Werner's (WERN) Q4 Earnings Beat Estimates, Decline Y/Y
Werner Enterprises, Inc. WERN reported first-quarter 2020 earnings per share (excluding 7 cents from non-recurring items) of 40 cents, which surpassed the Zacks Consensus Estimate of 35 cents. However, the bottom line declined 23.1% year over year.
Moreover, total revenues of $592.7 million beat the Zacks Consensus Estimate of $574.8 million. However, top line dropped marginally year over year due to lower fuel surcharge and logistics revenues.
Operating income (adjusted) came in at $31.1 million in the reported quarter, down 35%. Moreover, non-GAAP adjusted operating margin plunged 190 basis points (bps) to 6.3%. Operating expenses increased 2.5% to $561.6 million.
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 amounted to $464.86 million, up from $462.89 million in the year-ago quarter. The upside can be attributed to 3.2% increase in average revenues per truck. Adjusted operating income declined 20% to $35.3 million in the quarter. Additionally, adjusted operating margin contracted 190 bps to 7.6%. Adjusted operating ratio also deteriorated 190 bps to 92.4%. Notably, lower the metric, the better.
Werner Logistics segment’s revenues totaled $112.2 million, down 4% year over year. Segmental results were hampered by reduced transactional freight opportunities and intense competition from logistics rivals. Operating income plunged 77% to $1.1 million in the quarter under discussion. Further, operating margin fell 300 bps to 1%. The Other segment accounted for the rest of the top line.
Liquidity
As of Mar 31, the company had cash and cash equivalents of $72.23 million compared with $26.41 million at 2019 end. Long-term debt (net of current portion) totaled $175 million at the end of the first quarter compared with $225 million at 2019 end.
2020 Guidance
The Zacks Rank #3 (Hold) company anticipates truck growth to either remain flat or decline up to 5%. Gains on sales of equipment for the current year has been withdrawn due to weak demand in used truck market. Additionally, net capital expenditures (estimated between $260 million and $300 million) has been consistent from the previous guidance. During the first half of 2020, one-way truckload revenues per total mile are still projected at a decline of in 5-7%. Effective tax rate is still expected in the25-26% band for the first half of 2020. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Sectorial Snapshot
Apart from Werner Enterprises, there are some other companies in the Zacks Transportation sector like CSX Corporation CSX, Union Pacific Corporation UNP and Canadian Pacific Railway Limited’s CP that have delivered better-than-expected earnings in the first quarter.
CSX reported first-quarter 2020 earnings of $1 per share, which beat the Zacks Consensus Estimate of 92 cents. However, the bottom line fell approximately 2% year over year due to lower revenues.
Union Pacific’s first-quarter 2020 earnings of $2.15 per share surpassed the Zacks Consensus Estimate of $1.86. Moreover, the bottom line increased 11.4% on a year-over-year basis.
Canadian Pacific’s first-quarter 2020 earnings (excluding $1.08 from non-recurring items) of $3.3 (C$4.42) per share surpassed the Zacks Consensus Estimate of $2.86. Quarterly earnings surged more than 55% year over year.
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