Werner Enterprises Sees Major Truck Reduction Amid Q3 2024 Revenue Decline

In its third quarter 2024 financial report, Werner Enterprises revealed significant challenges in maintaining revenue and operational efficiency. Key figures highlighted a 9% decrease in total revenue, down to $745.7 million compared to the same period in 2023. The trucking giant experienced reduced earnings across various sectors, with the most pronounced impact observed in its Truckload Transportation Services (TTS) segment.

Revenue Declines and Fleet Reductions

Werner’s TTS revenue dropped by $49.4 million (9%) year-over-year. This decrease was driven in part by lower fuel surcharge revenues, which fell by $20 million. Net of these fuel charges, the company’s total revenue saw a 7% decline. The reduction in fleet size played a significant role, with an average of 7,414 trucks in service during Q3 2024—a stark drop of 812 trucks (9.9%) from the previous year. At the quarter’s end, total trucks were down 8.9% year-over-year.

Operational and Profit Metrics

The company’s operating income decreased by 54%, falling to $17.6 million. Operating margins also took a hit, dropping 220 basis points to 2.4%. Adjusted operating income reflected a 48% decline at $21.6 million, with an adjusted margin of 2.9%.

Net income attributable to Werner suffered a significant 72% reduction, coming in at $6.6 million. This led to a diluted earnings per share (EPS) of $0.11, down 72% from Q3 2023. The adjusted EPS also fell by 64%, ending at $0.15.

Sector-Specific Challenges

The TTS segment experienced a notable decrease in average revenues per truck per week, despite a slight year-over-year increase of 3.5%. The dedicated segment saw an 8.5% reduction in average trucks in service and a 6.9% decline in revenue. Average revenues per truck in the dedicated fleet rose modestly by 1.7%.

The Werner Logistics segment also faced hurdles, with revenue down 10% to $206.8 million and an adjusted operating income decline of 75% to $0.8 million. Challenges included lower brokerage volumes, competitive pricing, and reduced revenue per shipment in the intermodal category.

Cost Management and Future Outlook

Operational cost management included a 27% decrease in capital expenditures, which fell to $87.9 million compared to the $120 million from the previous year. This financial strategy helped maintain the average age of trucks at two years and trailers at 5.2 years.

CEO Derek Leathers emphasized the company’s ongoing structural adaptations to improve efficiency and cost savings. While freight conditions remained challenging, there was slight improvement due to late-quarter disruptions caused by hurricanes.

The company’s future guidance indicates a continued focus on optimizing operations, managing costs, and navigating margin pressures. As Werner adapts to fluctuating market conditions, fleet adjustments and strategic changes remain key priorities.