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Werner Enterprises posted net income of $53.7 million, or 82 cents a diluted share, for the first quarter, compared with $46.5 million, 68 cents, during the same time the previous year, the company reported May 3.
The Omaha, Neb.-based freight carrier and logistics company said revenue for the period ended March 31 increased by 24% to $764.6 million from $616.4 million.
“I’m excited to share another quarter of excellent financial results,” Werner CEO Derek Leathers said during a call with investors. “I’m very proud of our Werner team for achieving strong top- and bottom-line growth in the first quarter for both our truckload and logistics segments.”
Werner has a consumer-oriented freight base with more than three-quarters of its revenue coming from retail and food. Within the nearly 60% of the business that is retail the company focuses on discount retailers and home improvement.
“These winning customers are growing their market share and Werner continues to grow with them,” Leathers said. “Three of our top five customers are discount retailers that perform well in economic markets when consumers place even higher priorities on value. The other two customers in our top five are industry leading home improvement and beverage companies.”
Leathers added five of the top 11 customers are in discount retail or food and beverage. He noted they ship consumer nondurable goods with repeatable freight that is less sensitive to changes in the business cycle compared with durable goods.
“Economic uncertainties are increasing with inflation, interest rates tightening and effects of the war in Ukraine,” Leathers said. “Our business model is well-positioned to adapt, perform and even prosper in disruptive markets. During the first quarter procuring new trucks and trailers has been challenging, and we were not able to receive our full allotment.”
The results were mixed when it came to expectations by investment analysts on Wall Street, which had been looking for 86 cents per share and quarterly revenue of $744.29 million, according to Zacks Consensus Estimate.
Werner noted in the earnings report that its strategic minority equity investments in autonomous technology companies in Q1 had market valuation changes causing an unrealized loss on equity securities, which resulted in lower nonoperating income of $9.8 million. Interest expense increased to $1.4 million from $800,000 due to an increase in average debt outstanding. This was partially offset by a decrease in the average effective interest rate incurred on debt.
The truckload transportation services segment saw revenue increase 21% to $558.4 million from $462.9 million during the same time last year. Operating income increased 32% to $76.1 million from $57.6 million last year. The segment includes dedicated and one-way truckload operations.
One-way truckload revenue increased 19.1% to $186.8 million from $156.8 million last year.
Dedicated revenue increased 12.5% to $285.6 million from $253.8 million.
The report attributed the truckload segment results to fleet growth, higher freight rates and increased gains on sale of equipment. This was offset by cost increases for driver pay and driver sourcing, equipment maintenance and insurance.
“Dedicated has nearly 5,200 trucks and achieved 5% truck growth year-over-year,” Leathers said. “Dedicated continues to thrive and grow with strong demand from our long-term core customers. We consistently deliver high service and engineered solutions to meet their complex shipping requirements. And we continue to have a good pipeline of dedicated bid activity with new and existing customers. One-way truckload has roughly 3,000 trucks and grew its fleet by 7% year-over-year. One-way truckload experienced strong freight demand in January and February, which then moderated a bit in March.”
The logistics segment saw revenue increase 37% to $189 million from $137.9 million during the prior year quarter. Operating income surged 90% to $8.68 million from $4.57 million. The operating income was driven by improved revenue growth and an expanded operating margin. The segment includes truckload logistics, intermodal and final mile operations.
- Truckload logistics revenue increased 46%. This was driven by a 24% increase in revenues per shipment and a 19% increase in shipments.
- Intermodal revenue increased 29%. This growth was supported by a 37% increase in revenues per shipment that was partially offset by a 6% decrease in shipments.
- Final Mile revenue increased $18.1 million. This was primarily due to growth from the NEHDS acquisition in November 2021.
Werner noted in the report that logistics revenue increased 55% when excluding Werner Global Logistics. The business division covered freight forwarding services for international ocean and air shipments. Scan Global Logistics Group bought it during the first quarter 2021.
Werner ranks No. 17 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 33 on the TT Top 100 list of the largest logistics companies.
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