WERNER ENTERPRISES INC Q1 FY2026 earnings call

Market fundamentals improving, Warner taking measured steps for profitable long-term growth. Leaning into dedicated and specialized solutions, acquired First Fleet in Jan. Integration of First Fleet progressing ahead of schedule, 98% renewal rate, realized over $1M in savings. Dedicated revenue per truck per week, one-way metrics showing positive inflection. Relentless focus on safety (DOT preventable accident rate down 45% y/y), cost discipline (total operating expenses ex gains, insurance, fuel, purchase trans down 5% y/y), technology investment for operational excellence, centralizing loads into unified platform, leveraging AI and automation.

Truckload Transportation Services (TTS) Q1 total revenue was $594 million, up 18%. Revenues net of fuel surcharges increased 16% to $516 million. TTS adjusted operating income was $14.8 million, with an adjusted operating margin net of fuel of 2.9%, a 250 basis points increase. Dedicated represented 73% of TTS trucking revenues, up from 64% a year ago. The dedicated fleet ended the quarter up 2,230 trucks from the start of the year, a 46% increase. Dedicated revenue per truck per week rose 0.8%, with pro forma growth near 3% including First Fleet. In one-way business, trucking revenue net of fuel was $136 million, down 12%. Revenue per truck per week increased 9.6% due to higher rates and better production. Miles per truck increased 6% despite winter storms. Logistics revenue was $196 million, 24% of total, flat year-over-year but down 6% sequentially. Truckload logistics revenues decreased 4% on 9% lower shipments but 5% higher revenue per load. Intermodal revenues rose 18% on 22% load volume increase. Final mile revenues increased 8%. Logistics adjusted operating margin was negative 0.4%.

Reaffirm full year average truck fleet guidance up 23%-28%. Update dedicated revenue per truck per week guidance from down 1%-up 2% to flat-up 3%. One-way truckload revenue per total mile Q2 guidance up 1%-4%. Full year net capex guidance 185-225M. Effective tax rate guidance 25.5%-26.5%. Anticipated gains on sale of used equipment $8-18M.

Capacity exits continue due to regulatory enforcement, carrier bankruptcies, fuel prices impacting struggling carriers. Consumer facing mix of factors impacting demand. AI adoption and technology implementation risks. Potential disruptions from trade policy. Driver availability tightening.

Q: Chris Weatherby on market and First Fleet integration; A: Derek discussed market supply-driven rate lift, First Fleet integration ahead of schedule with 98% renewal, on track for synergies.

Q: Ari Rosa on dedicated upside; A: Derek explained dedicated as partnership, fleet additions at higher contribution margin, selective pipeline.

Q: Daniel Moore on fuel/weather impact and renewal rhythm; A: Chris said weather and fuel ~5c impact, one-way ~1/4 business repriced in Q1, rest in Q2.

Q: Jordan Alliger on dedicated pipeline; A: Derek said pipeline strong, selective, flight to quality, First Fleet adding density.

Q: Scott Group on one-way rev per mile and margin; A: Chris said mix change impacting rev per mile, full Q2 benefit from one-way restructuring, pricing up.

Q: Jason Seidel on driver pay and brokerage margin; A: Derek said dedicated drivers have good pay, brokerage margins improving as sell-side rates reset.

Q: Ken Hoekstra on dedicated contract terms and empty miles; A: Derek said renewing contracts, empty miles reduced with backhaul opportunities.

Q: Richa Hernane on capacity attrition and dedicated margin; A: Derek said capacity attrition ongoing, dedicated margin to improve with execution.

Q: Tom Wattowitz on inflation and brokerage carrier selection; A: Tom said inflation headwind, brokerage invested in carrier qualification tools.

Q: Brian Ausenbeck on regulatory levers; A: Derek said hair follicle testing gaining traction, enforcement ongoing.