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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 
[Markone]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-14690
WERNER ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
 
Nebraska 47-0648386
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
14507 Frontier Road 
Post Office Box 45308
Omaha,Nebraska68145-0308
(Address of principal executive offices) (Zip Code)
(402) 895-6640
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
 Title of each classTrading Symbol(s) Name of each exchange on which registered
Common Stock, $0.01 Par ValueWERN The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large Accelerated Filer   Accelerated filer 
Non-accelerated filer 
  Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of August 4, 2022, 63,418,047 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.


WERNER ENTERPRISES, INC.
INDEX
 
  PAGE
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
2

PART I
FINANCIAL INFORMATION

Cautionary Note Regarding Forward-Looking Statements:
This Quarterly Report on Form 10-Q contains historical information and forward-looking statements based on information currently available to our management. The forward-looking statements in this report, including those made in Item 2 (Management’s Discussion and Analysis of Financial Condition and Results of Operations) of Part I, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These safe harbor provisions encourage reporting companies to provide prospective information to investors. Forward-looking statements can be identified by the use of certain words, such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project” and other similar terms and language. We believe the forward-looking statements are reasonable based on currently available information. However, forward-looking statements involve risks, uncertainties and assumptions, whether known or unknown, that could cause our actual results, business, financial condition and cash flows to differ materially from those anticipated in the forward-looking statements. A discussion of important factors relating to forward-looking statements is included in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”). Readers should not unduly rely on the forward-looking statements included in this Form 10-Q because such statements speak only to the date they were made. Unless otherwise required by applicable securities laws, we undertake no obligation or duty to update or revise any forward-looking statements contained herein to reflect subsequent events or circumstances or the occurrence of unanticipated events.
3

Item 1. Financial Statements.
WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
  
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands, except per share amounts)2022202120222021
Operating revenues$836,276 $649,814 $1,600,881 $1,266,260 
Operating expenses:
Salaries, wages and benefits253,639 210,095 495,635 414,948 
Fuel125,446 58,503 213,867 109,341 
Supplies and maintenance62,656 49,414 119,681 95,561 
Taxes and licenses23,791 23,744 47,624 46,977 
Insurance and claims41,071 20,739 68,563 42,795 
Depreciation and amortization68,471 63,865 135,700 127,816 
Rent and purchased transportation197,116 150,920 382,353 297,413 
Communications and utilities3,781 3,333 7,707 6,355 
Other(14,618)(7,662)(28,683)(14,280)
Total operating expenses761,353 572,951 1,442,447 1,126,926 
Operating income74,923 76,863 158,434 139,334 
Other expense (income):
Interest expense1,787 701 3,226 1,539 
Interest income(313)(334)(588)(631)
Gain on investments in equity securities, net(24,095)(20,191)(14,289)(20,191)
Other126 54 199 96 
Total other expense (income)(22,495)(19,770)(11,452)(19,187)
Income before income taxes97,418 96,633 169,886 158,521 
Income tax expense23,809 24,601 41,242 39,997 
Net income73,609 72,032 128,644 118,524 
Net income attributable to noncontrolling interest(1,319) (2,605) 
Net income attributable to Werner$72,290 $72,032 $126,039 $118,524 
Earnings per share:
Basic$1.12 $1.06 $1.94 $1.74 
Diluted$1.12 $1.06 $1.93 $1.74 
Weighted-average common shares outstanding:
Basic64,394 67,926 64,965 67,929 
Diluted64,726 68,216 65,327 68,237 
See Notes to Consolidated Financial Statements (Unaudited).
4

WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
  
Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)2022202120222021
Net income$73,609 $72,032 $128,644 $118,524 
Other comprehensive income (loss):
Foreign currency translation adjustments(47)1,865 1,106 297 
Change in fair value of interest rate swaps, net of tax1,283 360 4,914 1,663 
Other comprehensive income1,236 2,225 6,020 1,960 
Comprehensive income74,845 74,257 134,664 120,484 
Comprehensive income attributable to noncontrolling interest(1,319) (2,605) 
Comprehensive income attributable to Werner$73,526 $74,257 $132,059 $120,484 
See Notes to Consolidated Financial Statements (Unaudited).
5

