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Werner Enterprises saw revenue rise but income decline during the third quarter of 2022, the company reported Nov. 2.
The Omaha, Neb.-based freight carrier and logistics provider posted Q3 net income attributable to the company of $55.1 million, or 86 cents a diluted share, for the three months ending Sept. 30. That compared with $63.8 million, 94 cents, the previous year. Total revenue rose 18% to $827.6 million from $702.9 million.
“Despite rising macroeconomic headwinds, I am pleased to report that we achieved year-over-year growth in our quarterly adjusted earnings per share for the ninth consecutive quarter,” Werner CEO Derek Leathers said during a call with investors. “Our large and resilient dedicated fleet performed very well. While we experienced moderating performance in one-way truckload, logistics and our driving school network given more challenging operating conditions, third quarter produced the third-highest ever adjusted earnings per share in a quarter in our history.”
Wall Street analysts had forecast EPS of 97 cents on quarterly revenue of $819.79 million, according to Zacks Consensus Estimate.
Werner’s Truckload Transportation Services segment saw Q3 revenue rise 18% to $621.9 million from $527.7 million, while operating income increased 18% to $74.1 million from $62.9 million last year. The segment includes dedicated and one-way truckload operations.
Werner on Oct. 1 acquired Baylor Trucking, a Milan, Ind.-based truckload carrier. The company, which operates 200 trucks and 980 trailers, achieved revenue of $81.5 million for the 12 months ended August 2022, Werner said. Baylor operates in the east-central and south-central U.S. between its two terminals.
“We added 200 high-performing Baylor trucks and professional drivers in our one-way truck fleet,” Leathers noted. “In light of the softening freight market and including the acquired trucks, we expect our fleet count to be up 100 to 200 trucks in fourth quarter.”
Leathers noted that peak-season freight opportunities in one-way truckload and logistics are more subdued in the current fourth quarter compared with the strong market environment a year ago.
“While inflationary cost pressures continue to be challenging, particularly for labor, equipment maintenance and insurance, we have begun to see some easing in the competitive driver recruiting and retention markets,” Leathers said. “In addition, within the consumer staples vertical, shoppers are increasingly trading down for value. By design nearly three-quarters of our revenues are in necessity-based retail and food and beverage.”
For Q3, one-way truckload operations revenue slipped 0.4% to $189.6 million from $190.3 million, while dedicated operations revenue increased 15.9% to $314.1 million from $271.1 million. Dedicated experienced strong and steady freight demand while one-way freight demand moderated further from Q2, Werner said.
“Dedicated continues to experience strong demand from the majority of our long-term customers, and the pipeline of new opportunities remain strong,” Leathers said. “A year ago, a bottleneck supply chain and three rounds of stimulus checks produced peak-season shipping that started earlier than normal in August of 2021. In the current freight market, there are far fewer projects and surge freight opportunities in one-way truckload and logistics.”
Revenue in Werner’s logistics segment increased 18% to $187.1 million from $158 million the prior year. Operating income decreased 33% to $5.15 million from $7.65 million. The segment includes truckload logistics, intermodal and final-mile operations.
“Werner Logistics achieved lower operating income in third quarter compared to a very strong performance in second quarter due to fewer premium pop-up freight opportunities, intermodal customer and market challenges, and softening demand and startup cost in final miles,” Leathers said.
Within the logistics segment, truckload logistics revenue increased 4%, driven by a 6% increase in shipments. This was partially offset by a 3% decrease in revenues per shipment. Intermodal revenue rose 10%, lifted by a 37% increase in revenues per shipment amid a 23% decrease in shipments. Final-mile revenue increased $21 million thanks to the November 2021 acquisition of NEHDS Logistics and continued growth in Werner’s national final-mile agent network.
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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