Werner Enterprises Reports Fourth Quarter and Full Year 2018 Results

Fourth Quarter 2018 Highlights (all metrics compared to fourth quarter 2017 unless otherwise noted)

  • Total revenues of $646.4 million, up $79.0 million, or 14%
  • Operating income of $74.9 million, up 66%; non-GAAP adjusted operating income of $73.6 million, up 63%
  • Operating margin of 11.6%, up 370 basis points (bps); non-GAAP adjusted operating margin of 11.4%, up 350 bps
  • Diluted EPS of $0.77, down 61%; non-GAAP adjusted diluted EPS of $0.75, up 79%

OMAHA, Neb., Feb. 06, 2019 (GLOBE NEWSWIRE) -- Werner Enterprises, Inc. (NASDAQ: WERN), one of the nation’s largest transportation and logistics companies, today reported financial results for the fourth quarter and full year ended December 31, 2018.

Total revenues for the quarter increased 14% to $646.4 million versus the prior year quarter, primarily attributable to dedicated fleet expansion, logistics growth, higher contractual rates, increased customer project revenues and lane mix changes.

Operating income of $74.9 million increased $29.9 million, or 66%. Operating margin of 11.6% increased 370 basis points due to revenue increases that exceeded cost increases, which benefited from a newer fleet and low driver turnover. On a non-GAAP basis, adjusted operating income of $73.6 million increased $28.6 million, or 63%. Adjusted operating margin of 11.4% improved 350 basis points from 7.9% for the same quarter last year.

Interest expense of $0.9 million was $0.5 million higher than the same quarter a year ago due to slightly higher aggregate debt and a higher average interest rate. The effective income tax rate during the quarter was 26.8% compared to an adjusted 32.6% effective income tax rate in fourth quarter 2017.

Net income of $54.6 million decreased 61%. Adjusted net income of $53.6 million increased 75%. Diluted earnings per share (EPS) for the quarter of $0.77 decreased 61%. Diluted EPS included a $0.03 per share real estate gain and a $0.01 per share insurance and claims accrual for interest on a previously disclosed jury verdict. On a non-GAAP basis, adjusted EPS of $0.75 increased 79% compared to $0.42 for the fourth quarter 2017. Fourth quarter 2017 and full year 2017 results included a $110.5 million, or $1.52 per diluted share, non-cash reduction in income tax expense, which resulted from the revaluation of net deferred income tax liabilities to reflect the lower federal corporate income tax rate enacted in December 2017.

We are extremely pleased and proud that Werner produced record results in 2018, both in our fourth quarter and the full year,” said Derek J. Leathers, President and Chief Executive Officer.

“Beginning three years ago, we made significant investments in our 5 T’s strategy of Trucks, Trailers, Talent, Technology and Terminals. Those investments, combined with our commitment to raise the bar on customer service, are delivering results. I want to personally thank the extremely talented and dedicated men and women of Werner who keep America moving every day. It is an exciting time at Werner. We believe we are uniquely positioned to continue advancing our market leadership given our new fleet, experienced driver and non-driver workforce and our diversified portfolio of dedicated truckload, one-way truckload and asset-backed logistics service offerings. In addition, our strong cash flow, flexible balance sheet and low debt level position Werner well for the future.”

Key Consolidated Financial Metrics

 Three Months Ended
December 31,
 Year Ended
December 31,
(In thousands, except per share amounts)2018 2017 Y/Y Change 2018 2017 Y/Y Change
Total revenues$646,365  $567,365  14%  $2,457,914  $2,116,737  16% 
Trucking revenues, net of fuel surcharge419,587  374,827  12%  1,588,175  1,403,863  13% 
Werner Logistics revenues137,224  112,414  22%  518,078  417,639  24% 
Operating income74,931  45,061  66%  224,215  143,820  56% 
Operating margin11.6%  7.9%  370 bps  9.1%  6.8%  230 bps 
Net income54,563  141,134  (61)%  168,148  202,889  (17)% 
Diluted earnings per share0.77  1.94  (61)%  2.33  2.80  (17)% 
Adjusted operating income (1)73,649  45,061  63%  228,577  143,820  59% 
Adjusted operating margin (1)11.4%  7.9%  350 bps  9.3%  6.8%  250 bps 
Adjusted net income (1)53,603  30,626  75%  171,413  92,381  86% 
Adjusted diluted earnings per share (1)0.75  0.42  79%  2.38  1.27  86% 

(1) See GAAP to non-GAAP reconciliation schedule.

