ECM Acquisition Presentation...7 0.2x 0.6x 0.3x 0.4x 12/31/18 12/31/19 12/31/20 3/31/21 3/31/21 Pro...
Transcript of ECM Acquisition Presentation...7 0.2x 0.6x 0.3x 0.4x 12/31/18 12/31/19 12/31/20 3/31/21 3/31/21 Pro...
Acquis i t ion of ECM Transpor t Group Ju ly 1 , 2021
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DISCLOSURE STATEMENT
This presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, asamended, and Section 21E of the Securities Exchange Act of 1934, as amended, and made pursuant to the safe harborprovisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are based oninformation presently available to the Company’s management and are current only as of the date made. Such statements areby nature subject to uncertainties and risks, including but not limited to, the impact of the coronavirus pandemic (COVID-19)and the operational, financial and legal risks detailed in the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2020 and Quarterly Report on Form 10-Q for the period ended March 31, 2021. These risks and uncertaintiescould cause actual results or events to differ materially from historical results or those anticipated.
For those reasons, undue reliance should not be placed on any forward-looking statement. The Company assumes no duty orobligation to update or revise any forward-looking statement, although it may do so from time to time as management believesis warranted or as may be required by applicable securities law. Any such updates or revisions may be made by filing reportswith the U.S. Securities and Exchange Commission, through the issuance of press releases or by other methods of publicdisclosure.
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Transaction HighlightsTerms • 80% ownership stake in ECM Transport Group (ECM)
• Exclusive option to buy remaining 20% ownership stake five years following transaction close
Financing &Closing
• $142.4M (funded with cash on hand and new borrowing)• Finalized a new $100M loan that matures in May 2024 with BMO Harris Bank N.A., with an all-in interest rate of 1.3%• Closed July 1, 2021• Expected to be accretive in year one
StrategicRationale
Expands terminal, fleet and driver footprint in the strategic Mid-Atlantic, Ohio and Northeast regions• Network of 8 terminals and 18 drop yard facilities complementary to existing Werner terminal infrastructure• Increased exposure to high velocity, shorter length of haul segments of 200-300 miles
Adds high-quality talent and increases Werner fleet size by more than 6% • Addition of over 500 highly-skilled and tenured drivers• Extremely low driver turnover• Fleet of nearly 500 trucks and 2,000 trailers• Synergies expected through combined management of fleet
Combines similar cultures focused on safety and customer service excellence • Highest standards of driver training and safe operations• Continuous investment in technology and IT infrastructure to enhance on-time delivery performance• Shared values of picking winning customers with high expectations, establishing long-term mutual service and revenue
objectives, and delivering best-in-class performance to stabilize volume and minimize churn• Existing ECM leadership (including founder and President Ed Meier), drivers and non-driver associates will remain in place
and we are retaining the ECM brand to ensure smooth integration and high driver retention• ECM will operate as a standalone business unit within Werner and their financial results will be reported in Werner’s One-
Way Truckload unit within Truckload Transportation Services
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5 Ts + S ARE CORE COMPONENTS OF OUR STRATEGY
Werner Key Focus Areas ECM
1. Trucks Maintain the age of our industry-leading
modern truck fleet, which includes state-of-the-art safety technology
Newer truck fleet (3-year average age), satellite tracking of trucks and trailers, leading safety technology
2. Trailers Remain at forefront of industry with young
trailer fleet age 4 to 1 trailer to tractor ratio to optimize
trip-intensive, shorter-haul freight
3. Talent Maintain rigorous hiring and retention
processes to attract and retain industry-leading talent
Strict driver hiring and retention criteria, very low driver turnover
4. Terminals
Grow our expansive network of terminals, dedicated fleet locations, and driving schools
Carefully designed comprehensive terminal and drop yard network designed to maximize productivity and optimize profitability
