Why did WERN's operating profit drop sharply in Q4 2024?

Werner Enterprises' operating profit dropped sharply in Q4 2024 due to a combination of factors: 1. **Revenue Decline**: The company experienced a decrease in operating revenues to $745,701,000 in Q4 2024, down from $817,744,000 in the same quarter the previous year. This decline was attributed to reduced revenues in both the Truckload Transportation Services (TTS) and Werner Logistics segments. The TTS segment saw a 9.9% decrease in the average number of tractors in service, and the Werner Logistics segment faced ongoing pricing pressure. 2. **Operating Expenses Increase**: Despite the revenue decline, operating expenses increased to $728,106,000, representing 97.6% of operating revenues. This increase in operating expenses, particularly in categories such as salaries, wages, and benefits, contributed to the decrease in operating profit margin. 3. **Comparative Performance**: Werner's performance in Q4 2024 was lackluster compared to its peers in the ground transportation industry. For instance, Ryder reported an 8.3% year-on-year increase in revenues, while Werner experienced a decrease. This comparative underperformance further highlights the challenges Werner faced in maintaining profitability. In summary, Werner's operating profit drop in Q4 2024 was primarily due to a combination of revenue decline and increased operating expenses.