Sign in

You're signed outSign in or to get full access.

WE

WERNER ENTERPRISES INC (WERN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue fell 8% year over year to $754.7M, GAAP operating margin compressed to 1.8%, and diluted EPS was $0.19; adjusted operating margin was 1.6% and adjusted EPS was $0.08 .
  • Management flagged elevated insurance and claims expense ($49.5M, incl. $19M unfavorable development), which reduced adjusted operating margin by ~250 bps and adjusted EPS by ~$0.22; absent this, TTS adjusted OI margin would have been materially higher .
  • Early improvement signs: One‑Way Truckload revenue per total mile rose 3.3% YoY (second consecutive quarter), peak-season volumes were ~2x last year at higher rates, and Logistics delivered its best quarter of 2024 by adjusted margin sequentially; Dedicated RPTPW increased 1.1% YoY .
  • 2025 guidance introduced: fleet growth of 1–5%, net capex reduced to $185–235M, One‑Way RPTM +1–4% in H1 2025 vs H1 2024, and effective tax rate 25–26%; Dedicated RPTPW growth maintained at 0–3% .
  • Stock reaction catalysts: normalization of insurance costs, sustained rate lift in One‑Way, H2’25 improvement in used equipment pricing, and continued cost-savings execution ($25M 2025 program) may support margins as demand tightens .

What Went Well and What Went Wrong

What Went Well

  • “Peak season was better than expected with peak volumes that were two times last year at higher rates.” One‑Way RPTM up 3.3% YoY; production improved for the second consecutive quarter .
  • Dedicated resilience: average fleet size grew sequentially; RPTPW increased 1.1% YoY; customer retention >90% and multiple Carrier of the Year awards .
  • Logistics: sequential improvement with the best operating margin/quarter of the year in 2024 on cost actions; Power Only volume +21% YoY; Intermodal shipments up, supporting segment mix .

What Went Wrong

  • Insurance/claims spiked to $49.5M, incl. $19M unfavorable prior-period claim development; this cut adjusted margin by ~250 bps and adjusted EPS by ~$0.22; TTS margins bore the brunt .
  • TTS adjusted operating margin net of fuel fell to 3.1% (from 7.5% in Q4’23) on smaller fleet and lower gains on sale of equipment; One‑Way average trucks −9.2% YoY .
  • Interest expense rose (+$2.2M YoY to $9.5M), and used equipment gains were modest, constraining bottom line leverage despite operational improvements .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$821.9 $760.8 $745.7 $754.7
Diluted EPS ($USD)$0.37 $0.15 $0.11 $0.19
Operating Margin (%)4.6% 2.6% 2.4% 1.8%
Adjusted Operating Margin (%)4.8% 2.8% 2.9% 1.6%
Segment Revenues ($USD Millions)Q4 2023Q2 2024Q3 2024Q4 2024
Truckload Transportation Services (TTS)$580.1 $537.1 $522.8 $527.3
Werner Logistics$227.0 $208.9 $206.8 $213.2
Other$19.0 $17.5 $18.7 $17.3
Key Margin MetricQ4 2023Q2 2024Q3 2024Q4 2024
TTS Adjusted Operating Margin, net of fuel surcharge (%)7.5% 5.0% 5.3% 3.1%
KPIsQ4 2023Q2 2024Q3 2024Q4 2024
Insurance & Claims Expense ($USD Millions)$34.0 $31.9 $27.7 $49.5
Cash Flow from Operations ($USD Millions)$118.3 $109.1 $61.0 $71.0
Net Capex ($USD Millions)$34.5 $99.2 $87.9 $28.8
TTS Average Trucks in Service8,168 7,630 7,414 7,495
TTS Avg Revenues per Truck per Week ($)$4,590 $4,619 $4,667 $4,707
One‑Way RPTM YoY Change (%)−8.6% −2.7% +0.3% +3.3%
Dedicated RPTPW YoY Change (%)+0.9% +0.4% +1.7% +1.1%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
TTS truck count (BoY to EoY)FY 2025N/A; FY 2024 was (8)% to (6)% decline +1% to +5% (annual) Raised (growth vs. prior declines)
Net capital expendituresFY 2025$240M–$260M (FY 2024) $185M–$235M (annual) Lowered
Dedicated RPTPW growthFY 20250%–3% (annual) 0%–3% (annual) Maintained
One‑Way Truckload RPTM growthH1 2025 vs H1 20240%–3% (Q4’24 vs Q4’23) +1%–4% (H1’25 vs H1’24) Slightly raised, different period context
Effective income tax rateFY 202525.5%–26.5% (annual) 25.0%–26.0% (annual) Lowered
DividendQ4 2024N/A$0.14 per share declared (paid Jan 15, 2025) Maintained distribution

