Werner Enterprises Q2 Earnings Call Highlights

Werner Enterprises (NASDAQ:WERN) reported second-quarter revenue growth of 24% as its One-Way restructuring, the addition of FirstFleet and improved safety performance lifted profitability amid a tightening truckload market.

Revenue totaled $934 million in the second quarter, while adjusted operating income increased 67% year over year to $27.6 million. Adjusted operating margin rose 80 basis points to 3%, and adjusted earnings per share were $0.22, up $0.14 from the prior-year period, CFO Chris Wikoff said.

The company recorded $1.5 million of gains on sales of property and equipment, down from $5.9 million a year earlier and $3.8 million in the first quarter. Wikoff said lower equipment-sale gains reduced adjusted EPS by $0.05. Second-quarter results also included nonrecurring M and restructuring costs, with 45% of pretax adjustments tied to the FirstFleet acquisition and 43% related to the One-Way restructuring.

Truckload results benefit from restructuring and FirstFleet

Truckload Transportation Services revenue rose 36% to $703 million, while revenue excluding fuel surcharges increased 26% to $582 million. Adjusted operating income for the segment was $32.3 million, and adjusted operating margin excluding fuel reached 5.5%, up 270 basis points year over year.

Wikoff said the margin improvement reflected FirstFleet’s contribution, stronger profitability in One-Way trucking and lower insurance and claims expense in Werner’s legacy operations. The company reported another year-over-year decline of roughly 45% in DOT-preventable accidents per million miles, matching its first-quarter improvement.

In the One-Way operation, revenue excluding fuel declined 16% to $138 million as the company operated fewer trucks following its restructuring. However, revenue per truck per week rose 27.7%, miles per truck increased 15.7%, and revenue per total mile gained 10.4%.

Leathers said the company has secured upper-single-digit to double-digit contractual pricing increases in some One-Way bids, while Wikoff said about 60% of the One-Way portfolio had been repriced at higher rates during the first half. One-Way adjusted operating margin improved by more than 700 basis points from a year earlier.

The average One-Way fleet fell 34% year over year to 1,736 trucks and was down 18% sequentially. Wikoff said the company’s repositioning of assets and drivers, combined with a tighter hiring environment, limited the pace of driver rehiring. He described the operation as more profitable, productive and specialized in selected geographies.

Dedicated trucking revenue excluding fuel increased 51% to $434 million. Dedicated represented 76% of Truckload Transportation Services revenue and 80% of segment trucks at quarter-end. Dedicated revenue per truck per week rose 5.4%, while Werner’s legacy dedicated fleet posted an 8% increase excluding the impact of the FirstFleet mix.

FirstFleet integration ahead of schedule

Werner said the FirstFleet integration has progressed well six months after the acquisition. Leathers said continuity among drivers, associates and customers has been strong, while the business achieved a 98% renewal rate on more than 80% of the portfolio renewed so far.

The company has realized more than $3 million in FirstFleet savings year to date, producing more than 100 basis points of margin improvement, according to Wikoff. Werner has identified actions representing approximately $9 million in annualized cost savings, including more than $7 million expected to be realized during 2026. The company maintained its target of $18 million in total synergies over 18 months.

Werner expects some fleet growth in the second half, though it lowered its full-year average Truckload Transportation Services fleet-growth outlook to 16% to 18% from a prior range of 23% to 28%. Management cited productivity improvements and slower driver hiring, describing the delayed growth as an opportunity that could extend into 2027 rather than a lost opportunity.

Logistics margins pressured by higher transportation costs

Logistics revenue declined 4% year over year to $212 million, although it rose 8% sequentially. The segment posted an adjusted operating margin of negative 1.3%, down 400 basis points, largely due to higher purchased transportation costs in truckload brokerage.

Truckload logistics revenue fell 10% as shipments declined 29%, partially offset by a 26% increase in revenue per load. Gross margin was pressured by volatile buy-side rates, particularly in April and May. Wikoff said June produced the segment’s best gross margin of the quarter.

Intermodal revenue increased 18%, supported by a 17% increase in load volume, while final-mile revenue rose 14%. Management said it is working with customers to reset contracts at higher rates and expects logistics margins to improve as the year progresses. Wikoff said July truckload brokerage gross margin per load was about 300 to 400 basis points higher than levels seen during the second quarter.

Guidance updates and market outlook

Werner raised its full-year dedicated revenue-per-truck-per-week outlook to growth of 3% to 5%, from prior guidance ranging from flat to up 3%. It expects third-quarter One-Way revenue per total mile to increase 10% to 13% year over year.

The company also raised its 2026 net capital expenditure forecast to $215 million to $250 million from $185 million to $225 million. Management said the increase will support fleet modernization and a limited pre-buy of 2026-model tractors ahead of 2027 emissions standards. Werner narrowed its expected annual gains on sales of used equipment and revenue-generating assets to $10 million to $14 million.

Leathers said regulatory enforcement related to non-domiciled commercial driver’s licenses, English-language proficiency, cabotage and electronic logging devices is contributing to capacity attrition. He said shippers are placing greater emphasis on safety, service and financial stability following recent litigation and large verdicts affecting the industry.

“We are building a leaner, more resilient portfolio that is spring-loaded for this upcycle,” Leathers said, adding that the company expects continued rate improvement, greater fleet utilization and sustained earnings growth through the second half of the year.

About Werner Enterprises (NASDAQ:WERN)

Werner Enterprises, Inc, founded in 1956 by Clarence L. “Chris” Werner, is a leading transportation and logistics provider based in Omaha, Nebraska. The company began as a one‐truck operation and has since grown into one of North America's largest carriers, offering an array of services to support diverse supply chains.

Werner's core business activities include full truckload dry van services, dedicated contract carriage, intermodal transport and brokerage solutions. The company also provides value-added services such as warehousing, freight management and fleet maintenance through its network of terminals and service centers.

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