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Werner Enterprises achieved record third-quarter earnings per share despite supply chain and labor challenges, the company reported Oct. 28.
The Omaha, Neb.-based freight carrier and logistics company posted net income of $63.8 million, or 94 cents a diluted share, for the three months ending Sept. 30. That compared with $46.3 million, 67 cents, during the same time the previous year.
Total revenue increased by 19% to $702.9 million from $590.2 million.
“I’m pleased to report that Werner delivered record third-quarter earnings, our fifth consecutive record-setting quarter,” Werner CEO Derek Leathers said during an Oct. 28 call with investors. “During the third quarter freight demand remained strong and the driver market remained very challenging. Our strategic investments in driver sourcing and driver pay in a competitive labor market enabled us to grow our fleet sequentially by 75 trucks.”
Leathers noted that strong consumer demand combined with ongoing supply chain bottlenecks are combining to keep retail inventory to sales ratios at historically low levels. “We expect a strong freight market through the balance of this year and well into 2022,” he said.
The company’s Q3 results were slightly below Wall Street expectations; investment analysts were looking for EPS of 95 cents per share on quarterly revenue of $705.02 million, according to Zacks Consensus Estimate.
Werner’s Truckload Transportation Services (TTS) segment reported Q3 revenue increased 15% to $527.7 million from $458.3 million a year ago. Operating income saw a slight decrease to $62.9 million from $63.1 million last year.
The TTS segment saw strong freight demand, which has continued into the fourth quarter. But total miles decreased by 8.2 million due to fleet mix changes, equipment parts shortages and coronavirus quarantine protocols causing drivers to become unavailable. This was partially offset by 7.2% higher average trucks in service.
“Despite a very difficult driver market, we were able to organically grow 75 trucks in TTS from second quarter to third,” Leathers said. “Our driver sourcing costs were higher in third quarter due to startup costs for our new and planned driving school locations, increased training pay for drivers hired from schools, [and] driver hiring incentives and driver lodging. In other words, we made investments in driver sourcing that precede the benefits we expect to realize going forward.”
The logistics segment saw Q3 revenue increase 35% to $158 million from $117.4 million. Operating income rebounded to $7.7 million from a loss of $852,000 during the prior-year quarter. Truckload logistics revenue was driven by a 33% increase in revenues per shipment and a 23% increase in shipments. The segment includes intermodal revenue, which was supported by a 25% increase in revenues per shipment despite a 5% decline in shipments.
Werner noted that logistics segment revenue increased 50% when Q3 2020 revenue from Werner Global Logistics is excluded. The company sold the division in the first quarter of 2021. The company also acquired an 80% equity ownership interest in ECM Transport Group for a purchase price of $141.3 million July 1.
“Werner continues to be well-positioned to achieve strong financial results as we benefit from our consumer-oriented freight base with winning retailers, driver-preferred dedicated fleets, industry-leading cross-border Mexico business, engineered lanes in our one-way truckload segment, our recent ECM acquisition and our comprehensive capacity solutions in Werner Logistics,” Leathers said.
Cowen and Co. analyst Jason Seidl said in a report that higher costs and fewer miles per truck in the TTS segment affected Werner’s Q3 results, but noted that the carrier’s conservative approach meant the company did not report “outsized” returns seen by some of its competitors.
Werner ranks No. 17 on the Transport Topics Top 100 list of largest for-hire carriers in North America and No. 30 on the Transport Topics Top 50 list of largest logistics companies.
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