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WERNER ENTERPRISES INC (WERN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue rose 3% year over year to $0.7715B and exceeded Wall Street consensus by ~$8.7M; adjusted diluted EPS of -$0.03 missed consensus $0.13, with GAAP diluted EPS of -$0.34 driven by a $18M class-action settlement and $3.4M related legal fees . EPS consensus and revenue consensus from S&P Global; see Estimates Context section for details.*
  • Logistics continued double-digit revenue growth (+12% YoY) and positive operating income, while TTS posted an operating loss on higher insurance and dedicated startup costs; adjusted TTS margin net of fuel fell 340 bps YoY to 1.9% .
  • 2025 guidance tightened: fleet growth range reduced to -2% to 0% (from +1% to +4%), net capex narrowed to $155M–$175M, and Q4 effective tax rate guided to 26–27% after discrete items elevated YTD tax rate; one-way rate/mile guided to -1% to +1% in Q4 vs prior year .
  • Near-term catalysts discussed: regulatory enforcement (ELP, non-domiciled CDLs, B-1 visa cabotage) accelerating capacity attrition, potential for normal-to-better seasonal spot rates, and dedicated startup costs dropping 75% in October; management expects some OR improvement in Q4 despite softer logistics volume .

What Went Well and What Went Wrong

What Went Well

  • Logistics revenue +12% YoY to $232.6M with adjusted operating income rising to $4.2M and margin +140 bps to 1.8%; Intermodal revenue +23% on +22% shipments; PowerLink +26% .
  • Dedicated revenue grew YoY and sequentially; dedicated average revenues per truck per week rose 1.3%, and dedicated trucks reached 67% of TTS fleet with continued new fleet awards .
  • Technology transformation: rebuilt cloud-based tech stack enabling AI automation; thousands of weekly interactions via conversational AI; logistics OpEx reductions with volume growth; back-office cost lowered ~40% over two years in one department .

What Went Wrong

  • TTS operating loss of $13.8M vs $21.6M income last year; adjusted TTS operating margin net of fuel fell to 1.9% (down 340 bps), with ~200 bps pressure from higher insurance claims and ~50 bps from dedicated startup costs .
  • One-way production declined on fleet mix shifts, new driver onboarding, and early-quarter network softness; miles per truck -4.7% YoY and revenue per truck per week -4.3% .
  • Consolidated GAAP diluted loss per share of -$0.34, impacted by $18M settlement accrual in salaries/wages and $3.4M legal fees; adjusted operating income fell 50% YoY to $10.9M and adjusted margin to 1.4% .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$0.746 $0.712 $0.753 $0.771
GAAP Diluted EPS ($USD)$0.11 -$0.16 $0.72 -$0.34
Adjusted Diluted EPS ($USD)$0.15 -$0.12 $0.11 -$0.03
Operating Margin (%)2.4% -0.8% 8.8% -1.7%
Adjusted Operating Margin (%)2.9% -0.3% 2.2% 1.4%

Segment Breakdown

Segment MetricQ1 2025Q2 2025Q3 2025
TTS Revenue ($USD Millions)$501.9 $517.6 $519.8
TTS Operating Income ($USD Millions)-$0.9 $64.1 -$13.8
TTS Operating Margin (%)-0.2% 12.4% -2.7%
Logistics Revenue ($USD Millions)$195.6 $221.2 $232.6
Logistics Operating Income ($USD Millions)-$0.5 $4.3 $3.0
Logistics Operating Margin (%)-0.2% 2.0% 1.3%

Key KPIs

KPIQ1 2025Q2 2025Q3 2025
TTS Avg Trucks in Service7,415 7,489 7,503
TTS Avg Rev/Truck/Week ($)$4,493 $4,632 $4,633
Dedicated Avg Trucks in Service4,783 4,855 4,865
Dedicated Avg Rev/Truck/Week ($)$4,482 $4,542 $4,624
One-Way Rev/Truck/Week ($)$4,513 $4,787 $4,649
One-Way Empty Miles (%)16.01% 15.50% 15.65%
One-Way YoY Rev/Total Mile Change (%)0.3% 2.7% 0.4%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceActual/ContextChange
TTS truck count from start to end of yearFY 2025+1% to +4% (as of 7/29/25) -2% to 0% (as of 10/30/25) -0.1% YTD (as of 9/30/25) Lowered
Net Capital ExpendituresFY 2025$145M–$185M (as of 7/29/25) $155M–$175M (as of 10/30/25) $93M YTD (as of 9/30/25) Tightened range
Dedicated RPTPW (net of fuel) growthFY 20250%–3% 0%–1.5% +0.4% YTD Lowered
One-Way RPTM (net of fuel) growthQ4 2025 vs Q4 20240%–3% (for Q3 vs PY) -1% to +1% (for Q4 vs PY) +0.4% in Q3 vs PY Tightened/tempered
Effective Income Tax RateQ4 202525%–26% annual (prior) 26%–27% (Q4) 48.2% YTD incl. $4.7M discrete in Q3; Q3 ETR 3.8% Raised Q4 ETR
Quarterly DividendOct 22, 2025Prior regular quarterly cadence$0.14 per share declared Aug 7; record Oct 6 Paid quarterly since 1987 Maintained dividend