Other Noteworthy Developments

During the fourth quarter, we realized a gain of $2.4 million, or $0.03 per share, related to the sale of real estate.

Separately, as previously noted, we are appealing a large adverse jury verdict rendered in May 2018. As such, we accrued $1.2 million of insurance and claims expense, or $0.01 per share, during the fourth quarter for post-judgment interest related to this jury verdict. We expect to accrue $1.2 million every quarter, until such time as the outcome of our appeal is finalized.

Truckload Transportation Services (TTS) Segment

  • Revenues of $494.7 million increased $55.5 million, or 13%
  • Operating income of $66.8 million increased $22.3 million, or 50%; non-GAAP adjusted operating income of $68.0 million increased $23.4 million, or 53%
  • Operating margin of 13.5% increased 340 basis points from 10.1%; non-GAAP adjusted operating margin of 13.7% increased 360 basis points from 10.1%
  • Average segment trucks in service totaled 7,787, an increase of 351 trucks year over year and 59 trucks sequentially
  • Dedicated unit trucks at quarter end totaled 4,500, or 58% of the total TTS segment fleet, compared to 4,000 trucks, or 54%, a year ago

Revenues increased 13% due to a 4.7% increase in average trucks in service, 6.9% growth in average revenues per truck and a $10.0 million increase in fuel surcharge revenues. The average revenues per truck increase was due primarily to an increase in average revenues per total mile, partially offset by a decrease in average miles per truck. The increase in average revenues per total mile was due primarily to higher contractual rates, increased customer project revenues, dedicated fleet expansion, and lane mix changes. The growth in our shorter-haul Dedicated fleet is primarily responsible for the decline in our average miles per truck, as the average miles per truck in our One-Way Truckload fleet decreased only slightly year over year.

During the fourth quarter, freight demand in our One-Way Truckload fleet was stronger than normal, but below the unusually strong freight demand market of fourth quarter 2017, which was aided by tightened industry supply following two major hurricanes in August and September 2017.

Due to growth in company trucks and a decline in independent contractor trucks during the quarter, company truck miles increased by approximately 5 million miles and independent contractor miles decreased by approximately 2 million miles. This caused a shift in expense from rent and purchased transportation expense to most other operating expense categories in the quarter compared to the same period last year.

Adjusted operating income increased 53% due to the combination of revenue growth led by rate per total mile improvement and effective operating cost management.

Comparisons of key financial metrics for the TTS segment, including operating ratios (actual and net of fuel surcharge revenues of $67.9 million and $57.9 million in fourth quarters 2018 and 2017, respectively, and $265.1 million and $205.5 million in 2018 and 2017, respectively), are shown below. Fluctuating fuel prices and fuel surcharge revenues impact the total company operating ratio and the TTS segment’s operating ratio when fuel surcharges are reported on a gross basis as revenues versus netting against fuel expenses. Eliminating fuel surcharge revenues, which are generally a more volatile source of revenue, provides a more consistent basis for comparing the results of operations from period to period.

Key Truckload Transportation Services (TTS) Segment Financial Metrics

 Three Months Ended
December 31,
 Year Ended
December 31,
 2018 2017 Y/Y Change 2018 2017 Y/Y Change
Total revenues$494,708  $439,173  13%  $1,881,323  $1,635,244  15% 
Operating income66,833  44,548  50%  202,581  138,059  47% 
Operating margin13.5%  10.1%  340 bps  10.8%  8.4%  240 bps 
Operating ratio86.5%  89.9%  (340) bps  89.2%  91.6%  (240) bps 
Adjusted operating income67,983  44,548  53%  212,870  138,059  54% 
Adjusted operating margin13.7%  10.1%  360 bps  11.3%  8.4%  290 bps 
Adjusted operating ratio86.3%  89.9%  (360) bps  88.7%  91.6%  (290) bps 
Adjusted operating ratio, net of fuel surcharge84.1%  88.3%  (420) bps  86.8%  90.3%  (350) bps 

