Transportation & Logistics Conference February 14, 2017
Disclosure Statement This presentation includes forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on Werner Enterprises current plans, and are not guarantees of future performance. They are subject to risk and uncertainties, that could cause actual results, and company plans and objectives, to differ materially from those expressed in the forward-looking statements. Such risks and uncertainties are discussed in the Company s Annual Report, on Form 10-K, filed with the SEC. 2
Premium Truckload Transportation and Logistics Services Provider 2016 Revenues: $2.0 B 2016 Net Income: $79 M Trucks*: 7,258 Trailers*: 24,298 NASDAQ: WERN Market Cap: $2.0 B Avg Daily Trading Volume (3 mo. 12/16): 884 K *4Q16 avg. (trucking/logistics) 3
Intensely Focused on the T s 4
Revenue Sources Vertical: % of Revenues* 60% 50% 40% 30% 20% 10% 0% 44% 44% 48% 27% 28% 29% 15% 14% 13% 15% 11% 12% 2014 2015 2016 (A) Growth from 2015 to 2016 due to additional Dedicated retail and e-commerce (A) Retail/CP Grocery Products Manuf./Industrial Logistics/Other * Top 50 customers Customers: % of Revenues 100% 80% 60% 40% 20% 0% 74% 76% 74% 60% 63% 61% 41% 45% 43% 25% 27% 27% 2014 2015 2016 Top 5 Top 10 Top 25 Top 50 5
Domestic Freight Market: Market Share & Growth Opportunities U.S. Freight Transportation Market ($873 Billion) Werner 2016 Revenues ($2.0 Billion) Rail Intermodal 15.2 2% Rail Carload 57.6 7% Water 11.3 1% Air Express Pipeline 28.7 44.5 3% 5% Ground Parcel 51.1 6% Truckload 321.7 37% Private Truck 305.6 35% LTL 36.8 4% * Sources: ATA and Stifel Nicolaus estimates 6
Freight Market Update 7
Comprehensive Solutions Customer Focused Freight Management Freight Movement Global Implementation Technological Advantages This is where it all begins. Werner provides complete 3PL supply chain solutions across all shipping modes and geographies, from network design through implementation. Transportation Solutions. With an asset-backed network of nearly 7,300 One- Way Truckload, Dedicated, Cross-Border and Logistics trucks, over 13,000 alliance carriers and ocean, air and rail companies, Werner provides unsurpassed delivery solutions worldwide. We speak the language. Providing door-to-door services for companies of all sizes and industries as they compete in today s global marketplace, sets us apart from our competition. Online and real-time, all the time. Sophisticated technology tools provide our customers instant visibility across their supply chain, which enables them to better manage their business. 8
Fuel Price Trends Price Per Gallon (in $) $5.00 $4.80 $4.60 $4.40 $4.20 $4.00 $3.80 $3.60 $3.40 $3.20 $3.00 $2.80 $2.60 $2.40 $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 2014 2015 2016 2017 *Dept. of Energy (DOE) U.S. national average cash fuel price survey (Nat l avg.) of truck stops used by shippers/carriers for billing fuel surcharges. Fuel price includes fuel taxes. 9
Supply - Capacity 60,000 Public Truckload Fleet Capacity 55,000 50,000 45,000 40,000 Including owner operators, capacity at public fleets is 9% below peak 3Q06 levels 35,000 30,000 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Note: Source Key Banc. Includes CGI, CVTI, JBHT, KNX, MRTN, SWFT, USAK, and WERN (excluding acquisitions, if applicable). 10
Truck Age Werner vs. Industry 7 6 5 Truck Age 4 3 2 WERN Trucking Segment Avg. Oper. Margin Truck Age < 2 Years 1990-2006 9.7% Truck Age > 2 Years 2007-2015 8.0% WERN 1.8 avg. truck age 12/31/16 1 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Truck Age - Werner Truck Age - Industry Source for Industry Data ACT Research (Y/E data) 11
Supply Industry Driver Shortage, Truck Driver Demographics AGING TRUCK DRIVER DEMOGRAPHICS DISTRIBUTION OF EMPLOYEES BY AGE GROUP % of Total 35% 30% 25% 20% 15% 10% 5% 0% THE AGING TRUCK DRIVER 1994, 2003 & 2013 % of drivers: 45+ yrs 1994 31% 2013 56% 20-24 Years 25-34 Years 35-44 Years 45-54 Years 55-64 Years 65+ Years % of Total 35% 30% 25% 20% 15% 10% 5% 0% WERNER DRIVER DEMOGRAPHICS COMPARED TO ALL INDUSTRIES AND TRUCKING INDUSTRY 20-24 Years 25-34 Years 35-44 Years 45-54 Years 55-64 Years 65+ Years 1994 2003 2013 Werner January 2017 All Industries 2013 Trucking Industry 2013 Source: ATRI, 2013 BLS Census For Industry Data 12
