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Yahoo
30-04-2025
- Business
- Yahoo
CEO Leathers says Werner ‘acting decisively' after red-ink quarter
Coming off a quarter with not just a net loss but an operating deficit as well, Werner Enterprises CEO Derek Leathers tackled a performance that he said 'clearly did not meet our expectations.' 'We faced several challenges during the quarter, some industry-wise, some specific to Werner, but we are acting decisively to address them,' he said. In post-market trade, Werner (NASDAQ: WERN) stock was down as much as 5%, and it's down about 25% in the past three months. A summary of the company's key earnings metrics can be found here. Here are five takeaways from Werner's first-quarter earnings call. Asked by analyst Scott Group whether the operating loss for Werner was a first – Group, a longtime follower of Werner, said he could not recall another – Leathers said that 'the quarter is in fact an outlier. So your model is correct.' 'We are taking this seriously,' Leathers said. 'This does not represent who we are, and we are going to make appropriate near-term moves, but always with an eye toward the reality of 'this too shall change.'' One positive on the financial side: Werner recently closed a deal for a $300 million receivables-backed credit line. Given that, Leathers said, 'we are well-positioned to be opportunistic relative to share repurchases and M&A.' He said liquidity at Werner is 'at a high point.' Leathers, in a discussion about the impact of tariffs on Werner's business, described what he called 'this sort of air pocket that's been largely talked about over the last several days.' He was referring to the reduction in inbound oceangoing freight from ports in Asia. 'That air pocket will have to be filled to some extent,' Leathers said, with other freight movement to substitute for demand that might be expected to slide as a result of that falloff in imports. He said Werner customers have been telling him their inventory levels 'are in good shape,' so there won't be a rescue from those customers needing to increase their freight demand. 'We'll be ready to respond regardless of which direction that demand side of the equation goes,' Leathers said. At Werner, Leathers said the company sees three separate areas of impact. One is on its own capital expenditures. The second is its exposure to Mexico, a significant part of the Werner business. The third is the macroeconomic impact that all companies will need to deal with. Internally, like any trucking company, Werner faces the prospect of higher equipment costs as it rolls over its fleet. 'We will continue to invest in trucks, trailers, technology and talent, while maintaining optionality when it comes to evaluating the impact from tariffs on our equipment costs,' Leathers said in his opening remarks. He added that the average age of the Werner fleet is 2.2 years. Leathers said most Mexican business for Werner is in the One Way segment, but he expressed no concerns for that activity. 'We have developed strong partnerships with customers and partner carriers as one of the largest transportation providers in the U.S. with a strong presence in Mexico,' which he said is a 'competitive advantage.' Mexico represents about 10% of Werner's business, according to Leathers. As far as the macro impact, Leathers said that so far, even in a quarter in which the company lost money, 'the consumer has remained engaged and resilient.' Werner's longtime role as a key carrier for discount retailers has held up strongly in past economic downturns, Leathers said. Leathers said it was 'a misnomer that we constantly hear about' that margins in Werner's Dedicated segment are 'some sort of drag as this market progresses further from here.' Noting that the company has 'studied this pretty closely,' he said that 'if you look back over the last 10 years, about eight out of 10 years, Dedicated does outperform our One Way margins,' referring to the other major transport part of the company's Truckload Transportation Services segment. He noted that Werner does not disclose specific margins within its subdivisions but that the margins in Dedicated 'stand up very well in both good markets and bad.' The Dedicated segment also has had several recent wins in securing new business, Leather said. The wins in what Leathers said was 'a competitive environment right now' will immediately boost operating margin in the Dedicated segment. They have not yet begun so there was no impact to the company's first-quarter earnings report, he said. Some of the new deals may not show up until the third quarter, Leathers added, but otherwise will be part of the company's second-quarter results. 'The win rate will continue to be pressured based on the competitive environment we're in,' Leathers said. 