,070 $ 39,148

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

Three Months Ended March 31, 2022

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

Net income attributable to noncontrolling interest — — — — — — 1,319

Other comprehensive income — — — 1,236 — 1,236 —

Purchases of 1,650,000 shares of common stock

— — — — ( 65,933 ) ( 65,933 ) —

Dividends on common stock ($ 0.13 per share)

— — ( 8,244 ) — — ( 8,244 ) —

Equity compensation activity, 7,802 shares

— ( 151 ) — — 151 — —

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

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, 2023

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

10 unchanged sentences

Other comprehensive income — — — 4,669 — 4,669 —

Dividends on common stock ($ 0.27 per share)

— — ( 17,113 ) — — ( 17,113 ) —

Equity compensation activity, 166,493 shares

— ( 5,434 ) — — ( 83 ) ( 5,517 ) —

Non-cash equity compensation expense — 6,291 — — — 6,291 —

BALANCE, June 30, 2023 $ 805 $ 130,694 $ 1,923,865 $ ( 6,623 ) $ ( 551,671 ) $ 1,497,070 $ 39,148

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 —

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

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

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 months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

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.

1 unchanged sentence

(2) Business Acquisitions

Developments during the three months ended March 31, 2023 related to our 2022 business acquisitions are discussed below.

Developments during the six months ended June 30, 2023 related to our 2022 business acquisitions are discussed below.

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”), for a total purchase price of $ 108.6 million after including the impacts of working capital adjustments, cash acquired, net present value of future insurance payments, and contingent consideration.

and RTS-TMS, Inc., doing business as ReedTMS Logistics (“ReedTMS”), for a final purchase price of $ 108.6 million after including the impacts of working capital adjustments, cash acquired, net present value of future insurance payments, and contingent consideration.

ReedTMS 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.

1 unchanged sentence

Pro forma information for this acquisition is not provided as it did not have a material impact on our consolidated operating results.

The following table summarizes the provisional purchase price allocation for ReedTMS, including any adjustments during the three months ended March 31, 2023 (in thousands):

The following table summarizes the purchase price allocation for ReedTMS, including any adjustments during the six months ended June 30, 2023 (in thousands):

November 5, 2022

5 unchanged sentences

as Reported at

March 31, 2023

June 30, 2023

Purchase Price

33 unchanged sentences

In exchange, the sellers obtained a $ 10.0 million Standby Letter of Credit with the Company named as beneficiary.

(3) The contingent earnout liability is recorded in other long-term liabilities on the consolidated condensed balance sheets as of March 31, 2023 and December 31, 2022 .

(3) The contingent earnout liability is recorded in other current liabilities on the consolidated condensed balance sheets as of June 30, 2023 and in other long-term liabilities as of December 31, 2022 .

For additional information regarding the valuation of the contingent liability, see Note 6 – Fair Value.

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

(“Baylor”), for a total purchase price of $ 89.0 million after including the impacts of working capital adjustments, cash acquired, and contingent consideration.

(“Baylor”), for a final purchase price of $ 89.0 million after including the impacts of working capital adjustments, cash acquired, and contingent consideration.

Baylor operates in the east central and south central United States.

1 unchanged sentence

Pro forma information for this acquisition is not provided as it did not have a material impact on our consolidated operating results.

No measurement period adjustments were recorded during the three months ended March 31, 2023.

No measurement period adjustments were recorded during the six months ended June 30, 2023.

Purchase Price Allocations

1 unchanged sentence

The purchase price of each acquisition has been allocated to the assets acquired and liabilities assumed using market data and valuation techniques.

The estimated fair values of the assets acquired and liabilities assumed are considered provisional for ReedTMS and Baylor, pending the completion of acquired tangible assets valuations, independent valuations of certain acquired intangible assets, and calculations of deferred taxes based upon the underlying tax basis of assets acquired and liabilities assumed.

The determination of estimated fair values requires management to make significant estimates and assumptions.

We believe that the information available provides a reasonable basis for estimating the values of assets acquired and liabilities assumed in the ReedTMS and Baylor acquisitions;

however, these provisional estimates may be adjusted upon the availability of new information regarding facts and circumstances which existed at the acquisition dates, and such adjustments may impact future earnings.

We expect to finalize the valuation of assets and liabilities for ReedTMS and Baylor as soon as practicable, but not later than one year from the respective acquisition dates.

