Werner Enterprises announced it has acquired final-mile carrier Nehds Logistics LLC for $64 million, which includes a potential earnout of $4 million. Nehds generated $71.4 million in revenue over the last 12 months and has grown revenue by 27% on average over the past three years.
The Monroe, Connecticut-based carrier operates a fleet of more than 400 company-owned and independent contractor trucks, largely in the Northeast and Midwest. It uses two-person teams to deliver big and bulky goods to residences and commercial facilities for companies like Bob’s Discount Furniture and Macy’s (NYSE: M).
The deal is expected to be accretive to Omaha, Nebraska-based Werner’s (NASDAQ: WERN) earnings in 2022 and brings 12 managed and seven customer facilities to its network. Margin detail was not provided on a call with analysts, but management coined the deal as “solidly profitable.” The purchase was financed through cash and debt.
|Acquisition price||$64M (includes $4M earnout)|
|Target revenue run rate||$71.4M|
|Werner revenue run rate||$2.5B|
|Expected synergies||increased scale, buying power|
|Earnings expectations||accretive to earnings in 2022|
|Recent acquisitions by Werner||ECM Transport Group|
|Financing||cash and debt|
“We feel as though the purchase price was properly reflective of the market today, and we’re excited about the opportunity looking forward to grow it both by combining it with our middle-mile expertise in dedicated as well as our existing customers and their needs today,” Derek Leathers, Werner’s chairman, president and CEO, said on the call. “We felt like this gave us a better solution when combined with our existing Werner Final Mile network.”
The carrier will rebrand and operate under the Werner Final Mile banner, which already has a national presence of independent contractor agent locations. Segment results will report up through Werner’s logistics unit. On an annual run rate, Werner’s final-mile offering now accounts for more than $100 million in revenue, with its entire logistics unit generating roughly $700 million.
Nehds’ existing leadership, staff and driver teams are expected to remain on board.
“The addition of the Nehds operations, management team, talented staff and strong customer relationships to the Werner family represents a significant step forward in our Final Mile delivery program,” Leathers stated in a press release issued after the market closed Monday.
“With a deep heritage of compassion for all associates, contractors and customers, we are grateful to unite with a like-minded company in Werner that has similar core values to Nehds,” said Gerry Burdo, founder and president of Nehds. “Werner’s technology, logistical expertise and geographic footprint is extremely attractive in partnering together.”
Werner is new to M&A
In the 65 years since it was founded, the company had yet to make an acquisition until this year. However, under the leadership of recently minted Chairman Leathers, the company has added M&A to its arsenal of capital deployment.
In July, it acquired a majority stake in the regional carriers that make up ECM Transport Group for $142 million. That deal added 500 trucks, a similar number of drivers, 2,000 trailers and eight terminals to Werner’s operations. ECM also brought over more than $100 million in revenue at nearly a 20% operating margin.
Leathers was quick to point out that the latest transaction is not a signal that Werner is set to become a “serial acquirer.”
He said future acquisition targets need to be additive to the company’s offering and quickly accretive to earnings. Werner is also looking for management teams that are aligned with existing core culture and have a growth path beyond just the transaction itself.
“If they meet those types of criteria, we’re going to be open-minded,” Leathers said.
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