Werner Enterprises saw another tough quarter to close 2023 and said it will continue to favor investment in its dedicated fleet over one-way operations.

The company’s 2024 guidance calls for the total truck count to be down 3% to flat, noting that the one-way truckload market is “uninvestable” at the current moment as rates continue to be pressured by excess capacity and tepid demand.

The one-way segment saw an 11% year over year (y/y) decline in average trucks in service to 2,929 units during the fourth quarter. Average trucks in use on the dedicated side were off just 3% y/y to 5,239 as some customers have reduced the number of trucks needed on a daily basis.

“We’re not going to continue to run a network in one-way at the return levels that we are seeing today … we owe it to our shareholders and others to make sure that isn’t the case,” said Chairman and CEO Derek Leathers on a Tuesday evening call with analysts.

The company achieved a $43 million cost savings run rate by the end of 2023 and has identified $40 million in new savings opportunities for 2024, of which, only 15% overlap with the prior year.

Werner (NASDAQ: WERN) reported fourth-quarter adjusted earnings per share of 39 cents, 4 cents light of the consensus estimate and 60 cents lower y/y. The result excluded acquisition-related expenses, costs from an insurance claim that has been appealed and changes to earnouts.

Compared to the 2023 fourth quarter, lower gains on sale were a 26-cent headwind, net interest expense (debt down $45 million y/y but variable interest expense up) was a 3-cent headwind, a lower tax rate was a 1-cent tailwind and a lower loss on equity investments was a 2-cent tailwind.

The company saw an 11% decline in the number of trucks sold but a more than 60% increase in trailers sold. Much lower per-unit gains were the culprit.  

Werner’s dedicated business saw revenue decline 2% y/y to $309 million. Revenue per truck per week was up 1%. The full-year 2024 outlook calls for the utilization metric to be flat to 3% higher.

Werner’s one-way segment reported a 12% y/y revenue decline to $178 million. Revenue per truck per week was down just 1% with the drop in tractor count accounting for the rest of the decline. Revenue per total mile was off 9% in the quarter and is expected to decline 6% to 3% y/y in the first half of 2024.

Total truckload operations produced a 92.5% adjusted operating ratio (the inverse of operating margin), 830 basis points worse y/y.

The logistics segment reported a 6% y/y increase in revenue to $227 million. The number was partially boosted by a brokerage acquisition last November. The segment was profitable, recording a 1.3% operating margin, which was 250 bps worse y/y.

Table: Werner’s key performance indicators

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