Any adjustments to the initial estimates of the fair value of the

acquired assets and liabilities assumed in the ReedTMS and Baylor acquisitions will be recorded as adjustments to the respective assets and liabilities, with the residual amounts allocated to goodwill.

The purchase price allocations for ReedTMS and Baylor are considered final as of June 30, 2023.

Revenue Recognition

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Truckload Transportation Services $ 570,192 $ 613,616 $ 1,158,522 $ 1,172,033

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

United States $ 765,316 $ 770,849 $ 1,547,609 $ 1,481,753

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, 2023 and December 31, 2022, the accounts receivable, trade, net, balance was $ 461.0 million and $ 518.8 million, respectively.

At June 30, 2023 and December 31, 2022, the accounts receivable, trade, net, balance was $ 437.6 million and $ 518.8 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, 2023 and December 31, 2022, the balance of contract assets was $ 7.3 million and $ 8.9 million, respectively.

At June 30, 2023 and December 31, 2022, the balance of contract assets was $ 6.8 million and $ 8.9 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.

A t March 31, 2023 and December 31, 2022, t he balance of contract liabilities was $ 1.2 million and $ 0.9 million, respectively .

The amount of revenues recognized in the three months ended March 31, 2023 that was included in the December 31, 2022 contract liability balance was $ 0.9 million.

A t June 30, 2023 and December 31, 2022, t he balance of contract liabilities was $ 1.1 million and $ 0.9 million, respectively .

The amount of revenues recognized in the six months ended June 30, 2023 that was included in the December 31, 2022 contract liability balance was $ 0.9 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, 2023 and 2022, 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, 2023 and 2022, revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material.

(4) Goodwill and Intangible Assets

Goodwill represents the excess of cost over the fair value of net identifiable tangible and intangible assets acquired in business combinations.

The following table summarizes changes in the carrying amount of goodwill by segment for the three months ended March 31, 2023 (in thousands):

The following table summarizes changes in the carrying amount of goodwill by segment for the six months ended June 30, 2023 (in thousands):

Werner Logistics

3 unchanged sentences

( 7,841 ) 4,228 ( 3,613 )

Balance as of March 31, 2023

Balance as of June 30, 2023

$ 46,056 $ 83,048 $ 129,104

2 unchanged sentences

The following table presents acquired intangible assets (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Customer relationships

3 unchanged sentences

$ 104,800 $ ( 13,288 ) $ 91,512 $ 89,500 $ ( 7,998 ) $ 81,502

Amortization expense on intangible assets was $ 2.8 million and $ 1.4 million for the three months ended March 31, 2023 and 2022, respectively, and is reported in depreciation and amortization on the consolidated statements of income.

As of March 31, 2023, we estimate future amortization expense for intangible assets will be $ 7.6 million for the remainder of 2023, and $ 10.1 million for each of the five succeeding fiscal years.

Amortization expense on intangible assets was $ 2.5 million and $ 5.3 million for the three and six months ended June 30, 2023, respectively, and $ 1.4 million and $ 2.7 million for the three and six months ended June 30, 2022, respectively, and is reported in depreciation and amortization on the consolidated statements of income.

As of June 30, 2023, we estimate future amortization expense for intangible assets will be $ 5.0 million for the remainder of 2023, and $ 10.1 million for each of the five succeeding fiscal years.

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, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Balance Sheet Classification

6 unchanged sentences

Weighted-average discount rate for operating leases 3.6 % 3.3 %

The following table presents the maturities of operating lease liabilities as of March 31, 2023 (in thousands):

The following table presents the maturities of operating lease liabilities as of June 30, 2023 (in thousands):

Maturity of Lease Liabilities

4 unchanged sentences

Present value of operating lease liabilities $ 41,272

During the three months ended March 31, 2023 and 2022, right-of-use assets of $ 1.5 million and $ 10.2 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 $ 2.9 million and $ 1.8 million for the three months ended March 31, 2023 and 2022, respectively, and are included in operating cash flows.

During the six months ended June 30, 2023 and 2022, right-of-use assets of $ 4.1 million and $ 11.2 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 $ 5.8 million and $ 3.8 million for the six months ended June 30, 2023 and 2022, respectively, and are included in operating cash flows.