WERNER ENTERPRISES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
 
(In thousands, except share amounts)June 30,
2022
December 31,
2021
 (Unaudited) 
ASSETS
Current assets:
Cash and cash equivalents$54,424 $54,196 
Accounts receivable, trade, less allowance of $9,976 and $9,169, respectively
482,006 460,518 
Other receivables165,205 24,449 
Inventories and supplies12,568 11,140 
Prepaid taxes, licenses and permits8,803 17,549 
Other current assets49,399 63,361 
Total current assets772,405 631,213 
Property and equipment2,703,628 2,557,825 
Less – accumulated depreciation1,032,948 944,582 
Property and equipment, net1,670,680 1,613,243 
Goodwill74,404 74,618 
Intangible assets, net52,597 55,315 
Other non-current assets278,501 229,324 
Total assets$2,848,587 $2,603,713 
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
Current liabilities:
Checks issued in excess of cash balances$6,032 $ 
Accounts payable126,178 93,987 
Current portion of long-term debt5,000 5,000 
Insurance and claims accruals221,219 72,594 
Accrued payroll57,624 44,333 
Accrued expenses30,274 28,758 
Other current liabilities24,653 24,011 
Total current liabilities470,980 268,683 
Long-term debt, net of current portion440,000 422,500 
Other long-term liabilities43,782 43,314 
Insurance and claims accruals, net of current portion242,094 237,220 
Deferred income taxes269,307 268,499 
Total liabilities1,466,163 1,240,216 
Commitments and contingencies
Temporary equity - redeemable noncontrolling interest38,552 35,947 
Stockholders’ equity:
Common stock, $0.01 par value, 200,000,000 shares authorized; 80,533,536 shares
issued; 63,415,565 and 65,790,112 shares outstanding, respectively
805 805 
Paid-in capital124,065 121,904 
Retained earnings1,777,092 1,667,104 
Accumulated other comprehensive loss(14,584)(20,604)
Treasury stock, at cost; 17,117,971 and 14,743,424 shares, respectively
(543,506)(441,659)
Total stockholders’ equity1,343,872 1,327,550 
Total liabilities, temporary equity and stockholders’ equity$2,848,587 $2,603,713 
See Notes to Consolidated Financial Statements (Unaudited).
6

WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
  Six Months Ended
June 30,
(In thousands)20222021
Cash flows from operating activities:
Net income$128,644 $118,524 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization135,700 127,816 
Deferred income taxes(630)15,036 
Gain on disposal of property and equipment(41,138)(24,008)
Non-cash equity compensation6,085 5,249 
Insurance and claims accruals, net of current portion4,874 4,632 
Other(4,142)842 
Gain on investments in equity securities, net(14,289)(20,191)
Changes in certain working capital items:
Accounts receivable, net(21,125)(49,978)
Other current assets20,728 3,144 
Accounts payable30,091 16,639 
Other current liabilities22,729 (8,241)
Net cash provided by operating activities267,527 189,464 
Cash flows from investing activities:
Additions to property and equipment(227,334)(192,983)
Proceeds from sales of property and equipment73,911 90,036 
Net cash invested in acquisition705  
Investment in equity securities(20,250)(5,000)
Decrease in notes receivable3,288 3,342 
Net cash used in investing activities(169,680)(104,605)
Cash flows from financing activities:
Repayments of short-term debt(2,500)(25,000)
Proceeds from issuance of short-term debt 5,000 
Repayments of long-term debt(100,000) 
Proceeds from issuance of long-term debt120,000 120,000 
Change in checks issued in excess of cash balances6,032  
Dividends on common stock(15,702)(12,906)
Repurchases of common stock(102,113)(5,507)
Tax withholding related to net share settlements of restricted stock awards(3,658)(3,740)
Net cash provided by (used in) financing activities(97,941)77,847 
Effect of exchange rate fluctuations on cash322 88 
Net increase in cash and cash equivalents228 162,794 
Cash and cash equivalents, beginning of period54,196 29,334 
Cash and cash equivalents, end of period$54,424 $192,128 
Supplemental disclosures of cash flow information:
Interest paid$3,236 $1,583 
Income taxes paid31,096 40,047 
Supplemental schedule of non-cash investing and financing activities:
Notes receivable issued upon sale of property and equipment$2,350 $2,646 
Change in fair value of interest rate swaps4,914 1,663 
Property and equipment acquired included in accounts payable8,431 6,715 
Property and equipment disposed included in other receivables1,205 32 
        Dividends accrued but not yet paid at end of period8,244 8,151 
See Notes to Consolidated Financial Statements (Unaudited).
7

WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND
TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTEREST
(Unaudited)
Three Months Ended June 30, 2022
(In thousands, except share and per share amounts)Common
Stock
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Stockholders’
Equity
Temporary Equity - Redeemable Noncontrolling Interest
BALANCE, March 31, 2022$805 $121,157 $1,713,046 $(15,820)$(477,724)$1,341,464 $37,233 
Net income attributable to Werner  72,290   72,290  
Net income attributable to noncontrolling interest      1,319 
Other comprehensive income   1,236  1,236  
Purchases of 1,650,000 shares of common stock
    (65,933)(65,933) 
Dividends on common stock ($0.13 per share)
  (8,244)  (8,244) 
Equity compensation activity, 7,802 shares
 (151)  151   
Non-cash equity compensation expense 3,059    3,059  
BALANCE, June 30, 2022$805 $124,065 $1,777,092 $(14,584)$(543,506)$1,343,872 $38,552 
Three Months Ended June 30, 2021
(In thousands, except share and per share amounts)Common
Stock
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Stockholders’
Equity
Temporary Equity - Redeemable Noncontrolling Interest
BALANCE, March 31, 2021$805 $114,588 $1,478,616 $(23,098)$(343,181)$1,227,730 $ 
Net income attributable to Werner  72,032   72,032  
Other comprehensive income   2,225  2,225  
Dividends on common stock ($0.12 per share)
  (8,151)  (8,151) 
Equity compensation activity, 13,725 shares
 (266)  266   
Non-cash equity compensation expense 2,747    2,747  
BALANCE, June 30, 2021$805 $117,069 $1,542,497 $(20,873)$(342,915)$1,296,583 $ 
See Notes to Consolidated Financial Statements (Unaudited).
8

WERNER ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND
TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTEREST (CONTINUED)
(Unaudited)
Six Months Ended June 30, 2022
(In thousands, except share and per share amounts)Common
Stock
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Stockholders’
Equity
Temporary Equity - Redeemable Noncontrolling Interest
BALANCE, December 31, 2021$805 $121,904 $1,667,104 $(20,604)$(441,659)$1,327,550 $35,947 
Net income attributable to Werner  126,039   126,039  
Net income attributable to noncontrolling interest      2,605 
Other comprehensive income   6,020  6,020  
Purchases of 2,495,100 shares of common stock
    (102,113)(102,113) 
Dividends on common stock ($0.25 per share)
  (16,051)  (16,051) 
Equity compensation activity, 120,553 shares
 (3,924)  266 (3,658) 
Non-cash equity compensation expense 6,085    6,085  
BALANCE, June 30, 2022$805 $124,065 $1,777,092 $(14,584)$(543,506)$1,343,872 $38,552 
Six Months Ended June 30, 2021
(In thousands, except share and per share amounts)Common
Stock
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total
Stockholders’
Equity
Temporary Equity - Redeemable Noncontrolling Interest
BALANCE, December 31, 2020$805 $116,039 $1,438,916 $(22,833)$(337,887)$1,195,040 $ 
Net income attributable to Werner  118,524   118,524  
Other comprehensive income   1,960  1,960  
Purchases of 130,446 shares of common stock
    (5,507)(5,507) 
Dividends on common stock ($0.22 per share)
  (14,943)  (14,943) 
Equity compensation activity, 130,593 shares
 (4,219)  479 (3,740) 
Non-cash equity compensation expense 5,249    5,249  
BALANCE, June 30, 2021$805 $117,069 $1,542,497 $(20,873)$(342,915)$1,296,583 $ 
See Notes to Consolidated Financial Statements (Unaudited).
9

