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Werner (WERN) Q3 Earnings & Revenues Miss, Decrease Y/Y

Zacks Equity Research

Werner Enterprises, Inc. WERN reported third-quarter 2019 adjusted earnings per share (excluding a penny from non-recurring items) of 57 cents, missing the Zacks Consensus Estimate of 60 cents. The bottom line also declined year over year. Results were affected by softness in freight demand and weak pricing.

Total revenues of $618.3 million also lagged the Zacks Consensus Estimate of $624.6 million and decreased 1.8% year over year primarily due to lower fuel surcharge and logistics revenues.

Operating income (adjusted) came in at $54.16 million in the reported quarter, down 11.6%. Moreover, adjusted operating margin dipped 90 basis points (bps) to 8.8%. Operating expenses decreased marginally to $564.91 million.

Werner Enterprises, Inc. Price, Consensus and EPS Surprise

 

Werner Enterprises, Inc. Price, Consensus and EPS Surprise

Werner Enterprises, Inc. price-consensus-eps-surprise-chart | Werner Enterprises, Inc. Quote


Segmental Results

Truckload Transportation Services (TTS) segment’s revenues of $480.4 million slipped 1% year over year. This downside was due to 1.5% decrease in average revenues per truck and lower fuel surcharge revenues. Adjusted operating income declined 13% to $49.7 million in the quarter. Additionally, adjusted operating margin contracted 140 basis points (bps) to 10.3%. Adjusted operating ratio also deteriorated 140 bps to 89.7%.

Werner Logistics segment’s revenues grossed $121.3 million, down 6% year over year. Segmental results were hampered by weak intermodal volumes due to delayed peak season and increased truck capacity. Operating income too plunged 37% to $3 million in the quarter under discussion. Further, operating margin fell 120 bps to 2.5%. The “other” segment accounted for the remainder of the top line.

Liquidity

As of Sep 30, 2019, the company had cash and cash equivalents of $14.35 million compared with $33.93 million at 2018 end. Long-term debt (net of current portion) totaled $275 million at the end of the third quarter compared with $50 million at 2018 end.

2019 Outlook

The Zacks Rank #3 (Hold) company anticipates truck growth at the lower end of 3-5% for the current year. However, truck growth is not expected in the fourth quarter of the year. Meanwhile, one-way truckload revenue per total mile is anticipated to either decline up to 3% or be flat year over year. The company expects gains on the sales of equipment at the lower end of $18-$20 million. Effective tax rate is predicted at the lower end of the 25-26% band. Net capital expenditures are estimated at the lower end of $275-$300 million. The company hopes to maintain the average age of its truck and trailer fleet either in the range of 1.8-4years or near this level. 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 awaiting third-quarter earnings reports from key players like Expeditors International of Washington, Inc EXPD, Air Lease Corporation AL and Hertz Global Holdings, Inc HTZ. Hertz will release third-quarter results on Nov 4. Expeditors and Air Lease will announce the same on Nov 5 and Nov 7, respectively.

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