Werner Logistics Segment

  • Revenues of $137.2 million increased $24.8 million, or 22%
  • Gross margin of 16.8% increased 240 bps
  • Operating income of $7.2 million increased $5.2 million, or 257%
  • Operating margin of 5.3% improved 350 bps

Revenues increased by 22%, led by Brokerage with 23% revenue growth. All five Logistics business units (Brokerage, Freight Management, Intermodal, Werner Global Logistics and Final Mile) experienced growth in revenues in fourth quarter 2018.

The gross margin percentage increased 240 bps to 16.8% due primarily to strength in pricing in transactional brokerage and Intermodal. Our operating margin increased 350 bps to 5.3% due to effective cost management, as other operating expenses grew at 12% compared to revenues which grew at 22%.

We continue to see strong customer interest in the Werner Logistics value proposition, particularly as the market remains strong and shippers tend to consolidate their logistics business with the stability of larger asset-backed logistics providers.

Key Werner Logistics Segment Financial Metrics

 Three Months Ended
December 31,
 Year Ended
December 31,
 2018 2017 Y/Y Change 2018 2017 Y/Y Change
Total revenues$137,224  $112,414  22%  $518,078  $417,639  24% 
Rent and purchased transportation expense114,156  96,267  19%  436,220  355,544  23% 
Gross profit23,068  16,147  43%  81,858  62,095  32% 
Other operating expenses15,825  14,116  12%  61,480  53,412  15% 
Operating income7,243  2,031  257%  20,378  8,683  135% 
Gross margin16.8%  14.4%  240 bps  15.8%  14.9%  90 bps 
Operating margin5.3%  1.8%  350 bps  3.9%  2.1%  180 bps 

Cash Flow and Capital Allocation

Cash flow from operations in 2018 was $418.2 million compared to $282.8 million in 2017, an increase of 48%.

Net capital expenditures in 2018 were $349.0 million compared to $198.8 million in 2017, an increase of 75%. We continue to invest in newer trucks and trailers to improve our driver experience, increase operational efficiency and more effectively manage our maintenance, safety and fuel costs. The average age of our truck fleet remains low by industry standards and was reduced to 1.8 years as of December 31, 2018 compared to 1.9 years as of December 31, 2017. Net capital expenditures are expected to moderate in 2019.

Gains on sales of equipment were $6.5 million, or $0.07 per share, compared to $0.8 million, or $0.01 per share, in the prior-year quarter. Year over year, 13% more trucks and 14% more trailers were sold, and we realized significantly higher average gains per truck and higher gains per trailer. Pricing in the market for our used trucks strengthened over the last four quarters, while we continued to make progress selling late-model trucks via our proprietary retail network. As a reminder, gains on sales of assets are reflected as a reduction of Other Operating Expenses in our income statement.

During the quarter, we repurchased 800,000 shares of common stock for a total cost of $25.8 million, or an average price of $32.19 per share. As of December 31, 2018, we had 2.6 million shares remaining under our share repurchase authorization.

As of December 31, 2018, we had $125 million of debt outstanding and over $1.26 billion of stockholders’ equity.
2019 Guidance Metrics 

The following table summarizes our initial 2019 guidance and assumptions: 

 2019 Outlook
Truck growth
3% to 5%
Growth expected to be in Dedicated and occur in first half of 2019 with minimal truck growth planned for second half of 2019
One-Way Truckload
revenue per total mile (RPTM)
4% to 8%
Year-over-year percentage increases are expected to be above guidance range in first quarter 2019 and gradually moderate due to significant RPTM increases in subsequent quarters of 2018
Gains on sales of equipment
$18 million to $20 million
Gains on sales of equipment are expected to be similar to 2018 and more consistent from quarter to quarter
Effective tax rate25% to 26%
Net capital expenditures$275 million to $300 million
Truck and trailer age
We intend to maintain the average age of our truck and trailer fleet at or near current levels of 1.8 and 4.1 years

Improved Disclosure

In our third quarter earnings release, we noted that our expectation for the percentage increase in average revenues per total mile for the full year 2018 compared to 2017 for our TTS segment was in the high end of the 9% to 12% range.  Our average revenues per total mile for the full year 2018 increased 11.8% compared to 2017.