WERNER ENTERPRISES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
(1) Basis of Presentation and Recent Accounting Pronouncements
Basis of Presentation
The accompanying unaudited interim consolidated financial statements include the accounts of Werner Enterprises, Inc. and its controlled subsidiaries (collectively, the “Company” or “Werner”). Noncontrolling interest on the consolidated condensed balance sheets represents the portion of a consolidated entity in which we do not have a direct equity ownership. In these notes, the terms “we,” “us,” or “our” refer to Werner Enterprises, Inc. and its subsidiaries. All significant intercompany accounts and transactions relating to these entities have been eliminated.
These consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission (SEC) instructions to Form 10-Q and, in the opinion of management, reflect all adjustments, which are all of normal recurring nature, necessary to present fairly the financial condition, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles (“GAAP”). These consolidated financial statements do not include all information and footnotes required by GAAP for complete financial statements; although in management’s opinion, the disclosures are adequate so that the information presented is not misleading.
Operating results for the three-month and six-month periods ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. 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.
These consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes contained in our 2021 Form 10-K.
New Accounting Pronouncements Adopted
In the first quarter 2022, we adopted Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848), which provides optional guidance for a limited period of time to ease the potential burden in accounting for reference rate reform on financial reporting. The provisions of this update are effective for all entities as of March 12, 2020 through December 31, 2022 and apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The adoption of the new guidance did not have a material impact on our consolidated financial statements.
(2) Business Acquisitions
On July 1, 2021, we acquired an 80% ownership interest in ECM Associated, LLC ("ECM”) for a final purchase price of $141.3 million after net working capital changes and net of cash acquired. ECM, through its ECM Transport, LLC (“ECM Transport”) and Motor Carrier Service, LLC (“MCS”) subsidiaries, provides regional truckload carrier services in the Mid-Atlantic, Ohio, and Northeast regions of the United States. The results of operations for ECM are included in our consolidated financial statements beginning July 1, 2021, and the noncontrolling interest is presented as a separate component of the consolidated financial statements.
On November 22, 2021, we acquired 100% of the equity interests in NEHDS Logistics, LLC (“NEHDS”) for a final purchase price of $62.3 million after including the impacts of contingent consideration and net working capital changes. The purchase price allocation for NEHDS is considered final as of March 31, 2022. NEHDS is a final mile residential delivery provider serving customers primarily in the Northeast and Midwest U.S. markets. NEHDS delivers primarily big and bulky products (primarily furniture and appliances) using 2-person delivery teams performing residential and commercial deliveries. The results of operations for NEHDS are included in our consolidated financial statements beginning November 22, 2021.
Amortization expense on intangible assets was $1.4 million and $2.7 million for the three and six months ended June 30, 2022.
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(3) Revenue
Revenue Recognition
Revenues are recognized over time as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
The following table presents our revenues disaggregated by revenue source (in thousands):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Truckload Transportation Services$613,616 $491,200 $1,172,033 $954,149 
Werner Logistics203,861 141,673 392,869 279,526 
Inter-segment eliminations(625)(193)(1,347)(327)
   Transportation services816,852 632,680 1,563,555 1,233,348 
Other revenues19,424 17,134 37,326 32,912 
Total revenues$836,276 $649,814 $1,600,881 $1,266,260 
The following table presents our revenues disaggregated by geographic areas in which we conduct business (in thousands). Operating revenues for foreign countries include revenues for (i) shipments with an origin or destination in that country and (ii) other services provided in that country. If both the origin and destination are in a foreign country, the revenues are attributed to the country of origin.
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
United States$770,849 $602,146 $1,481,753 $1,157,385 
Mexico51,461 39,325 94,752 78,081 
Other13,966 8,343 24,376 30,794 
Total revenues$836,276 $649,814 $1,600,881 $1,266,260 
Contract Balances and Accounts Receivable
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, 2022 and December 31, 2021, the accounts receivable, trade, net, balance was $482.0 million and $460.5 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, 2022 and December 31, 2021, the balance of contract assets was $10.2 million and $9.0 million, respectively. We have recognized contract assets within the other current assets financial statement caption on the consolidated condensed balance sheets. These contract assets are considered current assets as they will be settled in less than 12 months.
Contract liabilities represent advance consideration received from customers and are recognized as revenues over time as the related performance obligation is satisfied. The balance of contract liabilities was $1.5 million and $1.2 million at June 30, 2022 and December 31, 2021, respectively. The amount of revenues recognized in the six months ended June 30, 2022 that was included in the December 31, 2021 contract liability balance was $1.2 million. We have recognized contract liabilities within the accounts payable and other current liabilities financial statement captions on the consolidated condensed balance sheets. These contract liabilities are considered current liabilities as they will be settled in less than 12 months.
