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Werner Enterprises (WERN) Q1 Earnings Beat on Improved Fleet

Zacks Equity Research

Werner Enterprises, Inc. WERN delivered first-quarter 2019 adjusted earnings per share of 52 cents, beating the Zacks Consensus Estimate of 49 cents. Moreover, the bottom line surged 37% year over year on the back of new truck and trailer fleet.

However, total revenues of $596.1 million fell short of the Zacks Consensus Estimate of $623 million but increased 6% from the year-ago figure. The top line benefited from dedicated fleet expansion, lane mix changes and higher contractual rates.

Operating income (adjusted) came in at $49.17 million in the reported quarter, up 40%. Also, operating margin expanded 200 basis points to 8.2% on the back of an improved fleet among other factors. Meanwhile, operating expenses summed $548.1 million in the quarter under consideration, rising 3.9%.

Werner Enterprises, Inc. Price, Consensus and EPS Surprise

 

Werner Enterprises, Inc. Price, Consensus and EPS Surprise | Werner Enterprises, Inc. Quote

Segmental Results

Truckload Transportation Services (TTS) segment’s revenues totaled $462.89 million, up 7.3% year over year. This upside was owing to the rise in average trucks in service and an increase in average revenues per truck. Adjusted operating income jumped 32% to $44.1 million in the quarter on higher revenues and an effective cost management. Additionally, adjusted operating margin was up180 basis points (bps) to 9.5%. Moreover, adjusted operating ratio improved 180 bps to 90.5%.

Werner Logistics segment’s revenues grossed $117.37 million, flat year over year. Segmental results were hampered by severe winter weather conditions and lower spot pricing trends among other factors. Operating income soared 71% to $4.71 million in the quarter under discussion. Additionally, operating margin improved 170 bps to 4% on effective cost management. The “other” segment accounted for the remainder of the top line.

Liquidity

As of Mar 31, 2019, the company had cash and cash equivalents of $64.74 million compared with $33.93 million at 2018 end. Long-term debt (net of current portion) totaled $50 million at the end of the first quarter, flat compared to that in 2018 end.

2019 Outlook Intact

The Zacks Rank #3 (Hold) company continues to anticipate 3-5% truck growth in the current year with the same expected, primarily in its Dedicated fleet. Moreover, this growth is expected in the first three quarters of the year. Additionally, one-way truckload revenue per total mile is still estimated to increase in the 4-8% range. Meanwhile, the company expects gains on the sales of equipment between $18 million and $20 million. Effective tax rate is predicted in the 25-26% band while net capital expenditures are anticipated between $275 million and $300 million. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting first-quarter earnings reports from key players, namely Expeditors International of Washington, Inc. EXPD, Air Lease Corporation AL and Hertz Global Holdings, Inc HTZ. While Hertz Global will report first-quarter earnings on May 6, Expeditors and Air Lease will announce the same on May 7 and May 9, respectively.

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