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Werner Enterprises (WERN) Stock Down 3.5% on Q2 Earnings Miss

·5-min read

Werner Enterprises, Inc. WERN stock has declined 3.5% since its second-quarter 2022 earnings release on Aug 3. The downfall can be attributed to lower-than-expected earnings performance.

Quarterly earnings of 87 cents per share missed the Zacks Consensus Estimate of $1.02. The bottom line rose 1.1% on a year-over-year basis.

Total revenues of $836.3 million outperformed the Zacks Consensus Estimate of $784.2 million. The top line increased 29% on a year-over-year basis, primarily on higher revenues in the Truckload Transportation Services and Logistics segments.

Operating income (adjusted) came in at $77.6 million in the reported quarter, down 2% year over year. Adjusted operating margin fell 290 basis points (bps) to 9.3%. Operating expenses rose 32.9% to $761.35 million in the reported quarter.

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

Revenues in the Truckload Transportation Services (TTS) segment increased 25% on a year-over-year basis to $613.62 million. Adjusted operating income decreased 11% to $66.2 million. Adjusted operating margin surged 430 bps to 10.8%. Adjusted operating ratio (operating expenses as a percentage of revenues) improved 430 bps to 89.2%.

The Logistics segment’s revenues totaled $203.86 million, up 44% year over year. The segment reported an adjusted operating income of $12.9 million, up more than 100% year over year. Adjusted operating margin was 6.4%, reflecting an improvement of 360 bps.

Liquidity

As of Jun 30, 2022, Werner had cash and cash equivalents of $54.42 million compared with $125.95 million at the end of March 2022. Long-term debt (net of current portion) totaled $440 million at the end of the reported quarter compared with $421.25 million at the end of March 2022.

Outlook

Werner continues to anticipate TTS truck growth of 2-5% for 2022 from the year-ago reported figure. Net capital expenditures are estimated in the band of $275-$325 million (previous view: $250-$300 million).

Under the TTS guidance, WERN estimates Dedicated revenue per truck per week to increase 6-8% (previous view: 4-6%) in 2022, owing to expectations of strong rates. One-way Truckload revenues per total mile are predicted to now climb 2-5% (previous outlook: 14-17%) in the second quarter of 2022 from the comparable period’s level in 2021, owing to moderating freight market, lapping ECM acquisition and declining spot rates.

Werner expects truck age to be 2.2 years for 2022 (commensurate with 2021), while 2022 trailer age is forecast to be 4.8 years.

Effective income tax rate is still expected to be at 24.5-25.5%.

Currently, Werner carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Transportation Companies

Delta AirLines’ DAL second-quarter 2022 earnings (excluding 29 cents from non-recurring items) of $1.44 per share fell short of the Zacks Consensus Estimate of $1.71. Escalated operating expenses induced the earnings miss. Multiple flight cancellations in May and June also hurt results. The earnings miss disappointed investors, resulting in the stock shedding value in early trading. In the year-ago quarter, Delta incurred a loss of $1.07 per share when air-travel demand was not as buoyant as in the current scenario.

DAL’s revenues came in at $13,824 million, which not only beat the Zacks Consensus Estimate of $13,608.9 million and soared 94% from the year-ago quarter’s figure as air-travel demand rebounded from the pandemic lows. The uptick in air-travel demand in the United States can be gauged from the fact that 75.9% of second-quarter 2022 passenger revenues came from the domestic markets.

J.B. Hunt Transport Services, Inc. JBHTreported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.

JBHT’squarterly earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year.

JBHT’stotal operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million. The top line jumped 32% year over year on the back of strength across all segments. JBHT’s total operating revenues, excluding fuel surcharges, rose 21.2% year over year.

CSX Corporation (CSX)reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.

CSX’s quarterly earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.

CSX’s total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $2,990 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge, and contribution from the acquisition of Quality Carriers. CSX’s overall revenues per unit increased 27%.


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