Operating Lease Expense

Operating lease expense was $ 6.2 million and $ 5.1 million for the three months ended March 31, 2023 and 2022, respectively.

This expense included $ 3.0 million and $ 2.1 million for long-term operating leases for the three months ended March 31, 2023 and 2022, respectively, with the remainder for variable and short-term lease expense .

Operating lease expense was $ 5.9 million and $ 12.1 million for the three and six months ended June 30, 2023, respectively, and $ 5.3 million and $ 10.4 million for the three and six months ended June 30, 2022, respectively.

This expense included $ 3.0 million and $ 6.0 million for the three and six months ended June 30, 2023, respectively, and $ 2.3 million and $ 4.4 million for the three and six months ended June 30, 2022, 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 $ 2.7 million and $ 3.2 million for the three months ended March 31, 2023 and 2022, respectively.

The following table presents information about the maturities of these operating leases as of March 31, 2023 (in thousands):

Revenues were $ 2.7 million and $ 5.4 million for the three and six months ended June 30, 2023, respectively, and $ 3.1 million and $ 6.3 million for the three and six months ended June 30, 2022, respectively.

The following table presents information about the maturities of these operating leases as of June 30, 2023 (in thousands):

2023 (remaining) $ 4,851

17 unchanged sentences

Hierarchy Fair Value

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Other non-current assets:

1 unchanged sentence

1 $ 721 $ 723

Other current liabilities:

Contingent consideration associated with acquisitions 3 $ 4,336 $ —

Other long-term liabilities:

Contingent consideration associated with acquisitions 3 8,692 13,400

Total liabilities $ 13,028 $ 13,400

(1) Represents our investments in autonomous technology companies.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Balance at beginning of period

1 unchanged sentence

Measurement period adjustment associated with the acquisition of ReedTMS (1)

— — ( 800 ) —

Change in fair value 151 — 428 —

4 unchanged sentences

Additionally, as the liability is stated at present value, the passage of time alone will increase the estimated fair value of the liability each reporting period.

Any changes in fair value will be recorded in other operating expenses on the consolidated statements of income.

Change in fair value is recorded in other operating expenses on the consolidated statements of income.

Our ownership interests in Mastery Logistics Systems, Inc.

5 unchanged sentences

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.

The carrying amount of our fixed-rate debt not measured at fair value on a recurring basis was $ 91.3 million and $ 93.8 million as of March 31, 2023 and December 31, 2022, respectively.

The estimated fair value of our fixed-rate debt using the income approach, based on its net present value, discounted at our current borrowing rate, was $ 85.9 million and $ 87.2 million as of March 31, 2023 and December 31, 2022, respectively (categorized as Level 2 of the fair value hierarchy).

The carrying amount

of our variable-rate long-term debt approximates fair value due to the duration of our credit arrangement and the variable interest rate (categorized as Level 2 of the fair value hierarchy).

The carrying amount of our fixed-rate debt not measured at fair value on a recurring basis was $ 90.0 million and $ 93.8 million as of June 30, 2023 and December 31, 2022, respectively.

The estimated fair value of our fixed-rate debt using the income approach, based on its net present value, discounted at our current borrowing rate, was $ 85.8 million and $ 87.2 million as of June 30, 2023 and December 31, 2022, respectively (categorized as Level 2 of the fair value hierarchy).

The carrying amount of our variable-rate long-term debt approximates fair value due to the duration of our credit arrangement and the variable interest rate (categorized as Level 2 of the fair value hierarchy).

(7) Investments

4 unchanged sentences

We record changes in the values of these investments based on events that occur that would indicate the values have changed, in loss (gain) on investments in equity securities on the consolidated statements of income.

As of March 31, 2023 and December 31, 2022, the value of our investment in MLSI was $ 86.8 million and the value of our investment in Fleet Defender, Inc.

As of June 30, 2023 and December 31, 2022, the value of our investment in MLSI was $ 86.8 million and the value of our investment in Fleet Defender, Inc.

was $ 250 thousand.

There was no activity related to our equity investments without readily determinable fair values during the three months ended March 31, 2023 and 2022.

As of March 31, 2023, cumulative upward adjustments on our equity securities without readily determinable fair values totaled $ 56.8 million.