To provide greater transparency for the components of the Truckload Transportation Services segment, this quarter we began disclosing key operating statistics separately for both the Dedicated and One-Way Truckload units within TTS in the Operating Statistics by Segment table on page 10. On the investor relations section of our website, werner.com, we have provided a link to a downloadable spreadsheet comprising comparable historical operating statistics data for both Dedicated and One-Way Truckload for each of the last 12 quarters. We will continue to report TTS truck, trailer and revenue per truck operating statistics going forward. Given additional clarity and transparency provided for Dedicated and One-Way Truckload, we will no longer be reporting the other TTS revenue operating statistics that we previously reported.

Conference Call Information

Werner Enterprises, Inc. will conduct a conference call to discuss fourth quarter and full year 2018 earnings today beginning at 4:00 p.m. CT. The news release, live webcast of the earnings conference call, and accompanying slide presentation will be available at www.werner.com in the “Investors” section under “Webcasts & Presentations.” To participate on the conference call, please dial (877) 317-6789 (domestic) or (412) 317-6789 (international). Please mention to the operator that you are dialing in for the Werner Enterprises call.

A replay of the conference call will be available on February 6, 2019 at approximately 6:00 p.m. CT through March 7, 2019 by dialing (877) 344-7529 (domestic) or (412) 317-0088 (international) and using the access code 10127422. A replay of the webcast will also be available at www.werner.com in the “Investors” section under “Webcasts & Presentations.

About Werner Enterprises

Werner Enterprises, Inc. was founded in 1956 and is a premier transportation and logistics company, with coverage throughout North America, Asia, Europe, South America, Africa and Australia. Werner maintains its global headquarters in Omaha, Nebraska and maintains offices in the United States, Canada, Mexico and China. Werner is among the five largest truckload carriers in the United States, with a diversified portfolio of transportation services that includes dedicated; medium-to-long-haul, regional and expedited van; and temperature-controlled. The Werner Logistics portfolio includes truck brokerage, freight management, intermodal, international and final mile services. International services are provided through Werner’s domestic and global subsidiary companies and include ocean, air and ground transportation; freight forwarding; and customs brokerage.

Werner Enterprises, Inc.’s common stock trades on The NASDAQ Global Select MarketSM under the symbol “WERN”. For further information about Werner, visit the Company’s website at www.werner.com.

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are based on information presently available to the Company’s management and are current only as of the date made. Actual results could also differ materially from those anticipated as a result of a number of factors, including, but not limited to, those discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

For those reasons, undue reliance should not be placed on any forward-looking statement. The Company assumes no duty or obligation to update or revise any forward-looking statement, although it may do so from time to time as management believes is warranted or as may be required by applicable securities law. Any such updates or revisions may be made by filing reports with the U.S. Securities and Exchange Commission, through the issuance of press releases or by other methods of public disclosure.

John J. Steele
Executive Vice President, Treasurer
and Chief Financial Officer
(402) 894-3036

Source: Werner Enterprises, Inc.

