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WE

WERNER ENTERPRISES INC (WERN)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 missed Wall Street expectations: adjusted EPS was -$0.12 vs consensus +$0.12 and revenue was $712.1M vs consensus $739.3M, driven by elevated insurance costs ($0.09 EPS impact), extreme weather ($0.04), and higher IT spend ($0.05) .
  • TTS adjusted margin net of fuel fell to 0.4% while Logistics turned positive with 0.3% adjusted margin; management raised the 2025 cost-savings target to $40M and achieved $8M in Q1 .
  • Dedicated pipeline strengthened with awards representing >200 trucks to implement in late Q2/early Q3; One-Way revenue per total mile rose 0.3% YoY for the third consecutive quarter .
  • Guidance largely maintained (fleet +1% to +5%, net capex $185M–$235M, tax rate 25%–26%); One-Way rate guide updated to flat to +3% for Q2 YoY; liquidity reached $777M after closing a new $300M receivables facility .

What Went Well and What Went Wrong

What Went Well

  • Dedicated momentum: highest dedicated awards since Q2 2022 (>200 trucks slated for late Q2/early Q3) and strong customer retention .
  • Logistics improved: adjusted operating margin rose to 0.3% on double-digit OpEx improvement; Intermodal shipments +16% YoY .
  • Liquidity and capital efficiency: free cash flow of $37M, debt reduced sequentially, and a new $300M receivables facility lifted total liquidity to $777M .

Management quote: “Awards signed this quarter were the highest since the second quarter of 2022… Dedicated expertise is a competitive advantage” .

What Went Wrong

  • Insurance and claims expense remained elevated (~$44M), with one adverse verdict contributing ~$0.08 EPS impact; overall EPS -$0.12 adjusted .
  • Weather and operational inefficiencies: extreme weather (~$0.04 EPS impact) and tariff-induced stop‑and‑go impacted utilization and deadhead .
  • TTS margin compression: adjusted TTS margin net of fuel fell to 0.4% (down ~430 bps YoY) as One-Way miles per truck declined 3.5% YoY and empty miles increased to 16.01% .

Financial Results

Trend vs prior quarters

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$745.7 $754.7 $712.1
Adjusted EPS ($USD)$0.15 $0.08 -$0.12
Operating Margin (%)2.4% 1.8% -0.8%
Adjusted Operating Margin (%)2.9% 1.6% -0.3%

Actual vs Wall Street consensus (Q1 2025)

MetricActualConsensus
Revenue ($USD Millions)$712.1 $739.3*
Adjusted EPS ($USD)-$0.12 $0.12*
EBITDA ($USD Millions)$62.9*$89.3*

Values retrieved from S&P Global.*

Segment breakdown (Q1 2025)

SegmentRevenue ($USD Millions)Adjusted Operating Income ($USD Millions)Adjusted Margin (%)
Truckload Transportation Services (TTS)$501.9 $2.0 0.4% (net of fuel)
Werner Logistics$195.6 $0.7 0.3%

KPIs (Q1 2025)

KPIValue
TTS average trucks in service7,415
Dedicated average trucks in service4,783
Dedicated revenue per truck per week YoY change-0.3%
One-Way trucking revenue (net of fuel)$154.4M
One-Way average empty miles16.01%
One-Way revenue per total mile YoY change+0.3%
Gains on sale of property & equipment$2.8M
Operating cash flow$29.4M
Free cash flow$37M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
TTS truck count from beginning to end of yearFY2025+1% to +5% +1% to +5% Maintained
Net capital expendituresFY2025$185M–$235M $185M–$235M Maintained
Effective tax rateFY202525%–26% 25%–26% (Q1 actual 23.7%) Maintained
Dedicated RPTPW growth (net of fuel)FY20250%–3% 0%–3% Maintained
One-Way Truckload rate per total mileNear term+1% to +4% (1H25 vs 1H24) Flat to +3% (Q2 vs Q2 2024) Lowered
Dividend per shareQ2 2025 pay date$0.14 declared $0.14 (paid May 7, 2025) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Insurance/nuclear verdictsElevated insurance costs; claims pressure ~$44M insurance; $0.09 EPS impact; isolated adverse verdict; advocating tort reform Mixed near term; structural reform sought
Dedicated pipeline & marginsDedicated fleet grew sequentially; retention >90% Highest awards since Q2’22 (>200 trucks), retention 87%; dedicated outperforms One‑Way margins Improving pipeline; margin accretive
One-Way rate/mixYoY rate improved for 2nd straight quarter; peak stronger Rate per total mile +0.3% YoY; bid season retention strong; spot volatility from tariffs Improving rates; volumes volatile
Technology (EDGE TMS)Advancing roadmap, cost savings actions Logistics fully on EDGE; >½ One‑Way and ¼ Dedicated migrated; productivity gains; EPS impact from IT ~$0.05 Scaling; benefits ramp 2H25
Cost actionsStructural changes; savings underway 2025 savings target raised to $40M; $8M achieved in Q1 Accelerating
Tariffs/importsHurricane/port disruptions impact Q3 Tariffs driving stop‑and‑go networks; West Coast ~10% One‑Way volume; Q2 guide adjusted Headwind near term
Mexico cross‑borderStrategic exposure noted ~10% total revenues; long‑term competitive advantage Positive long term
Liquidity & capital2024 YE liquidity $460M New $300M facility; liquidity $777M; net debt/EBITDA 1.7x Strengthened
Used equipment gainsLow vs prior years Gains $2.8M Q1; values improving in April Improving

