32 unchanged sentences
The most significant variable expenses that impact the TTS segment are driver salaries and benefits, fuel, fuel taxes (included in taxes and licenses expense), payments to independent contractors (included in rent and purchased transportation expense), supplies and maintenance and insurance and claims.
−Removed: As discussed further in the comparison of operating results for first quarter 2024 to first quarter 2023, several industry-wide issues have caused, and could continue to cause, costs to increase in future periods.
+Added: As discussed further in the comparison of operating results for second quarter 2024 to second quarter 2023, several industry-wide issues have caused, and could continue to cause, costs to increase in future periods.
These issues include shortages of drivers or independent contractors, changing fuel prices, changing used truck and trailer pricing, compliance with new or proposed regulations and tightening of the commercial truck liability insurance market.
13 unchanged sentences
Three Months Ended (3ME)
−Removed: March 31, Percentage Change in Dollar Amounts
−Removed: 2024 2023 3ME
+Added: June 30, Six Months Ended (6ME)
+Added: June 30, Percentage Change in Dollar Amounts
+Added: 2024 2023 2024 2023 3ME 6ME
(in thousands) $ % $ % $ % $ % % %
20 unchanged sentences
Three Months Ended
+Added: June 30, Six Months Ended
+Added: 2024 2023 2024 2023
TTS segment (in thousands) $ % $ % $ % $ %
6 unchanged sentences
Three Months Ended
−Removed: TTS segment 2024 2023 % Change
+Added: June 30, Six Months Ended
+Added: TTS segment 2024 2023 % Change 2024 2023 % Change
Average tractors in service 7,630 8,351 (8.6) % 7,783 8,456 (8.0) %
25 unchanged sentences
Three Months Ended
+Added: June 30, Six Months Ended
+Added: 2024 2023 2024 2023
Werner Logistics segment (in thousands) $ % $ % $ % $ %
6 unchanged sentences
Three Months Ended
−Removed: Werner Logistics segment 2024 2023 % Change
+Added: June 30, Six Months Ended
+Added: Werner Logistics segment 2024 2023 % Change 2024 2023 % Change
Average tractors in service 22 33 (33.3) % 24 36 (33.3) %
1 unchanged sentence
Total trailers (at quarter end) 3,350 2,885 16.1 % 3,350 2,885 16.1 %
−Removed: Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023
+Added: Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
Operating Revenues
−Removed: Operating reve nues decreased 7.6% for the three months ended March 31, 2024, comp ared to the same period of the prior year.
−Removed: When comparing first quarter 2024 to first quarter 2023, TTS segment reven ues decreased $37.2 million, or 6.3%, and Werner Logistics revenues decreased $26.2 million, or 11.5%.
−Removed: Dedicated freight demand in first quarter 2024 was steady, absent isolated fleet losses, and the Dedicated pipeline of opportunities remains strong, but competitive.
−Removed: One-Way Truckload and Werner Logistics volumes reflected normal seasonality while revenues and profitability were impacted by ongoing pricing pressure.
−Removed: Inclement weather further negatively impacted One-Way and Werner Logistics in first quarter 2024.
−Removed: We expect the challenging freight market to continue through second quarter and into the second half of 2024.
−Removed: Trucking revenues, net of fuel surcha rge, decreased 4.7% in first quart er 2024 compared to first quarter 2023 due to a 7.3% decrease in the average number of tractors in service, partially offset by a 2.8% increase in averag e revenues per tractor per week, net of fuel surcharge .
−Removed: During first quarter 2024, One-Way Truckload average revenues per total mile, net of fuel surcharg e, decreased 5.1%, as One-Way Truckload remained challenged by ongoing pricing pressure.
−Removed: Dedicated average revenues per tractor per week, net of fuel surcharge, increased 1.3%, despite losing a few fleets to changes in the supply chain approach for select customers and isolated competitive pricing.
−Removed: We continue to expect average revenues per total mile, net of fuel surcharge, for the One-Way Truckload fleet to decrease in a range of 6% to 3% in the first half of 2024 compared to first half of 2023.
−Removed: We continue to expect Dedicated average revenues per tractor per week, net of fuel surcharge, to remain flat or increase up to 3% in 2024 compared to 2023, as Dedicated demand remains steady, and we anticipate the pipeline of opportunities in Dedicated to continue to be strong, but competitive.
−Removed: The average number of tractors in service in the TTS segm ent decreased 7.3% to 7,935 in first qu arter 2024 from 8,561 in first quarter 2023 , as we decreased our fleet size to adjust to the challenging freight market conditions .
−Removed: W e ended first quarter 2024 wi th 7,810 tractors in the TTS segment, a year-over-year decrease of 665 tractors compared to the e nd of first quarter 2023, and a sequenti al decrease of 190 tractors compared to the end of fourth quarter 2023.
−Removed: Within TTS, our Dedicated unit ended first quarter 2024 with 5,080 tractors (or 65% of our total TTS segment fleet) compared to 5,345 tractors (or 63%) a year ago.
−Removed: The Dedicated environment has become more competitive through this prolonged weak freight market.
−Removed: We are receiving new business awards in our Dedicated unit to assist with backfilling lost business, and we foresee potential for growth in our Dedicated unit in the second half of the year;
−Removed: although, we recognize the challenge and believe it is reasonable to lower our fleet size expectations at this time while we focus on maintaining price and margin discipline across our portfolio.
−Removed: We currently expect our fleet size at the end of 2024 to decrease in a range of 6% to 3% when compared to the fleet size at the end of 2023.
