Werner Expands Borrowing Capacity with $1B Credit Facility as it Eyes Acquisitions
January 17, 2023
By Retail Dive
Werner Enterprises entered into a more than $1 billion credit facility on Dec. 20, with the proceeds to be used for working capital, acquisitions and other investments.
The new credit agreement replaces two $300 million credit facilities and a $100 million loan, according to a securities filing, collectively rolling over $585 million of the carrier’s outstanding debt.
With the changes, Werner has a “remaining borrowing capacity of $416.2 million to fund capital expenditures, business acquisitions, common stock repurchases, working capital and other general corporate purposes,” the filing said.
The new credit facility gives Werner more room for borrowing, which could be beneficial in a potential economic downturn, Stifel Senior Research Analyst Bert Subin told Transport Dive.
If the economy were to falter further, carriers could get anxious and look to exit the market, Subin said. That could trigger M&A opportunities for carriers with cash on hand, often publicly traded carriers.
“They don’t want to feel like they’re overpaying,” Subin said of companies concerned about overvalued businesses adversely affecting deals for buyers.
Werner engaged in a flurry of M&A activity from July 2021 to November 2022, closing on acquisitions of ECM Transport Group, NEHDS Logistics, Baylor Trucking and ReedTMS Logistics. Executives also noted on a November earnings call that the company would continue to evaluate possible acquisitions.
“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,” Werner CEO, President and Chairman Derek Leathers said during the call.
Subin said he’d be surprised if Werner made an acquisition imminently, adding that the carrier appears to be digesting recent deals it’s made.
For Werner, replacing its credit facilities was more of a standard move, Subin said.
The carrier is certainly not alone in doing so. C.H. Robinson Worldwide renewed a $1 billion credit facility in November, extending a maturity date from October 2023 to November 2027, among other changes. Marten Transport renewed a $30 million credit line in August.
Knight-Swift Transportation Holdings has expressed a similar interest in acquisitions. President and CEO David Jackson said on an October earnings call that the company’s interest in acquiring “only continues to grow.” Jackson added that the carrier is very interested in LTL and “may be overdue for some truckload business,” regarding M&A.
