Werner Enterprises is undergoing a significant strategic overhaul of its one-way truckload operations, aiming to optimize fleet utilization and restore the segment to profitability. These structural adjustments are projected to conclude by the end of the first quarter, with the financial benefits likely becoming apparent in the second quarter. This announcement coincided with the company's fourth-quarter earnings report, which revealed a net loss largely influenced by substantial restructuring and impairment charges.
The company reported a headline net loss of $27.8 million for the quarter, or 46 cents per share. However, this figure included $44.2 million in restructuring and impairment charges, most of which were non-cash. Excluding these charges and other unique items, the adjusted net income stood at $3.3 million, equating to 5 cents per share. This was slightly below consensus estimates and a decrease compared to the previous year.
A core component of this restructuring involves transitioning the one-way business towards more lucrative services such as expedited, cross-border, and long-haul deliveries, often utilizing driver teams. Werner is also exploring better ways to integrate this unit with its power-only offerings. The company has already begun phasing out unprofitable regional and short-haul operations and is actively working on further integrating past fleet acquisitions to streamline operations.
This strategic pivot is part of Werner's broader initiative to bolster its presence in dedicated trucking, a business model characterized by its resilience and multiyear contracts with shippers. Just last month, Werner completed the acquisition of dedicated carrier FirstFleet and its real estate in a $283 million transaction. This acquisition significantly expanded Werner's fleet by over 2,400 tractors and added $615 million in revenue, positioning the company as the fifth-largest dedicated provider in the U.S. This deal is expected to immediately contribute positively to earnings and free cash flow.
In the fourth quarter, consolidated revenue reached $738 million, marking a 2% year-over-year decrease and falling short of the $761 million consensus estimate. The total truckload (TL) revenue declined by 3% year-over-year to $513 million, with the segment's adjusted operating ratio worsening to 97.2%, indicating reduced operating efficiency. One-way revenue saw an 8% drop year-over-year, attributed to a 10% reduction in the average number of trucks in service, despite a 2% increase in revenue per truck per week and improved miles per truck per week.
The one-way fleet, which peaked at nearly 3,300 tractors in 2022, has been reduced to fewer than 2,400 units in the most recent quarter—a substantial 28% decline. Despite this downsizing, Werner remains optimistic about participating in an improving spot market. Conversely, dedicated revenue increased by 1% year-over-year, driven by a 2% rise in the average truck count, partially offset by a 1% decline in revenue per truck per week.
For the first half of the upcoming year, Werner projects one-way revenue per total mile to range from flat to a 3% increase year-over-year. For its dedicated segment, revenue per truck per week is anticipated to be between a 1% decrease and a 2% increase year-over-year. These projections are based on an assumption of mid-single-digit contractual rate increases in the one-way sector and low to mid-single-digit increases in the dedicated sector. The company acknowledges that there will be a delay in implementing new contract rates and that efforts to extend the length of haul in the one-way business might slightly impede rate-per-mile expectations. Approximately 25% of Werner's bids are negotiated in the first quarter, with another 33% in the second quarter.
The company's shares experienced a 7.1% decline on Friday, contrasting with a 1.2% rise in the S&P 500. This follows a period of significant stock appreciation since before Thanksgiving, largely correlating with an increase in tender rejections and spot rates in the market.