 (In thousands, except per share amounts)
 Three Months Ended
December 31,
 Year Ended
December 31,
 2018 2017 2018 2017
 $ % $ % $ % $ %
Operating revenues$646,365  100.0  $567,365  100.0  $2,457,914  100.0  $2,116,737  100.0 
Operating expenses:               
Salaries, wages and benefits200,549  31.0  180,927  31.9  781,064  31.8  681,547  32.2 
Fuel62,795  9.7  58,194  10.3  254,564  10.4  198,745  9.4 
Supplies and maintenance46,518  7.2  44,049  7.8  185,074  7.5  164,325  7.7 
Taxes and licenses23,711  3.7  22,673  4.0  87,318  3.5  86,768  4.1 
Insurance and claims24,275  3.8  19,591  3.4  98,133  4.0  79,927  3.8 
Depreciation59,712  9.2  55,020  9.7  230,151  9.4  217,639  10.3 
Rent and purchased transportation153,777  23.8  132,427  23.3  589,002  24.0  509,573  24.1 
Communications and utilities4,035  0.6  3,947  0.7  16,063  0.6  16,105  0.7 
Other(3,938) (0.6) 5,476  1.0  (7,670) (0.3) 18,288  0.9 
Total operating expenses571,434  88.4  522,304  92.1  2,233,699  90.9  1,972,917  93.2 
Operating income74,931  11.6  45,061  7.9  224,215  9.1  143,820  6.8 
Other expense (income):         
Interest expense853  0.1  351    2,695  0.1  2,243  0.1 
Interest income(658)   (752) (0.1) (2,737) (0.1) (3,308) (0.1)
Other204    35    376    328   
Total other expense (income)399  0.1  (366) (0.1) 334    (737)  
Income before income taxes74,532  11.5  45,427  8.0  223,881  9.1  144,557  6.8 
Income tax expense19,969  3.1  (95,707) (16.9) 55,733  2.3  (58,332) (2.8)
Net income$54,563  8.4  $141,134  24.9  $168,148  6.8  $202,889  9.6 
Diluted shares outstanding71,136    72,660    72,057    72,558   
Diluted earnings per share$0.77    $1.94    $2.33    $2.80   

 (In thousands, except per share amounts)
 Three Months Ended
December 31,
 Year Ended
December 31,
 2018 2017 2018 2017
Operating revenues$646,365  $567,365  $2,457,914  $2,116,737 
Operating expenses571,434  522,304  2,233,699  1,972,917 
Adjusted for:       
Insurance and claims (1)(1,150)   (15,189)  
Property tax settlement (2)    4,900   
Gains on sale of real estate (3)2,432    5,927   
Adjusted operating expenses572,716  522,304  2,229,337  1,972,917 
Adjusted operating income (4)73,649  45,061  228,577  143,820 
Total other expense (income)399  (366) 334  (737)
Adjusted income before income taxes73,250  45,427  228,243  144,557 
Adjusted income tax expense (benefit)19,647  (95,707) 56,830  (58,332)
Deferred income tax adjustment for tax reform (5)  110,508    110,508 
Adjusted net income (4)53,603  30,626  171,413  92,381 
Diluted shares outstanding71,136  72,660  72,057  72,558 
Adjusted diluted earnings per share (4)$0.75  $0.42  $2.38  $1.27 

(1) During second quarter 2018, we accrued $11,250 of pre-tax insurance and claims expense (including interest of $1,300) related to a previously disclosed excess adverse jury verdict rendered on May 17, 2018 in a lawsuit arising from a December 2014 accident. Additional information about the accident was included in our Current Report on Form 8-K dated May 17, 2018. Under our insurance policies in effect on the date of this accident, our maximum liability for this accident is $10.0 million (plus pre-judgment and post-judgment interest) with premium-based insurance coverage that exceeds the jury verdict amount. The Company is appealing this verdict. During third quarter 2018 and fourth quarter 2018, respectively, we accrued $2,789 of interest and legal fees and $1,150 of interest related to this jury verdict. Management believes excluding the effect of this item provides a more useful comparison of our performance from period to period. This item is included in the Truckload Transportation Services segment in our Segment Information table.

(2) During third quarter 2018, we reached a favorable settlement related to a property tax dispute that reduced taxes and licenses expense by $4,900, for property taxes that were previously expensed and paid over a multi-year period. This item is included in the Truckload Transportation Services segment in our Segment information table.

(3) During second quarter 2018, we sold a parcel of real estate which resulted in a $3,495 pre-tax gain on sale. During fourth quarter of 2018, we sold a parcel of real estate which resulted in a $2,432 pre-tax gain. These items are included in Corporate in our Segment Information table.

