Dive Brief:
- Werner Enterprises’ operating income plummeted by 58% year over year to $27.6 million in Q2, the company reported Tuesday.
- A smaller dedicated fleet, one-way rate pressure from previously negotiated contract renewals and lower gains on used equipment sales took a toll, Chairman and CEO Derek Leathers said on an earnings call Tuesday.
- Amid the downturn, the company has lowered its planned 2024 capital expenditures to a range of $225 million to $275 million, from a previous range of $250 million to $300 million, CFO Chris Wikoff said.
Dive Insight:
Leathers described a truckload market downcycle “closer to the end than the beginning, but not yet really at an inflection point,” at an investor conference last month.
He declined to predict during the earnings call when an inflection point might arrive, but he projected modest sequential improvement in the carrier’s operating ratio from Q2 to Q3.
“While it remains too early to call an inflection, we are encouraged by signs of tightening,” Leathers said. “Freight demand has been steady but competitive.”
Werner's dedicated truck count shrinks in 2024
The carrier’s dedicated fleet shrank by 7% YoY to fewer than 5,000 trucks in Q2, according to an investor presentation. That truck count is expected to grow in the second half of the year, Wikoff said.
Werner’s reduction in capital expenditures is part of a cost analysis that aims to cut in a structural way to position the carrier for a freight rebound, the CEO said. Most of that spend is on trucks and trailers.
“At this point, we just felt it was prudent to kind of claw that back some,” Leathers said.
