What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-08 · 114 added, 103 removed, 573 unchanged (27% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

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

22 unchanged sentences

Net income 23,504 55,925 89,058 184,569

Net income attributable to noncontrolling interest ( 139 ) ( 1,319 ) ( 449 ) ( 2,605 )

Net loss (income) attributable to noncontrolling interest 200 ( 874 ) ( 249 ) ( 3,479 )

Net income attributable to Werner $ 23,704 $ 55,051 $ 88,809 $ 181,090

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(In thousands) 2023 2022 2023 2022

3 unchanged sentences

Change in fair value of interest rate swaps, net of tax ( 694 ) 1,857 ( 1,768 ) 6,771

Other comprehensive income, net 2,641 1,236 4,669 6,020

Other comprehensive income (loss), net ( 2,027 ) 1,149 2,642 7,169

Comprehensive income 21,477 57,074 91,700 191,738

Comprehensive income attributable to noncontrolling interest ( 139 ) ( 1,319 ) ( 449 ) ( 2,605 )

Comprehensive loss (income) attributable to noncontrolling interest 200 ( 874 ) ( 249 ) ( 3,479 )

Comprehensive income attributable to Werner $ 21,677 $ 56,200 $ 91,451 $ 188,259

2 unchanged sentences

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands, except share amounts) June 30,

(In thousands, except share amounts) September 30,

2023 December 31,

34 unchanged sentences

Common stock, $ 0.01 par value, 200,000,000 shares authorized;

80,533,536 shares

80,533,536 shares issued;

63,390,516 and 63,223,003 shares outstanding, respectively

10 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(In thousands) 2023 2022

20 unchanged sentences

Net cash invested in acquisition ( 188 ) 705

Investment in equity securities — ( 20,250 )

Investment in equity securities, net ( 2,865 ) ( 20,250 )

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

4 unchanged sentences

Repayments of short-term debt ( 33,750 ) ( 3,750 )

Proceeds from issuance of short-term debt 30,000 —

Repayments of long-term debt ( 50,000 ) ( 100,000 )

4 unchanged sentences

Tax withholding related to net share settlements of restricted stock awards ( 5,554 ) ( 3,704 )

Net cash used in financing activities ( 64,196 ) ( 97,941 )

Other cash flows from financing activities — ( 750 )

Net cash provided by (used in) financing activities ( 19,978 ) 7,450

Effect of exchange rate fluctuations on cash 1,523 68

16 unchanged sentences

TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTEREST

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

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

6 unchanged sentences

Equity Temporary Equity - Redeemable Noncontrolling Interest

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

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

Net income attributable to Werner — — 23,704 — — 23,704 —

Net income attributable to noncontrolling interest — — — — — — 139

Other comprehensive income — — — 2,641 — 2,641 —

Net income (loss) attributable to noncontrolling interest — — — — — — ( 200 )

Other comprehensive loss — — — ( 2,027 ) — ( 2,027 ) —

Dividends on common stock ($ 0.14 per share)

3 unchanged sentences

Non-cash equity compensation expense — 2,380 — — — 2,380 —

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

BALANCE, September 30, 2023 $ 805 $ 133,038 $ 1,938,694 $ ( 8,650 ) $ ( 551,672 ) $ 1,512,215 $ 38,948

Three Months Ended September 30, 2022

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

6 unchanged sentences

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

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

Net income attributable to Werner — — 55,051 — — 55,051 —

8 unchanged sentences

Non-cash equity compensation expense — 3,035 — — — 3,035 —

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

Distribution to noncontrolling interest — — — — — — ( 750 )

BALANCE, September 30, 2022 $ 805 $ 127,046 $ 1,823,927 $ ( 13,435 ) $ ( 551,785 ) $ 1,386,558 $ 38,676

See Notes to Consolidated Financial Statements (Unaudited).

