Earnings for the trucking and logistics company Werner Enterprises Inc. took a bit of a dive in not just the final quarter of last year but for all of 2016 as it said it continued to make a significant investment in its business.
Net income in the fourth quarter declined 40% from a year ago to $21.8 million with earnings per share of 30 cents compared to 51 cents. Total revenue fell 2% to $518.8 million while revenue minus fuel surcharges declined 6% to $347.5 million.
“Our fourth quarter 2016 freight demand demonstrated seasonal improvement from third quarter 2016,” Werner said in a statement. “We believe part of this improvement was industry specific and part was company specific.”
For all of 2016, Werner’s net income fell 36% from 2015, totaling $79.1 million as earnings per share came in at $1.09 versus $1.71 a year earlier. Total revenue and revenue minus fuel surcharges each fell 4% to $2 billion and $1.4 billion, respectively.
According to the company, 2016 was a very challenging freight and rate year for its truckload and logistics business segments.
“Our significant investment in the five T's at Werner, trucks, trailers, terminals, talent and technology, is raising the bar for service and we expect will result in improved financial results going forward,” the company said.
Werner said it is nearing completion of a significant reinvestment in its fleet over the last two years to reduce the average age of its trucks and trailers, which stood at 1.8 years at the end of 2016.
Net capital expenditures in 2016 were $429.6 million compared to $351.5 million in 2015. It estimates net capital expenditures for 2017 to be in the range of $225 million to $275 million.
In fourth quarter 2016, Werner said it averaged 7,178 trucks in service in its truckload segment and 80 intermodal drayage trucks in its Werner Logistics segment. It ended fourth quarter 2016 with 7,100 trucks in the truckload segment, a year-over-year decrease of 350 trucks and a sequential decrease of 75 trucks.
Its specialized services unit, primarily dedicated, ended fourth quarter 2016 with 3,760 trucks, or 53% of Werner’s total truckload segment fleet compared to 49% as of December 2015. This followed the fleet moving trucks from its truckload operations into its dedicated segment earlier in the year.
Average revenue per tractor per week increased from the third quarter by 3.8% in fourth quarter 2016 compared to third quarter 2016 due to a 1% decrease in average miles per truck combined with a 4.8% increase in average revenues per total mile, according to Werner.
Average revenues per tractor per week decreased 1.9% in fourth quarter 2016 compared to fourth quarter 2015. That resulted from a 3.8% decrease in average miles per truck combined with a 1.9% increase in average revenues per total mile.
“Shifting trucks to shorter-haul dedicated from longer-haul one-way truckload had a favorable impact on revenue per total mile and an unfavorable impact on miles per truck,” Werner said.
One area in which Werner saw an increase in business was with its non-asset based Werner Logistics segment, which includes brokerage, freight management, intermodal and international operations.
Its revenue increased 11% in the fourth quarter from a year ago to $107.2 million while operating income was barely lower at $4.2 million, compared to $4.4 million a year earlier.