Werner Enterprises on Thursday, Jan. 22, reported revenues and earnings for the fourth quarter and year ended Dec. 31:
The Omaha, Neb.-based company said the overall freight market became increasingly challenging as each month progressed from mid-September to December 2008. A very weak retail environment, combined with extremely soft housing and manufacturing markets, resulted in fewer available shipments, according to Werner; this was especially heightened in the truckload market and caused increased price competition for freight in the spot market as carriers competed for loads to keep their trucks productive.
The company said freight rates also were lower in the spot market due to the increased competition for freight and because the decline in fuel prices resulted in lower freight rates from third-party brokerage companies and the company’s Value Added Services (VAS) segment, where the fuel surcharge is included in the base rate. As fourth quarter 2008 progressed, Werner said it was able to reduce its reliance on third-party brokerage freight by reducing its fleet and increasing noncommitted freight from its VAS segment.
In the truckload segment, Werner said it again reduced the size of its van medium-to-long-haul fleet in fourth quarter 2008 by 500 trucks, partially offset by an increase in trucks in its regional and expedited fleets; this helped reduce the company’s exposure to the longer haul market, which remains the most difficult of the truckload markets. Werner said that in January 2009, it has reduced the van fleet by an additional 150 trucks; and since March 2007, it has reduced the van fleet from 3,000 trucks to about 1,350 trucks in January 2009. In addition, management took several proactive steps during fourth quarter 2008 to reduce a variety of controllable costs.
Werner said the severe tightening of the credit and financial markets may create significant challenges for highly leveraged carriers that have financing issues or refinancing needs. Unless freight and financial market conditions improve quickly, Werner said it believes there is a higher probability of increased carrier failures in 2009, but that it believes its financial strength places it in a unique position to capitalize on the opportunities ahead.
The driver recruiting and retention market has improved from a year ago, according to Werner; the weakness in the construction and automotive industries and a rising national unemployment rate continue to positively affect the company’s driver availability and selectivity. In addition, the company said its strong mileage utilization and financial strength are attractive to drivers when compared to many other carriers.
Werner said its financial position remains strong; during the recent turbulence in the financial and credit markets, the company believes that its financial strength separates it from carriers that are highly leveraged. Werner said it ended the quarter with $30.0 million of debt and $48.6 million of cash, after paying the $150.3 million special dividend to shareholders in December 2008. The company expects to repay the $30.0 million of debt in first quarter 2009.
