Werner Enterprises Reports Earnings Drop on Steady Revenue
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The Omaha, Neb.-based freight carrier and logistics company posted net income of $23.7 million, or 37 cents a diluted share, for the three months ending Sept. 30. That compared with $55.1 million, or 86 cents, during the same time the previous year.
Total revenue decreased by 1% to $817.7 million from $827.6 million.
“2023 has presented us with a challenging operating environment,” Werner CEO Derek Leathers said during a call with investors. “The third quarter was no different, and our financial results did not meet our expectations.”
Leathers added the company is focused on being a brand known for safety, reliability, service and durable results. He believes the company will continue to see long-term value with its financial strength, scale, capabilities and diversified portfolio, combined with an ongoing commitment to innovative technology and sustainability.
Leathers said, “Our primary focus in this complex operating environment is controlling what we can. This includes operational execution by leaning into the strength of our dedicated fleet, through superior customer service and fleet efficiency. This focus continues to result in strong customer retention, a stable fleet and competitive margins.”
Leathers added one-way truckloads remain challenged by elevated spot exposure and ongoing pricing pressure, as anticipated. He noted the focus is on utilizing one-way assets, optimizing the fleet and maintaining long-term pricing discipline.
“Despite a shorter average length of haul, we realized 3.3% year-over-year growth in average total miles per truck per week, the second consecutive quarter of improvement,” Leathers said. “Within logistics, Q3 volume and revenue continue to perform well, delivering double-digit revenue growth and strong volume growth. We continue to execute our cost savings program and have seen sequential and year-over-year progress in certain expense categories.”
Leathers noted the company continues to face macro headwinds with lower equipment gains, higher interest expense and inflationary pressure. But he believes cost-saving initiatives, a focus on innovation and reinvestment positions the business to benefit as freight conditions improve.
“In short, freight conditions in the third quarter were challenging, and along with the second quarter, I would describe this as the most difficult period of my career from a market perspective,” Leathers said. “Despite these challenges, our results continue to reflect a business model that is durable, diversified and resilient, even in a lower, for longer and tough operating environment.”
The results were mixed when it came to expectations by investment analysts on Wall Street, which had been looking for 48 cents per share and quarterly revenue of $802.39 million, according to Zacks Consensus Estimate.
The Truckload Transportation Services (TTS) segment reported that revenue decreased 8% to $572.2 million from $621.9 million during the same time the previous year. Operating income fell 48% to $38.8 million from $74.1 million last year.
The earnings report noted that dedicated operations experienced modest net reduction in its fleet size of 2% year-over-year. Dedicated revenue per truck per week remained nearly unchanged being down only 0.4% year-over-year. One-Way Truckload freight demand during the quarter reflected a softer freight market.
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The logistics segment reported that revenue increased 23% to $230.3 million from $187.1 million during the year-ago period. This was primarily driven by truckload logistics operations revenue increasing 48%. This was the result of an increase in shipments due to the November 2022 ReedTMS acquisition, which was partially offset by a decline in revenues per shipment. But operating income for the segment still fell 61% to $2.01 million from $5.15 million.
Werner ranks No. 17 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 34 on the TT Top 100 list of the largest logistics companies.