Werner Profits Drop 40% But Still Top Analyst Forecasts
Werner Enterprises Inc. continued a difficult quarter for truckload companies, suffering a 40% drop in profits to close out this past year but still beating the lackluster forecast of analysts.
The Omaha, Nebraska, carrier, which ranks No. 15 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, generated $21.8 in profits in the fourth quarter, or 30 cents per share. One year ago, the number was $36.6 million, or 51 cents.
J.B. Hunt Transport Services Inc. has been the only publicly traded truckload carrier to post higher year-over-year profits in the three-month period ending Dec. 31.
Swift Transportation, Knight Transportation Inc., Heartland Express Inc., and Covenant Transportation Group Inc. all reported double-digit percentage declines in net income, although all were profitable.
Swift ranks No. 6, Knight ranks No. 29, Heartland ranks No. 41 and Covenant ranks No. 43 on the for-hire TT100.
Werner told investors that conditions in the trucking industry were better than in the third quarter.
“Freight volumes and transactional spot market pricing in the one-way truckload market improved in fourth-quarter 2016 from third-quarter 2016," the company wrote in a statement. "We experienced more typical seasonal freight volumes in one-way truckload in fourth-quarter 2016, which were better than fourth-quarter 2015."
Revenues dropped 2% to $518.8 million due to a weak performance in the trucking segment outpacing a strong performance in the smaller logistics and drayage unit. Trucking revenues dropped 6% to $347.5 million, while logistics rose 11% to $107.2 million.
Werner averaged 7,178 trucks in truckload unit and 80 intermodal drayage trucks in the logistics segment, slashing total tractors on the road on a year-over-year and sequential basis. Nevertheless, revenue per tractor per week increased 3.8% sequentially due to higher revenue per total mile. On a year-over-year basis, revenue per tractor per week fell 1.9%.
“In fourth-quarter 2016, transactional spot rates demonstrated material improvement, and contract rates began to stabilize for new contracts. Expectations are rising for improved pricing in 2017,” the company wrote.
However, Werner also increased depreciation costs $4.1 million because of the weak used-truck market, which the company said would continue in the first quarter of 2017. Insurance and claims expense in fourth-quarter 2016 rose almost $4 million due to higher accident claims in 2015, but company executives added that frequency declined 8% last year compared with 2015.
Nevertheless, Werner came out 4 cents ahead of the consensus forecast of analysts, as compiled from Bloomberg News. The trucking company also beat the estimates on net income and revenue.
