Werner reports lower 4Q earnings

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Werner Enterprises on Monday, Jan. 22, reported revenues and earnings for the fourth quarter and year ended Dec. 31. Revenues decreased 1% to $518.4 million in fourth quarter 2006 compared to $526.3 million in fourth quarter 2005. Revenues, excluding fuel surcharges, increased 1% to $453.8 million in fourth quarter 2006 from $449.0 million for the fourth quarter of 2005. The Omaha, Neb.-based company reported fourth-quarter net earnings of $24 million, compared with $28.8 million in the same period last year.

For the full year, revenues increased 6% to $2.081 billion in 2006 compared to $1.972 billion in 2005. Revenues, excluding fuel surcharges, increased 3% to $1.794 billion in 2006 from $1.736 billion for 2005. For the full year, Werner said earnings grew to $98.6 million in 2006 from $98.5 million in the prior year.

Werner said an increased supply of trucks competing in its primary market segments was caused principally by a huge, industry-wide accelerated purchase of new trucks. Many carriers took delivery of more new trucks than normal in the second half of 2006 to delay the purchase of more costly new trucks that are required to meet federally-mandated engine emissions requirements beginning with engines manufactured in January 2007.

The accelerated purchase of new trucks disrupted the supply-and-demand balance in the second half of 2006, contributing to a more challenging freight market for truckload carriers, according to Werner. During fourth quarter 2006, there was a substantial year-over-year change in spot market truckload freight rates, as the pendulum for spot market pricing swung from truckload carriers in the fourth quarters of 2004 and 2005 to shippers in fourth quarter 2006.

Werner said the softer freight market and the softer truck sales market are making it more difficult for marginal carriers to remain in business. As these marginal carriers are facing significant funding requirements for truck licensing in first quarter 2007, some trucks may not be licensed, which would tighten capacity. The company anticipates that the recent excess truck capacity in the market will reverse gradually, and capacity may tighten toward the fall peak season of 2007.