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2014 and 2015 were cyclically contrasting years
Werner Enterprises has reported revenues and record earnings for Q4 and year ended December 31, 2015. Total revenues declined 2.0% in 2015, to US$2,093.5 million, as operating income increased 25.0% to US$200.5 million and net income increased 25.0% to US$123.7 million. Trucking revenues, net of fuel surcharges, increased 6.0% to US$1,411.1 million.
2015 was a strong earnings year for Werner Enterprises. Freight demand in Q4, 2015 was less robust than the strong Q4, 2014; however, it was consistent with average freight demand in the fourth quarters of 2013, 2012 and 2011. Demand was less than expected in the first half of Q4, 2015, picked up significant strength in latter November and early December and then tapered to seasonally solid freight levels for the remainder of the year.
Freight demand to date in January 2016 has been seasonally softer and in-line with the same periods of 2013, 2012 and 2011. Compared to the same periods in January 2015 and January 2014, freight demand is not as strong.
2014 and 2015 were cyclically contrasting years. 2014 provided the benefits of gradually improving demand from a strengthening economy and constrained supply due to a tight driver market and increasing safety regulations. Freight demand in 2015 did not strengthen as the year progressed, as the rate of economic growth slowed.
The truckload sector also experienced supply increases in 2015 as small carrier confidence rose as a result of better rates in 2014 and much lower fuel prices beginning in late 2014. Finally, as 2015 ended, truckload supply began to stabilise as truck orders declined significantly and safety regulators finalised the long awaited electronic logging device regulations in December 2015.
Noting the difficult comparisons to the strong freight market in Q4, 2014, average revenues per tractor per week, net of fuel surcharge, decreased 2.3% in Q4, 2015 compared to Q4, 2014. Total revenues declined by 4.0% in Q4, 2015 compared to Q4, 2014. However, trucking revenues, net of fuel surcharge revenues, grew 4.0% in Q4, 2015 compared to Q4, 2014. The significantly lower fuel prices in Q4, 2015 compared to Q4, 2014 primarily caused a reduction in fuel surcharge revenues by US$36.0 million in the Truckload segment and revenues by an estimated US$6.0 million in the VAS segment. This had the effect of reducing total consolidated revenues by an estimated eight percentage points in Q4, 2015 compared to Q4, 2014.