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WERNER ENTERPRISES INC (WERN)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered sequential improvement: revenue $753.1M (-1% YoY), adjusted operating margin 2.2% (down 60 bps YoY), and adjusted EPS $0.11 (down 36% YoY), while GAAP EPS rose to $0.72 (+380% YoY) propelled by one-time legal and earnout reversals .
  • Results beat Wall Street consensus: revenue $753.1M vs $734.3M*, adjusted EPS $0.11 vs $0.049*, and EBITDA $124.6M* vs $82.5M*; a notable reversal from Q1’s misses (revenue $712.1M vs $739.3M*, EPS -$0.12 vs $0.116*) . Values retrieved from S&P Global.
  • Dedicated implementations and One-Way Truckload rate gains (revenue per total mile +2.7% YoY) supported core Truckload, while Logistics grew revenue 6% with margin expansion (adjusted OI margin 2.7%) .
  • Guidance tightened/lowered for fleet growth (1–4%) and net capex ($145–$185M), with cost savings target raised (> $45M) and equipment gains guidance lifted ($12–$18M), reflecting disciplined capital allocation and operational self-help .
  • Potential stock catalysts: estimate beats, Texas Supreme Court verdict reversal (reversing $90M case; $45.7M benefit) and $55M buyback (2.1M shares at $26.05), alongside improving used equipment gains and technology-driven productivity .

What Went Well and What Went Wrong

What Went Well

  • Logistics posted YoY revenue growth (+6%), adjusted operating income up 246%, and adjusted margin expanded to 2.7% on disciplined cost management and higher volumes; Intermodal had its best operating income quarter in two years .
  • One-Way Truckload revenue per total mile rose 2.7% YoY (fourth consecutive quarter), aided by contractual rate changes; Dedicated fleet implementations progressed and quarter-end fleet grew 1.3% YoY .
  • Management amplified cost actions and tech productivity: “We are driving efficiency by scaling the use of conversational AI… and growing no-touch, fully automated load bookings,” and raised the 2025 cost savings target to >$45M .

What Went Wrong

  • Adjusted profitability remained pressured: adjusted OI $16.6M (-22% YoY), adjusted EPS $0.11 (-36% YoY), and TTS adjusted OI margin net of fuel fell 220 bps to 2.8% due to elevated insurance/claims, fuel net impacts, and Dedicated startups (~40 bps headwind to TTS adj OI margin) .
  • Operating cash flow fell to $46.0M (-58% YoY) and net capex, while reduced YoY, remained elevated sequentially as the company continued reinvestment in fleet and technology .
  • Q1 headwinds highlight fragility: prior quarter revenue and EPS missed consensus and weather/tariffs created network inefficiencies; ongoing macro/tariff uncertainty and spot rate softness persist into Q3 .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$754.7 $712.1 $753.1
Diluted EPS (GAAP, $)$0.19 -$0.16 $0.72
Adjusted Diluted EPS ($)$0.08 -$0.12 $0.11
Operating Margin (%)1.8% -0.8% 8.8%
Adjusted Operating Margin (%)1.6% -0.3% 2.2%
Q2 2025 vs EstimatesConsensus*Actual
Revenue ($USD Millions)734.3*753.1
Primary EPS ($)0.049*0.11
EBITDA ($USD Millions)82.5*124.6*
Values retrieved from S&P Global.
Segment MetricsQ4 2024Q1 2025Q2 2025
TTS Revenue ($MM)$527.3 $501.9 $517.6
TTS Operating Income ($MM)$11.7 -$0.9 $64.1
TTS Adjusted Operating Income ($MM)$14.6 $2.0 $12.8
TTS Adjusted OI Margin, net of fuel (%)3.1% 0.4% 2.8%
Logistics Revenue ($MM)$213.2 $195.6 $221.2
Logistics Operating Income ($MM)$1.2 -$0.5 $4.3
Logistics Adjusted Operating Income ($MM)$2.4 $0.7 $5.9
Logistics Adjusted OI Margin (%)1.1% 0.3% 2.7%
KPIsQ4 2024Q1 2025Q2 2025
TTS Avg Trucks in Service7,495 7,415 7,489
Dedicated Trucks at Quarter End4,840 4,835 4,890
TTS Avg Rev per Truck per Week ($)$4,707 $4,493 $4,632
One-Way Rev per Total Mile YoY (%)+3.3% +0.3% +2.7%
Gains on Sale of PPE ($MM)$6.5 $2.8 $5.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
TTS truck count growth (beg. to end of year)FY 20251% to 5% (as of 4/29/25) 1% to 4% (as of 7/29/25) Lowered
Net capital expenditures ($)FY 2025$185M–$235M (as of 4/29/25) $145M–$185M (as of 7/29/25) Lowered
Dedicated RPTPW growth (net of fuel)FY 20250%–3% 0%–3% Maintained
One-Way Truckload RPTM growth (net of fuel)Q2/Q3 vs prior year0%–3% (Q2 guide) 0%–3% (Q3 guide reissued) Maintained/reissued
Effective income tax rateFY 202525%–26% 25%–26% Maintained
Cost savings programFY 2025>$40M (prior) >$45M Raised
Equipment gains guidance ($)FY 2025$8M–$18M (prior) $12M–$18M Raised
Quarterly dividend ($/share)Q2/Q3 2025$0.14 (declared 5/21/25) $0.14 (continued) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Technology/AI & EDGE TMSOngoing tech investment; improving Logistics operations Scaling conversational AI, automation; EDGE TMS adoption driving 20% brokerage productivity Strengthening execution, structural productivity tailwinds
Supply chain, tariffs, macroPeak season better than expected; tariff uncertainty noted Stable fundamentals outlook; spot rates seasonality; tariffs/interest rates uncertain Cautiously constructive; normalizing seasonality
Safety/legal/regulatoryElevated claims; tort pressure; near-record low DOT accident rates Texas Supreme Court reversal of $90M verdict; ELP enforcement gradually ramping Legal overhang reduced; enforcement may tighten capacity
Segment performance (Dedicated/One-Way)Dedicated pipeline strong; One-Way rate up second quarter Dedicated implementations ramp; One-Way rates up fourth consecutive quarter Continued Dedicated growth; rate improvement durability
Capital allocation & balance sheetNo repurchases in Q4; liquidity strong $55M buyback; capex moderated; liquidity $695M Opportunistic buybacks; capex discipline
Used equipment gainsGains mixed; real estate gains adjusted out Equipment gains more than doubled QoQ/YoY; guidance raised Improving resale values; potential tailwind

