Dive Brief:
- Werner Enterprises has closed on an acquisition of ReedTMS Logistics for $112.4 million, the carrier announced Monday in a securities filing.
- The asset-light logistics provider and TL carrier is based in Florida and has a freight brokerage network of 19,000 active carriers, according to a news release.
- “ReedTMS Logistics further strengthens our freight brokerage capabilities,” Werner Chairman, President and CEO Derek Leathers said in a statement. “ReedTMS will elevate our logistics portfolio with new customers, by expanding and diversifying our industry verticals.”
Dive Insight:
Leathers highlighted Werner’s growth strategy last week in a Q3 earnings call and noted the company’s stringent criteria for acquisitions and priority in organic growth.
Executives have noted how acquisitions must meet several conditions: completing Werner’s portfolio based on the target company’s geography or services; having superior service and safety culture; and being accretive to the company’s earnings.
“We are remaining disciplined and we are searching for companies with strong management teams that we expect to retain with a company culture that has demonstrated a high focus for valuing its professional drivers, carriers, associates and customers,” Leathers said on the call.
The acquisition is expected to help Werner's logistics business unit, which had its operating income plunge from $7.7 million to $5.1 million YoY in Q3. According to a securities filing, Werner attributed the decline to:
- fewer premium pop-up freight opportunities
- intermodal customer and market challenges
- softening demand and start-up costs in final mile
The more challenging environment follows years of pandemic-related demand that sent many carriers’ profits soaring to new heights despite capacity constraints. Werner’s quarterly operating income set records in Q1 and Q2 2021.
And despite economic headwinds, several companies recently expanded with acquisitions, including Werner with Baylor Trucking a little over a month ago. Similarly, KAG Logistics acquired Connectrans Logistics in October, giving it access to the Canadian market. Purdy Brothers Trucking said in August that it acquired assets from Phoenix Leasing of Tennessee as it pushed into the Southeast.
Werner acquired ReedTMS Logistics with a 100% stake in the company’s stock. The business had a 28% annual compound growth rate of revenues over the last five years, according to the news release.