Performance Obligations
We have elected to apply the practical expedient in Accounting Standards Codification (“ASC”) Topic 606, Revenue From Contracts With Customers, to not disclose the value of remaining performance obligations for contracts with an original expected length of one year or less. Remaining performance obligations represent the transaction price allocated to future reporting periods for freight shipments started but not completed at the reporting date that we expect to recognize as revenue in the period subsequent to the reporting date; transit times generally average approximately 3 days.
During the six months ended June 30, 2022 and 2021, revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material.
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(4) Leases
We have entered into operating leases primarily for real estate. The leases have terms which range from 1 year to 18 years, and some include options to renew. Renewal terms are included in the lease term when it is reasonably certain that we will exercise the option to renew.
Operating leases are included in other non-current assets, other current liabilities and other long-term liabilities on the consolidated condensed balance sheets. These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using our incremental borrowing rate because the rate implicit in each lease is not readily determinable. We have certain contracts for real estate that may contain lease and non-lease components which we have elected to treat as a single lease component. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense is reported in rent and purchased transportation on the consolidated statements of income.
The following table presents balance sheet and other operating lease information (dollars in thousands):
 June 30, 2022December 31, 2021
Balance Sheet Classification
Right-of-use assets (recorded in other non-current assets)$34,143 $28,458 
Current lease liabilities (recorded in other current liabilities)$7,191 $6,380 
Long-term lease liabilities (recorded in other long-term liabilities)28,042 22,634 
Total operating lease liabilities$35,233 $29,014 
Other Information
Weighted-average remaining lease term for operating leases7.40 years7.63 years
Weighted-average discount rate for operating leases2.6 %2.7 %
The following table presents the maturities of operating lease liabilities as of June 30, 2022 (in thousands):
Maturity of Lease Liabilities
2022 (remaining)$4,145 
20237,102 
20246,146 
20255,238 
20264,230 
Thereafter11,883 
Total undiscounted operating lease payments$38,744 
Less: Imputed interest(3,511)
Present value of operating lease liabilities$35,233 
Cash Flows
During the six months ended June 30, 2022 and 2021, right-of-use assets of $11.2 million and $2.1 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 $3.8 million and $1.9 million for the six months ended June 30, 2022 and 2021, respectively, and are included in operating cash flows.
Operating Lease Expense
Operating lease expense was $5.3 million and $10.4 million for the three and six months ended June 30, 2022, respectively, and $3.5 million and $7.1 million for the three and six months ended June 30, 2021, respectively. This expense included $2.3 million and $4.4 million for the three and six months ended June 30, 2022, respectively, and $1.0 million and $2.0 million for the three and six months ended June 30, 2021, respectively, for long-term operating leases, with the remainder for variable and short-term lease expense.
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Lessor Operating Leases
We are the lessor of tractors and trailers under operating leases with initial terms of 1 to 10 years. We recognize revenue for such leases on a straight-line basis over the term of the lease. Revenues were $3.1 million and $6.3 million for the three and six months ended June 30, 2022, respectively, and $3.0 million and $6.1 million for the three and six months ended June 30, 2021, respectively. The following table presents information about the maturities of these operating leases as of June 30, 2022 (in thousands):
2022 (remaining)$4,267 
20232,986 
2024 
2025 
2026 
Thereafter 
Total$7,253 
(5) Fair Value
Fair Value Measurement — Definition and Hierarchy
ASC 820-10, Fair Value Measurement, defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date.
ASC 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability, developed based on market data obtained from sources independent of the Company. Unobservable inputs reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability, developed based on the best information available in the circumstances.
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows:
Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access.
Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Such inputs include quoted prices in markets that are not active, quoted prices for similar assets and liabilities in active and inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 — Unobservable inputs for the asset or liability, where there is little, if any, observable market activity or data for the asset or liability.
In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine fair value. This pricing methodology applies to our Level 1 assets and liabilities. If quoted prices in active markets for identical assets and liabilities are not available to determine fair value, then we use quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable, either directly or indirectly. This pricing methodology would apply to Level 2 assets and liabilities.
The following table presents the Company's fair value hierarchy for assets measured at fair value on a recurring basis (in thousands):
Level in
Fair Value
Hierarchy
Fair Value
June 30, 2022December 31, 2021
Other non-current assets:
Equity securities (1)
1$2,818 $17,166 