5. Technology Continuously upgrade and modernize IT
infrastructure and data security (e.g., Werner EDGE)
Continuous IT investment to enhance on-time performance in regional market
+ Sustainability Further develop our sustainability practices
with specific milestone goals through a multi-phased strategy
Will join Werner in our sustainability journey
TRANSACTION ALIGNED WITH OUR COMMITMENT TO REMAIN AT THE FOREFRONT OF THE TL INDUSTRY
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Werner and ECM network
Selected ECM data
2020 Revenues
$108M
Trucks500
2020 Operating
Margin19.8%
Trailers2,000
2020 Driver Turnover
Extremely low
Drivers> 500
Founded 1988
Facilities8
terminals, 18 drop yards
Omaha, NE
Brownstown, MI
Allentown, PAJoliet, IL
El Paso, TX
Laredo, TXLakeland, FL
Fontana, CA
Dallas, TX
HQ
Dunn, NC
Columbus, OH
Bethlehem, PA
Jacksonville, FL
Tampa, FLSan Antonio, TX
Grandview, MO
West Memphis, ARLithia Springs, GA
Springfield, OH
Phoenix, AZ
Henderson, CO
Orlando, FL
Savannah, GA
Millington, TN
Werner Driver Training SchoolsWerner Terminals ECM Terminals
Northwood, OH
Fremont, OH
York, PACheswick, PAHunker, PAMeadow Lands, PA
Richmond, IN
Akron, OH
St. Louis, MO
Jackson, MS
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WERNER + ECM PRO FORMAPremium Truckload Transportation & Logistics Services Provider
1 As of 6/25/21 for Market Cap and Dividend Yield and as of 3/31/21 for Dedicated Fleet Size and One-Way Truckload Fleet Size. 2 Associates as of 3/31/21 includes 12,830 employees and 375 independent contractor drivers. 3 TTS includes Dedicated and One-Way Truckload.
Omaha, NE $3.0B 4,920 3,315 13,205 1.1%Headquarters Market Cap1 Dedicated
Fleet Size1One-Way
Fleet Size1Associates2 Dividend Yield1
2 0 2 0 R e v e n u e s b y S e g m e n t 2 0 2 0 R e v e n u e s b y Ve r t i c a l 2 0 2 0 R e v e n u e s b y C u s t o m e r
9%
18%
20%
53%
10%
20%
19%
51%
Logistics/Other
Food & Beverage
Manuf./Ind.
Retail
Top 50 Customers
Werner + ECM Werner
77%
20%
3%
79%
67%
49%
36%
79%
66%
49%
36%
Top 50
Top 25
Top 10
Top 5
Werner + ECM Werner
78%
19%
3%
Truckload Transportation Services (TTS) Werner Logistics Driver Training Schools and Other
Werner Werner + ECM Pro Forma
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0.2x
0.6x
0.3x 0.2x0.4x
12/31/18 12/31/19 12/31/20 3/31/21 3/31/21 ProForma
Pro Forma Net Debt to LTM EBITDA
DISCIPLINED CAPITAL ALLOCATION
Continual and Consistent Investment in the 5Ts + S
Reinvestments in new, feature rich trucks and trailers, including the latest safety technology, that extend sustainable competitive advantages for customers and drivers
Werner Edge enhanced IT (better, faster, less expensive, more secure)
Committed to Returning Cash to Shareholders
130K shares purchased for $5.5M in 1Q21, average price per share of $42 Continued quarterly dividends since July 1987; raised quarterly dividend by
11% in 1Q21 and another 20% in 2Q21 Will continue to consider bolt-on strategic acquisitions
Maintain a Strong and Flexible Financial Position
Debt of $175M, Equity of $1.228B (as of 3/31/21) New loan borrowing of $100M for ECM acquisition 6/30/21 Long-term goal of net debt to EBITDA of 0.5x to 1.0x
PrioritiesCapital Allocation History 2018-2020 $1.4B
Reinvestment in 5 T's + S
$899M
Dividends$334M
Share Buybacks
$171M
Consistent and flexible execution of 5 Ts + S strategy during COVID enabled Werner to achieve record first quarter Adjusted operating income and Adjusted EPS
Strong freight demand expected in 2021; balanced revenue portfolio and consumer-centric freight base with winning customers provides earnings and cash flow stability through the cycle
Expanding existing driver training school network with four new locations in 2021; supports modest fleet growth augmented with asset-light logistics program
Committed to continuous improvement in operational performance; aligning with leading edge technology partners to enhance Safety and Supply Chain Automation, Visibility and Productivity
Management team firmly committed to achieving recently announced Environmental, Social, and Governance goals; inaugural Corporate Sustainability Report (CSR) to be issued in third quarter 2021
Financially and operationally well-positioned to grow earnings and free cash flow while creating long-term, sustainable shareholder value
INVEST WITH US
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F O R M O R E I N F O R M A T I O N , V I S I T W E R N E R . C O M