(4) Our definition of the non-GAAP measures adjusted operating income, adjusted net income and adjusted diluted earnings per share begins with (a) operating expenses, the most comparable GAAP measure. We add the insurance and claims jury verdict expense accrual and related interest and legal fees to (a) and subtract the gains on sale of real estate and the property tax settlement from (a) to arrive at (b) adjusted operating expenses. We subtract (c) total other expense (income) from (b) adjusted operating expenses to arrive at (d) adjusted income before income taxes. We calculate adjusted income tax expense (benefit) by applying the incremental income tax rate excluding discrete items to the net pre-tax adjustments and adding this additional income tax to actual income tax expense. We then subtract adjusted income tax expense and the fourth quarter 2017 deferred income tax adjustment from adjusted income before income taxes to arrive at adjusted net income. The adjusted net income is divided by the diluted shares outstanding to calculate the adjusted diluted earnings per share.

(5) During fourth quarter 2017 and full year 2017, our results included a $110,508 non-cash reduction in income tax expense, which resulted from the revaluation of net deferred income tax liabilities to reflect the lower federal income tax rate enacted on December 22, 2017. The Tax Cuts and Jobs Act of 2017 (the Tax Act) lowered the federal corporate income tax rate to 21% from 35% beginning in 2018.

 (In thousands)
 Three Months Ended
December 31,
 Year Ended
December 31,
 2018 2017 2018 2017
Truckload Transportation Services$494,708  $439,173  $1,881,323  $1,635,244 
Werner Logistics137,224  112,414  518,078  417,639 
Other (1)14,115  15,488  56,903  62,745 
Corporate589  399  2,759  1,938 
Subtotal646,636  567,474  2,459,063  2,117,566 
Inter-segment eliminations (2)(271) (109) (1,149) (829)
Total$646,365  $567,365  $2,457,914  $2,116,737 
Operating Income       
Truckload Transportation Services$66,833  $44,548  $202,581  $138,059 
Werner Logistics7,243  2,031  20,378  8,683 
Other (1)(886) (570) (453) 35 
Corporate1,741  (948) 1,709  (2,957)
Total$74,931  $45,061  $224,215  $143,820 

(1) Other includes our driver training schools, transportation-related activities such as third-party equipment maintenance and equipment leasing, and other business activities. On January 1, 2018, we adopted Accounting Standards Update 2014-09, “Revenue from Contracts with Customers”, using the modified retrospective transition method, and comparative information has not been restated. Adoption of the new standard resulted in a $3.6 million and $14.3 million reduction of Other revenues for the three-month and annual periods ended December 31, 2018, respectively, that would have been reported as Other operating expense prior to the new standard with no impact to operating income.

(2) Inter-segment eliminations represent transactions between reporting segments that are eliminated in consolidation.

 Three Months Ended
December 31,
   Year Ended
December 31,
 2018 2017 % Change 2018 2017 % Change
Truckload Transportation Services segment           
Average tractors in service7,787  7,436  4.7% 7,622  7,305  4.3%
Average revenues per tractor per week (1)$4,145  $3,878  6.9% $4,007  $3,696  8.4%
Total tractors (at quarter end)           
Company7,240  6,805  6.4% 7,240  6,805  6.4%
Independent contractor580  630  (7.9)% 580  630  (7.9)%
Total tractors7,820  7,435  5.2% 7,820  7,435  5.2%
Total trailers (at quarter end)23,945  22,900  4.6% 23,945  22,900  4.6%
One-Way Truckload           
Trucking revenues, net of fuel surcharge$204,266  $192,274  6.2% $770,972  $708,988  8.7%
Average tractors in service3,315  3,427  (3.3)% 3,345  3,483  (4.0)%
Total tractors (at quarter end)3,320  3,435  (3.3)% 3,320  3,435  (3.3)%
Average percentage of empty miles11.66% 11.98% (2.7)% 11.17% 11.32% (1.3)%
Average revenues per tractor per week (1)$4,739  $4,316  9.8% $4,432  $3,914  13.2%
Average % change YOY in revenues per total mile (1)10.5% 7.0%   13.2% 3.0%  
Average % change YOY in total miles per tractor per week(0.6)% (0.2)%   0.0% 1.8%  
Average completed trip length in miles (loaded)851  805  5.7% 833  813  2.4%
Trucking revenues, net of fuel surcharge$215,321  $182,553  17.9% $817,203  $694,875  17.6%
Average tractors in service4,472  4,009  11.5% 4,277  3,822  11.9%
Total tractors (at quarter end)4,500  4,000  12.5% 4,500  4,000  12.5%
Average revenues per tractor per week (1)$3,703  $3,502  5.7% $3,673  $3,496  5.1%
Werner Logistics segment           
Average tractors in service42  44  (4.5)% 42  50  (16.0)%
Total tractors (at quarter end)40  45  (11.1)% 40  45  (11.1)%
Total trailers (at quarter end)1,310  1,600  (18.1)% 1,310  1,600  (18.1)%