Management Commentary

  • “Second quarter results showed significant improvement over the first quarter, with operational and strategic progress across our business… Logistics posted year-over-year revenue growth, solid operating income and margin expansion through disciplined cost management and increased volumes.” — Derek Leathers, CEO .
  • “Volume on our Werner EDGE TMS Platform is growing… Logistics has largely been on EDGE TMS for several quarters, leading to 20% productivity improvement in brokerage loads per full-time employee.” — Derek Leathers .
  • “We are driving efficiency by scaling the use of conversational AI… and back office efficiencies like carrier payment automation.” — Derek Leathers .
  • “We are slightly increasing our 2025 savings target to greater than $45 million… Actions to achieve the full $45 million have largely already been taken.” — Chris Wikoff, CFO .
  • “We continue to be confident in the pathway back to double-digit TTS operating margins.” — Management on margin trajectory .

Q&A Highlights

  • Cycle shape and capacity: Management anticipates a supply-driven upcycle as capacity exits (bankruptcies, repossessions), normal seasonality returning, and OEM order curtailment extending the upcycle slope .
  • Temporary demand and “flight to quality”: Pop-up engineered one-way solutions continued; customers aggregating around well-capitalized, diversified carriers; some projects may extend into Q4 .
  • ELP enforcement impact: Werner expects no direct fleet impact (already testing for English proficiency), enforcement ramping unevenly state-by-state; potential capacity attrition from enforcement and avoidance behavior .
  • Rate vs inflation and TTS margin path: Mid-single digit rate recovery needed in One-Way, plus Dedicated growth, cost discipline, tech leverage, and sustained used equipment recovery to return to low-double-digit TTS margins (10–12%+) over time .
  • Dedicated startups and margin headwinds: Startup costs ($1M) and revenue inefficiencies ($1M) totaled ~40 bps drag on TTS adjusted OI margin; fuel net impacts added ~70 bps; normalized run-rate would be ~3.9% net of fuel .

Estimates Context

  • Q2 beats: Revenue $753.1M vs $734.3M*, adjusted EPS $0.11 vs $0.049*, EBITDA $124.6M* vs $82.5M*. Signals improvement vs Q1’s misses (revenue $712.1M vs $739.3M*, EPS -$0.12 vs $0.116*) . Values retrieved from S&P Global.
  • Coverage depth: 11 revenue estimates and 14 EPS estimates for Q2; FY 2025 consensus revenue $3.00B* and EPS $0.094* indicate modestly cautious full-year outlook. Values retrieved from S&P Global.
  • Implications: Consensus likely revises upward near-term on Logistics strength and One-Way rate gains, but adjusted margin compression (insurance/startup costs) tempers EPS flow-through.

Key Takeaways for Investors

  • Sequential recovery with clear self-help: Logistics execution, EDGE TMS productivity, and cost savings (> $45M) underpin improving results despite a still-challenging freight backdrop .
  • Truckload mix quality improving: Dedicated implementations and One-Way contractual rate traction (+2.7% YoY revenue per total mile) support core TTS, with startup inefficiencies expected to fade into Q3–Q4 .
  • Legal overhang substantially reduced: Texas Supreme Court reversal provided a $45.7M insurance benefit, boosting GAAP results and reducing future insurance accruals; focus remains on safety and tort reform advocacy .
  • Capital discipline: Net capex lowered to $145–$185M and buybacks ($55M in Q2) reflect balance-sheet flexibility and return orientation; equipment gains and resale values offer incremental tailwinds .
  • Near-term modeling: Use adjusted metrics; reflect ~40 bps margin headwind from Dedicated startups and ~70 bps from fuel net impacts in Q2, with sequential improvements expected in H2 as fleets mature .
  • Estimate trajectory: Expect near-term upward revisions for revenue/EBITDA on Logistics and equipment gains; EPS revisions should be more measured until insurance costs normalize. Values retrieved from S&P Global.
  • Trading setup: Positive sentiment from beats and legal resolution, but watch spot rate seasonality, ELP enforcement effects on capacity, and tariff/interest-rate uncertainties that could affect H2 demand cadence .