'But we like the momentum.' Werner posted insurance costs of more than $40 million. What Leathers called 'elevated insurance costs and claims' had an impact on earnings per share of 9 cents, with 8 cents of that coming from a nuclear verdict late in the quarter. Insurance costs in the first quarter of 2025 were $43.8 million. A year ago, they were $36.4 million. A spokeswoman for Werner told FreightWaves the judgment referred to by Leathers was from a 2019 accident in Louisiana, with the decision handed down in the quarter. With interest, the judgement was approximately $7 million, she said. It is a separate case from the now more than $100 million nuclear verdict Werner was hit with in 2018 in Texas that is now sitting before the Texas Supreme Court. (Oral arguments were in December, and a verdict could come any day … or in weeks or months.) Responding to an analyst question about the executive order signed by President Donald Trump requiring English proficiency to drive a truck, Leathers noted that Werner tests for English proficiency, 'so we're in great shape.' But he added that he doesn't see any sudden changes in the market as a result of the executive order, noting that the rule has long been in place. But it also had guidance going back to the Obama administration not to be enforced. 'It's difficult to change enforcement overnight at roadside levels,' Leathers said. 'It's harder than people think. But if you tie it back to the core reason why that regulation exists, which was safety, then we certainly support the principle behind the original regulation.' And that principle, he added, was that 'drivers need to be able to communicate with first responders at the scene of an accident.' As to what the rule would mean 'tomorrow,' Leathers said, 'it would be inappropriate for me to guess.' Enforcement levels may vary around the country, according to Leathers. But whether 'you have three loads stopped somewhere in the country, or you've got 30, you still have freight not moving if a driver was to be put out of service.' A 'decent percentage' of drivers cannot speak English, Leathers said. He suggested the industry seems to believe that number is 10% to 15%, but 'that doesn't mean that much capacity leaves tomorrow because of all the enforcement issues I've described.' More articles by John Kingston A market on the precipice: 5 takeaways from the April State of Freight TFI's Bedard upbeat on revamped US LTL operations even as numbers sink 2 more charged in death of Louisiana staged truck accident witness The post CEO Leathers says Werner 'acting decisively' after red-ink quarter appeared first on FreightWaves. Sign in to access your portfolio
Yahoo
30-04-2025
- Business
- Yahoo
Werner (NASDAQ:WERN) Misses Q1 Revenue Estimates
Freight delivery company Werner (NASDAQ:WERN) missed Wall Street's revenue expectations in Q1 CY2025, with sales falling 7.4% year on year to $712.1 million. Its non-GAAP loss of $0.12 per share was significantly below analysts' consensus estimates. Is now the time to buy Werner? Find out in our full research report. Revenue: $712.1 million vs analyst estimates of $737.2 million (7.4% year-on-year decline, 3.4% miss) Adjusted EPS: -$0.12 vs analyst estimates of $0.12 (significant miss) Adjusted EBITDA: $64.22 million vs analyst estimates of $89.32 million (9% margin, 28.1% miss) Operating Margin: -0.8%, down from 2% in the same quarter last year Free Cash Flow Margin: 3.1%, down from 9% in the same quarter last year Market Capitalization: $1.74 billion 'First quarter results were below our expectations due to elevated insurance costs, extreme weather, a smaller fleet and changes in customer activity stemming from tariff-induced uncertainty. Despite these challenges, we are seeing strength in Dedicated with a streak of wins in new fleet contracts to be implemented in the coming quarters. One-Way Truckload revenue per total mile was up modestly for the third consecutive quarter, despite weather disruptions, increased deadhead, and network inefficiencies. Logistics improved operating income and margin with ongoing focus on cost management,' said Derek Leathers, Chairman and CEO. Conducting business in over a 100 countries, Werner (NASDAQ:WERN) offers full-truckload, less-than-truckload, and intermodal delivery services. Examining a company's long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Werner's sales grew at a sluggish 3.9% compounded annual growth rate over the last five years. This was below our standard for the industrials sector and is a rough starting point for our analysis. Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Werner's performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.9% annually. Werner isn't alone in its struggles as the Ground Transportation industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time. We can better understand the company's revenue dynamics by analyzing its most important segments, Truckload Transportation and Logistics, which are 70.5% and 27.5% of revenue. Over the last two years, Werner's Truckload Transportation revenue (deliveries made with Werner's fleet) averaged 7.8% year-on-year declines while its Logistics revenue (brokered deliveries using third-party fleets) was flat. This quarter, Werner missed Wall Street's estimates and reported a rather uninspiring 7.4% year-on-year revenue decline, generating $712.1 million of revenue. Looking ahead, sell-side analysts expect revenue to grow 5% over the next 12 months. Although this projection indicates its newer products and services will fuel better top-line performance, it is still below average for the sector. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories. Werner was profitable over the last five years but held back by its large cost base. Its average operating margin of 7.2% was weak for an industrials business. This result isn't too surprising given its low gross margin as a starting point. Analyzing the trend in its profitability, Werner's operating margin decreased by 9.3 percentage points over the last five years. This raises questions about the company's expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Werner's performance was poor no matter how you look at it - it shows that costs were rising and it couldn't pass them onto its customers. This quarter, Werner's breakeven margin was down 2.8 percentage points year on year. Conversely, its gross margin actually rose, so we can assume its recent inefficiencies were driven by increased operating expenses like marketing, R&D, and administrative overhead. Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions. Sadly for Werner, its EPS declined by 34.4% annually over the last five years while its revenue grew by 3.9%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes. Diving into the nuances of Werner's earnings can give us a better understanding of its performance. As we mentioned earlier, Werner's operating margin declined by 9.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don't tell us as much about a company's fundamentals. Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business. For Werner, its two-year annual EPS declines of 71.3% show it's continued to underperform. These results were bad no matter how you slice the data. In Q1, Werner reported EPS at negative $0.12, down from $0.14 in the same quarter last year. This print missed analysts' estimates. Over the next 12 months, Wall Street expects Werner's full-year EPS of $0.28 to grow 338%. We struggled to find many positives in these results. Its Logistics revenue missed and its revenue fell short of Wall Street's estimates. Overall, this quarter could have been better. The stock traded down 3.8% to $26.60 immediately after reporting. Werner underperformed this quarter, but does that create an opportunity to invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. Sign in to access your portfolio
Yahoo
17-03-2025
- Automotive
- Yahoo
Werner® Named an Inaugural Truckload Carriers Association Elite Fleet
OMAHA, Neb., March 17, 2025--(BUSINESS WIRE)--Werner Enterprises, Inc. (Nasdaq: WERN), a premier transportation and logistics provider, is honored to be named a 2025 Truckload Carriers Association (TCA) Elite Fleet, recognizing the company's commitment to providing a top-tier workplace for professional drivers. This inaugural designation highlights carriers fostering exceptional work environments, competitive compensation and innovative practices empowering their professional drivers. Developed in partnership with the University of Denver's Transportation & Supply Chain Institute, the TCA Elite Fleet certification is awarded to carriers excelling in key areas such as driver engagement, compensation, benefits, training, safety and company culture. Werner's dedication to these principles has earned it a place among the 48 inaugural honorees. "At Werner, we know the power behind our success comes from our professional drivers," said Werner's Chairman and CEO, Derek Leathers. "Being named a TCA Elite Fleet reinforces our unwavering commitment to creating a workplace where professional drivers feel valued, supported and empowered to succeed." The TCA Elite Fleet certification process is rigorous, requiring carriers to undergo a detailed application, have their professional drivers surveyed for validation and earn top scores across multiple categories. This recognition underscores Werner's dedication to providing a supportive and empowering work environment for professional drivers, ensuring they have the resources, technology and support needed to thrive in today's transportation industry. TCA Elite Fleets will be honored at TCA's Annual Convention in Phoenix, with a special