Werner (WERN) Beats Q3 Earnings Estimates, Revenues Miss

Zacks Equity Research
·4-min read

Werner Enterprises Inc. WERN reported third-quarter 2020 earnings per share (excluding 2 cents from non-recurring items) of 69 cents, beating the Zacks Consensus Estimate of 65 cents. Moreover, the bottom line surged 21.1% year over year. Reduced operating expenses aided the bottom line. 

Total revenues of $590.2 million missed the Zacks Consensus Estimate of $594 million. The top line also declined 4.5% year over year due to lower fuel surcharge and logistics revenues.

Operating income (adjusted) came in at $64.3 million in the reported quarter, up 19% year over year. Moreover, adjusted operating margin improved 210 basis points (bps) to 10.9%. Operating expenses declined 6.5% to $528.11 million.

Werner Enterprises, Inc. Price, Consensus and EPS Surprise

Werner Enterprises, Inc. Price, Consensus and EPS Surprise
Werner Enterprises, Inc. Price, Consensus and EPS Surprise

Werner Enterprises, Inc. price-consensus-eps-surprise-chart | Werner Enterprises, Inc. Quote

Segmental Results

Truckload Transportation Services (“TTS”) segment’s revenues fell 5% year over year to $458.26 million. The downside can be attributed to $20.4 million decrease in fuel surcharge revenues and 4.9% decline in average trucks in service. Adjusted operating income ascended 31% to $65.24 million.  Additionally, adjusted operating margin expanded 390 bps to 14.2%. Adjusted operating ratio (operating expenses as a percentage of revenues) improved 390 bps to 85.8%. Notably, lower the value of the metric, the better.

Werner Logistics segment’s revenues totaled $117.35 million, down 3% year over year due to 15% decline in truckload logistics volume. The segment reported operating loss of $0.85 million in the third quarter against operating income of $3.03 million in the year-ago period. Further, operating margin was (0.7%) in the third quarter compared with 2.5% in the year-ago quarter. The Other segment accounted for the rest of the top line.

Liquidity

As of Sep 30, 2020, Werner, carrying a Zacks Rank #2 (Buy), had cash and cash equivalents of $40.48 million compared with $26.41 million at 2019 end. Long-term debt (net of current portion) totaled $175 million at the end of the third quarter compared with $225 million at 2019 end. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Outlook

Werner anticipates TTS truck growth to decline between 3% and 1% year over year in the fourth quarter of 2020. Additionally, it expects gains on sales of equipment to be in the range of $2-$3 million in the fourth quarter. Meanwhile, net capital expenditures are estimated in the band of $88-$113 million. The same for 2020 is forecast in the range of $275-$300 million. For the fourth quarter, one-way truckload revenues per total mile are predicted to increase 3-5% year over year.

Sectorial Snapshot

Let’s take a look into some other Zacks Transportation sector companies’ third-quarter earnings.

Southwest Airlines Co. LUV, carrying a Zacks Rank #3 (Hold), incurred a loss of $1.99 per share (excluding 3 cents from non-recurring items) in the third quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.44. Moreover, operating revenues of $1,793 million surpassed the Zacks Consensus Estimate of $1,678.2 million.
 
Trinity Industries Inc TRN, carrying a Zacks Rank #3, reported third-quarter 2020 earnings (excluding 4 cents from non-recurring items) of 17 cents per share, massively surpassing the Zacks Consensus Estimate of 5 cents. Total revenues of $459.4 million also outperformed the Zacks Consensus Estimate of $443.8 million.

CSX Corporation CSX, carrying a Zacks Rank of 3, reported third-quarter 2020 earnings of 96 cents per share, surpassing the Zacks Consensus Estimate of 93 cents. However, total revenues of $2,648 million lagged the Zacks Consensus Estimate of $2,704.6 million.

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