Werner Enterprises on Wednesday reported a 15 percent decline in earnings for its third quarter, ending the company’s string of 10 consecutive quarters of growth.
Sarpy County-based Werner said the decline was a result of softer freight demand, rising fuel prices and other costs that have exceeded rate increases.
The transportation and logistics firm’s net income was $25.1 million, or 34 cents per share, down from $29.6 million, or 40 cents per share, this time last year.
The company’s total revenue was down 1 percent, from $509.6 million to $506.5 million. Meanwhile, the company’s operating income dropped 17 percent, from $50 million to $41.8 million.
The earnings decline was the company’s first since January 2010 but was in line with an earnings expectations report the company released in September, which estimated earnings would be between 33 cents and 36 cents per share.
Historically, transportation companies see seasonal improvement in the third quarter, reflecting that shelves are being stocked to prepare for the holiday season.
But in an interview last week, president and CEO Derek Leathers said businesses and individuals are continuing to postpone purchasing decisions before the holidays, which leads to idle numbers for the trucking industry.
“It’s fairly flat, or even a little worse than flat,” he said. “There’s at least the potential of yet another year of shortening the supply chain and shipping all the holiday goods at the last minute.”
The company said its customers also kept leaner inventory levels because of economic and political uncertainties.
Additionally, diesel fuel costs were higher, with prices 7 cents per gallon higher in the third quarter compared with this time last year, and 11 cents per gallon higher than in the second quarter this year. In the first 17 days of October 2012, the average diesel fuel price was 40 cents per gallon higher than the average last year, the company said.
Only Werner’s revenue from value-added services — which include brokerage, freight management and international logistics operations — got a boost, up 8 percent from $76.6 million in the second quarter to $82.5 million in the third quarter.
Werner spent $58 million in the third quarter on capital expenditures, including new trucks and trailers and environmentally friendly equipment like aerodynamic truck features, idle reduction systems, tire inflation systems and trailer skirts.
Werner said the driver shortage facing the industry continued to be a problem in the third quarter because of driver pay increases by competitors, a lower number of and increased competition for truck driving school graduates and an improving housing construction market.
Werner averaged 7,222 trucks in service during the third quarter and, by the end, were operating 215 fewer. The decline resulted from a decision to leave less-profitable customer business during the quarter, the company said.