Werner Enterprises posts lower 1Q revenues, earnings

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Werner Enterprises, Inc. on Thursday, April 16, reported revenues and earnings for the first quarter ended March 31. Revenues decreased 23 percent to $394.5 million compared to $512.8 million in the 2008 first quarter. Trucking revenues, excluding trucking fuel surcharges, declined 12 percent to $308.0 million compared to $348.4 million. Value Added Services (“VAS”) revenues declined 24 percent to $47.5 million compared to $62.2 million. Earnings declined to $6.9 million from $8.4 million.

The Omaha, Neb.-based company said the already soft freight market weakened further during the 2009 first quarter. The recessionary economy combined with many shippers aggressively reducing their inventories caused a severe slowdown in freight shipments, particularly in the retail sector, which is the company’s largest industry vertical.

The company said it proactively adapted to these challenging market conditions by further reducing its fleet by 4 percent during the quarter, a 150-truck reduction in January and a 175-truck reduction in March; however, during the quarter, the decline in freight shipments exceeded the company’s fleet reduction efforts, which caused a significant decline in the company’s daily prebooked percentages of loads to trucks. In the last few days of March and into the first half of April, freight volumes began to improve from the weak levels experienced for most of the first quarter, but freight volumes remain well below the same period in the prior year, according to Werner.

The company said it continues to diversify its business from the medium-to-long-haul solo driver Van fleet (the “Van” fleet) to Dedicated, Regional, Expedited and North America cross-border in the Truckload Transportation Services (“Truckload”) segment and Freight Management, Intermodal, Brokerage and Werner Global Logistics international in the VAS segment. Werner said this helped soften the impact of the weak freight market during the quarter while providing expanded services to its customers.

Werner said it remains committed to serving the one-way longer-haul segment of the truckload market, and that while it has de-emphasized the lower-asset return, solo driver solution, it continues to grow several other customer-focused solutions for this market such as using team drivers, engineered networks of relay trucks, third-party brokerage carriers, power-only with trucks provided by third-party carriers, and intermodal.

Werner said that as the economy slowed during the latter part of 2008, management intensified its efforts to aggressively manage and reduce controllable costs and identify further efficiencies, and that numerous additional cost savings programs were implemented during the quarter. The company said it believes that the weak freight market and the severe tightening of the credit and financial markets are making it increasingly more difficult for highly leveraged truckload carriers to remain in business. The company said an expected increase in trucking company failures combined with a low level of Class 8 truck builds gradually may improve the supply-and-demand balance in the industry over the next few quarters.