Management Commentary

  • “Our first quarter results did not meet our expectations… revenues were 7% lower… adjusted EPS was negative $0.12” .
  • “Dedicated awards… representing over 200 trucks… scheduled to be implemented in late Q2 and early Q3” .
  • “We are increasing our 2025 cost savings target to $40 million… achieved $8 million in savings in the first quarter” .
  • “Total liquidity at quarter end was $777 million… closed on a new $300 million committed receivable securitization facility” .
  • “One‑Way… revenue per total mile increased 0.3%… rate increases on One‑Way bids… spot weakness tied to tariff uncertainty” .

Q&A Highlights

  • Dedicated vs One‑Way margins: dedicated outperforms and margin discrepancy widened in Q1 due to One‑Way duress .
  • Insurance outlook: elevated due to cost per claim, not frequency; two quarters >$40M considered outliers; tort reform needed .
  • Market capacity/demand: tariff uncertainty created network disruptions; potential catalyst for capacity attrition; BLS trucking employment below 2019 levels .
  • Q2 profitability path: aim to return to positive EPS; cost reductions to accelerate; some Dedicated start‑up costs .
  • Technology benefits: Logistics fully on EDGE; rising load-per-employee and OpEx savings; broader benefits expected late Q3/Q4 2025 .

Estimates Context

  • Q1 2025: revenue miss ($712.1M vs ~$739.3M*) and EPS miss (-$0.12 vs $0.12*) with EBITDA below consensus ($62.9M* vs ~$89.3M*) .
  • Prior quarter Q4 2024: EPS below expectations ($0.08 vs ~$0.22*) and revenue slightly below consensus ($754.7M vs ~$763.1M*) .
  • Near-term trend: Q2 2025 later reported a beat on both EPS ($0.11 vs ~$0.049*) and revenue ($753.1M vs ~$734.3M*), aided by one‑time insurance reversal and stronger execution .

Values retrieved from S&P Global.*

Q1 2025 Actual vs Consensus Detail

MetricActualConsensus
Revenue ($USD Millions)$712.1 $739.3*
Adjusted EPS ($USD)-$0.12 $0.12*
EBITDA ($USD Millions)$62.9*$89.3*

Key Takeaways for Investors

  • Q1’s miss was largely driven by non-operational headwinds (insurance verdict and weather), masking steady progress in Dedicated and Logistics cost control .
  • Dedicated pipeline (>200 trucks) and rising One‑Way rates support gradual margin recovery as tariff volatility normalizes .
  • Execution on the $40M 2025 cost-savings plan and EDGE TMS ramp are key to near-term earnings leverage; expect more visible benefits in late Q3/Q4 .
  • Liquidity is robust ($777M) with a new $300M facility, providing optionality for repurchases/M&A and cushioning macro uncertainty .
  • Near-term guidance unchanged except One‑Way rate guide trimmed to flat to +3% for Q2 YoY, reflecting tariff impacts and spot weakness .
  • Watch insurance/tort developments (Texas Supreme Court reversal in Q2) and used equipment gains—both are tailwinds vs Q1’s headwinds .
  • Dividend continuity ($0.14/share) underscores capital return discipline amid cycle pressure .