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 2025)Current Period (Q3 2025)Trend
Technology/AI initiativesCost actions, tech investments; restructuring to drive synergies . Logistics OpEx reduction with volume growth; PowerLink growth .Rebuilt cloud tech stack; AI automation lowers back-office costs ~40%; Werner EDGE TMS driving efficiency and customer visibility .Accelerating execution and benefits
Supply/demand; regulatory enforcementTariff uncertainty impacted customer activity in Q1 .Enforcement on ELP, non-domiciled CDLs, B-1 cabotage tightening capacity; potential impact larger than ELD rollout; region-specific spot tightness .Tightening supply; supportive for rates
Dedicated pipeline/startupsNew dedicated fleet wins to implement late Q2/early Q3 ; continued implementations in Q2 .Start-up costs elevated in Q3, down ~75% in October; dedicated revenue and truck mix increasing .Pipeline robust; start-up headwinds receding
Insurance & claimsElevated insurance costs in Q1; smaller fleet impact .Insurance lower than Q2 but higher YoY; normalized run rate ~$35–$38M targeted; tort reform discussed .Gradual normalization; policy engagement
Peak season & retail—Peak expected similar to last year; discount/value retail exposure supportive; selective asset allocation to reduce cost .Normal seasonality with selective strategy

Management Commentary

  • “Over the past four years, we've completely rebuilt our technology stack…cloud-based platform…automating processes and layering new AI agents quickly and effectively…our largest expense in one back-office department has been lowered by 40% over the last two years through modernization and AI automation” .
  • “Adjusted EPS was negative $0.03. Adjusted operating margin was 1.4%. Adjusted TTS operating margin was 1.9% net of fuel surcharge…legal settlement agreement…$18 million related to class action litigation…$3.4 million in the quarter…a $0.26 negative impact to GAAP EPS” .
  • “In logistics…gross margin was pressured as…higher margin project work was replaced with contractual business…purchased transportation costs have increased” .
  • “Capacity continues to exit…enforcement…ELP…non-domiciled CDLs…B‑1 visa cabotage…larger than what we saw with the introduction of ELDs” .

Q&A Highlights

  • Sequential OR outlook: management expects Q4 to be seasonally softer in revenue (logistics), but with upside to operating income as dedicated startup costs drop and one-way production improves; gains on sales lighter .
  • Regulatory enforcement magnitude: combined ELP, non-domiciled CDLs, and B-1 cabotage could remove 150k–200k drivers conservatively, with regional spot tightness where enforcement ramps; potential larger impact than 2018 ELDs .
  • Insurance expense: normalized run-rate estimated ~$35–$38M with focus on reducing frequency; broader industry push for tort reform and federal jurisdiction for interstate accidents .
  • Peak season: expected similar to last year; strategic reallocation to denser lanes to achieve similar gross margin with lower cost; spot exposure intentionally higher to capture upside if enforcement lifts spot .

Estimates Context

MetricQ3 2025 ConsensusQ3 2025 ActualSurpriseQ4 2025 Consensus
Revenue ($USD Millions)762.8*771.5 +8.7 (beat)768.7*
Primary EPS ($USD)0.13*-0.03 (adjusted) -0.16 (miss)0.12*

Notes: Values marked with * retrieved from S&P Global. Adjusted diluted EPS used for comparison given typical Street convention; GAAP diluted EPS was -$0.34 .

Key Takeaways for Investors

  • Mixed quarter: top-line beat, but adjusted EPS miss, reflecting insurance and dedicated startup costs; litigation settlement and legal fees depressed GAAP EPS, but are non-recurring items in adjusted metrics .
  • Dedicated remains the growth engine with improving mix and sustained RPTPW gains; startup cost drag is abating rapidly, supporting Q4 margin improvement in TTS .
  • Logistics growth broad-based (Truckload, Intermodal), but gross margin mix shifted toward contractual work and purchased transportation increased; monitor October softness and margin pressure .
  • Regulatory enforcement is tightening capacity and could lift spot/contract pricing into 2026; Werner’s compliant fleet and scale position it to benefit from a healthier rate environment .
  • Cost savings program execution strong ($36M of $45M achieved YTD), with technology-driven efficiency gains poised to contribute further in 2026; supports medium-term margin expansion .
  • Balance sheet/liquidity solid ($695M available; $725M debt; net debt/adjusted EBITDA 1.9x), providing flexibility for selective capex, share repurchases, and M&A; dividend maintained .
  • Near-term modeling: apply Q4 one-way RPTM guidance (-1% to +1%), effective tax rate 26–27%, lighter gains on equipment sales, and slightly softer logistics volume; expect TTS OR improvement sequentially as startup costs fall .