Meanwhile, the truckload and logistics carrier announced Gary L. Werner will retire from his position as vice chairman and a member of Werner’s board of directors, effective Feb. 12, 2016.
Werner Enterprises, Inc. grew its net income 12 percent in the fourth quarter of 2015 to $36.6 million compared to the fourth quarter of 2014, despite revenues falling 4 percent to $528.78 million during the same period.
The Omaha, Neb.-based truckload carrier and logistics provider posted earnings per share (EPS) of $0.51 per share, up from $0.45 per share the previous year and beating consensus analyst expectations of $0.46 per share. EPS grew for the sixth straight quarter.
Trucking revenues at Werner fell 4.8 percent year-over-year to $419.43 million in fourth quarter 2015, but operating income increased 5.8 percent to $57.95 million, according to the company’s latest financial statements. Revenues in Werner’s non-asset based Value Added Services (VAS) segment fell 1.8 percent to $96.72 million, while operating income shot up 84.1 percent to $4.42 million.
Werner noted significantly lower fuel prices caused a reduction in fuel surcharge revenues by $36 million in the truckload segment and revenues by an estimated $6 million in VAS. This reduced total consolidated revenues by an estimated 8 percentage points in fourth quarter 2015 compared to fourth quarter 2014.
For the full year in 2015, Werner’s earnings jumped 25 percent to $123.71 million, again despite a 2 percent dip in revenues to $2.09 billion.
Full year EPS stood at $1.71 per share, up from $1.36 per share in 2014.
Werner said that although demand in the fourth quarter was lower than in 2014, it was consistent with average freight demand in the fourth quarters of the previous three years.
“Demand was less than expected in the first half of fourth quarter 2015, picked up significant strength in latter November and early December and then tapered to seasonally solid freight levels for the remainder of the year,” the company said. “Freight demand to date in January 2016 has been seasonally softer and in-line with the same periods of 2013, 2012 and 2011. Compared to the same periods in January 2015 and January 2014, freight demand is not as strong.”
Werner increased its capital expenditures in 2015 to $351.5 million from to $212.3 million the previous year in order to lower the average age of its truck fleet. The company said its fleet attained an average truck age of 1.9 years as of Dec. 31, 2015, down from 2.2 years as of Dec. 31, 2014.
Looking ahead to 2016, Werner estimated net capital expenditures in the range of $400 million to $450 million, “assuming mid-single digit fleet growth and a continuing reduction in our truck average age. However, if the freight market shows significant weakness during 2016, we will consider adjusting our capital expenditures accordingly.”
Werner noted that driver recruitment “remained challenging” during the fourth quarter of 2015. “Several difficult market factors persist including a declining number of, and increased competition for, driver training school graduates, a gradually declining national unemployment rate, aging truck driver demographics and increased truck safety regulations,” it said.
During the fourth quarter, Werner announced strategic driver and owner-operator pay increases in its Van 48-state business units totaling slightly more than $10 million on an annualized basis for nearly 20 percent of the company’s drivers. “Most of these increases became effective January 2016. Over time, we expect the cost benefits of improved retention, higher mileage productivity and lower safety costs will more than offset these pay increases,” said Werner.
Trucking carriers have been trying for the last few years to attract younger truckers to stem a growing shortage of qualified drivers across the industry caused by an aging and retiring work force that hasn’t been replenished by the new generations.
American Trucking Associations published a report last October estimating the shortage of drivers in the trucking industry would reach 48,000 by the end of 2015 and could grow to as many as 175,000 by 2024.
Werner also announced Vice Chairman and Board Member Gary L. Werner will retire from his position, effective Feb. 12, 2016. Werner worked for the company for more than 40 years in various management roles.
Werner boosts profits despite lower revenues in 2015
