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Company earningsLogisticsNewsTruckingTruckloadTruckload Carriers

Werner raises rate-per-mile guidance

Q1 has some moving parts but comes in ahead of consensus

Inventory replenishment, federal stimulus and increased vaccinations had management from Werner Enterprises (NASDAQ: WERN) calling for favorable freight fundamentals to continue through the back half of 2021 on a call with analysts Wednesday evening.

The Omaha, Nebraska-based transportation and logistics provider reported first-quarter adjusted earnings of 68 cents per share after the close, 5 cents ahead of the consensus estimate and 28 cents better than the year-ago quarter.

An increase in the tax rate compared to the 2020 period was a 2-cent-per-share headwind and management estimates that weather was a 7-cent-per-share hit to the quarter. However, these items were more than offset by lower insurance expense and higher gains on sale.

Werner reported a 4% year-over-year increase in consolidated revenue to $616.4 million, primarily due to a step higher in logistics revenue. Adjusted operating income was 68% higher year-over-year at $62.7 million, a first-quarter record.

The company’s one-way segment reported a 1% year-over-year increase in revenue per truck per week, 2% higher in the dedicated segment.

Revenue per total mile, excluding fuel surcharges, increased 9.5% in the one-way fleet, which was at the high end of management’s prior guidance range of 7% to 10% for the first half of the 2021. Given the continuation of tight capacity and elevated truck demand, guidance for the pricing metric was raised to a range of 13% to 16% for the second quarter.

The comparable metric for the dedicated unit came in 2% higher year-over-year, and management extended its 3% to 5% guidance to include the full year versus only the first half previously.

Table: Werner’s key performance indicators

Werner is halfway through contract renewals and rates have been increasing by an average of high-single- to low-double-digit percentages on its one-way and TL brokerage contracts.

The TL adjusted operating ratio was 85.8%, 570 basis points better year-over-year as TL rates increased and insurance and claims expense declined. The first quarter of 2020 included $10 million in insurance and claims expense related to a serious accident. Additionally, gains on sale were $8 million higher year-over-year in the first quarter of 2021, an 8-cent-per-share tailwind.

Werner now expects gains on equipment sales of $17.5 million to $20.5 million during the first half of 2021. The prior guidance called for gains on sale of $12 million to $15 million for the entire year.

The logistics segment recorded a 23% year-over-year increase in revenue to $137.9 million. TL logistics revenue was up 20% as a 22% increase in revenue per load was partially offset by a modest decline in volumes. Intermodal logistics revenue grew 30% with volumes and yields up 23% and 6%, respectively.

Gross margin in the segment fell 190 bps to 12.6% as spikes in spot TL and drayage rates outpaced contractual increases.

Click for more FreightWaves articles by Todd Maiden.

Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.

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