+Added: Operating reve nues decreased 6.2% for the three months ended June 30, 2024, comp ared to the same period of the prior year.
+Added: When comparing second quarter 2024 to second quarter 2023, TTS segment reven ues decreased $33.1 million, or 5.8%, and Werner Logistics revenues decreased $15.6 million, or 7.0%.
+Added: Dedicated freight demand remains steady and durable despite a continued challenging freight market, and the Dedicated pipeline of opportunities remains strong, but competitive.
+Added: One-Way Truckload freight conditions improved midway through second quarter 2024 and continued into July.
+Added: Werner Logistics revenues and profitability continue to be impacted by ongoing pricing pressure.
+Added: Trucking revenues, net of fuel surcharge, decreased 5.9% in second quart er 2024 compared to second quarter 2023 due to an 8.6% decrease in the average number of tractors in service, partially offset by a 3.0% increase in average revenues per tractor per week, net of fuel surcharge.
+Added: During second quarter 2024, One-Way Truckload average revenues per total mile, net of fuel surcharg e, decreased 2.7%, as One-Way Truckload remained challenged by ongoing pricing pressure.
+Added: One-Way Truckload average tractors in service decreased 11.2%, offset with 10.8% higher average total miles per tractor per week in second quarter 2024.
+Added: As a result, One-Way Truckload total miles were down only 1.6% compared to second quarter 2023.
+Added: We expect average revenues per total mile, net of fuel surcharge, for the One-Way Truckload fleet to remain flat or decrease by no more than 3% in third quarter 2024 compared to third quarter 2023.
+Added: Dedicated average revenues per tractor per week, net of fuel surcharge, increased 0.4%.
+Added: We continue to expect Dedicated average revenues per tractor per week, net of fuel surcharge, to remain flat or increase up to 3% in 2024 compared to 2023, as we continue to maintain high customer retention and the pipeline of opportunities in Dedicated remains strong.
+Added: The average number of tractors in service in the TTS segment decreased 8.6% to 7,630 in second qu arter 2024 from 8,351 in second quarter 2023.
+Added: The prolonged weak freight market combined with the impact from certain fleet losses as a result of maintaining our pricing and operating margin discipline resulted in fewer tractors at the end of second quarter 2024.
+Added: W e ended second quarter 2024 wi th 7,460 tractors in the TTS segment, a year-over-year decrease of 825 tractors compared to the e nd of second quarter 2023, and a sequenti al decrease of 350 tractors compared to the end of first quarter 2024.
+Added: Within TTS, our Dedicated unit ended second quarter 2024 with 4,825 tractors (or 65% of our total TTS segment fleet) compared to 5,260 tractors (or 63%) a year ago.
+Added: We currently expect our TTS segment fleet size at the end of 2024 to decrease in a range of 6% to 3% when compared to the fleet size at the end of 2023.
We cannot predict whether future driver shortages, if any, would have a further adverse effect on our fleet size.
If such a driver market shortage were to occur, it could result in further fleet size reductions, and our results of operations could be adversely affected.
−Removed: Trucking fuel surcharge revenues decreased 17.3% to $73.0 million in first quarter 2024 from $88.3 million in first quarter 2023.
−Removed: These revenues represent collections from customers for the increase in fuel and fuel-related expenses, including the fuel component of our independent contractor cost (recorded as rent and purchased transportation expense) and fuel taxes (recorded in taxes and licenses expense), when diesel fuel prices rise.
+Added: Trucking fuel surcharge revenues decreased 8.8% to $70.0 million in second quarter 2024 from $76.7 million in second quarter 2023.
+Added: These revenues represent collections from customers for the increase in fuel and fuel-related expenses, including the fuel component of our independent contractor cost (recorded as rent and purchased transportation expense) and fuel taxes (recorded
+Added: in taxes and licenses expense), when diesel fuel prices rise.
Conversely, when fuel prices decrease, fuel surcharge revenues decrease.
7 unchanged sentences
Werner Logistics revenues are generated by its three operating units.
−Removed: Werner Logistics recorded revenue and brokered freight expense of $4.1 million in first quarter 2024 and $5.3 million in first quarter 2023 for certain shipments performed by the TTS segment (also recorded as trucking revenue by the TTS segment), and these transactions between reporting segments are eliminated in consolidation.
−Removed: In first quarter 2024, Werner Logistics revenues decreased $26.2 million, or 11.5%.
−Removed: Truckload Logistics revenues (76% of total Werner Logistics segment revenues) decreased 13% in first quarter 2024, driven by a decrease in shipments and a decline in revenue per shipment.
−Removed: Final Mile revenues (12% of total Werner Logistics segment revenues) increased $1.1 million or 5% in first quarter 2024, despite a softer market for discretionary spending on big and bulky products.
−Removed: Intermodal revenues (12% of total Werner Logistics segment revenues) decreased 15% in first quarter 2024, due to lower revenue per shipment, partially offset by an increase in shipments.
−Removed: Werner Logistics had an operating loss of $2.3 million in first quarter 2024 compared to operating income of $4.9 million in first quarter 2023, and its operating margin percentage decreased to (1.2)% in first quarter 2024 from 2.2% in first quarter 2023.
−Removed: Adverse weather combined with a competitive freight and rate market in first quarter 2024 impacted Werner Logistics revenue and profitability despite normal seasonality in volume and maintaining high client retention.
