Werner's earnings trounce the estimates, with EPS almost double a year earlier

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Werner Enterprises had a strong second quarter, trouncing analyst consensus on its expected performance. Here are some of the highlights from its earnings release. Werner does not hold an earnings call for analysts

  • Its second quarter earnings per share of 61 cts beat consensus estimates by 11 cts. That's about 18% above the estimates; consensus estimates usually aren't off by that much. Revenue of just under $620 million beat consensus revenue estimates by between $20-$21 million. The EPS number was almost double that of the second quarter of 2017, which came in at 32 cts.

 

  • One operating number that jumped out as having changed--sequentially with the first quarter, rather than compared to the second quarter of 2017--was the average tractor revenue per week. In the second quarter of this year, it was $4,027, up 9.5% from $3,676 a year ago. But it was also up significantly from the first quarter of this year, when it was $3,772.

 

  • Another notable operating number was in the average completed trip length in miles. For the second quarter it was 447, compared to 470 in the second quarter of 2017 and roughly flat with the 449 miles recorded in the first quarter. Werner attributed the decline in part to the growth in its Dedicated division, which has 565 trucks more than a year ago. "This business typically has shorter miles per trip at a higher rate per mile," the company said. The Dedicated division had 4,380 trucks at the end of the second quarter, up from 3,815 a year ago. That figure is now 57% of all the trucks Werner has in its Truckload division.

 

  • Combine the rising level of average tractor revenue per week with the drop in miles, and it accounts for a 13.3% increase in average revenues per total mile. "The increase in average revenues per total mile was due primarily to higher contractual rates, more freight choices with higher rates, support for customer surge business, lane mix changes and growth in our Dedicated business," Werner said in its earnings statement. It expects full year average revenues per total mile to be up 9% to 12% in 2018 compared to 2017.

 

  • The operating ratio for the Truckload Transportation Services division was 90.8%, up from 91.1% a year ago, not adjusted for fuel surcharge. After adjustment--which is considered more accurate--it was a more significant increase, up to 86.4% from 89.8%.

 

  • Werner's purchased transportation expense was significantly more than in the second quarter of 2017, but was smaller than in the first quarter of this year. As companies have difficulty meeting all of their demand in-house, they have been turning to independent owner-operators to fill the gap, and that shows up in the rent and purchased transportation expense line. In the second quarter of this year, rent & purchased (reported under the Werner Logistics segment) was $112.9 million, up from $85.4 million a year earlier. But that was down from $135.9 million in the first quarter of this year.

 

  • Discussing other shifts in the industry, Werner said that "changing dynamics" in the industry are being seen "as customers shift freight from one-way fleets to shorter length of haul dedicated fleets, which result in the need for more trucks to haul the same amount of freight." As a result, Werner's trucks in service was up 3.8% year on year, but its miles increased just 0.4%.

 

  • The average percentage of empty miles was largely flat from the second quarter of 2017 to 2018, 12.36% in the most recent quarter versus 12.3% in 2Q 2018. It was down slightly from the 12.56% of the first quarter.

 

  • The number of independent contractors listed by Werner is dropping significantly. It was 700 in the second quarter of 2017, all the way down to 625 in 2Q 2018. It was up from 605 in the first quarter of this year.

 

  • Werner said it the second quarter recorded the lowest driver turnover percentage in the last 20 years.