awards program on March 17. View the full list of TCA Elite Fleets here. Learn more about Werner at About Werner Enterprises Werner Enterprises, Inc. delivers superior truckload transportation and logistics services to customers across the United States, Mexico and Canada. With 2024 revenues of $3.0 billion, an industry-leading modern truck and trailer fleet, nearly 13,000 talented associates and our innovative Werner EDGE® technology, we are an essential solutions provider for customers who value the integrity of their supply chain and require safe and exceptional on-time service. Werner® provides Dedicated and One-Way Truckload services as well as Logistics services that include truckload brokerage, freight management, intermodal and final mile. Werner embraces inclusion as a core value and manages key risks and opportunities through a balanced sustainability strategy. View source version on Contacts Jill Samuelson, Associate Vice President – Marketing and CommunicationsWerner Enterprises, Inc.(D) 402.819.5319 | (C)
Yahoo
08-02-2025
- Automotive
- Yahoo
Werner optimistic after tough Q4
Management from Werner Enterprises noted some green shoots on a Thursday quarterly call but the period was marred by unfavorable claims developments. Werner (NASDAQ: WERN) reported fourth-quarter adjusted earnings per share of 8 cents after the market closed, 14 cents below the consensus estimate and 31 cents lower year over year. The number included a $19 million hit, or 22 cents per share, from unfavorable changes in liability claims. The company said the 'unprecedented rise in verdicts and litigation settlements' came despite operating at 'near 20-year record lows in U.S. Department of Transportation preventable accidents per million miles.' Werner has made significant investments in collision-avoidance technology and has numerous safety initiatives in place but one claim erases those efforts. 'You can have a phenomenal year and even have, on the handful of claims, really good facts [surrounding the case], and it doesn't necessarily always lead to a good outcome,' said Chairman and CEO Derek Leathers on the call. He noted progress on tort reform in some states but said the industry still has a long road ahead to fix its insurance issues. 'We're seeing ongoing progress being made at state levels where we're getting some rationality into the room relative to how liability should be treated so some day we don't wake up with $35-a-dozen eggs,' Leathers said. Looking past the insurance headwinds, he called out some green shoots in the truckload market like an increase in tender rejections and the move off the bottom for spot rates. He said unlike the past two years, external impacts like winter storms now cause a reaction to rejections and rates. The company is seeing low- to mid-single-digit rate increases so far in the one-way TL bid season. The adjusted EPS result excluded nonrecurring items like acquisition-related expenses, costs from an insurance claim that was appealed and gains from equity investments. Gains on the sale of equipment, which are included in the number, were down 55% y/y to $1.4 million. (Lower gains on sale were a 2-cent headwind at a normalized tax rate.) Revenue in the TL segment declined 9% y/y to $527 million. Average trucks in service declined by a high-single-digit percentage in both the dedicated and one-way fleets. That was partially offset by a 5.1% increase in revenue per truck per week (excluding fuel surcharges) in one-way and a 1.1% increase to the metric in dedicated. The TL unit reported a 96.9% adjusted operating ratio (inverse of operating margin), 440 basis points worse y/y. The jump in insurance expense was a nearly 400-bp margin headwind for the segment during the quarter. The company is forecasting revenue per truck per week at the dedicated fleet to be flat to up 3% y/y for full-year 2025. One-way revenue per total mile is expected to increase by 1% to 4% in the first half of the year. The logistics unit reported a 6% y/y revenue decline to $213 million and a small operating profit. The adjusted operating margin was 1.1%, 20 bps worse y/y. This was the best quarter for the segment in 2024. Werner outlined an additional $25 million in cost savings for 2025 to go along with the $100 million savings run rate achieved over the past two years. First-quarter adjusted EPS is expected to be roughly in line with the 14 cents earned in the 2024 first quarter, which was 3 cents light of the consensus estimate at the time of the print. More FreightWaves articles by Todd Maiden: XPO shares up on strong Q4 financial performance Old Dominion poised to take share when market turns Pricing index logs fastest growth rate since freight recession began The post Werner optimistic after tough Q4 appeared first on FreightWaves. Sign in to access your portfolio
