Dive Brief:
- Werner Enterprises’ used equipment sales in Q2 helped strengthen margins, reflecting a hotter market, executives said Tuesday on an earnings call.
- Gains on sales of property and equipment totaled $5.9 million for the quarter, versus $2.7 million a year ago, according to an earnings release.
- The surge was driven by lucrative resale values reaching more than two-year highs, translating to the “best gains on used equipment that we’ve had in six quarters,” EVP, Treasurer and CFO Chris Wikoff said on the call.
Dive Insight:
Pricing for used equipment has come amid shifts in U.S. trade policy and retreats across multiple carriers’ capital expenditure plans.
“Used truck and trailer values have accelerated since March, benefiting from tariff and other macro uncertainty,” CEO and Chairman Derek Leathers said on the call.
Trade policy was the driver in the elevated tractor pricing, Wikoff said. That meant even though there were fewer unit sales from one quarter to the next, the profit increased.
Used pricing finally rose year over year for the first time in over two-and-a-half years, according to an ACT Research report Monday. That’s when the average Class 8 retail sale price was up 10.4% in June compared to a year ago, according to the report.
“Well, it finally happened,” Steve Tam, VP of ACT Research, said in the report. But the reasoning may be more difficult to decipher, given forward pull due to tariffs amid a stubborn freight recession.
“The data and analysis are averages,” Tam added, “and different segments of the industry are experiencing different realities.”
For Werner, the pricing environment helped the carrier achieve $66.3 million in operating income for Q2, or an adjusted operating income of $16.6 million. Also during the quarter, a Texas Supreme Court decision reversed a $90 million jury award, Leathers said.
“This ruling led to the reversal of a $45.7 million net liability, including interest and benefiting GAAP operating income,” Wikoff said.
