Werner Q3 Revenue Rises 23% as TTS Margins Improve

Werner Enterprises (NASDAQ: WERN) reported a stronger third quarter as the addition of FirstFleet and improving One-Way Truckload performance lifted revenue and Truckload Transportation Services margins. The carrier also lowered its 2026 capital-spending forecast because of equipment-delivery timing while narrowing several operating assumptions.

Revenue for the quarter ended Sept. 30 rose 23% year over year to $951 million. Adjusted operating income increased 92% to $21.0 million, while the adjusted operating margin expanded 80 basis points to 2.2%. Adjusted diluted earnings were $0.16 per share, compared with $0.11 per share on a GAAP basis.

GAAP operating income was $17.0 million, representing a 1.8% operating margin. Results benefited from $8.0 million in gains on property and equipment sales, an increase of $3.5 million from a year earlier. Rapidly rising fuel prices, investments in driver recruitment and retention, and adverse insurance reserve development involving certain FirstFleet claims weighed on profitability.

Truckload margins strengthen

Truckload Transportation Services, which includes Dedicated and One-Way Truckload, generated $714.0 million of revenue, up 37%. Revenue excluding fuel surcharges increased 28% to $588.8 million. Adjusted operating income climbed 172% to $24.3 million, and the adjusted operating margin excluding fuel surcharges widened by 220 basis points to 4.1%.

On a GAAP basis, the segment moved to operating income of $23.2 million from a $13.8 million loss a year earlier. Its GAAP operating margin was 3.3%, compared with negative 2.7% in the prior-year quarter.

Werner attributed the improvement to FirstFleet, better One-Way Truckload profitability and higher equipment-sale gains. Higher net fuel expense and spending on driver recruitment and retention partly offset those benefits. Management said the FirstFleet integration remained ahead of schedule, accelerating planned synergies. The company has identified $18 million of FirstFleet-related synergies that it expects to support operating margins by about 300 basis points over approximately 18 months.

Dedicated represented 81% of TTS trucks at quarter-end. Dedicated revenue per truck per week, excluding fuel surcharges, increased 5.6% year over year, while end-of-period tractor count rose 43%, reflecting the FirstFleet addition and fleet growth.

One-Way Truckload continued to benefit from Werner’s restructuring efforts. Revenue per total mile excluding fuel surcharges increased 9.7%, and miles per truck rose 22.4%, producing a 34.3% increase in revenue per truck per week. The overall TTS fleet ended the quarter at 8,740 trucks, up 17.4% year over year, while average trucks increased 15.5%.

Werner said it remains confident in a path toward mid-cycle, double-digit adjusted TTS operating margins. The presentation tied that objective to higher One-Way rates and utilization, Dedicated pricing and growth, stronger used-equipment values, cost savings and FirstFleet synergies. That target depends on operating and market assumptions that have not yet been fully realized.

Logistics remains below prior-year levels

Werner Logistics revenue fell 7% to $215.8 million, while revenue less purchased transportation expense declined 6% to $31.1 million. Adjusted operating income dropped 82% to $0.8 million, and the adjusted operating margin contracted 140 basis points to 0.4%.

The business recorded a GAAP operating loss of $0.4 million and a negative 0.2% margin, compared with operating income of $3.0 million and a 1.3% margin a year earlier.

Truckload Logistics, which accounted for 70% of segment revenue, posted a 13% revenue decline as shipments fell 40% year over year and 11% sequentially. Intermodal revenue increased 7%, and Final Mile revenue rose 18%. Although Logistics profitability remained lower than a year earlier, the adjusted margin improved 170 basis points sequentially as purchased transportation costs stabilized and higher contract rates reached more customers.

Capital-spending forecast reduced

Werner now expects 2026 net capital expenditures of $190 million to $205 million, down from its previous range of $215 million to $250 million. The company attributed the reduction to the timing of original-equipment manufacturer deliveries and said it remains committed to refreshing its fleet and reducing average tractor age.

The company narrowed its forecast for 2026 average TTS truck-count growth to 16% to 17% from 16% to 18%. It now expects Dedicated revenue per truck per week, excluding fuel surcharges, to grow 4% to 5%, compared with the previous 3% to 5% range. The forecast for One-Way Truckload revenue per total mile growth remains 10% to 13%.

Werner also revised its expected 2026 GAAP effective income tax rate to 24.5% to 25.5% from 25.5% to 26.5%. The third-quarter rate was 13.2%, including discrete tax items.

Operating cash flow totaled $21 million in the quarter and $189 million for the first nine months of 2026. Year-to-date free cash flow was $160 million, or 5.9% of revenue, while net capital expenditures totaled $29 million. At Sept. 30, Werner had $654 million of liquidity, including $615 million of available credit and $39 million of cash, and net debt equal to 1.9 times trailing covenant-defined EBITDA.

Management expects seasonal support from spot freight rates and peak-season activity, but the presentation also identified several pressures. Fuel, insurance and equipment-replacement costs remain elevated, quality-driver availability is constrained, and insurance claim development affected third-quarter results. Werner’s outlook also depends on contract pricing, freight demand, equipment values, fleet productivity and the successful realization of FirstFleet integration benefits.