2 unchanged sentences

TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTEREST (CONTINUED)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

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

15 unchanged sentences

Non-cash equity compensation expense — 8,671 — — — 8,671 —

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

BALANCE, September 30, 2023 $ 805 $ 133,038 $ 1,938,694 $ ( 8,650 ) $ ( 551,672 ) $ 1,512,215 $ 38,948

Nine Months Ended September 30, 2022

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

17 unchanged sentences

Non-cash equity compensation expense — 9,120 — — — 9,120 —

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

Distribution to noncontrolling interest — — — — — — ( 750 )

BALANCE, September 30, 2022 $ 805 $ 127,046 $ 1,823,927 $ ( 13,435 ) $ ( 551,785 ) $ 1,386,558 $ 38,676

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 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.

Operating results for the three and nine months ended September 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 six months ended June 30, 2023 related to our 2022 business acquisitions are discussed below.

Developments during the nine months ended September 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.

3 unchanged sentences

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

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

(“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.

The results of operations for Baylor are included in our consolidated financial statements beginning October 1, 2022.

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 nine months ended September 30, 2023.

Purchase Price Allocations

We accounted for the ReedTMS and Baylor purchases using the acquisition method of accounting under GAAP.

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

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

The following table summarizes the purchase price allocation for ReedTMS, including any adjustments (in thousands):

November 5, 2022

5 unchanged sentences

as Reported at

June 30, 2023

September 30, 2023

Purchase Price

27 unchanged sentences

$ 52,841 $ ( 3,613 ) $ 49,228

(1) The measurement period adjustments were recorded during the three months ended March 31, 2023.

No material statement of income effects were identified with these adjustments.

4 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 current liabilities on the consolidated condensed balance sheets as of June 30, 2023 and in other long-term liabilities as of December 31, 2022 .

(3) The contingent earnout liability is recorded in other current liabilities on the consolidated condensed balance sheets as of September 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 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.

The results of operations for Baylor are included in our consolidated financial statements beginning October 1, 2022.

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 six months ended June 30, 2023.

Purchase Price Allocations

We accounted for the ReedTMS and Baylor purchases using the acquisition method of accounting under GAAP.

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

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

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

5 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 June 30, 2023 and December 31, 2022, the accounts receivable, trade, net, balance was $ 437.6 million and $ 518.8 million, respectively.

At September 30, 2023 and December 31, 2022, the accounts receivable, trade, net, balance was $ 449.8 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 June 30, 2023 and December 31, 2022, the balance of contract assets was $ 6.8 million and $ 8.9 million, respectively.

At September 30, 2023 and December 31, 2022, the balance of contract assets was $ 8.2 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 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.

A t September 30, 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 nine months ended September 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 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.

During the nine months ended September 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 six months ended June 30, 2023 (in thousands):

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

Werner Logistics

3 unchanged sentences

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

Balance as of June 30, 2023

Balance as of September 30, 2023

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

2 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Customer relationships

3 unchanged sentences

$ 104,800 $ ( 15,806 ) $ 88,994 $ 89,500 $ ( 7,998 ) $ 81,502

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.

Amortization expense on intangible assets was $ 2.5 million and $ 7.8 million for the three and nine months ended September 30, 2023, respectively, and $ 1.4 million and $ 4.1 million for the three and nine months ended September 30, 2022, respectively, and is reported in depreciation and amortization on the consolidated statements of income.

As of September 30, 2023, we estimate future amortization expense for intangible assets will be $ 2.5 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):

June 30, 2023 December 31, 2022

September 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 June 30, 2023 (in thousands):

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

Maturity of Lease Liabilities

4 unchanged sentences

Present value of operating lease liabilities $ 38,219

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.

During the nine months ended September 30, 2023 and 2022, right-of-use assets of $ 3.8 million and $ 12.4 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 $ 8.4 million and $ 5.9 million for the nine months ended September 30, 2023 and 2022, respectively, and are included in operating cash flows.

Operating 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 .

Operating lease expense was $ 5.7 million and $ 17.8 million for the three and nine months ended September 30, 2023, respectively, and $ 5.4 million and $ 15.8 million for the three and nine months ended September 30, 2022, respectively.

