Earnings Watch: Werner rises 27%
OMAHA, NE – Trucking and logistics provider Werner Enterprises has reported that its earnings climbed 27% for the second quarter, compared to the same period a year ago.
Werner said it ended Q2 with earnings per diluted share of $0.32 compared to earnings per diluted share of $0.25 for Q2 2016. The company noted that Q2 ’16 results included a $3.4 million pre-tax gain, or three cents per diluted share, on the sale of real estate.
“Second quarter 2017 freight demand in our One-Way Truckload fleet improved seasonally throughout the quarter,” Werner said in a statement. “The seasonal improvement was better than normal in some periods of second quarter 2017, compared to seasonally softer than normal freight demand in second quarter 2016. Freight volumes thus far in July 2017 in One-Way Truckload have been seasonally better than normal and stronger than the same period in July 2016.”
Werner reported average revenues per tractor per week increased 4.1% in this year’s Q2 compared to the same period a year earlier due to a 2.4% increase in average revenues per total mile and a 1.7% increase in average miles per truck.
“During second and third quarter of 2016, to take advantage of a strengthening Dedicated market, we moved trucks from One-Way Truckload, lessening the need to find freight for trucks in the more challenged one-way truckload market,” the company pointed out “The shifting of trucks to shorter-haul Dedicated from longer-haul One-Way Truckload had a favorable impact on revenue per total mile and an unfavorable impact on miles per truck.”
The company also advised that freight volume metrics have improved, 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, particularly noting the expected tightening of supply when the electronic hours of service mandate for the trucking industry becomes effective in December of this year.”
Stating that it has completed “a significant reinvestment” to cut the average age of trucks and trailers, Werner said its investment in newer equipment is improving driver satisfaction, raising operational efficiency, and helping it better manage maintenance, safety and fuel costs.
“We intend to maintain our newer fleet age of trucks and trailers,” said Werner. “The average age of our truck fleet was 1.9 years as of June 30, 2017. Net capital expenditures in the first half of 2017 were $70 million compared to $261 million in the first half of 2016. For the full year of 2017, we expect net capital expenditures to be in the range of $175 million to $225 million, which is substantially lower than the $430 million of net capital expenditures in 2016.”
Werner allowed that driver recruitment “remains challenging,” noting such negative factors as a declining number of, and increased competition for, driver training school graduates, a low and declining national unemployment rate, aging truck driver demographics, and increased truck safety regulations. Still, it stated that proactive moves taken in the last two years, including raising driver pay, lowering the fleet age, installing safety and training features on all new trucks and investing in our driver training schools, has enabled the carrier to once again improve driver turnover to achieve lowest second quarter rate in 19 years.
The company also pointed out that eliminating fuel surcharge revenues, which are “generally a more volatile source of revenue,” shows that its Truckload segment’s operating ratios for second quarter 2017 and second quarter 2016 were 91.1% and 94.0%, respectively, and for year-to-date 2017 and 2016 they are 92.5% and 92.7%, respectively, when fuel surcharge revenues are reported as revenues instead of a reduction of operating expenses.
“Our financial position remains strong,” Werner declared. “As of June 30, 2017, we had $75 million of debt outstanding and over $1 billion of stockholders’ equity.”
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