Werner Q2 revenue rises to $836M on strong freight demand

Werner is also appealing a $90 million verdict against the company stemming from a lawsuit filed after a 2014 accident in Odessa, Texas, in which a 7-year-old died.

Another factor affecting Werner’s second quarter earnings was higher fuel prices, said CFO John Steele.

“For the second quarter the average fuel price per gallon was $2.21 higher year over year,” Steele said. “Our fuel surcharge programs helped mitigate the higher cost of fuel for loaded miles, but fuel impacted our profits and loss for empty miles, out-of-route miles, and truck idle time. Fuel lowered our second quarter earnings by an estimated 9 cents a share compared to the second quarter a year ago.”

Dedicated trucking boosts strong quarter

Omaha, Nebraska-based Werner’s truckload unit reported revenue of $613 million, 25% higher year over year. 

Revenue in the dedicated trucking segment increased 14.4% year over year in the second quarter to $300 million, with the average trucks in service 4.7% higher year over year. Revenue per truck per week increased 9% year over year to $4,452. 

Werner’s one-way segment increased its revenue 13.2% year over year to $188 million. The average number of trucks in service was 14.3% higher than the same quarter last year, with 3,102.

Leathers said the company continues to see a strong “pipeline” of freight demand from existing customers and potential clients.

“We have significant interest from customers, both organic growth within existing fleets looking to grow and or expand, to new locations, as well as new blood customers that are interested in the products and services that Werner provides,” he said.

“What that allows us to do, even in these economic conditions, is to continue to be selective on what gets through the pipeline, and what we ultimately implement, and that gives us the confidence for revenue per truck per week looking forward.”

Almost 60% of Werner’s freight is tied to retail, with most coming from discount retailers and home improvement stores. The revenue from that group is strong as its top customers logged top-line growth of 38% on average in 2021, the company said.

One-way’s revenue per truck per week was down 0.9% year over year in the quarter at $4,665. Revenue per total mile increased 13.7% year over year.

Werner raised its revenue-per-truck-per-week guidance in its dedicated division to 6% to 8% for the rest of the year, up from prior guidance of 4% to 6%.

Werner’s one-way revenue-per-total-mile forecast for the third quarter of 2022 is 2%, compared to 5% growth during the third-quarter of 2021.

“Over the last few months, concerns about the direction of the economy and the truckload freight market have increased,” Leathers said. “We expect that as industry truckload freight demand continues to moderate, more for discretionary goods and less for consumer staples, competition for freight begins to increase and these factors may impact our one-way truckload fleet more than dedicated or logistics visibility into the peak season.”

A freight recession?

Despite transportation costs and a volatile freight environment, Leathers said he sees trucking demand remaining resilient going into the last two quarters of the year.

“If you think about where we were for two years and how hyperinflated many of the metrics were  — whether it be spot market pricing, overbooked networks, general volatility and what was being purchased in the quantities that were being consumed — and you look at it more recently, over the last few months, it’s returning to a more normalized setting.”

Leathers said one of the biggest impacts on Werner looking ahead could be how retailers handle inventory.

“The last piece of noise that’s tough for all of us to determine is the inventory issue. There’s certain retailers with over-inventory situations, and yet there’s others that are struggling to get the shelves stocked and filled,” he said. “Right now, at this time it’s too tough to try to generalize on how that plays out. We’re just going to stick with our knitting and put service above all else.”

Steele, who announced during the call that he is retiring after 33 years at Werner, added that a constraint on the entire trucking industry going forward could be the tight supply of available new trucks.

“The industry supply of trucks has been limited due to the OEM supply chain issues and a relatively low unemployment rate,” Steele said. “I really think the supply side is more constrained than it has been in the past; that’s the issue that we have to deal with.”

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