−Removed: We expect Truckload Logistics margins will remain challenged in the near-term, but may improve later in the year through cost saving initiatives and further synergies realized from the integration of our acquired companies.
+Added: Werner Logistics recorded revenue and brokered freight expense of $3.3 million in second quarter 2024 and $3.5 million in second quarter 2023 for certain shipments performed by the TTS segment (also recorded as trucking revenue by the TTS segment), and these transactions between reporting segments are eliminated in consolidation.
+Added: In second quarter 2024, Werner Logistics revenues decreased $15.6 million, or 7.0%, compared to second quarter 2023.
+Added: Truckload Logistics revenues (75% of total Werner Logistics segment revenues) decreased $17.3 million, or 10%, in second quarter 2024, driven by a decrease in shipments and a decline in revenue per shipment.
+Added: The Power Only solution, which utilizes third-party carriers who provide only a driver and a tractor, represented a growing portion of the Truckload Logistics volume in second quarter 2024, as Power Only volumes increased over 30% in second quarter 2024 compared to second quarter 2023.
+Added: Intermodal revenues (13% of total Werner Logistics segment revenues) increased $4.1 million, or 17%, in second quarter 2024, due to an increase in shipments, partially offset by lower revenue per shipment.
+Added: Final Mile revenues (12% of total Werner Logistics segment revenues) decreased $2.5 million, or 9%, in second quarter 2024.
+Added: Werner Logistics operating income decreased to $0.5 million in second quarter 2024 from $4.4 million in second quarter 2023, and its operating margin percentage decreased to 0.3% in second quarter 2024 from 1.9% in second quarter 2023.
+Added: The operating environment continues to be competitive, which is pressuring Werner Logistics operating margins in the short term.
Operating Expenses
−Removed: Our operating ratio (operati ng expenses expressed as a percentage of ope rating revenues) was 98.0% for the three months ended March 31, 2024 and 93.6% for the three months ended March 31, 2023.
+Added: Our operating ratio (operati ng expenses expressed as a percentage of ope rating revenues) was 97.4% in second quarter 2024 compared to 94.2% in second quarter 2023.
Expense items that impacted the overall operating ratio are described on the following pages.
The tables on pages 20 through 22 show the consolidated statements of income in dollars and as a percentage of total operating revenues and the percentage increase or decrease in the dollar amounts of those items compared to the same period of the prior year, as well as the operating ratios, operating margins, and certain statistical information for our two reportable segments, TTS and Werner Logistics.
−Removed: Salaries, wages and benefits decreased $2.9 million or 1.1% in first quarter 2024 compared to first quarter 2023 and increased 2.3% as a percentage of operating revenues to 34.5%.
−Removed: The lower dollar amount of salaries, wages and benefits expense in the first quarter of 2024 was due primarily to decreased non-driver pay and the impact of 3.4 million fewer company tractor miles in the first quarter 2024, partially offset by higher benefit costs.
−Removed: The decrease in non-driver pay was primarily due to a smaller average number of non-driver employees.
−Removed: Non-driver salaries, wages and benefits in our non-trucking Werner Logistics segment decreased 7% in first quarter 2024 compared to first quarter 2023.
+Added: Salaries, wages and benefits decreased $6.6 million or 2.5% in second quarter 2024 compared to second quarter 2023 and increased 1.2% as a percentage of operating revenues to 34.1%.
+Added: The lower dollar amount of salaries, wages and benefits expense in the second quarter of 2024 was due primarily to the impact of 6.5 million fewer company tractor miles and decreased non-driver pay in the second quarter 2024, partially offset by higher benefit costs.
+Added: The decrease in non-driver pay was due primarily to a smaller average number of non-driver employees.
+Added: Non-driver salaries, wages and benefits in our non-trucking Werner Logistics segment decreased 11% in second quarter 2024 compared to second quarter 2023.
We renewed our workers’ compensation insurance coverage on April 1, 2024.
7 unchanged sentences
If such a driver shortage were to occur and driver pay rate increases became necessary to attract and retain drivers, our results of operations would be negatively impacted to the extent that we could not obtain corresponding freight rate increases.
−Removed: Fuel decreased $13.8 million or 15.1% in first quarter 2024 compared to first quarter 2023 and decreased 0.9% as a percentage of operating revenues to 10.1%, primarily due to lower average diesel fuel prices, and 3.4 million fewer company tractor miles in first quarter 2024.
−Removed: Average diesel fuel prices were 31 cents per gallon lower in first quarter 2024 than in first quarter 2023 and were 20 cents per gallon lower than in fourth quarter 2023.
+Added: Fuel decreased $5.7 million or 7.4% in second quarter 2024 compared to second quarter 2023 and decreased 0.1% as a percentage of operating revenues to 9.5%, due primarily to lower average diesel fuel prices, and 6.5 million fewer company tractor miles in second quarter 2024.
+Added: Average diesel fuel prices were 6 cents per gallon lower in second quarter 2024 than in second quarter 2023 and were 15 cents per gallon lower than in first quarter 2024.
We continue to employ measures to improve our fuel mpg such as (i) limiting tractor engine idle time by installing auxiliary power units, (ii) optimizing the speed, weight and specifications of our equipment and (iii) implementing mpg-enhancing equipment changes to our fleet including new tractors, more aerodynamic tractor features, idle reduction systems, trailer tire inflation systems, trailer skirts and automated manual transmissions to reduce our fuel gallons purchased.
3 unchanged sentences
The SmartWay Transport Partnership is a national voluntary program developed by the EPA and freight industry representatives to reduce greenhouse gases and air pollution and promote cleaner, more efficient ground freight transportation.