Earnings Call Themes & Trends

TopicQ2 2024 (prior)Q3 2024 (prior)Q4 2024 (current)Trend
One‑Way rate lift & utilizationRPTM −2.7% YoY; utilization gains; plan to transition to higher rates RPTM turned positive (+0.3%); utilization +6.6%; modest sequential TTS margin improvement RPTM +3.3% YoY; Q4 peak at 2x volumes; rate discipline continues Improving
Dedicated resilience & pipelineRPTPW +0.4% YoY; selective growth RPTPW +1.7%; end‑of‑period fleet up; net wins > losses RPTPW +1.1%; sequential avg fleet up; retention >90% Stable to improving
Logistics & Power OnlyReturned to profit; Power Only +30% YoY Adjusted OI +$0.8M; Power Only +18% YoY Best quarter of 2024; Power Only +21% YoY Improving mix
Safety/insuranceInsurance −$5M YoY; record-low preventables Insurance down $3M YoY; cautious on Q4 margin One‑off unfavorable claims (+$19M); run‑rate seen closer to $33–35M/quarter Transitory spike
Technology roadmap (EDGE TMS)Logistics & intermodal on EDGE; One‑Way migration underway Truckload Logistics fully on EDGE; productivity gains Continued transition; side‑view cameras; cyber monitoring collaboration in Q4 Advancing
Tariffs/macro & MexicoNearshoring growth; 25th anniv. Mexico ops Peak tightening (hurricanes/ports); mixed seasonal backdrop Mexico ~>10% of revenue exposure; tariff uncertainty but optionality strong Watchful

Management Commentary

  • “Tender rejection rates remain seasonally elevated. Spot rates are off the bottom and at a 2‑year high...we anticipate a challenging but improving environment.” — CEO Derek Leathers .
  • “Our focus on intentionality to influence rate lift is showing as One‑Way rate improved over 300 bps YoY...the greatest lift to TTS margin going forward.” — CFO Chris Wikoff .
  • “We achieved over $50M of in‑year savings in 2024...we’re laser focused on a 2025 program totaling $25M.” — CFO Chris Wikoff .
  • “Absent insurance reserve adjustments, TTS margins would have continued modest sequential expansion; the $19M adjustment was ~400 bps impact.” — Management .
  • “We have optionality in Mexico—cross‑dock, Power Only, intermodal—with exposure a little north of 10% of revenues.” — CEO Derek Leathers .

Q&A Highlights

  • Mexico/tariffs: Exposure a little north of 10% of revenue; customer dialogue steady; optionality (Laredo cross‑dock, Power Only, intermodal) positions WERN well amid tariff uncertainty .
  • Dedicated strategy: Selective growth focused on “true” Dedicated; add‑backs to existing fleets drive higher incremental margins; pipeline robust but disciplined pricing .
  • Rate environment: Early One‑Way rate increases consistent with low‑ to mid‑single‑digit outcomes; customer sentiment improving and more receptive to adjustments .
  • Insurance run‑rate: Q4 insurance/claims ($49M) an outlier; management points to ~$33–35M/quarter proxy and highlights record‑low preventables .
  • Logistics margins: Continued cost reductions; Power Only scale supports mix; sequential improvement expected despite spot buy-rate pressure .
  • Used equipment: Expect stability in H1’25 and moderate improvement H2’25; gains (ex‑real estate) guided to $8–18M for 2025 .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS/revenue was not retrievable at the time of analysis due to SPGI limits; as a result, a beat/miss determination versus estimates is unavailable at this time. Values would default to S&P Global if accessible (S&P Global disclaimer).

Key Takeaways for Investors

  • Elevated Q4 insurance/claims (including $19M unfavorable development) masked operational progress; normalization of insurance run‑rate is a key near‑term earnings lever .
  • One‑Way rate momentum and production gains are aligning; sustained low‑ to mid‑single‑digit rate lifts could materially expand TTS margins from depressed levels as capacity tightens .
  • Dedicated remains the stabilizer (RPTPW growth, retention >90%); targeted add‑backs/new wins at proper pricing drive attractive incremental margins .
  • Logistics mix improving via Power Only and cost actions; expect sequential margin progress even as buy rates rise with spot; execution on EDGE TMS should support seat‑level productivity .
  • 2025 guide implies cautious improvement: fleet growth (+1–5%), lower capex ($185–235M), modest One‑Way H1 rate lift (+1–4%), and 25–26% tax rate; capital discipline persists .
  • H2’25 used equipment pricing improvement and continued structural cost saves ($25M) are medium‑term margin tailwinds .
  • Dividend maintained ($0.14 per share), reflecting balance sheet resilience and liquidity (~$460M) at year‑end .

Appendix: Additional Data Points

  • Liquidity at 12/31/24: ~$460M (cash + revolver availability), debt $650M, cash $41M, equity $1.5B .
  • Gains on sale Q4: $6.5M total incl. $5.1M real estate; used equipment gains down ~$1.7M YoY excluding real estate .
  • TTS fleet at quarter-end: 7,450 total trucks (company + IC); trailers 25,495 .

All statements and figures are sourced from Werner’s Q4 2024 8‑K and press releases, and Q2/Q3 2024 earnings materials and transcripts as cited above.