Werner Swings to Profit as FirstFleet Deal Powers Freight Recovery
Werner Enterprises posted 24% revenue growth and its best truckload pricing gains in a decade even as GAAP profit fell 85% against a year-ago legal settlement.
Werner Enterprises (WERN) reported total revenue of $933.9 million for the second quarter, up 24% from a year earlier and a sharp acceleration from 14% growth in the first quarter and roughly flat results in the fourth quarter of 2024. The truckload carrier's diluted earnings per share came to $0.11, down 85% from the prior year, but the comparison was skewed by $53.6 million in litigation and contingent-consideration reversals that had boosted the year-ago quarter.
Stripped of one-time items, the underlying trajectory looked different. Adjusted operating income rose 67% year over year to $27.6 million, continuing a recovery that ran from an adjusted operating loss in the third quarter of 2024 to modest gains in the following two quarters. Adjusted operating margin reached 3.0%, up 80 basis points from a year earlier and 150 basis points sequentially, while adjusted diluted EPS rose to $0.22 from $0.02 in the first quarter. Cash flow from operations climbed 84% to $84.7 million from $46.0 million.
The Truckload Transportation Services segment drove the improvement, with adjusted operating income of $32.3 million, up 153% year over year and well ahead of $14.8 million in the first quarter and $12.7 million in the fourth quarter of 2024. The FirstFleet acquisition, lower insurance and claims costs, and improved profitability in its One-Way Truckload business contributed to these results. Average revenue per truck per week in that unit rose 27.7% year over year, which the company called its strongest gain in a decade, while revenue per total mile rose 10.4%, extending a multi-quarter pricing acceleration.
The FirstFleet deal, which closed January 27, 2025, also reshaped the Dedicated fleet, where truck count rose 42.3% year over year at quarter-end and average trucks in service climbed 43.7%, adding 644 trucks sequentially from the first quarter. The acquisition carried costs: Werner booked $4.3 million to $4.4 million in FirstFleet-related acquisition expenses in the quarter, bringing the year-to-date total to $10.3 million, alongside a new $4.1 million restructuring and impairment charge that had no counterpart in prior periods.
Werner Logistics moved the other direction. The brokerage segment swung to an operating loss of $3.9 million, with margin down 380 basis points year over year, deepening losses that began with $0.2 million in the fourth quarter of 2024 and $2.0 million in the first quarter. Within that segment, Truckload Logistics shipments fell 29% year over year while revenue per shipment rose 26%, a trade of volume for price that has yet to offset the segment's cost base.
Werner raised several forward targets to reflect the quarter's pricing strength. Full-year One-Way Truckload revenue-per-mile growth guidance jumped to 10%-13% from a prior 1%-4%, and Dedicated RPTPW guidance rose to 3%-5% from flat-to-3%. TTS average truck count growth guidance was pulled down to 16%-18% from 23%-28%, a tempering of fleet-growth ambitions even as per-unit economics improved. The effective tax rate climbed to 27.3% from 24.9% in the first quarter and 20.8% in the fourth quarter of 2024, though the company held its full-year guidance at 25.5%-26.5%.
Werner also raised its full-year net capital expenditure guidance to $215 million-$250 million from $185 million-$225 million, citing plans to reduce the average age of its tractor fleet. The quarter itself produced net capex proceeds of $9.7 million as the company sold more equipment than it bought, a reversal from $65.6 million of net capex spending a year earlier. Net interest expense held roughly flat sequentially at $10.1 million, up about $2.1 million from a year earlier on higher average debt tied to the FirstFleet financing.