−Removed: For April 2024, the average diesel fuel price per gallon was approximately 5 cents lower than the average diesel fuel price per gallon in April 2023 and approximately 10 cents higher than in second quarter 2023.
+Added: For July 2024, the average diesel fuel price per gallon was approximately 12 cents lower than the average diesel fuel price per gallon in July 2023 and approximately 54 cents lower than in third quarter 2023.
Shortages of fuel, increases in fuel prices and petroleum product rationing can have a material adverse effect on our operations and profitability.
We are unable to predict whether fuel price levels will increase or decrease in the future or the extent to which fuel surcharges will be collected from customers.
−Removed: As of March 31, 2024, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.
−Removed: Supplies and maintenance decreased $6.5 million or 9.5% in first quarter 2024 compared to first quarter 2023 and decreased 0.2% as a percentage of operating revenues.
−Removed: Supplies and maintenance expense decreased due to the lower costs for over-the-road tractor and trailer maintenance and tires, and the impact of 3.4 million fewer company tractor miles.
+Added: As of June 30, 2024, we had no derivative financial instruments to reduce our exposure to fuel price fluctuations.
+Added: Supplies and maintenance decreased $3.0 million or 4.6% in second quarter 2024 compared to second quarter 2023 and increased 0.1% as a percentage of operating revenues.
+Added: Supplies and maintenance expense decreased due primarily to the lower costs for over-the-road tractor and trailer maintenance, the impact of 6.5 million fewer company tractor miles, and lower driver and placement driver-related costs such as driver advertising and lodging.
We have taken steps to reduce repair and maintenance expense by growing our in-house maintenance capabilities throughout our terminal network.
−Removed: Insurance and claims decreased $0.1 million or 0.3% in first quarter 2024 compared to first quarter 2023 and increased 0.3% as a percentage of operating revenues.
−Removed: We had lower expense for small dollar liability claims, resulting from a lower amount of unfavorable reserve development, partially offset by higher expense for new claims due to an increasing cost per claim.
−Removed: Our expense for large dollar liability claims was higher due primarily to unfavorable reserve development.
−Removed: We also incurred insurance and claims expense of $0.5 million in first quarter 2024 and $1.5 million for first quarter 2023, for accrued interest related to a previously-disclosed adverse jury verdict rendered on May 17, 2018, which we are continuing to defend.
+Added: Insurance and claims decreased $4.9 million or 13.3% in second quarter 2024 compared to second quarter 2023 and decreased 0.3% as a percentage of operating revenues.
+Added: We had lower expense for small dollar liability claims, resulting primarily from a higher amount of favorable reserve development.
+Added: Our expense for large dollar liability claims was also lower due to a lower amount of unfavorable reserve development partially offset by higher new claims.
+Added: We also incurred insurance and claims expense of $1.0 million in second quarter 2024 and $1.4 million for second quarter 2023, for accrued interest related to a previously-disclosed adverse jury verdict rendered on May 17, 2018, which we are continuing to defend.
Interest is accrued at $0.5 million per month until such time as the outcome of the litigation is finalized, excluding months where the plaintiffs requested an extension of time to respond to our petition for review.
5 unchanged sentences
We maintain liability insurance coverage with insurance carriers in excess of the $15.0 million per claim.
−Removed: Our liability insurance premiums for the policy year that began August 1, 2023 are $1.0 million higher than premiums for the previous policy year.
−Removed: Depreciation and amortization expense decreased $43 thousand or 0.1% in first quarter 2024 compared to first quarter 2023 and increased 0.8% as a percentage of operating revenues due primarily to a decrease in depreciation of furniture, office, and technology equipment as we continue to transition to more cloud-based technology solutions.
−Removed: These decreases were mostly offset by more trailers in service, the higher cost of new tractors and trailers, and the addition of auxiliary power units.
−Removed: The average age of our tractor fleet remains low by industry standards and was 2.1 years as of March 31, 2024, and the average age of our trailers was 5.0 years.
−Removed: We are continuing to invest in new tractors and trailers and our terminals in 2024 to improve our driver experience, increase operational efficiency and more effectively manage our maintenance, safety and fuel costs.
+Added: Our liability insurance premiums for the policy year that began August 1, 2024 are lower than premiums for the previous policy year as a result of changes in our retention levels.
+Added: Depreciation and amortization expense decreased $2.2 million or 3.0% in second quarter 2024 compared to second quarter 2023 and increased 0.4% as a percentage of operating revenues due primarily to decreases in depreciation of tractors as we had fewer average tractors in service, and technology equipment as we continue to transition to more cloud-based technology solutions.
+Added: Depreciation of other service equipment also decreased due to certain assets becoming fully depreciated.
+Added: These decreases were partially offset by the higher cost of new tractors and trailers.
+Added: The average age of our tractor fleet remains low by industry standards and was 2.1 years as of June 30, 2024, and the average age of our trailers was 4.9 years.
+Added: We are continuing to invest in new tractors and trailers, technology, and our terminal network in 2024 to improve our driver experience, increase operational efficiency and more effectively manage our maintenance, safety and fuel costs.
During the remainder of 2024, we expect the average age of our tractor and trailer fleets to remain at or near current levels.
−Removed: Rent and purchased transportation expense decreased $16.3 million or 7.4% in first quarter 2024 compared to first quarter 2023, and increased 0.1% as a percentage of operating revenues.