Werner Driver Recruiting/Retention Advantages TRUCKS: 1.8 Avg. Age Automatic Manual Transmissions (62% and growing) Collision Mitigation Systems (72% and growing) TRAILERS: GPS Tracking (70% and growing) New Branding TALENT: Raised Driver Pay 1Q16 to Increase Experience Top 50 Military Employer (all U.S. Employers) Strengthening Our Driver Schools (Quality vs. Quantity) Strengthening Our IT Capabilities (new CIO-2Q16) TECHNOLOGY: Integrating Truck/Logistics on One Platform Enhancing Logistics Software TERMINALS: Upgrading for a Better Driver Experience Investing in Specific Geographic Terminal Locations 13
Cash Flow and Cap Ex Millions of Dollars $500 $475 $450 $425 $400 $375 $350 $325 $300 $275 $250 $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 $275 M $225 M Cash Flow from Operations Cap Ex, Net 14
Werner Trucks Truck Fleet Getting Newer, Suspended Fleet Growth Plans in 2Q16 Until Meaningfully Better Freight & Rate Market 2.8 8,750 Average Truck Age (Y/E or Q/E) 2.6 2.4 2.2 2.0 1.8 1.6 1.4 1.2 8,500 8,250 8,000 7,750 7,500 7,250 7,000 6,750 6,500 Average Trucks in Service Average Truck Age (Y/E or Q/E) Average Trucks in Service 15
Adapted to the Softer Freight Market in 2016 Smaller Total Fleet, More Dedicated 4,500 4,000 3,500 3,000 EOP Trucks 2,500 2,000 1,500 1,000 500 0 12/15 03/16 06/16 09/16 12/16 YOY Change One Way TL Dedicated % Trucks Dedicated 3,675 3,760 3,855 3,930 3,760 2% 85 One Way TL 3,775 3,570 3,400 3,245 3,340 (12%) (435) Total 7,450 7,330 7,255 7,175 7,100 (5%) (350) 16
Rate and Utilization Metrics, Last 16 Quarters RPTPW* TRENDS TRUCK TRENDS RPTPW $4,000 $3,900 $3,800 $3,700 $3,600 $3,500 $3,400 $3,300 $3,200 $3,100 $3,000 1Q 2Q 3Q 4Q Avg. Trucks in Service 7,500 7,400 7,300 7,200 7,100 7,000 6,900 6,800 Q1 Q2 Q3 Q4 2013 2014 2015 2016 2013 2014 2015 2016 Avg. Miles Per Truck 30,000 29,500 29,000 28,500 28,000 27,500 27,000 MILES PER TRUCK TRENDS Q1 Q2 Q3 Q4 2013 2014 2015 2016 Revenue Per Total Mile (RPTM) *Net of fuel surcharge revenues Note: Shifting trucks to shorter-haul Dedicated from longer-haul Van Network in 2Q16 and 3Q16 had a favorable impact on RPTM and an unfavorable impact on miles per truck. 17 $1.80 $1.75 $1.70 $1.65 $1.60 $1.55 $1.50 RPTM* TRENDS Q1 Q2 Q3 Q4 2013 2014 2015 2016
Trucking Operating Margin Declined in 2Q16; Margin Recovery in Process YOY Change in Basis Points (BP) 500 450 400 350 300 250 200 150 100 50-50 0-100 -150-200 -250-300 -350-400 -450-500 -550-600 -650-700 -750-800 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 TL/Dedicated OI % YOY Change in Basis Points (BP) TL/Dedicated OI % 3Q15 excludes two nonrecurring expense items totaling $3.9 million. 18
Profitability Trends Operating Income (millions of $) $8 $7 $6 $5 $4 $3 $2 $1 $0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 OI (Millions of $) OI (as a % of Revenues) Operating Income (as a % of Revenues) 19
Total Company Operating Margin and EPS Trends (A) OP INC - % OF REVENUES 12 11 10 9 8 7 6 5 4 3 2 EPS Trends by Quarter $0.55 $0.50 $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $- (A) Total Company (Trucking and Logistics) (B) 3Q15 - excludes 3 cents/share for two nonrecurring expense items. (C) 2Q16 excludes 3 cents/share for nonrecurring real estate gain. (D) 3Q16 excludes 5 cents/share for nonrecurring real estate gain. 1Q 2Q 3Q 4Q $0.45 $0.36 $0.35 $0.35 $0.30 $0.29 $0.24 $0.20 2014 2015 2016 $0.51 $0.47 (B) $0.44 $0.32 $0.28 $0.30 $0.22 (C) $0.21 (D) 2013 2014 2015 2016 20
EPS Trends $2.00 $1.80 $1.71 $1.60 $1.40 $1.40 $1.40 $1.36 $1.20 $1.00 $1.22 $1.25 $1.08 $1.02 $0.94 $0.90 $1.10 $1.18 $1.09 $0.80 $0.60 $0.40 $0.20 $0.25 $0.27 $0.34 $0.22 $0.22 $0.17 $0.13 $0.46 $0.46 $0.51 $0.41 $0.61 $0.72 $0.76 $0.61 $0.60 $0.76 $0.79 $0.00 21
WERN Truckload* Operating Margin 11.5% 11.0% 9.0% 8.7% 6.8% 5.0% 5.9% 7.9% 9.3% 9.0% 7.2% 9.0% 7.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ST Target * Truckload Transportation Services (includes One-Way TL and Dedicated). Above percentages include fuel (fuel surcharge revenues and fuel expense). 22
Targeting a 15% ROE & 9% ROA ROE 11.3% 8.8% 8.1% 7.5% 11.1% 14.5% 13.6% 11.7% 12.4% 14.1% 8.2% 15.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ST Target 6.9% 5.4% 5.2% 4.6% 6.6% ROA 8.4% 7.7% 6.5% 7.0% 8.0% 4.7% 9.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ST Target 23
A RENEWED FOCUS ON QUALITY TRUCKS TRAILERS TALENT TECHNOLOGY TERMINALS Newer trucks with enhanced safety and training features Newer trailers with new branding/ GPS tracking Award-Winning Customer Service THIS IS WERNER Driven by Innovation Upgrading facilities 24