Werner Enterprises : First Quarter 2025 Earnings Presentation

Published: 2025-04-29 20:25:53 ET WERN

1Q25 EARNINGS PRESENTATION

April 29, 2025

BUSINESS OVERVIEW

DEREK LEATHERS

Chairman and Chief Executive Officer

WERNER OVERVIEW (WERN)

$1.7B1

MARKET CAP

2.0%1

DIVIDEND YIELD

13,0162

ASSOCIATES

3052

INDEPENDENT CONTRACTORS

YEARS IN BUSINESS

18%

OMAHA, NE

HEADQUARTERS

16%

55%

6TH

LARGEST DEDICATED CARRIER IN U.S.3

> 87%

DEDICATED CUSTOMER RETENTION RATE

2,297

4,8354

2,6054

7,4404

TOTAL DRIVERS IN COMPANY HISTORY WITH ONE MILLION OR MORE SAFE DRIVING MILES WITH WERNER

DEDICATED

ONE-WAY TRUCKLOAD TTS TRUCKS

4 TRAILING

WERNER COMPANY DRIVERS WITH MILITARY EXPERIENCE

WERNER COMPANY DRIVERS WHO ARE WOMEN

(HIGHER THAN INDUSTRY AVERAGE)

EMISSIONS REDUCTION GOAL BY 2035

28,130

ASSETS

1 As of 4/25/25 for Market Cap and Dividend Yield.

2 Number of Associates and Independent Contractors as of 3/31/25.

3 Source: Transport Topics

4 As of 3/31/25; TTS includes Dedicated and One-Way Truckload. Trailing assets includes TTS and Logistics.

1Q25 FINANCIAL HIGHLIGHTS

1Q25

Y/Y Change

HIGHLIGHTS

Revenues

$712M

(7)%

GAAP EPS

$(0.16)

(264)%

Adj. EPS1

$(0.12)

(188)%

Adj. Operating Income1

$(1.8)M

(110)%

Adj. Operating Margin1

(0.3)%

(270) Bps

Adj. TTS Operating Margin1, 2

0.4%

(430) Bps

1 1Q25 operating income (GAAP) was $(5.8)M, operating margin (GAAP) was (0.8)% and TTS operating margin (GAAP) was (0.2)%. See attached Reconciliation of Non-GAAP Financial Measures.

2 Net of fuel surcharge revenues.

DRIVESM STRATEGY SUPPORTS 2025 STRATEGIC PRIORITIES

WERNER DRIVESM

BUILDING ON 5Ts AND SHAPING OUR FUTURE

DRIVING GROWTH IN CORE BUSINESS

Expanding TTS & Logistics adjusted operating income margin

Increasing One-Way rates

Growing Dedicated fleet size

DRIVING OPERATIONAL EXCELLENCE

Resolute focus on safety

Advancing our technology roadmap through the transition to our cloud-based EDGE TMS

Executing on additional $40 million in cost savings

DRIVING CAPITAL EFFICIENCY

Streamlining business processes including further integration of our acquisitions

Maintaining strong operating cash flow and optimizing working capital

Managing CapEx while maintaining a modern tractor fleet

Maximizing equipment fleet sales

FINANCIAL RESULTS

CHRIS WIKOFF

Executive Vice President, Treasurer

and Chief Financial Officer

1Q25 RESULTS

TOTAL REVENUES ($M)

$833

ADJUSTED OPERATING INCOME1 ($M)

AND ADJUSTED OPERATING MARGIN1 ADJUSTED EPS1

$0.60

$769

$712

$0.13

$(0.12)

$57.5

$18.6

6.9%

2.4%

$(1.8)

1Q23 1Q24 1Q25

(0.3)%

1Q23 1Q24 1Q25

Y/Y COMMENTARY (1Q25 vs. 1Q24)

Total revenues decreased $57M, or 7%

1.4% lower TTS revenues per truck per week2

6.6% decrease in TTS average trucks

OWT revenue per total mile increased 0.3%

Logistics revenues decreased 3% Y/Y and 8% sequentially

110% decrease in adj. operating income, or $20M

$7.4M of elevated insurance expense driven by unfavorable development on prior period claims

Consolidated adj. operating margin decreased 270 bps

TTS adj. operating income1 decreased $20.7M

Logistics adj. operating income1 increased $1.9M Y/Y

Adj. EPS decreased primarily from:

Higher insurance & technology costs

Adverse weather conditions & network

inefficiency

Higher interest expense & lower gains

1 Operating income (GAAP) was $53.4M in 1Q23, $15.6M in 1Q24 and $(5.8)M in 1Q25. Operating margin (GAAP) was 6.4% in 1Q23, 2.0% in 1Q24 and (0.8)% in 1Q25. EPS (GAAP) was $0.55 in 1Q23, $0.10 in 1Q24 and $(0.16) in 1Q25. TTS operating income (GAAP) was $51.0M in 1Q23, $20.8M in 1Q24 and $(0.9)M in 1Q25. Logistics operating income (loss) (GAAP) was $4.9M in 1Q23, $(2.3)M in 1Q24 and $(0.5)M in 1Q25. See attached Reconciliation of Non-GAAP Financial Measures.

