Werner Enterprises announced Monday that it has acquired freight broker ReedTMS Logistics for $112.4 million. The transaction also included the acquisition of a small dedicated carrier.
The purchase price includes a maximum earnout of $7.5 million dependent on 2023 results. The deal was funded through Werner’s existing credit facilities, which it will look to expand in the coming weeks.
Tampa, Florida-based ReedTMS generated $372 million in revenue through the two entities for the 12-month period ended Sept. 30. Ninety percent of the revenue in the combined portfolio comes from the truckload and freight brokerage platform, which has 70,000 carriers, 19,000 of which are considered active.
The company has grown revenue at a 28% compounded annual growth rate over the last five years, according to a news release said.
“They’ve been doing great work essentially with one hand tied behind their back,” said Derek Leathers, Werner’s chairman, president and CEO on a Monday call with analysts. “It’s a midsize broker with high quality results but doing so without the asset backing that they now can really count on.”
Founded in 1996, ReedTMS has more than 800 customers, two-thirds of which are in the food and beverage industries. Its top 10 accounts have been active with the broker for an average of eight years. Brokerage revenue on the platform is 65% contractual with the other 35% tied to the spot market.
The asset-based fleet operates 130 trucks and 775 trailers, hauling mostly temperature-controlled freight.
A margin profile for the company was not provided but Werner’s management team said the business is profitable and expected to be accretive to earnings in the first year. Werner’s logistics segment generated $765 million in revenue with a 5.2% adjusted operating margin for the recently reported 12-month period. Including ReedTMS, revenue was $1.1 billion.
|Acquisition price||$112.4M (earnout of up to $7.5M)|
|ReedTMS revenue run rate||$372M|
|Werner revenue run rate||$3.6B (pro forma)|
|Earnings expectations||accretive in year one|
|Recent acquisitions by Werner||Baylor Trucking, Nehds Logistics, ECM Transport Group|
The acquisition marks the fourth deal Werner has completed since Leathers took over as chairman. It acquired ECM transport, a 500-truck fleet, for $142 million in July of 2021. Nearly a year ago it added final-mile carrier Nehds Logistics in a $64 million deal and last month it picked up Baylor Trucking and its 200 trucks at an undisclosed price.
“We feel really good about the four acquisitions that we’ve made and how they fit into the portfolio,” Leathers added. “We’re not looking to just become a rollup company and we’re not going to stray from our stated objective, which is to always grow and invest organically in this business first and foremost. At the same time, when the right opportunities come along … we’re going to take it serious.”
ReedTMS will remain a stand-alone operation with its leadership team, drivers and nondriver employees continuing to operate under the current banner.
“Werner will enable us to achieve key goals, including creating broader opportunities for our associates, expanding our service capabilities for our customers and helping us continue our quest to leverage best in class technology solutions for our associates, customers, suppliers and other stakeholders,” said Jason Reed, CEO of ReedTMS.
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