Werner’s third quarter saw revenue growth outperform Wall Street expectations, driven by continued expansion in its Logistics and Dedicated segments. However, significant margin pressures weighed on profitability, with adjusted earnings per share falling well below analyst forecasts. Management attributed these challenges to elevated startup costs in Dedicated, a less favorable business mix, and lower miles per truck within the One-Way segment. CEO Derek Leathers highlighted that “the third quarter presented some challenges, namely in our One-Way business,” but also pointed to progress in technology transformation and cost controls as positives.
Is now the time to buy WERN? Find out in our full research report (it’s free for active Edge members).
Werner (WERN) Q3 CY2025 Highlights:
- Revenue: $771.5 million vs analyst estimates of $764.2 million (3.5% year-on-year growth, 1% beat)
- Adjusted EPS: -$0.03 vs analyst estimates of $0.13 (significant miss)
- Adjusted EBITDA: $80.58 million vs analyst estimates of $88.28 million (10.4% margin, 8.7% miss)
- Operating Margin: -1.7%, down from 2.4% in the same quarter last year
- Market Capitalization: $1.59 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Werner’s Q3 Earnings Call
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Jordan Alliger (Goldman Sachs) inquired about improvements in operating ratio for Q4. CFO Chris Wikoff indicated expectation of seasonal softness but noted that dropping startup expenses and rebounding production should provide some upside.
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Matthew Milask (Stifel) asked about the impact of regulatory enforcement on capacity. CEO Derek Leathers explained that enforcement trends could remove tens of thousands of drivers annually, intensifying supply constraints.
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Jason Seidl (TD Cowen) pressed for rate outlook during bid season and the overlap of regulatory issues. Leathers forecasted better bid season results than last year, emphasizing the importance of continued enforcement and insurance scrutiny.
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Eric Morgan (Barclays) questioned the drivers behind lower utilization in Q3. Leathers attributed it to fleet mix changes, onboarding of Dedicated drivers, and project-related mix, but signaled improvement in October.
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Scott Group (Wolfe Research) explored the regional nature of market tightness and whether drivers were relocating to avoid enforcement. Leathers responded that while some avoidance occurs, tightening remains widespread and is not offset by relocations.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will be watching (1) signs that regulatory enforcement continues to impact industry capacity and supports rate recovery, (2) the pace at which Werner’s technology transformation drives further cost reductions and operational gains, and (3) Dedicated contract wins and margin stabilization as startup costs subside. The company’s exposure to resilient retail customers and continued progress in cost control will be important signposts for sustained improvement.
Werner currently trades at $26.65, up from $25.39 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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