Werner Posts Q3 Revenue Gain Despite Cost-Driven Losses
Class Action Lawsuit Settlement Payments Hit Bottom-Line Results
Key Takeaways:
- Werner Enterprises posted a third-quarter net loss of $20.6 million, compared with a $6.6 million profit a year earlier, largely due to $21.4 million in legal settlement costs.
- Revenue rose 3% to $771.5 million, as logistics sales climbed 12% while truckload revenue slipped 1% amid persistent freight market weakness.
- The company said it is focusing on cost control, technology investments and diversification into new verticals to position for long-term growth despite ongoing market challenges.
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Werner Enterprises saw its third-quarter bottom line swing from a year-ago profit to a loss as one-time expenses took a toll on its three-month results.
The Omaha, Neb.-based freight and logistics company in October entered into an $18 million agreement to settle a class action lawsuit brought by a group of plaintiffs alleging unpaid wages, unauthorized deductions and other items. Werner also incurred legal fees of $3.4 million related to this litigation. The company listed these items as adjustments to its operating income on a basis not adhering to generally accepted accounting principles. The company posted an operating loss of $13 million, compared with operating income of $17.6 million a year ago.
Werner said its Q3 net loss attributable to itself was $20.6 million, or negative 34 cents per diluted share, compared with a net gain of $6.57 million, 11 cents, during the same time the previous year. Total Q3 revenue increased by 3% to $771.5 million from $745.7 million.
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Werner stressed that it has remained focused on cost discipline, technology-driven efficiency and capital allocation, and strong liquidity amid the industry’s persistent freight downturn.
“As this challenging operating environment continues, we are taking actions to position the business for long-term growth,” CEO Derek Leathers said during a conference call with investment analysts. “Our fleet is new and modern due to the investments made in the last few years. We’re progressing through our transformational technology journey, and our balance sheet is strong, enabling flexibility in our capital allocation strategy.”
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Leathers added, “While we experienced significant challenges in one-way [business] this quarter, results across the rest of our business are steadily improving. What remains constant during these uncertain times is our competitive advantage. We are a large-scale, award-winning reliable partner with diverse and agile solutions to support customers transportation and logistics needs.”
Segment Results
Performance across the company was a mixed bag.
Truckload Transportation Services revenue slipped 1% to $519.8 million compared with $522.8 million. The company said the average number of trucks in service during Q3 increased 1.2% from the prior year, but average revenue per truck per week decreased 0.7%.
Leathers
“We are building a foothold in new verticals like tech and aftermarket automotive parts,” Leathers said. “Our new customers are seeing the value of our strength and scale in dedicated in these new applications. But there is a short-term upfront investment as we pursue these opportunities. In terms of the challenges in the quarter, in logistics we experienced margin pressure from mixed changes, and in one-way, we saw decreased miles per truck, although we view this as temporary, as one-way production has been recovering throughout October.”
For dedicated TTS, average revenue per truck per week increased 1.3%, while one-way revenue per total mile increased 0.4%. The segment experienced an operating loss of $13.8 million during the quarter.
“Startup costs in dedicated were more elevated compared to the second quarter and more than we anticipated,” Leathers said. “Overall, as market dynamics remain unpredictable, we are keeping focus where it matters most — on delivering superior value to our customers and positioning Werner for long-term success. We remain confident in our business fundamentals and progress that we are achieving toward our long-term goals and strategic objectives.”
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Logistics segment overall revenue increased 12% to $232.6 million from $206.8 the previous year. Drilling down, truckload logistics revenue increased 13% due primarily to higher volume, while intermodal jumped 23% due to volume gains and relatively stable revenue per shipment.
“In logistics, we continued a double-digit growth trajectory with lower operating costs year over year despite some anticipated change in mix,” Leathers said.
Final-mile revenue decreased 1% year over year but jumped 4% sequentially. Operating income came in at $3.01 million, compared with a net loss of $345,000 the prior year.
Werner ranks No. 18 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and is No. 8 on the truckload sector list. Also, Werner ranks No. 32 on the TT Top 100 list of the largest logistics companies.
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