Werner Enterprises Profits Jump 27% on Strong Truckload Performance
Werner Enterprises Inc. scored a rare win for the truckload industry as profits increased 27% in the second quarter, easily surpassing the growth in the consensus forecast of industry analysts.
The Omaha, Neb. carrier generated $23.2 million in profits or 32 cents per share for the three-month period ending June 30. The Bloomberg News forecast called for $18.7 million or 26 cents.
One year ago, profits were $18.3 million or a quarter.
Revenue also was on the upswing with a 4% increase to $519.5 million compared with 2016 levels.
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Werner’s successful quarter came from the strength of its Truckload Transportation Services unit, about four times larger in revenue than the Global Logistics division, which ended the period with a much weaker performance.
Revenue at the truckload division rose 6.4% to $403.5 million and operating income — the amount after deducting expenses — surged 58% to $36 million. The miles per load rose on average to 470 from 459 and average miles per truck rose 1.7%, both notable because statistics from American Trucking Associations show that distances per haul have generally trended downward over the past decade. Average revenues per tractor per week rose 4.1% to $3,676 while dead-head miles dropped to 12.3% from 13.41% one year ago.
“Freight volume metrics have improved, as evidenced by a lower empty mile percentage, rising average miles per truck and higher pricing for transactional spot market shipments. Assuming this freight volume trend continues, we expect contractual rates to begin to improve over the next few quarters,” the company wrote in its earnings release.
Nevertheless, the company continued to feel the struggles of the used truck market. Gains on sales of assets were $2.5 million compared with $6.8 million in second quarter 2016, which included a $3.4 million real estate gain. Werner sold fewer trucks and fewer trailers in the quarter than a year ago.
“The used truck pricing market remained difficult but relatively stable in second quarter 2017 due to a higher than normal supply of used trucks in the market and low buyer demand,” it wrote. “Due to the weak used truck market, we reduced the estimated life of certain trucks to more rapidly depreciate the trucks to their residual values. This change resulted in additional depreciation expense in fourth quarter 2016 of $4.1 million, in first quarter 2017 of $2.6 million and in second quarter 2017 of $0.7 million.”
Werner Global Logistics revenue and operating income receded from a year ago. Revenue declined 3% to $100.8 million and operating income plummeted 65% to $2.3 million. The logistics division consists of freight brokerage, freight management, intermodal, international business and the final mile division launched with an eye to e-commerce. Werner acknowledged that similar to other freight brokers, margins compressed in the quarter.
“Werner Logistics achieved solid revenue growth year over year in our truck brokerage solution, while our intermodal and international solutions had lower revenues due to more challenging market conditions,” the company stated. “[But] a large Werner Logistics Freight Management customer (5.7% of Werner Logistics revenues in second quarter 2016) that was acquired in 2015 transitioned to their parent company’s transportation platform mid-quarter during first quarter 2017.”
Through the first half of the year, revenue is up 4% to $1 billion and profits rose 2% to $39.2 million or 54 cents.
Werner ranks No. 16 on the Transport Topics Top 100 list of the largest North American for-hire carriers.
