WERNER ENTERPRISES INC Q1 FY2025 earnings call

Core Business Growth - Driving growth in core business, including expanding TTS & Logistics operating income margins, increasing runway rates, and growing Dedicated fleet. Awarded new Dedicated fleets and seeing positive results on One-Way bids. ### Operational Excellence - Focus on safety, reliability, technology roadmap, and cost control. Recognized as TCA Elite Fleet. Progressing EDGE TMS platform; all logistics loads except Final Mile run through EDGE TMS. ### Capital Efficiency - Maintaining strong operating metrics, sold more used equipment than purchased. Reduced debt, liquidity at new high with $300 million credit facility. ### Tariffs Impact - Considered in CapEx, used equipment gains, Mexico freight exposure, and broader retail demand. Working with OEMs to mitigate tariff impacts.

Truckload Transportation Services (TTS) total revenue for the quarter was $502 million, down 9%. Revenues net of fuel surcharges declined 7% to $444 million. TTS adjusted operating income was $2 million, with adjusted operating margin net of fuel at 0.4%. Dedicated revenue net of fuel was $279 million, down 7%, representing 64% of TTS trucking revenues. One-Way trucking revenue net of fuel was $154 million, a decrease of 9%. Logistics revenue was $196 million, 27% of total first quarter revenues, down 3% year-over-year. Logistics adjusted operating margin was 0.3%, improved 90 basis points year-over-year.

Full year fleet guidance up 1% to 5%, driven more by Dedicated. Net CapEx guidance range $185 million to $235 million, lower than historical ranges. Dedicated revenue per truck per week expected within 0% to 3% range; One-Way Truckload revenue per total mile guide flat to up 3% in Q2. 2025 effective tax rate guidance range 25% to 26% unchanged.

Adverse insurance settlements and nuclear verdicts continue to pressure results. Disruptive weather was a headwind during the quarter. Fluid tariff impact on CapEx, equipment costs, and cross-border freight. Elevated technology spend is a current headwind.

Q: Walk through Dedicated margins and recent dedicated wins impact on margins A: Derek Leathers states Dedicated outperforms One-Way margins in most years. Recent wins are operating margin contributors but not yet implemented.

Q: Insurance issue mitigation A: Derek Leathers mentions need for tort reform and state legislation; focusing on lowering preventable accident rate.

Q: Supply demand issue and market correction A: Derek Leathers says driver counts down, tariff uncertainty and network disruptions are catalysts for capacity attrition.

Q: Import cliff and Q2 margin outlook A: Chris Wikoff states ~10% of One-Way volume exposed to West Coast; Q2 revenue outlook uncertain but optimism in Dedicated and Logistics.

Q: M&A performance and margin improvement A: Derek Leathers says M&A not yet leveraged; focusing on immediate and dramatic action to improve margins.

Q: Dedicated wins and margin potential A: Derek Leathers says new Dedicated business is margin accretive as it spreads fixed costs and adds to existing fleets.

Q: English proficiency requirement for truck drivers A: Derek Leathers supports safety regulation; some industry drivers may not speak English, but Werner is well-positioned.