Werner Enterprises said Wednesday that volumes during this 12 months’s peak season will shake out largely consistent with last 12 months but pricing will likely be notably lower.
The corporate’s rate guidance for the fourth quarter calls for revenue per total mile in its one-way segment to be flat to barely down from the third quarter but off 7% to 9% 12 months over 12 months (y/y). Its outlook for the dedicated fleet was unchanged as revenue per truck per week continues to be expected to complete the total 12 months flat to up 3%. That metric was up 1.8% 12 months so far through the third quarter.
Werner (NASDAQ: WERN) reported third-quarter adjusted earnings per share of 42 cents, 7 cents light of the consensus estimate and 48 cents lower y/y.
In comparison with the year-ago quarter, lower gains on sale were a 14-cent headwind, net interest expense was a 5-cent headwind (increased debt from past acquisitions) and a lower tax rate was a 1-cent tailwind. The result excluded 5 cents in acquisition-related expenses and costs from an insurance claim that has been appealed.
Revenue in the corporate’s truckload segment was 8% lower y/y to $572 million, down 4% y/y excluding fuel surcharges.
Dedicated revenue was down 2% y/y excluding fuel surcharges as average trucks in service were off by an analogous percentage. Revenue per truck per week (excluding fuel) was down just barely y/y.
Management noted some customers are using fewer trucks on average than they were a 12 months ago. Nevertheless, it said truck counts with its largest customer, Dollar General (NYSE: DG), were up sequentially. Werner also has plans for further expansion with the corporate, which has been a priority as Dollar General is constructing its own private fleet.
“Contained in the constructing our confidence level is high relative to that relationship,” said Derek Leathers, chairman, president and CEO, on a Wednesday call with analysts.
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One-way revenue was down 7% y/y excluding fuel surcharges as average trucks in service were down 6% and revenue per truck per week was off 2% excluding fuel. Revenue per total mile (excluding fuel) was down 5% y/y within the period.
The TL segment recorded a 91.5% adjusted operating ratio, which was 640 basis points worse y/y. Werner has identified greater than $43 million in cost savings opportunities, of which 70% has been realized.
The corporate plans to proceed to cut back its average tractor age to cut back maintenance expenses. The expense line was 80 bps lower y/y as a percentage of consolidated revenue. The typical tractor age was 2 years within the third quarter in comparison with 2.3 years in the identical period last 12 months. The corporate was running greater than 500 trucks with over 400,000 miles a 12 months ago. It’s now operating fewer than 50 units with high mileage currently.
Logistics revenue increased 23% y/y to $230 million partly resulting from the acquisition of ReedTMS last November. Lower revenue per load in truck brokerage was a headwind. Excluding the acquisition, loads were 8% higher y/y and up 9% from the second quarter.
The logistics unit reported a 1.4% adjusted operating margin, which was 160 bps worse y/y and 100 bps lower than within the second quarter.
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