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Werner Enterprises Inc. saw fourth-quarter earnings increase from the year-ago period while revenue declined slightly, the company reported Feb. 4.
The Omaha, Neb.-based freight carrier and logistics company posted net income of $60.6 million, or 88 cents a diluted share, for the three months ending Dec. 31. That represents a 25% increase from $48.5 million, 70 cents, during the same time the previous year. Revenue slipped to $620.3 million from $621.8 million.
The results surpassed expectations by investment analysts on Wall Street, which had been looking for 78 cents per share and revenue of $611.80 million, according to Zacks Consensus Estimate.
Werner associates quickly reacted to changes in freight and working conditions and delivered record results.
For the full year, Werner Enterprises reported net income of $169.1 million, $2.44, on revenue of $2.37 billion compared with net income of $166.9 million, $2.38, on revenue of $2.46 billion in 2019.
“2020 was a very challenging and disruptive year,” CEO Derek Leathers said during a conference call with investors after the report was released. “Werner associates quickly reacted to changes in freight and working conditions and delivered record results.”
Werner achieved record operating income and adjusted earnings per share in 2020.
Leathers credited the resilience, tenacity and perseverance of his workers for helping to overcome significant obstacles and challenges throughout the year. He noted that going forward the primary focus will continue to be on providing best-in-class service as well as the health and safety of associates and customers.
WERN Quotes by TradingView
“We are confident that freight demand for our services will be strong in 2021,” Leathers said. “On the supply side, structural, truck driver availability constraints and OEM production challenges are expected to continue to limit industry capacity growth for at least the next several quarters. On the demand side, our key customers are producing strong sales that are expected to continue as the economy recovers and additional COVID stimulus packages are implemented.”
Leathers is confident that his company is well-positioned to be successful in 2021. He noted having a newer fleet and the high performance delivered by associates has differentiated service levels while efficiently managing controllable costs.
“Customer inventories continue to be at historically low levels,” Leathers said. “We are well-positioned to succeed in this business environment, as we did in 2018 when freight was strong and capacity was tight. We are also positioned to succeed in the event the freight market begins to normalize at some point in the future.”
The truckload transportation services segment reported quarterly revenue decreased 2% to $475 million from $486.6 million during the same time last year. Operating income for the segment increased 33% to $78.6 million from $59.2 million during the prior-year quarter.
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Werner said that the dedicated fleet portion of its truckload segment saw freight demand remain strong during the quarter. The company added 230 trucks to the dedicated fleet. The one-way truckload freight demand was also strong. The company credited the strong demand in part to the peak holiday shopping season starting earlier than normal and continuing through December.
Logistics segment revenue increased 8% to $130.1 million for the quarter from $120.1 million during the same period in 2019. Operating income for the segment decreased 22% to $2.6 million from $3.4 million during the prior-year quarter.
The gross margin percentage for the logistics segment decreased due to a large rise in spot truckload rates in the second half of 2020. That significantly increased the cost of capacity for contractual brokerage shipments in fourth quarter. Improving customer rates for contractual brokerage shipments, the gross margin percentage and operating margin percentage both improved sequentially from third and fourth quarters.
Cowen and Co. said the company still has room to grow despite an already strong fourth quarter that exceeded expectations. The investment bank and financial services company said in a report that, given capacity and demand trends, it expects continued strong performance through 2021.
“Management provided certain metrics surrounding 2021 outlook that called for 1-3% growth in its TTS Truck segment, citing continued momentum in its dedicated fleet,” Cowen analyst Jason Seidl wrote in the report. “The company highlighted that its driver training school network continues to source new drivers and is adding four schools to its network.
While driver pay is expected to increase about 6% in 2021, management remained very confident that rate increases will more than outpace driver pay despite the driver capacity challenges.”
The driver shortage has been an ongoing issue that the coronavirus pandemic made worse. Werner has said that since last March, the number of driver school training school graduates has declined by an estimated 40% nationally. This has created an increased demand for drivers.
Werner Enterprises has 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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