−Removed: Rent and purchased transportation expense consists mostly of payments to third-party capacity providers in the Werner Logistics segment and other non-trucking operations, payments to
−Removed: independent contractors in the TTS segment, and cloud-based technology fees.
+Added: Rent and purchased transportation expense decreased $6.7 million or 3.1% in second quarter 2024 compared to second quarter 2023, and increased 0.9% as a percentage of operating revenues.
+Added: Rent and purchased transportation expense consists mostly of payments to third-party capacity providers in the Werner Logistics segment and other non-trucking operations, payments to independent contractors in the TTS segment, and cloud-based technology fees.
The payments to third-party capacity providers generally vary depending on changes in the volume of services generated by the Werner Logistics segment.
−Removed: Werner Logistics recorded revenue and brokered freight expense of $4.1 million in first quarter 2024 and $5.3 million in first quarter 2023 for certain shipments performed by the TTS segment (also recorded as trucking revenue by the TTS segment), and these transactions between reporting segments are eliminated in consolidation.
−Removed: Werner Logistics purchased transportation expense decreased $16.0 million in first quarter 2024 as a result of lower logistics revenues, but increased to 85.2% as a percentage of Werner Logistics revenues in first quarter 2024 from 82.4% in first quarter 2023.
−Removed: Rent and purchased transportation expense for the TTS segment decreased $1.4 million in first quarter 2024 compared to first quarter 2023 due primarily to fewer independent contractor miles and lower reimbursements to independent contractors because of lower average diesel fuel prices, partially offset by higher cloud-based technology fees.
−Removed: Independent contractor miles decreased approximately 1.4 million miles in first quarter 2024 and as a percentage of total miles were 4.3% in first quarter 2024 compared to 4.9% in first quarter 2023.
−Removed: Because independent contractors supply their own tractors and drivers and are responsible for their operating expenses, the decrease in independent contractor miles as a percentage of total miles shifted costs from the rent and purchased transportation category to other expense categories, including (i) salaries, wages and benefits, (ii) fuel, (iii) depreciation, (iv) supplies and maintenance and (v) taxes and licenses.
+Added: Werner Logistics
+Added: recorded revenue and brokered freight expense of $3.3 million in second quarter 2024 and $3.5 million in second quarter 2023 for certain shipments performed by the TTS segment (also recorded as trucking revenue by the TTS segment), and these transactions between reporting segments are eliminated in consolidation.
+Added: Werner Logistics purchased transportation expense decreased $8.3 million in second quarter 2024 as a result of lower logistics revenues, but increased to 84.8% as a percentage of Werner Logistics revenues in second quarter 2024 from 82.6% in second quarter 2023 due to the competitive operating environment in 2024.
+Added: Rent and purchased transportation expense for the TTS segment increased $1.1 million in second quarter 2024 compared to second quarter 2023 due primarily to higher independent contractor miles and cloud-based technology fees, partially offset by lower reimbursements to independent contractors because of lower average diesel fuel prices.
+Added: Independent contractor miles increased approximately 0.2 million miles in second quarter 2024 and as a percentage of total miles were 4.8% in second quarter 2024 compared to 4.5% in second quarter 2023.
+Added: Because independent contractors supply their own tractors and drivers and are responsible for their operating expenses, the increase in independent contractor miles as a percentage of total miles shifted costs from other expense categories, including (i) salaries, wages and benefits, (ii) fuel, (iii) depreciation, (iv) supplies and maintenance and (v) taxes and licenses to the rent and purchased transportation category.
Challenging operating conditions continue to make independent contractor recruitment and retention difficult.
3 unchanged sentences
These increased expenses could negatively affect our results of operations to the extent that we would not be able to obtain corresponding freight rate increases.
−Removed: Other operating expenses increased $14.1 million in first quarter 2024 compared to first quarter 2023 and increased 1.8% as a percentage of operating revenues due to lower gains on sales of property and equipment (primarily used tractors and trailers).
+Added: Other operating expenses increased $6.9 million in second quarter 2024 compared to second quarter 2023 and increased 0.9% as a percentage of operating revenues due to lower gains on sales of property and equipment (primarily used tractors and trailers), partially offset by decreased costs associated with professional technology services and decreased bad debt expense.
Gains on sales of property and equipment are reflected as a reduction of other operating expenses and are reported net of sales-related expenses (which include costs to prepare the equipment for sale).
−Removed: Gains on sales of property and equipment were $3.6 million in first quarter 2024, compared to $18.3 million in first quarter 2023.
−Removed: We sold fewer tractors and substantially more trailers in first quarter 2024 compared to first quarter 2023 and realized lower average gains per tractor and trailer due to lower pricing in the market for our used equipment.
−Removed: Compared to 2023, we expect our gains on sales of property and equipment to be considerably lower in 2024, in a range between $10 million and $20 million for the year.
+Added: Gains on sales of property and equipment were $2.7 million in second quarter 2024, including $1.8 million from sales of real estate, compared to $11.9 million in second quarter 2023.
+Added: We sold fewer tractors and substantially more trailers in second quarter 2024 compared to second quarter 2023 and realized lower average gains per tractor and trailer due to lower pricing in the market for our used equipment.
+Added: Compared to 2023, we expect our gains on sales of property and equipment to be considerably lower in 2024, in a range between $7 million and $13 million for the year as we expect lower pricing for our used equipment to continue.
Other Expense (Income)
−Removed: Other expense, net of other income, decreased $0.2 million in first quarter 2024 compared to first quarter 2023.
