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SEC filingWerner's Q1 2026 operating income improved to $4.0M from a loss of $5.8M, driven by FirstFleet acquisition and restructuring.
For the three months ended March 31, 2026, Werner Enterprises reported consolidated operating revenues of $808.6 million, a 13.6% increase from $712.1 million in the prior-year period. The improvement was primarily driven by the FirstFleet acquisition, which added approximately 2,400 tractors and 11,000 trailers, and a strategic restructuring of the One-Way Truckload business. Operating income swung to a positive $4.0 million (0.5% margin) from a loss of $5.8 million ((0.8)% margin) in Q1 2025, a 168.5% improvement. Net loss attributable to Werner narrowed to $4.3 million from $10.1 million, a 57.8% reduction.
Key expense drivers included a 15.0% increase in salaries, wages and benefits ($36.4 million) due to higher driver and non-driver pay and the FirstFleet acquisition, and a 30.7% increase in fuel expense ($19.4 million) from 17.6 million more company tractor miles and higher diesel prices (46 cents per gallon higher YoY). Insurance and claims expense decreased 4.2% ($1.8 million), benefiting from lower small-dollar liability claims and favorable reserve development, partially offset by FirstFleet-related costs. Depreciation and amortization rose 8.8% ($6.1 million) from acquired intangible and tangible assets, partly offset by lower amortization from impaired customer relationships. Other operating expenses increased 63.7% ($3.1 million) due to professional services for the acquisition, partially offset by higher gains on equipment sales ($3.8 million vs. $2.8 million).
TTS Segment: Revenues increased 18.4% to $594.3 million, with trucking revenues net of fuel surcharge up 17.4%. The segment generated operating income of $13.9 million (2.3% margin) versus a loss of $0.9 million ((0.2)% margin) a year ago. Dedicated revenues (net of fuel surcharge) rose 33.5% to $371.9 million, driven by a 32.4% increase in average tractors in service (primarily from FirstFleet). One-Way Truckload revenues (net of fuel surcharge) declined 11.7% to $136.4 million, reflecting a 19.4% reduction in average tractors due to restructuring. However, One-Way Truckload average revenues per tractor per week increased 9.6% to $4,944, with total miles per tractor per week up 5.7% and revenues per total mile up 3.6%, signaling early restructuring gains.
Werner Logistics Segment: Revenues were essentially flat at $195.8 million. Operating loss widened to $2.0 million (1.0% margin) from $0.5 million (0.2% margin). Truckload Logistics (72% of segment revenue) saw a 4% revenue decline due to 9% fewer shipments, partially offset by 5% higher revenue per shipment. Intermodal revenues grew 18% on 22% more shipments, while Final Mile revenues increased 8%. Margin pressure stemmed from spot freight rate increases outpacing customer contract rate renewals.
Management provided several forward-looking metrics. For Q2 2026, One-Way Truckload average revenues per total mile (net of fuel surcharge) are expected to increase 1% to 4% YoY. Full-year 2026 guidance includes: Dedicated average revenues per tractor per week (net of fuel surcharge) flat to +3%; TTS average tractors in service up 23% to 28%; net capital expenditures of $185 million to $225 million; net interest expense of $40 million to $45 million; effective tax rate of 25.5% to 26.5%; and gains on equipment sales of $8 million to $18 million. Management highlighted a strong Dedicated pipeline, continued capacity attrition from regulatory enforcement (non-domiciled CDLs), and elevated spot freight rates as tailwinds. The Werner Logistics margin pressure is viewed as transitory as contract rates reset.
As of March 31, 2026, Werner held $61.5M in cash and cash equivalents, with total debt of $878.2M (including $286.2M from the LSA and $583.4M from the 2022 Credit Agreement). Shareholders' equity stood at $1.35B. The company had $451.1M in available borrowing capacity. The balance sheet was impacted by the FirstFleet acquisition, which added $214.8M in purchase price funded through debt and cash, increasing leverage.
Werner reported $18.1M in property and equipment purchase commitments as of March 31, 2026. Additionally, the FirstFleet acquisition includes a contingent earnout liability of $30.0M (fair value) with a potential undiscounted payment between $0 and $35.0M based on revenue metrics. The company also has $878.2M in debt maturing primarily in 2027 ($869.6M) and 2026 ($8.6M). Restructuring liabilities for the One-Way Truckload business amounted to $5.0M. Lease liabilities totaled $109.5M for operating leases and $53.6M for finance leases.
Dividends remained at $0.14 per share quarterly, totaling $8.4M paid in Q1 2026, flat year-over-year. No share repurchases were executed. Net debt increased by $126.2M, primarily due to the FirstFleet acquisition. Capital expenditures were $52.8M (6.5% of sales), including additions for revenue equipment and real estate. The company also invested $2.0M in equity securities and $11.6M in the Autotech Fund cumulative.
Truckload Transportation Services (TTS) generated $594.3M in revenue (up 18.4% YoY) and operating income of $13.9M, driven by the FirstFleet acquisition and improved utilization. Werner Logistics revenue was $195.8M (flat), with an operating loss of $2.0M. Geographically, 96.1% of revenues were from the United States, 3.6% from Mexico, and 0.3% from Canada. The TTS segment includes Dedicated and One-Way Truckload, with restructuring costs in One-Way of $44.2M cumulative through Q1 2026.
Operating cash flow (CFO) of $83.5M significantly exceeded the net loss of $4.5M, indicating strong cash generation from non-cash charges and working capital management. Depreciation and amortization of $76.2M was the primary non-cash add-back, while working capital provided a net $14.3M inflow, driven by a $29.7M increase in accounts payable and a $15.7M decrease in other current assets. This contrasts with the prior year where working capital was a net $7.4M use.
Capital expenditures of $52.8M were more than double the prior year's $23.5M, but proceeds from asset sales also rose to $50.8M, resulting in a net capex of only $2.0M. The company invested $184.8M in an acquisition, which was the primary driver of the $194.0M cash used in investing activities.
Financing activities provided $112.1M, largely from net short-term debt issuance of $165.0M, partially offset by $42.8M in long-term debt repayments and $8.4M in dividends. No share repurchases were made. The company ended the quarter with $61.5M in cash, up from $59.9M at the start.
Anomalies include the large acquisition outlay and the significant swing in accounts payable, which may reflect timing of payments. Income taxes paid were minimal at $1.9M versus $21.1M in the prior year, contributing to the CFO improvement.