Werner warns Q3 profit falls short as fuel, driver pay and insurance bite

Werner Enterprises, one of the largest U.S. truckload carriers, told investors on Monday that third-quarter profit will come in well below the prior quarter, blaming fuel, driver pay and an insurance adjustment. The company released preliminary, unaudited numbers on October 19 and will report in full on October 27.

What Werner said

In its October 19 release filed with the SEC, Werner guided to third-quarter revenue of roughly $946 million to $951 million. It expects GAAP diluted earnings of about $0.10 to $0.11 per share and adjusted earnings of about $0.15 to $0.16 per share.

For comparison, Werner's second-quarter release of July 28 showed revenue of $933.9 million and adjusted earnings of $0.22 per share. Revenue is holding up. Earnings per share are not.

Werner put the hit at about $0.18 per share in cumulative cost headwinds versus the second quarter. It named three causes: "rapidly rising fuel prices," spending on driver recruitment and retention, and a late-quarter insurance reserve adjustment tied to past claims. It did not give a dollar figure for any of them, and it did not offer a fourth-quarter outlook.

RTTNews reported that Werner shares were down about 4.3% in premarket trading on Monday, at $31.40.

Why fuel and insurance matter here

Fuel was already a big line for Werner. In the second quarter it spent $119.9 million on fuel, or 12.8% of revenue, against 8.0% a year earlier, according to the July release. Fuel surcharges recover part of that, but only with a lag and only on freight that carries a surcharge. A fast climb late in a quarter lands on the income statement before it shows up in billings.

The insurance item is the other warning sign. In July, Werner said insurance and claims costs had trended favorably for two straight quarters. A reserve adjustment on older claims reverses that story for this quarter.

What it means for carriers

Werner's miss is a reminder that higher spot and contract rates do not automatically reach the bottom line. Fleets that price loads on stale fuel assumptions, or that lean on weekly surcharge tables that trail the pump, absorb the gap in a rising market. Check how often your surcharge schedule resets.

What shippers and brokers should watch

Large carriers that miss on costs tend to push harder in bid season. Expect more requests for shorter surcharge lag, higher accessorial charges and rate floors. The October 27 report should show whether Werner is seeing contract rate gains large enough to cover the cost increases it has flagged.

For current pump prices, see PDI's diesel page at /diesel.