Werner Enterprises reports Q3 23 results

PRESS RELEASE

November 1, 2023

Third Quarter 2023 Highlights (all metrics compared to third quarter 2022)

– Total revenues of $817.7 million, down 1%

– Operating income of $37.9 million, down 50%; non-GAAP adjusted operating income of $41.9 million, down 47%

– Operating margin of 4.6%, down 460 basis points; non-GAAP adjusted operating margin of 5.1%, down 450 basis points

– Diluted EPS of $0.37, down 57%; non-GAAP adjusted diluted EPS of $0.42, down 53%

OMAHA, Neb.–(BUSINESS WIRE)– Werner Enterprises, Inc. (Nasdaq: WERN), a premier transportation and logistics provider, today reported results for the third quarter ended September 30, 2023.

“Despite a continued challenging economic backdrop and soft freight market, in the third quarter 2023, we grew total revenue net of fuel year-over-year led by our Logistics segment that grew revenues for the 12th-straight quarter, and our Dedicated business that remained steady with near-flat year-over-year revenue-per-truck,” said Derek J. Leathers, Chairman, President and CEO. “Pricing and margin pressures persist in Logistics, while soft freight demand has reduced overall fleet size in Truckload Transportation Services (“TTS”) and we are seeing lower equipment gains. Offsetting these impacts and ongoing inflationary headwinds are certain moderating expense categories from our cost saving efforts. Our results continue to reflect a business model that is durable, diversified and resilient despite an extraordinary and extended down cycle. The combination of our talented associates, cycle-tested management team, scale, reputation, and innovation positions us well to navigate, grow and expand margin as the freight market strengthens.”

Total revenues for the quarter were $817.7 million, a decrease of $9.9 million compared to the prior year quarter, due to a $49.7 million decrease in TTS revenues, partially offset by Logistics revenues growth of $43.1 million or 23% including the ReedTMS acquisition. The TTS revenue decline was largely due to $28.4 million lower fuel surcharge revenues. Net of fuel surcharges, consolidated total revenues grew during the quarter by $18.6 million or 3%.

Operating income of $37.9 million decreased $38.4 million, or 50%, while operating margin of 4.6% decreased 460 basis points. On a non-GAAP basis, adjusted operating income of $41.9 million decreased $37.6 million, or 47%. Adjusted operating margin of 5.1% declined 450 basis points from 9.6% for the same quarter last year.

TTS operating income decreased by $35.3 million, and TTS adjusted operating income decreased by $34.7 million. Logistics operating income decreased $3.1 million and adjusted operating income decreased by $2.5 million. Corporate and Other (including driving schools) operating income remained flat.

Net interest expense of $6.9 million increased $4.5 million primarily due to higher interest rates for variable rate debt and an increase in average debt outstanding. The effective income tax rates during the third quarter and year to date 2023 were 23.0% and 24.3%, respectively.

During third quarter 2023, we had net losses on our strategic investments of $0.1 million compared to net gains of $0.1 million in third quarter 2022. Consistent with prior reporting, increases or decreases to the values of these strategic investments are adjusted out for determining non-GAAP adjusted net income and non-GAAP adjusted earnings per share.

Net income attributable to Werner of $23.7 million decreased 57%. On a non-GAAP basis, adjusted net income attributable to Werner of $26.6 million decreased 53%. Diluted EPS of $0.37 decreased 57%. On a non-GAAP basis, adjusted diluted EPS of $0.42 decreased 53%.

The full release is here.