(1) Represents our investments in autonomous technology companies. For additional information regarding the valuation of these equity securities, see Note 6 – Investments.
We have no material liabilities measured at fair value on a recurring basis for the periods presented.
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Our ownership interest in Mastery Logistics Systems, Inc. (“MLSI”) does not have a readily determinable fair value and is accounted for using the measurement alternative in ASC 321, Investments - Equity Securities. For additional information regarding the valuation of our investment in MLSI, see Note 6 – Investments.
Fair Value of Financial Instruments Not Recorded at Fair Value
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. These financial instruments are recorded at or near their respective transaction prices and historically have been settled or converted to cash at approximately that value (categorized as Level 2 of the fair value hierarchy).
The carrying amounts of our long-term debt approximate fair value due to the duration of our credit arrangements and the variable interest rates (categorized as Level 2 of the fair value hierarchy).
(6) Investments
Equity Investments without Readily Determinable Fair Values
In 2020, we entered into a strategic partnership with MLSI, a transportation management systems company. We are collaborating with MLSI to develop a cloud-based transportation management system using MLSI's SaaS technology which we have agreed to license. In June 2022, we paid MLSI $20.0 million for additional shares of its preferred stock. This minority equity investment is being accounted for under ASC 321 using the measurement alternative, and is recorded in other noncurrent assets on the consolidated condensed balance sheets. As of June 30, 2022 and December 31, 2021, the value of our investment was $86.8 million and $38.2 million, respectively. We record changes in the value of this investment, based on events that occur that would indicate the value of our investment in MLSI has changed, in gain or loss on investments in equity securities on the consolidated statements of income. During second quarter 2022, investments by third-parties resulted in the remeasurement of our investment in MLSI, and in the three and six months ended June 30, 2022, we recognized an unrealized gain of $28.6 million. No gains or losses were recorded in the three and six months ended June 30, 2021. At June 30, 2022, cumulative unrealized gains on our investment in MLSI totaled $56.8 million.
Equity Investments with Readily Determinable Fair Values
We own strategic minority equity investments in autonomous technology companies, which are being accounted for under ASC 321 and are recorded in other noncurrent assets on the consolidated condensed balance sheets. We record changes in the value of these investments, based on the share prices reported by Nasdaq, in gain or loss on investments in equity securities on the consolidated statements of income. We recognized an unrealized loss of $4.5 million and $14.3 million on these investments for the three and six months ended June 30, 2022, respectively, and an unrealized gain of $20.2 million for the three and six months ended June 30, 2021. For additional information regarding the fair value of these equity investments, see Note 5 – Fair Value.
(7) Debt and Credit Facilities
On March 25, 2022, we entered into a new credit agreement (the “Wells Credit Agreement”) with Wells Fargo Bank, National Association ("Wells Fargo"), replacing our previous credit agreement with Wells Fargo dated May 14, 2019, as amended. The Wells Credit Agreement provides for a $300.0 million unsecured revolving line of credit ("Wells Line of Credit"), with a $75.0 million maximum limit for the aggregate amount of letters of credit issued, and expires on May 14, 2024. The Wells Credit Agreement also provides for an unsecured term loan commitment not to exceed a principal amount of $100.0 million ("Wells Term Loan"), with the outstanding principal balance due and payable in full on May 14, 2024. The proceeds of the Wells Line of Credit and Wells Term Loan may be used for the Company's general corporate purposes.
Amounts drawn under the Wells Line of Credit and the outstanding principal balance of the Wells Term Loan bear interest either, at our option, (i) at a variable rate based on the daily Secured Overnight Financing Rate ("SOFR") plus 0.10% and a margin ranging between 0.675% and 0.925%, or (ii) at a fixed rate based on the Term SOFR in effect on the first day of an applicable interest period designated by us plus 0.10% in the case of one month Term SOFR, 0.15% in the case of three month Term SOFR, 0.25% in the case of six month Term SOFR, and plus, in each case, a margin ranging between 0.675% and 0.925%, payable monthly. The margin rates are based on our ratio of total funded debt to earnings before interest, income taxes, depreciation and amortization (“EBITDA”). The Wells Credit Agreement also requires us to pay Wells Fargo (i) an annualized letter of credit fee based on the face amount of each letter of credit outstanding at rates ranging between 0.55% and 0.80% per annum and (ii) a nonrefundable commitment fee on the average daily unused amount of the Wells Line of Credit (after deducting undrawn letters of credit) at rates ranging between 0.11% and 0.15% per annum. The rates for the letter of credit and nonrefundable commitment fees are based on our ratio of total funded debt to EBITDA.
On March 25, 2022, we also entered into a second amendment to our existing unsecured revolving line of credit agreement, dated May 14, 2019, with BMO Harris Bank N.A. (“BMO Harris”), expiring May 14, 2024 (“BMO Line of Credit”). The
14

