Werner expands final mile portfolio with acquisition of NEHDS Logistics LLC

Omaha, Neb.-based Werner Enterprises, a lobal freight transportation and logistics services provider and the nation’s seventh-largest truckload carrier with more than $2.4 billion revenue last year, announced yesterday it has acquired Monroe, Conn.-based NEHDS Logistics LLC, a premium final mile logistics services provider.

The purchase price was $64 million, with a $4 million earnout, according to Werner.

Established in 2006, NEHDS’s core services focus on white glove delivery, installation, warehousing and inventory management of home furniture and appliances. The company has significant regional density with 19 fully managed or operated cross-dock, warehouse, and customer locations primarily in the Northeast and Midwest U.S. with additional facilities in the Mid-Atlantic and Southeast with a fleet comprised of more than 400 delivery trucks. The company uses two-person delivery teams for commercial and residential deliveries.

Werner officials said that bringing NEHDS into the fold will allow it to integrate the company into its existing nationwide final mile home delivery network, for big and bulky products, and also provide current and existing customers with an expanded menu of service offerings.

“The addition of the NEHDS operations, management team, talented staff and strong customer relationships to the Werner family represents a significant step forward in our Final Mile delivery program. The combination of award- winning service that NEHDS provides to its clients, along with the comprehensive portfolio of trucking capability, final mile logistics services and technology will bring the Werner and NEHDS customer base many advantages,” said Derek Leathers, Chairman, President and Chief Executive Officer, in a statement.

Leathers added that both companies share a passion for valuing its professional drivers, associates and customers.

“We look forward to welcoming the NEHDS team and working together to maintain and grow the excellent relationships with current customers, independent contractors, employee drivers and office associates,” he said, “We are excited at the opportunity to create additional value for new and existing customers. We remain committed to profitably growing our Logistics portfolio.”

Going forward, Werner said that the NEHDS leadership team, driver, non-driver associates, and independent contractors will remain on board, and NEHDS will be rebranded into Werner Final Mile. And it added that it expects this acquisition to be accretive in 2022 and anticipates cost synergies in various parts of its business.

“It makes sense for Werner to double down on its core surface transportation business,” said Ben Gordon, managing partner of Cambridge Capital and also managing partner of BGSA Holdings. “Like many companies in trucking, the next frontier is last-mile. NEHDS gives Werner the ability to expand its final mile capabilities, addressing the customer gap that has expanded in the past year. As FedEx and UPS pass through 5.9% rate increases, and cut back on their ability to serve certain customers, there is a golden opportunity for smart trucking companies to grow in this arena.”

And Robert W. Baird & Co. analyst Garrett Holland wrote in a research note that he views this acquisition as an incremental positive, noting that it is consistent with Werner’s focused M&A strategy, as well as strengthens its final mile offering and logistics platform overall.

What’s more, Holland wrote that thew NEHDS operating model leverages company assets and asset-light capacity and complements Werner’s existing independent contractor network.

“The acquisition augments Werner’s logistics capabilities, and the faster-growing and higher-return Logistics platform should continue to increase as a percentage of total company revenue,” he stated. With NEHDS, Werner’s Logistics business is tracking toward a ~$700M revenue run-rate in 2022. While NEHDS represents Werner’s second acquisition in 2022 (following ECM Transport in July) and does not preclude the company from pursuing other transactions, management intends to remain disciplined with M&A pursuits, favoring targets that are quickly accretive to the company’s strategy and financial performance.”

Werner made its official entrance into the final mile market in May 2017.

Company officials said, at the time, that this service would provide nationwide delivery and related services to residential and business locations and leverage its large network of delivery teams with operations in nearly 200 locations. And they added that through this service Werner will mainly deliver large or heavy goods and items with two uniformed associates operating a 24- or 26-foot lift gate straight truck. Types of deliveries this service will provide include: curb or porch delivery; a threshold delivery, where an item is delivered to the first dry area, or a white glove delivery to a room of choice, dunnage is removed, and where light assembly may be provided.

A Werner executive told LM, at that time, there were a few big drivers behind Werner’s decision to enter this market.

“It’s a changing marketplace when it comes to the buying habits in the U.S. and the global population,” he said. “Nearly half of our revenue is touching retail and affecting a large amount of our customer base and volume. And, for us to continue to add value to our customers, it was a natural step for Werner to expand into this part of the supply chain.”