Werner's Second-Quarter Earnings to Trail Analyst Expectations
Werner Enterprises Inc. said difficult rate negotiations, lower spot-market prices and other factors in a sluggish freight market would reduce its second-quarter earnings to a range of 21 cents to 25 cents per share, which is below the average estimate of 40 cents per share based on Bloomberg’s analyst survey.
Earnings in last year’s second quarter were 44 cents per share, and first-quarter net income was 28 cents per share.
Werner, which ranks No. 16 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, also attributed the shortfall to higher costs for driver pay implemented in the first quarter and more compensation to independent contractors. Weak used truck prices also hurt, the Omaha, Nebraska-based company’s statement said.
Werner’s announcement was the first report that earnings would trail Wall Street estimates, prompting commentary from analysts about broader market conditions.
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“Preliminary results confirm our checks suggesting fundamentals have materialized softer than expected quarter to date, reflecting incremental capacity and elevated inventories,” said a report from Todd Fowler, an analyst at Keybanc Capital Markets.
Also included in Werner’s results was a $3.4 million pre-tax gain from a real estate sale.
"To address these more challenging market conditions, Werner continues to focus on various cost-management initiatives,” the statement said, including a commitment not to increase the size of its truck fleet until there is meaningful improvement” in market conditions improve. Previously planned purchases of new equipment will continue to lower the average fleet age to 1.5 years.