(1) Net of fuel surcharge revenues

 (In thousands)
 Three Months Ended
December 31,
 Year Ended
December 31,
 2018 2017 2018 2017
Capital expenditures, net$59,682  $77,740  $348,972  $198,845 
Cash flow from operations (1)115,646  59,597  418,159  282,828 
Return on assets (annualized) (2)10.6% 31.6% 8.7% 11.5%
Return on equity (annualized) (2)17.4% 51.8% 13.7% 19.5%

(1) On January 1, 2018, we adopted Accounting Standards Update 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”, by applying the retrospective transition method to each period presented. Adoption of the guidance resulted in a $5.3 million decrease to fourth quarter 2017 cash flow from operations and a $1.0 million increase to cash flow from operations for the year ended December 31, 2017.

(2) Includes the $110.5 million non-cash reduction in income tax expense in fourth quarter 2017 and full year 2017 resulting from the revaluation of net deferred income tax liabilities due to the Tax Act. Excluding this item, return on assets was 6.9% and 5.3% and return on equity was 11.5% and 9.0% for the fourth quarter 2017 and full year 2017, respectively. Management believes the exclusion of the tax reform benefit provides a more useful comparison of our performance from period to period.

 (In thousands, except share amounts)
 December 31, 2018 December 31, 2017
Current assets:   
Cash and cash equivalents$33,930  $13,626 
Accounts receivable, trade, less allowance of $8,613 and $8,250, respectively337,927  304,174 
Other receivables26,545  26,491 
Inventories and supplies10,060  11,694 
Prepaid taxes, licenses and permits16,619  15,972 
Other current assets31,577  28,272 
Total current assets456,658  400,229 
Property and equipment2,247,577  2,114,337 
Less – accumulated depreciation760,015  767,474 
Property and equipment, net1,487,562  1,346,863 
Other non-current assets (1)139,284  60,899 
Total assets$2,083,504  $1,807,991 
Current liabilities:   
Checks issued in excess of cash balances$  $21,539 
Accounts payable97,781  73,802 
Current portion of long-term debt75,000   
Insurance and claims accruals67,304  79,674 
Accrued payroll40,271  32,520 
Other current liabilities30,004  24,642 
Total current liabilities310,360  232,177 
Long-term debt, net of current portion50,000  75,000 
Other long-term liabilities10,911  12,575 
Insurance and claims accruals, net of current portion (1)214,030  108,270 
Deferred income taxes233,450  195,187 
Stockholders’ equity:   
Common stock, $.01 par value, 200,000,000 shares authorized; 80,533,536   
shares issued; 70,441,973 and 72,409,222 shares outstanding, respectively805  805 
Paid-in capital107,455  102,563 
Retained earnings1,413,746  1,267,871 
Accumulated other comprehensive loss(16,073) (15,835)
Treasury stock, at cost; 10,091,563 and 8,124,314 shares, respectively(241,180) (170,622)
Total stockholders’ equity1,264,753  1,184,782 
Total liabilities and stockholders’ equity$2,083,504  $1,807,991 

(1) Under the terms of our insurance policies, we are the primary obligor of the damage award in the previously mentioned adverse jury verdict, and as such, we have recorded a $79.2 million receivable from our 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 unaudited condensed balance sheet as of December 31, 2018.