This expense included $ 2.8 million and $ 8.8 million for the three and nine months ended September 30, 2023, respectively, and $ 2.2 million and $ 6.6 million for the three and nine months ended September 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 $ 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):

Revenues were $ 2.8 million and $ 8.2 million for the three and nine months ended September 30, 2023, respectively, and $ 3.3 million and $ 9.6 million for the three and nine months ended September 30, 2022, respectively.

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

2023 (remaining) $ 2,378

17 unchanged sentences

Hierarchy Fair Value

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Other non-current assets:

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

17 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 $ 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 fixed-rate debt not measured at fair value on a recurring basis was $ 90.0 million and $ 93.8 million as of September 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 $ 86.6 million and $ 87.2 million as of September 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).

5 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 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.

As of September 30, 2023 and December 31, 2022, the value of our investment in MLSI was $ 89.8 million and $ 86.8 million, respectively, and the value of our investment in Fleet Defender, Inc.

was $ 250 thousand.

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,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

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.

As of September 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 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.

As of September 30, 2023 and December 31, 2022, the value of these investments was $ 0.6 million and $ 0.7 million, respectively.

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

The following table summarizes the activity related to our equity investments with readily determinable fair values during the periods presented (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Loss (gain) on investments in equity securities, net $ 34 $ ( 114 ) $ 36 $ 14,235

Portion of unrealized loss (gain) for the period related to equity securities still held at the reporting date 35 ( 114 ) 28 14,235

Equity Method Investment

2 unchanged sentences

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.

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.

We contributed $ 2.6 million to the Fund during the nine months ended September 30, 2023.

As of September 30, 2023, the value of our investment in the Fund was $ 1.7 million and is recorded in other noncurrent assets on the

consolidated condensed balance sheets.

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

We recognized a loss of $ 0.1 million and $ 1.0 million from the Fund for the three and nine months ended September 30, 2023, respectively, which is reported in loss from equity method investment on the consolidated statements of income.

(8) Notes Receivable

6 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Independent contractor notes receivable

10 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Student notes receivable

17 unchanged sentences

There are no scheduled principal payments due on the 2022 Credit Agreement until the maturity date, and interest is payable in arrears at periodic intervals not to exceed three months.

On June 30, 2021, we entered into a $ 100.0 million unsecured fixed-rate term loan commitment with BMO Harris, with quarterly principal payments of $ 1.25 million and a final payment of principal and interest due and payable on May 14, 2024 ("BMO Term Loan").

("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 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.

As of September 30, 2023 and December 31, 2022, our outstanding debt totaled $ 690.0 million and $ 693.8 million, respectively.

As of September 30, 2023, we had an outstanding revolving credit loan balance of $ 600.0 million under the 2022 Credit Agreement, including (i) $ 320.0 million at a variable interest rate of 6.67 %, (ii) $ 150.0 million which is effectively fixed at 2.88 % with interest rate swap agreements through May 2024, (iii) $ 40.0 million which is effectively fixed at 6.20 % with interest rate swap agreements through July 2025, and (iv) $ 90.0 million which is effectively fixed at 5.87 % with interest rate swap agreements through July 2026.

Subsequent to the end of the quarter, in October 2023, we borrowed an additional $ 15.0 million under our revolving line of credit.

The $ 1.075 billion of borrowing capacity under our 2022 Credit Agreement at September 30, 2023, is further reduced by $ 51.0 million in stand-by letters of credit under which we are obligated.

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

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 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):

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

At September 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 $ 247.5 million at June 30, 2023 .

We have committed to property and equipment purchases of approximately $ 94.6 million at September 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 $ 36.9 million as of June 30, 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 June 30, 2023 and December 31, 2022.

As a result of this jury verdict, the Company had recorded a liability of $ 38.3 million as of September 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.

No assurances can be given regarding whether the Texas Supreme Court will accept the Company’s petition to review or the outcome of any such review.

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.

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.

The period covered by this class action suit is August 2008 through March 2014.

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 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.

As of September 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.

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Three Months Ended

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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.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

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June 30, Six Months Ended

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Total $ 74,586 $ 70,397 $ 223,797 $ 206,097

(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