Werner Increases Net Income but Sees Lower Revenue in Q3
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Werner Enterprises posted mixed results as profits increased on lower revenue during the third quarter, the company announced Oct. 28.
The Omaha, Neb.-based freight carrier and logistics company reported net income of $46.3 million, or 67 cents a diluted share, for the three months ending Sept. 30. That compared with $39 million, or 56 cents a share, during the year-ago period.
Revenue decreased by 5% to $590.2 million from $618.3 million during the same time in 2019. The report also highlighted that operating income increased 16% during the quarter to $62.1 million from $53.4 million year-over-year.
Wall Street predicted 65 cents per share and quarterly revenue of $594 million, according to Zacks Consensus Estimate.
“The shortest recession in U.S. economic history during the second quarter was followed by a steep rebound as robust truckload freight demand from our customers combined with a stubbornly tight driver market produced strong truckload freight market conditions,” Werner Enterprises CEO Derek Leathers said during a conference call with investors.
The report noted that one-way truckload freight demand was strong and improved throughout the quarter. Dedicated freight demand also remained strong. The cost of third-party truckload capacity increased significantly due to the rapid rise in spot rates during the quarter, the report noted.
“I am extremely proud and grateful for how our entire Werner team responded,” Leathers said. “While there remains significant uncertainties ahead related to COVID-19 and its effect on the economy, we are increasingly confident demand for our service will be strong for the fourth quarter and heading into 2021.”
Leathers noted the main reasons he believes demand will remain strong are persistent driver supply constraints, and many key customers are generating strong sales that significantly reduce their inventories. He added restocking likely will continue over multiple quarters.
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“We’re well-prepared to thrive in this type of business environment as we did in 2018 when freight was strong and capacity was tight,” Leathers said. “In the event the economy were to soften, causing demand to slow, you can look to our industry-leading performance in 2019 as an indicator of how we are able to respond.”
Werner also experienced a decreased fleet size due to the market challenge earlier this year. But that already has started to turn around. Leathers noted that the business outlook shows continued modest fleet growth in the fourth quarter.
“Our fleet declined during the first nine months of 2020 by 4% due to the COVID uncertainties and challenging driver market,” Leathers said. “During the third quarter, we grew our trucks fleet sequentially by 60 trucks.”
The truckload segment saw revenue decrease 5% during the quarter to $458.3 million from $480.4 million in the third quarter of 2019. The report noted the drop mostly was due to a $20.4 million decrease in fuel surcharge revenues and a 4.9% decrease in average trucks in service. That partially was offset by a 5% increase in average revenue per truck. Operating income for the segment increased 29% to $63.1 million from $48.9 million during the same time last year.
Revenue in the logistics segment decreased 3% to $117.4 million from $121.3 million in 2019. Operating loss for the segment decreased 128% to $852,000 from an operating income of $3 million.
Werner Enterprises was founded in 1956. Since then, it has grown to include more than 7,800 tractors, 24,000 trailers and about 13,000 employees and independent contractors. The company provides service throughout North America, Asia, Europe, South America, Africa and Australia.
Werner ranks No. 16 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 17 on the Transport Topics Top 50 list of the largest logistics companies.
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