The following table summarizes the activity related to our equity investments without readily determinable fair values during the periods presented (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Investment in equity securities

$ — $ 20,250 $ — $ 20,250

Upward adjustments (1)

— 28,638 — 28,638

(1) During 2022, investments by third-parties resulted in the remeasurements of our investment in MLSI.

Our updated investment values were based upon the prices paid by third parties.

As of June 30, 2023, cumulative upward adjustments on our equity securities without readily determinable fair values 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 loss (gain) on investments in equity securities on the consolidated statements of income.

As of March 31, 2023 and December 31, 2022, the value of these investments was $ 0.6 million and $ 0.7 million, respectively.

We recognized an unrealized loss of $ 0.1 million and $ 9.8 million on these investments for the three months ended March 31, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, the value of these investments was $ 0.7 million.

We recognized an unrealized gain of $ 0.1 million and an unrealized loss of $ 2 thousand on these investments for the three and six months ended June 30, 2023, respectively, and an unrealized loss of $ 4.5 million and $ 14.3 million for the three and six months ended June 30, 2022, respectively.

For additional information regarding the fair value of these equity investments, see Note 6 – Fair Value.

Equity Method Investment

In January 2023, we committed to make a $ 20.0 million investment in Autotech Fund III pursuant to a limited partnership agreement.

Autotech Fund III is managed by Autotech Ventures, a venture capital firm focused on ground transportation technology.

In January 2023, we committed to make a $ 20.0 million investment in Autotech Fund III (the “Fund”) pursuant to a limited partnership agreement.

The Fund is managed by Autotech Ventures, a venture capital firm focused on ground transportation technology.

Our interest, which represents an ownership percentage of less than 20 %, is being accounted for under ASC 323, “ Investments - Equity Method and Joint Ventures .” As a limited partner, we will make periodic capital contributions toward this total commitment amount.

As of March 31, 2023, our cumulative investment in Autotech Fund III was $ 2.1 million, which we contributed during the three months ended March 31, 2023.

As of March 31, 2023, the value of our investment in Autotech Fund III was $ 2.1 million and is recorded in other noncurrent assets on the consolidated condensed balance sheets.

We will record earnings and losses attributed to the fund in loss (earnings) from equity method investment on the consolidated statements of income.

No earnings or losses were recognized for the three months ended March 31, 2023.

The carrying amount of Autotech Fund III as of March 31, 2023 approximates its fair value, as this is the most recent information available to us at this time.

We contributed $ 2.6 million to the Fund during the six months ended June 30, 2023.

As of June 30, 2023, the value of our investment in the Fund was $ 1.8 million and is recorded in other noncurrent assets on the consolidated condensed balance sheets.

The carrying amount of the Fund as of June 30, 2023 approximates its fair value as of March 31, 2023, as this is the most recent information available to us at this time.

We recognized a loss $ 0.8 million from the Fund for the three and six months ended June 30, 2023, and is reported in loss from equity method investment on the consolidated statements of income.

(8) Notes Receivable

4 unchanged sentences

There are no scheduled principal payments due on the MLSI promissory note until the maturity date, and interest accrues at 7.5 % compounded annually, with the first accrued interest payment due on January 24, 2028, and at the end of each calendar year thereafter.

The independent contractor notes receivable, MLSI subordinated promissory note, and other notes receivable are included in other current assets and other non-current assets in the consolidated balance sheets.

The following table presents our notes receivable (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Independent contractor notes receivable

8 unchanged sentences

We also provide financing to some individuals who attended our driver training schools.

The student notes receivable is included in other receivables and other non-current assets in the consolidated balance sheets.

The student notes receivable is included in other receivables and other non-current assets in the consolidated condensed balance sheets.

The following table presents our student notes receivable (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Student notes receivable

19 unchanged sentences

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, 2023 and December 31, 2022, our outstanding debt totaled $ 691.3 million and $ 693.8 million, respectively.

As of March 31, 2023, we had an outstanding revolving credit loan balance of $ 600.0 million under the 2022 Credit Agreement, including (i) $ 450.0 million at a variable interest rate of 6.11 % and (ii) $ 150.0 million which is effectively fixed at 2.88 % with two interest rate swap agreements through May 14, 2024.

In addition, as of March 31, 2023, we had $ 91.3 million outstanding under the BMO Term Loan at a fixed interest rate of 1.28 %.