second amendment increased our BMO Line of Credit from $200.0 million to $300.0 million and changed the variable interest rate calculation by replacing the LIBOR with the SOFR. Amounts drawn under the BMO Line of Credit bear interest, for a selected interest period, at a variable rate based on the SOFR plus 0.10% and a margin ranging between 0.70% and 1.50%, based on our ratio of total funded debt to EBITDA, payable at the end of the applicable interest period. No changes were made to the annualized letter of credit fee, nonrefundable commitment fee, and financial covenants as a result of the second amendment. We also have a $100.0 million unsecured fixed-rate term loan commitment with BMO Harris, with quarterly principal payments of $1.25 million, which began on September 30, 2021, and a final payment of principal and interest due and payable on May 14, 2024 ("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, 2022 and December 31, 2021, our outstanding debt totaled $445.0 million and $427.5 million, respectively. As of June 30, 2022, we had a total of $250.0 million outstanding under our revolving lines of credit, including (i) $100.0 million at a weighted average variable interest rate of 2.10%; (ii) $75.0 million at a variable interest rate of 1.93%, which is effectively fixed at 2.29% with an interest rate swap agreement through May 14, 2024; and (iii) $75.0 million at a variable interest rate of 1.96%, which is effectively fixed at 2.34% with an interest rate swap agreement through May 14, 2024. The total borrowing capacity of $600.0 million under our revolving lines of credit at June 30, 2022, is further reduced by $58.4 million in stand-by letters of credit under which we are obligated. In addition, as of June 30, 2022, we had $100.0 million outstanding under the Wells Term Loan at a variable interest rate of 2.23% and $95.0 million outstanding under the BMO Term Loan at a fixed interest rate of 1.28%. Availability of such funds under the debt agreements is conditional upon various customary terms and covenants. Such covenants include, among other things, financial covenants requiring us (i) to exceed a minimum ratio of earnings before interest, income taxes, depreciation and amortization to interest expense and/or (ii) not to exceed a maximum ratio of total funded debt to earnings before interest, income taxes, depreciation and amortization (as such terms are defined in each credit facility). As of June 30, 2022 we were in compliance with these covenants.
At June 30, 2022, the aggregate future maturities of long-term debt by year are as follows (in thousands):
2022 (remaining)$2,500 
20235,000 
2024437,500 
2025 
2026 
Total$445,000 
(8) Commitments and Contingencies
We have committed to property and equipment purchases of approximately $182.4 million at June 30, 2022.
We are involved in certain claims and pending litigation, including those described herein, arising in the ordinary course of business. The majority of these claims relate to bodily injury, property damage, cargo and workers’ compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters. We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the knowledge of the facts, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our consolidated financial statements. Moreover, the results of complex legal proceedings are difficult to predict, and our view of these matters may change in the future as the litigation and related events unfold.
On May 17, 2018, in Harris County District Court in Houston, Texas, a jury rendered an adverse verdict against the Company in a lawsuit arising from a December 30, 2014 accident between a Werner tractor-trailer and a passenger vehicle. On July 30, 2018, the court entered a final judgment against Werner for $92.0 million, including pre-judgment interest.
The Company has premium-based liability insurance to cover the potential outcome from this jury verdict. 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 $31.4 million as of June 30, 2022, and $28.8 million as of December 31, 2021. 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, 2022 and December 31, 2021.
The Company is pursuing an appeal of this verdict. No assurances can be given regarding the outcome of any such appeal.
15

