(Reuters) - Werner Enterprises Inc (WERN.O) reported a higher quarterly net profit on Thursday, driven by a “meaningfully better” freight environment than in the year-ago period, but fell a penny short of analyst expectations and also missed on revenue.
The catastrophic hurricanes that hit Florida and Texas in August and September resulted in short-term costs for the company but also boosted freight rates due to tighter capacity.
The company said it expects freight metrics to continue improving in the future, as “we have increasing confidence that contractual rates will strengthen over the next few quarters.”
The Omaha, Nebraska-based trucking company posted third-quarter net income of $22.5 million, or 31 cents per share, up from $18.9 million, or 26 cents per share a year earlier. Wall Street analysts on average expected earnings per share of 32 cents.
Werner also missed expectations on revenue, which rose to $528.6 million from $508.7 million a year ago. Analysts on average expected revenue of $532.7 million.
Werner said driver recruiting is becoming more challenging, citing fierce competition for a declining pool of driver training school graduates and a historically low national unemployment rate, among other factors.
The industry faces a shortage of roughly 864,000 truckers in the next decade, according to the American Trucking Associations lobby group.
Werner also said a new mandate that will force U.S. trucking companies to electronically log employee hours beginning on Dec. 18 will tighten supply on the market, driving up rates.
Paper logs, now in wide use, allow truckers to fudge the books, inflate their hours on the road and boost the bottom line.
Werner noted that freight metrics have improved, adding: “We have increasing confidence that contractual rates will strengthen over the next few quarters, particularly noting the improving freight market conditions and the expected tightening of supply when the electronic hours of service mandate for the trucking industry becomes effective on December 18, 2017.”
Major truck outfits like Werner, Schneider National Inc (SNDR.N) and Covenant Transportation Group Inc (CVTI.O) have used electronic logs for years, and back the rule, but the mandate could sap productivity by 3 percent to much as 15 percent, according to industry estimates.
Reporting by Eric M. Johnson in Seattle; Editing by Matthew Lewis