−Removed: Net interest expense decreased $0.1 million due to a decrease in average debt outstanding, mostly offset by higher interest rates for variable rate debt.
−Removed: In July 2023 and April 2024, we entered into additional variable-for-fixed interest rate swap agreements for notional amounts of $130.0 million and $75.0 million, respectively, to further limit our exposure to increases in interest rates on a portion of our variable-rate indebtedness (see Note 7 and Note 11 in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I of this report for information regarding these interest rate swaps).
−Removed: We continue to expect net interest expense for full-year 2024 to be an increase compared to 2023, primarily due to repricing of the BMO Term Loan that is maturing in May 2024 and the impact of two lower-priced interest rate swaps that are also expiring in May 2024.
−Removed: Year-over-year variability in debt can also be a factor, which has been a favorable offset through the first quarter of 2024.
+Added: Other expense, net of other income, increased $0.4 million in second quarter 2024 compared to second quarter 2023, due primarily to a $1.0 million increase in net interest expense, partially offset by a $0.7 million decrease in the amount of loss recognized from our equity method investment (see Note 6 in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I of this report for information regarding our equity method investment).
+Added: Net interest expense increased due to higher interest rates for variable-rate debt and the impact of replacing lower-cost debt and interest rate swaps with higher-cost debt and interest rate swaps upon maturity, partially offset by a decrease in average debt outstanding.
+Added: In May 2024, we repaid the remaining outstanding principal balance under the BMO Term Loan using proceeds from the 2022 Credit Agreement, and two variable-for-fixed interest rate swap agreements with an aggregate notional amount of $150.0 million matured.
+Added: In second quarter 2024, we also entered into two variable-for-fixed interest rate swap agreements with an aggregate notional amount of $150.0 million to limit our exposure to increases in interest rates on a portion of our variable-rate indebtedness (see Note 7 in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I of this report for further information on our debt and interest rate swaps).
+Added: We continue to expect net interest expense for full-year 2024 to be higher than 2023, primarily due to repricing of the BMO Term Loan that matured in May 2024 and the impact of two lower-priced interest rate swaps that matured in May 2024 as described above.
Income Tax Expense
−Removed: Income tax expense decreased $8.3 million in first quarter 2024 compared to first quarter 2023, due primarily to lower pre-tax income, partially offset by an increase in the effective income tax rate.
−Removed: Our effective income tax rate (income taxes expressed as a percentage of income before income taxes) was 32.9% in first quarter 2024 compared to 24.3% in first quarter 2023.
−Removed: The higher income tax rate was attributed primarily to a higher amount of unfavorable discrete income tax items in first quarter 2024 related to prior year state income tax audits and the tax impact of equity compensation.
+Added: Income tax expense decreased $7.2 million in second quarter 2024 compared to second quarter 2023, due primarily to lower pre-tax income.
+Added: Our effective income tax rate (income taxes expressed as a percentage of income before income taxes) was 24.2% in second quarter 2024 compared to 25.2% in second quarter 2023.
+Added: The lower effective income tax rate was attributed to differences in discrete income tax items.
+Added: Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
+Added: Operating Revenues
+Added: Operating revenues decreased 6.9% for the six months ended June 30, 2024, compared to the same period of the prior year.
+Added: When comparing the first six months of 2024 to the first six months of 2023, TTS segment revenues decreased $70.3 million, or 6.1%, and Werner Logistics revenues decreased $41.8 million, or 9.2%.
+Added: In the TTS segment, trucking revenues, net of fuel surcharge, decreased $51.8 million, due primarily to an 8.0% decrease in average tractors in service, partially offset by a 2.9% increase in average revenues per tractor per week, net of fuel surcharge.
+Added: TTS segment fuel surcharge revenues for the six months ended June 30, 2024 decreased $22.0 million, or 13.4%, when compared to the same period of the prior year due to lower average diesel fuel prices in the 2024 period.
+Added: The lower Logistics revenues resulted from continued pricing pressure.
+Added: Operating Expenses
+Added: Our operating ratio (operating expenses expressed as a percentage of operating revenues) was 97.7% for the six months ended June 30, 2024 and 93.9% for the six months ended June 30, 2023.
+Added: Expense items that impacted the overall operating ratio are described on the following pages.
+Added: The tables on pages 20 through 22 show the consolidated statements of income in dollars and as a percentage of total operating revenues and the percentage increase or decrease in the dollar amounts of those items compared to the same period of the prior year, as well as the operating ratios, operating margins, and certain statistical information for our two reportable segments, TTS and Werner Logistics.
+Added: Salaries, wages and benefits decreased $9.5 million, or 1.8%, in the first six months of 2024 compared to the same period in 2023 and increased 1.8% as a percentage of operating revenues to 34.3%.
+Added: The lower dollar amount of salaries, wages and benefits expense in the first six months of 2024 was due primarily to lower driver pay from 9.9 million fewer company tractor miles and decreased non-driver pay in the first six months of 2024, partially offset by higher benefit costs.
+Added: The decrease in non-driver pay was due primarily to a smaller average number of non-driver employees.
+Added: Non-driver salaries, wages and benefits in our non-trucking Werner Logistics segment decreased 9% in the first six months of 2024 compared to the same period in 2023.
+Added: Fuel decreased $19.5 million, or 11.5%, in the first six months of 2024 compared to the same period in 2023 and decreased 0.5% as a percentage of operating revenues due to lower average diesel fuel prices and 9.9 million fewer company tractor miles in the first six months of 2024.
