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Werner's (WERN) Q1 Earnings Top Estimates, Increase 70% Y/Y

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Werner Enterprises Inc. WERN reported first-quarter 2021 earnings of 68 cents per share, which surpassed the Zacks Consensus Estimate of 63 cents. Moreover, the bottom line surged 70% year over year. Reduced operating expenses aided the bottom line.

Total revenues of $616.4 million outperformed the Zacks Consensus Estimate of $616.1 million. The top line inched up 4% on a year-over-year basis. The uptick can be primarily attributed to Logistics revenues growth.

Operating income (adjusted) came in at $62.7 million in the reported quarter, up 68% year over year. Moreover, adjusted operating margin increased 390 basis points (bps) to 10.2%. Operating expenses dropped 1.4% to $553.97 million.

Werner Enterprises, Inc. Price, Consensus and EPS Surprise

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 declined marginally on a year-over-year basis to $462.94 million. The downside was caused by 7% fall in fuel surcharge revenues and 0.9% decline in average trucks in service. Adjusted operating income surged 67% to $58.88 million. Additionally, adjusted operating margin expanded 510 bps to 12.7%. Adjusted operating ratio (operating expenses, as a percentage of revenues) improved 510 bps to 87.3%. Notably, lower the value of the metric, the better.

Werner Logistics segment’s revenues totaled $137.85 million, up 23% year over year due to 23% rise in intermodal logistics volume. The segment reported operating income of $4.57 million, skyrocketing more than 100% from the year-ago quarter’s levels. Further, operating margin was 3.3%, up 230 bps from first-quarter 2020 levels. The Other segment accounted for the rest of the top line.

Liquidity

As of Mar 31, 20201 Werner, carrying a Zacks Rank #3 (Hold), had cash and cash equivalents of $83.13 million compared with $29.33 million at 2020 end. Long-term debt (net of current portion) totaled $175 million at the end of the first quarter, flat compared with2020-end reported figure. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

2021 Outlook

Werner still anticipates TTS truck growth of 1-3% year over year in 2021. The company continues to expect modest fleet growth for full year 2021.

Net capital expenditures are estimated in the band of $275-$300 million (unchanged from the previous guidance).

Effective income tax rate is still expected in the range of 24.5-25.5%
Truck age and Trailer age is expected to be at two years and low-to-mid “four” years, respectively.

Q2 Outlook

The company expects gains on sales of equipment in the range of $7-$10 million in the second quarter of 2021.

Under the TTS guidance, One-Way Truckload revenues per total mile are expected to increase in the 13-16% band during the second quarter of 2021 from second-quarter 2020 levels.

Sectorial Snapshot

Within the broader Transportation sector, Delta Air Lines DAL, J.B. Hunt Transport Services JBHT and Kansas City Southern KSU recently reported first-quarter 2021 results.

Delta, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding $1.70 from non-recurring items) of $3.55 per share. The figure was wider than the Zacks Consensus Estimate of a loss of $3.08. Total revenues of $4,150 million topped the Zacks Consensus Estimate of $3,821.3 million.

J.B. Hunt, a Zacks #3 ranked player, reported earnings of $1.37 per share. The figure beat the Zacks Consensus Estimate of $1.18. Total operating revenues of $2,618.1 million also surpassed the Zacks Consensus Estimate of $2,486.9 million.

Kansas City Southern, carrying a Zacks Rank of 3, reported earnings (excluding 23 cents from non-recurring items) of $1.91 per share. The figure missed the Zacks Consensus Estimate of $2. Quarterly revenues of $706 million lagged the Zacks Consensus Estimate of $714.3 million.

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