The $ 1.075 billion of borrowing capacity under our 2022 Credit Agreement at March 31, 2023, is further reduced by $ 60.4 million in stand-by letters of credit under which we are obligated.

As of June 30, 2023 and December 31, 2022, our outstanding debt totaled $ 640.0 million and $ 693.8 million, respectively.

As of June 30, 2023, we had an outstanding revolving credit loan balance of $ 550.0 million under the 2022 Credit Agreement,

including (i) $ 400.0 million at a variable interest rate of 6.43 % and (ii) $ 150.0 million which is effectively fixed at 2.88 % with two interest rate swap agreements through May 14, 2024.

In addition, as of June 30, 2023, we had $ 90.0 million outstanding under the BMO Term Loan at a fixed interest rate of 1.28 %.

Subsequent to the end of the quarter, in July 2023, we borrowed an additional $ 50.0 million under the 2022 Credit Agreement, which will be classified as long-term in the consolidated condensed balance sheets.

The $ 1.075 billion of borrowing capacity under our 2022 Credit Agreement at June 30, 2023, is further reduced by $ 48.6 million in stand-by letters of credit under which we are obligated.

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

Such covenants include, among other things, two financial covenants requiring us (i) not to exceed a maximum ratio of net funded debt to EBITDA and (ii) to exceed a minimum ratio of EBITDA to interest expense.

As of March 31, 2023, we were in compliance with these covenants.

At March 31, 2023, the aggregate future maturities of long-term debt by year are as follows (in thousands):

As of June 30, 2023, we were in compliance with these covenants.

In July 2023, we entered into four additional variable-for-fixed interest rate swap agreements for a notional amount of $ 130.0 million to further limit our exposure to increases in interest rates on a portion of our variable-rate indebtedness (see Note 13, Subsequent Event, for additional information regarding these swap agreements).

At June 30, 2023, the aggregate future maturities of long-term debt by year are as follows (in thousands):

2023 (remaining) $ 2,500

1 unchanged sentence

(10) Commitments and Contingencies

We have committed to property and equipment purchases of approximately $ 271.4 million at March 31, 2023 .

We have committed to property and equipment purchases of approximately $ 247.5 million at June 30, 2023 .

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 $ 35.5 million as of March 31, 2023, and $ 34.1 million as of December 31, 2022.

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, 2023 and December 31, 2022.

The Company is pursuing an appeal of this verdict.

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

As a result of this jury verdict, the Company had recorded a liability of $ 36.9 million as of June 30, 2023, and $ 34.1 million as of December 31, 2022.

The Company pursued an appeal of this verdict, and on May 18, 2023, the Texas Court of Appeals overruled Werner’s appeal and affirmed the trial court’s judgment.

The Company has since filed a Petition for Review with the Texas Supreme Court, seeking further review of the Texas Court of Appeals decision.

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

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.

5 unchanged sentences

On January 10, 2023, the trial court denied Plaintiff’s motion for a new trial and entered judgment in Werner’s favor on all claims.

As of March 31, 2023, 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, 2023, 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

2023 2022 2023 2022

Net income attributable to Werner $ 29,881 $ 72,290 $ 65,105 $ 126,039

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(i) Truckload Logistics, which uses contracted carriers to complete shipments for brokerage customers and freight management customers for which we offer a full range of single-source logistics management services and solutions;

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

(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”) 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.

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Revenues by Segment

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Operating Income (Loss) by Segment

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Depreciation and Amortization by Segment

4 unchanged sentences

Total $ 74,898 $ 68,471 $ 149,211 $ 135,700

(13) Subsequent Event

In July 2023, we entered into four additional variable-for-fixed interest rate swap agreements for a notional amount of $ 130 million, with notional values of $ 40 million and $ 90 million maturing in July 2025 and 2026, respectively.

These interest rate swap agreements will further limit our exposure to increases in interest rates on a portion of our variable-rate indebtedness.

Under the terms of the interest rate swap agreements, we will receive monthly variable-rate interest payments based on one-month Term SOFR, and make monthly fixed-rate interest payments as specified in the interest rate swap agreements.

We have designated these interest rate swap agreements as cash flow hedges.

Changes in fair value of outstanding derivatives in cash flow hedges will be recorded in other comprehensive income (loss) in the consolidated statements of comprehensive income until earnings are impacted by the hedged transaction.

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