+Added: Average diesel fuel prices were 19 cents per gallon lower in the first six months of 2024 than in same period in 2023.
+Added: Supplies and maintenance decreased $9.4 million, or 7.1%, in the first six months of 2024 compared to the same period in 2023 and remained flat as a percentage of operating revenues.
+Added: Supplies and maintenance expense decreased due primarily to lower costs for over-the-road repairs and tires, and the impact of 9.9 million fewer company tractor miles.
+Added: We also had lower driver and placement driver-related costs such as driver advertising and lodging.
+Added: These decreases were partially offset by higher costs for tolls.
+Added: Insurance and claims decreased $5.0 million, or 6.9%, in the first six months of 2024 compared to the same period in 2023 and remained flat as a percentage of operating revenues.
+Added: We had lower expense for small dollar liability claims, resulting from favorable reserve development in the first six months of 2024 compared to unfavorable reserve development for the same period in 2023, partially offset by higher expense for new claims.
+Added: We had slightly higher expense for large dollar liability claims, resulting from a higher expense for new claims, mostly offset by unfavorable reserve development.
+Added: Higher expense for new claims was impacted by increased cost per claim in the first six months of 2024 compared to the same period in 2023.
+Added: Depreciation and amortization expense decreased $2.3 million, or 1.5%, in the first six months of 2024 compared to the same period in 2023 and increased 0.5% as a percentage of operating revenues due primarily to decreases in depreciation of tractors as we had fewer average tractors in service, and technology equipment as we continue to transition to more cloud-based technology solutions.
+Added: Depreciation of other service equipment also decreased due to certain assets becoming fully depreciated.
+Added: These decreases were partially offset by the higher cost of new tractors and trailers.
+Added: Werner Logistics purchased transportation expense decreased $24.3 million in the first six months of 2024 as a result of lower logistics revenues, and increased 2.5% as a percentage of Werner Logistics revenues to 85.0% in the first six months of 2024 from 82.5% in the same period in 2023.
+Added: Rent and purchased transportation expense for the TTS segment decreased $0.2 million in the first six months of 2024 compared to the same period in 2023 due primarily to fewer independent contractor miles and lower reimbursements to independent contractors because of lower average diesel fuel prices, partially offset by higher cloud-based technology fees in the first six months of 2024.
+Added: Independent contractor miles decreased approximately 1.2 million miles in the first six months of 2024 and as a percentage of total miles were 4.5% in the first six months of 2024 compared to 4.7% in the first six months of 2023.
+Added: Other operating expenses increased $21.0 million in the first six months of 2024 compared to the same period in 2023 and increased 1.3% as a percentage of operating revenues due primarily to lower gains on sales of property and equipment, partially offset by decreased costs associated with professional technology services.
+Added: Gains on sales of property and equipment were $6.2 million in the first six months of 2024, compared to $30.2 million in the same period in 2023.
+Added: We sold fewer tractors and substantially more trailers in the first six months of 2024 compared to the same period in 2023 and realized lower average gains per tractor and trailer due to lower pricing in the market for our used equipment.
+Added: Other Expense (Income)
+Added: Other expense, net of inco me, increased $0.2 million in the first six months of 2024 compared to the same period in 2023 due primari ly to a $0.9 million increase in net interest expense, partially offset by a $0.6 million decrease in the amount of loss from our equity method investment (see Note 6 in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I of this report for information regarding our equity method investment).
+Added: Net interest expense increased due to higher interest rates for variable-rate debt and the impact of replacing lower-cost debt and interest rate swaps with higher-cost debt and interest rate swaps upon maturity, partially offset by a decrease in average debt outstanding (see Note 7 in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I of this report for further information on our debt and interest rate swaps).
+Added: Income Tax Expense
+Added: Income tax expense decreased $15.5 million in the first six months of 2024 compared to the same period in 2023 , due primarily to lower pre-tax income, partially offset by an increase in the effective income tax rate.
+Added: Our effective income tax rate (income taxes expressed as a percentage of income before income taxes) was 28.0% in the first six months of 2024 compared to 24.7% in the first six months of 2023 .
+Added: The higher income tax rate was attributed primarily to differences in discrete income tax items in the first six months of 2024 primarily related to the tax impact of equity compensation.
Liquidity and Capital Resources:
2 unchanged sentences
Capital expenditures, business acquisitions, stock repurchases, and dividend payments are components of our cash flow and capital management strategy, which to a large extent, can be adjusted in response to economic and other changes in the business environment.
−Removed: Management’s approach to capital allocation focuses on
−Removed: investing in key priorities that support our business and growth strategies and providing shareholder returns, while funding ongoing operations.
−Removed: Management believes our financial position at March 31, 2024 is strong.
−Removed: As of March 31, 2024, we had $60.3 million of cash and cash equivalents and over $1.5 billion of stockholders’ equity.
+Added: Management’s approach to capital allocation focuses on investing in key priorities that support our business and growth strategies and providing shareholder returns, while funding ongoing operations.
+Added: Management believes our financial position at June 30, 2024 is strong.
+Added: As of June 30, 2024, we had $70.4 million of cash and cash equivalents and nearly $1.5 billion of stockholders’ equity.
Cash is invested primarily in short-term money market funds.
−Removed: In addition, we have a $1.075 billion credit facility, for which our total available borrowing capacity was $559.1 million as of March 31, 2024 (see Note 7 in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I of this report for information regarding our credit agreements).