In July 2022, the Hopkins County District Court in Sulphur Springs, Texas approved a $150.0 million settlement, voluntarily agreed to by the Company and its insurers, of a motor vehicle accident lawsuit in Texas arising from a May 24, 2020 accident between a Werner tractor-trailer and a passenger vehicle. 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 with premium-based coverage for the remainder of the settlement amount. As a result of this settlement, the Company recognized $9.5 million of insurance and claims expense for the three and six months ended June 30, 2022, and had recorded a liability of $10.0 million and $0.5 million as of June 30, 2022 and December 31, 2021, respectively. Under the terms of the Company’s insurance policies, the Company is the primary obligor of the settlement, and as such, the Company has also recorded a $140.0 million receivable from its third-party insurance providers in other current assets and a corresponding liability of the same amount in the current portion of insurance and claims accruals in the consolidated condensed balance sheets as of June 30, 2022.
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. 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. 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. The United States Court of Appeals for the Eighth Circuit denied Plaintiffs’ appeal and granted Werner’s appeal, vacating the judgment in favor of the plaintiffs. The appellate court sent the case back to the trial court for proceedings consistent with the appellate court’s opinion. On June 22, 2020, the trial court denied Plaintiffs’ request for a new trial and entered judgment in favor of the Company, dismissing the case with prejudice. On July 21, 2020, Plaintiffs’ counsel filed a notice of appeal of that dismissal, and that appeal remains pending. As of June 30, 2022, 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. Based on the knowledge of the facts, management does not currently believe the outcome of these class actions is likely to have a material adverse effect on our financial position or results of operations. However, the final disposition of these matters and the impact of such final dispositions cannot be determined at this time.
(9) Earnings Per Share
Basic earnings per share is computed by dividing net income attributable to Werner by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to Werner by the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding restricted stock awards. Performance awards are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied. There are no differences in the numerators of our computations of basic and diluted earnings per share for any periods presented.
The computation of basic and diluted earnings per share is shown below (in thousands, except per share amounts).
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Net income attributable to Werner$72,290 $72,032 $126,039 $118,524 
Weighted average common shares outstanding64,394 67,926 64,965 67,929 
Dilutive effect of stock-based awards332 290 362 308 
Shares used in computing diluted earnings per share64,726 68,216 65,327 68,237