A joint statement by Gregory L. Werner, President and Chief Executive Officer; C.L. Werner, Chairman; and Gary L.Werner, Vice Chairman of Werner enterprises is given below.The statement has been taken from the company’s 2007 annual report.
Last year presented unusually difficult market conditions. In 2007, our revenues declined slightly to $2.071 billion, and our earnings per share declined 18 percent to $1.02. Increasingly weaker freight demand, record setting high fuel prices, a slowing domestic economy and the lingering effects of the 2006 truck pre-buy created both rate and cost challenges for our industry and our company. Tough times require thoughtful, insightful and decisive actions. We took several important and strategic steps to improve our financial performance and carefully position Werner Enterprises for continued long term success.
During first quarter 2007, we critically assessed the longer-haul truckload freight market. At least six months before several of our larger competitors took similar actions, we began reducing the size of our medium-tolong-haul Van fleet.This quickly enabled Werner Enterprises to better match declining demand with fewer trucks, stabilize our rates with improved freight selection, heighten driver satisfaction with increasing miles per truck and limit our controllable costs. Relative to the best publicly-owned carriers in the industry, Werner Enterprises produced the best earnings performance and operating metrics during the second half of 2007 compared to the same period in 2006.
While we reduced our exposure to the longer-haul sector of the market, our Dedicated, Regional, Expedited and North America International fleets achieved modest growth and more stable operating margins, particularly when considering the challenging operating environment. We continue to be excited about the opportunities and growth prospects for our quality service offerings in these markets. Recognizing the importance of producing the highest possible service during a period when customers have more choices, the collaborative efforts and significant contributions of our professional employees and owner operators produced our best on-time service record in the last five years.
We also successfully expanded and diversified Werner Enterprises in the non-asset-based logistics markets, achieving 67 percent operating income growth. Our Brokerage and Freight Management service offerings achieved their freight growth goals, while at the same time achieving higher operating margins. Our Intermodal service offering capably executed our business plan in a tougher intermodal market and made meaningful operating income improvement. Finally, our developing Werner Global Logistics service offering is well positioned and poised to accelerate growth in overseas markets.
Our management team continues its intense focus on managing our controllable costs. Excluding fuel, during 2007 we held our trucking cost per mile increase to less than 2 percent, below inflationary and competitor trend levels.These efforts are continuing as we begin 2008 with an uncertain domestic economy.
With a very new fleet entering 2007, our capital expenditure needs for new equipment in 2007 were at the lowest level in the past 10 years. This allowed us to put our cash flow to work to strengthen our balance sheet by paying off our remaining debt, while at the same time purchasing $114 million of our common stock at prices we believe will prove to be beneficial for our stockholders in the future. We suspect there will be opportunities in 2008 and 2009 for Werner Enterprises to capitalize on our financial strength, as compared to many competitors with significant financial leverage.
We sincerely appreciate our partner customers who we supported with committed capacity during the strong freight markets of 2004 and 2005. They have supported us with freight, fair rates, reasonable fuel surcharge programs and additional logistics business during the softer freight markets of 2006 and 2007. We also want to thank the outstanding men and women of Werner Enterprises who have stepped up their service, worked harder than ever and held the line on costs during the past year.
Most importantly, we want to thank you for your patience and understanding during recent periods when industry conditions have been less favorable and stock price returns have been less attractive. While we are always disappointed when our earnings are lower than the prior year, we are encouraged by the significant progress we have made. Werner Enterprises is well positioned for future success with rock solid financial stability, excellent customer service, attractive and growing asset-based and non-asset based service offerings and a highly motivated professional workforce.