+Added: In addition, we have a $1.075 billion credit facility, for which our total available borrowing capacity was $399.1 million as of June 30, 2024 (see Note 7 in the Notes to Consolidated Financial Statements (Unaudited) set forth in Part I of this report for information regarding our credit agreements).
After considering developments in the banking sector, we believe the six commercial banks in our $1.075 billion syndicated credit facility all have strong tier-one capital ratios and good loan-to-deposit ratios.
1 unchanged sentence
Item 7 of Part II of our 2023 Form 10-K includes our disclosure of material cash requirements as of December 31, 2023.
−Removed: There were no material changes in the nature of these items during the three months ended March 31, 2024.
−Removed: During the three months ended March 31, 2024, we generated cash flow from operations of $88.6 million, a 46.9% or $78.3 million decrease in cash flows compared to the same three-month period a year ago.
−Removed: The decrease in net cash provided by operating activities was due primarily to working capital changes and a decrease in net income for the three-month period ended March 31, 2024.
−Removed: We were able to make net capital expenditures, repay debt, make strategic investments, pay dividends, and repurchase company stock with the net cash provided by operating activities and existing cash balances.
−Removed: Net cash used in investing activities was $19.4 million for the three-month period ended March 31, 2024 compared to $129.2 million during the same period in 2023.
−Removed: Net property and equipment additions (primarily revenue equipment) were $19.0 million for the three-month period ended March 31, 2024, compared to $102.7 million during the same period of 2023.
+Added: There were no material changes in the nature of these items during the six months ended June 30, 2024.
+Added: During the six months ended June 30, 2024, we generated cash flow from operations of $197.7 million, a 29.9% or $84.1 million decrease in cash flows compared to the same six-month period a year ago.
+Added: The decrease in net cash provided by operating activities was due primarily to a decrease in net income for the six-month period ended June 30, 2024 and working capital changes.
+Added: We were able to make net capital expenditures, repay debt, make strategic investments, pay dividends, and repurchase company stock with the net cash provided by operating activities and existing cash balances, supplemented by borrowings under our existing credit facility.
+Added: Net cash used in investing activities was $119.4 million for the six-month period ended June 30, 2024 compared to $280.3 million during the same period in 2023.
+Added: Net property and equipment additions (primarily revenue equipment) were $118.2 million for the six-month period ended June 30, 2024, compared to $254.2 million during the same period of 2023.
We currently estimate net capital expenditures (primarily revenue equipment) in 2024 to be in the range of $225 million to $275 million, compared to net capital expenditures in 2023 of $408.7 million.
We intend to fund these net capital expenditures through cash flows from operations and financing available under our existing credit facility, if necessary.
−Removed: As of March 31, 2024, we were committed to property and equipment purchases of approximately $188.3 million.
−Removed: During the three-month period ended March 31, 2023, we purchased a $25.0 million subordinated promissory note from Mastery Logistics Systems, Inc.
+Added: As of June 30, 2024,
+Added: we were committed to property and equipment purchases of approximately $202.6 million.
+Added: During the six-month period ended June 30, 2023, we purchased a $25.0 million subordinated promissory note from Mastery Logistics Systems, Inc.
with a maturity date of January 24, 2030.
−Removed: Net financing activities used $70.8 million during the three months ended March 31, 2024, and used $16.2 million during the same period in 2023.
−Removed: We had net repayments on our debt of $51.3 million during the three months ended March 31, 2024, decreasing our outstanding debt to $597.5 million at March 31, 2024.
−Removed: We repaid $2.5 million on our debt during the three-month period ended March 31, 2023.
−Removed: We paid dividends of $8.9 million during the three months ended March 31, 2024 and $8.2 million during the same period in 2023.
+Added: Net financing activities used $67.8 million during the six months ended June 30, 2024 compared to $64.2 million during the same period in 2023.
+Added: We had net borrowings on our debt of $21.3 million during the six months ended June 30, 2024, increasing our outstanding debt to $670.0 million at June 30, 2024.
+Added: We repaid $53.8 million on our debt during the six months ended June 30, 2023.
+Added: We paid dividends of $17.8 million during the six months ended June 30, 2024 and $16.5 million during the same period in 2023.
We currently plan to continue paying a quarterly dividend.
−Removed: Financing activities for the three months ended March 31, 2024, also included common stock repurchases of 167,818 shares at a cost of $6.5 million.
+Added: Financing activities for the six months ended June 30, 2024, also included common stock repurchases of 1,787,810 shares at a cost of $67.1 million.
We did not repurchase any shares of common stock during the same period in 2023.
1 unchanged sentence
The timing and amount of such purchases depend upon economic and stock market conditions and other factors.
−Removed: As of March 31, 2024, the Company had purchased 3,856,008 shares pursuant to our current Board of Directors repurchase authorization and had 2,143,992 shares remaining available for repurchase.
+Added: On May 14, 2024, the Board of Directors approved a new stock repurchase program under which the Company is authorized to repurchase up to 5,000,000 shares of its common stock.
+Added: Upon approval of the new program, the Board of Directors withdrew the previous stock repurchase authorization , which had 1,627,651 shares rem aining available for repurchase .
+Added: As of June 30, 2024, the Company had purchased 1,103,651 shares pursuant to the new authorization and had 3,896,349 shares remaining available for repurchase.
Item 1 of Part I of our 2023 Form 10-K includes a discussion of pending proposed regulations that may have an effect on our operations if they become adopted and effective as proposed.
14 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.