Werner Reports Earnings Decline Despite Revenue Gain in Q4
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Werner Enterprises experienced an earnings decline despite revenue gains due to changing macroeconomic conditions in the fourth quarter, the company reported Feb. 7.
The Omaha, Neb.-based freight carrier and logistics provider posted net income of $61 million, or 94 cents a diluted share, for the three months ending Dec. 31. That compared with $77.9 million, $1.15, during the same time the previous year.
Total revenue increased by 13% to $861.5 million from $765.2 million.
“My sincere thanks go out to the talented Werner team who remain resolutely committed to our values by providing superior safety and service to our customers,” Werner CEO Derek Leathers said during a call with investors Feb. 7. “As we look back on the fourth quarter, freight in our large dedicated fleet was steady and performed well. One-way truckload and logistics were challenged by a seasonally weaker-than-normal freight market in contrast to the very strong conditions a year ago.”
Leathers noted changing macroeconomic conditions led to the lackluster truckload and logistics freight market in the quarter. But he believes the company was able to produce strong quarterly results because of the durability and resilience of its business model and leadership team. He noted the company remains focused on implementing its strategy to drive value to customers, associates, shareholders, suppliers and carrier partners.
“We expect that the 2023 freight market will be challenging in the first half and then gradually begin to show improvement in the second half as capacity exits the market and retail inventory resets to normalize levels,” Leathers said. “Over the last several years, we intentionally built a powerful business model that performs well in both strong and challenging freight markets.”
Leathers added the dedicated fleet, one-way truckload fleet and logistics segment provide a resilient portfolio of complementary services and industry verticals. He noted that this business model coupled with a seasoned leadership team gives him confidence that the company will be able to weather any economic environment.
“During 2022, we are proud to achieve the lowest DOT preventable accident rate per million miles in the last 10 years,” Leathers said. “A testament to our continued focus on approving safety and service across our fleet. During the quarter, our strong balance sheet provided the flexibility to add two stellar companies to the Werner family.”
Fourth-quarter results were above expectations by investment analysts on Wall Street, which had been looking for 92 cents per share and quarterly revenue of $843.73 million, according to Zacks Consensus Estimate.
“The normal seasonal freight spike for certain dedicated retail customers didn’t occur this year given the increasingly challenging macro environment and relatively muted consumer spending,” Leathers said. “Fourth-quarter freight was seasonally soft in one-way truckload and logistics.”
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Werner also closed on two acquisitions during the quarter. ReedTMS Logistics was acquired on Nov. 5. The truckload carrier provides a suite of freight brokerage and truckload solutions to a diverse customer base.
Baylor Trucking was acquired Oct. 1. The truckload carrier operates 200 trucks and 980 trailers in the east central and south central regions through its two terminals.
“On Oct. 1, we acquired Baylor, a high performing truckload carrier based in Milan, Ind., with 200 trucks,” Leathers said. “Baylor is a 75-year-old company with outstanding leadership, elite drivers and impeccable customer service. The first week of November, we acquired ReedTMS Logistics, a rapidly growing Tampa, Fla.-based freight broker and dedicated carrier with a skilled and knowledgeable leadership team. ReedTMS has a 26 -year history of developing and expanding long-term customer relationships.”
For the full year, Werner reported net income of $245.6 million, $3.74, on revenue of $3.29 billion, compared with net income of $261.5 million, $3.82, on revenue of $2.73 billion in 2021.
The Truckload Transportation Services segment reported revenue for the fourth quarter increased 13% to $634.8 million from $563.2 million during the same time the previous year. Operating income declined 9% to $80.3 million from $88.2 million. The report noted that dedicated experienced solid and steady freight demand from customers. But one-way truckload customer freight demand was seasonally weaker than normal.
The logistics segment revenue increased 15% to $213.5 million from $185 million the prior year. Operating income declined 16% to $9.87 million from $11.7 million. The operating income decline was due to a seasonally soft freight market in the quarter. The report noted that truckload logistics revenues in the segment increased 20%. This was driven by a 34% increase in shipments that was partially offset by an 11% decline in revenue per shipment. Intermodal revenues decreased 23%. Final-mile revenue increased $14 million.
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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