2 Net of fuel surcharge revenues.

1Q25 TRUCKLOAD TRANSPORTATION SERVICES (TTS) RESULTS

1Q23

1Q24

1Q25

1Q25 vs. 1Q24

Revenues ($M)

$588.3

$551.1

$501.9

(9)%

Revenues, net FSC ($M)

$500.0

$478.1

$444.2

(7)%

Adjusted Operating Income1 ($M)

$53.7

$22.7

$2.0

(91)%

Adjusted Operating Margin1, 2

10.7%

4.7%

0.4%

(430) bps

Adjusted Operating Ratio1, 2

89.3%

95.3%

99.6%

430 bps

Lower total revenues due to $15M of lower fuel surcharges, 6.6% fewer average trucks, 2.5% lower miles per truck mitigated by 1.2% higher rates

TTS adjusted margin declined Y/Y, primarily from higher insurance costs, a smaller fleet and lower miles per truck

$8.0M higher insurance expense Y/Y represented 160 bps of Y/Y reduction in operating margin

Dedicated fleet represents 65% of total TTS trucks at quarter end; revenue per truck per week decreased 0.3% Y/Y

One-Way revenue per total mile increased 0.3% Y/Y; miles per truck down 3.5% due to adverse weather conditions during the quarter

Y/Y COMMENTARY (1Q25 vs. 1Q24)

1 TTS operating income (GAAP) was $51.0M in 1Q23, $20.8M in 1Q24, and $(0.9)M in 1Q25. TTS operating margin (GAAP) was 8.7% in 1Q23, 3.8% in 1Q24, and (0.2)% in 1Q25. TTS operating ratio (GAAP) was 91.3% in 1Q23, 96.2% in 1Q24, and 100.2% in 1Q25. See attached Reconciliation of Non-GAAP Financial Measures. 2 Net of fuel surcharge revenues.

TTS1 FLEET METRICS UPDATE

TTS FLEET DOWN 5% Y/Y TO 7,440 AT QUARTER END; RPTPW DOWN 1%; INCREASED 23 OUT OF LAST 29 QUARTERS

TRUCKING REVENUES2 ($M)

$310 $301 $279

1Q23 1Q24 1Q25

$183

$169

$154

1Q23 1Q24 1Q25

AVERAGE TRUCKS DEDICATED TRUCKLOAD

5,370 5,149 4,783

1Q23 1Q24 1Q25

ONE-WAY TRUCKLOAD

3,191

2,786 2,632

1Q23 1Q24 1Q25

REVENUES / TRUCK / WEEK2

$4,441 $4,497 $4,482

1Q23 1Q24 1Q25

$4,414 $4,661 $4,513

1Q23 1Q24 1Q25

1TTS consists of the Dedicated and One-Way Truckload fleets. See attached Reconciliation of Non-GAAP Financial Measures.

2 Net of fuel surcharge revenues.

1Q25 WERNER LOGISTICS RESULTS

1Q23

1Q24

1Q25

1Q25 vs. 1Q24

Revenues ($M)

$228.7

$202.5

$195.6

(3)%

Revenues, less purchased transportation expense ($M)1

$40.2

$30.0

$28.4

(5)%

Adjusted Operating Income (loss) ($M)1

$6.4

$(1.2)

$0.7

157%

Adjusted Operating Margin1

2.8%

(0.6)%

0.3%

90 bps

Y/Y COMMENTARY (1Q25 vs. 1Q24)

Truckload Logistics revenues (75% of Logistics revenues) decreased 5%

Intermodal revenues (14% of Logistics revenues) increased 14%

Final Mile revenues (11% of Logistics revenues) decreased 12%

Truckload Logistics shipments decreased 4% Y/Y and 7% sequentially

Werner PowerLinkSM volumes increased high single digits Y/Y

Improved adjusted operating margin Y/Y due OpEx improvement

1 Werner Logistics operating income (loss) (GAAP) was $4.9M in 1Q23, $(2.3)M in 1Q24, and $(0.5)M in 1Q25. Werner Logistics operating margin (GAAP) was 2.2% in 1Q23, (1.2)% in 1Q24, and (0.2)% in 1Q25. See attached Reconciliation of Non-GAAP Financial Measures.

Beginning to see synergies from improved technology and systems

~20% of 2025 expected savings from M&A synergies

Disciplined approach through:

Operational Innovation

Leveraging Technology

M&A Integration

>60% structural and sustainable

COST CONTAINMENT

FOCUS & DISCIPLINE

ACTIONS IN PLACE TO GENERATE ADDITIONAL COST SAVINGS IN 2025

$40M+

Projected

Savings

2025 Target

$8M

STRONG CAPITAL & CASH FLOW GENERATION

CASH FLOW

($ millions)

LIQUIDITY1

($ millions)

$446

$449

$474

$409

$333

$318

$330

$266 $235

$193

$140

$131

$66

$95

$180

Cash,

2020 2021 2022 2023 2024

Op. CF

Available Credit,

$52

$777

Total Liquidity

$725

SOLID CASH FLOW & LIQUIDITY

Free Cash Flow of $37M or 5% of revenue

Record liquidity of $777 million with new $300 million

More used equipment sales versus CapEx

committed receivables securitization facility

purchases in Q1

1 As of 3/31/25.

2 See attached Reconciliation of Non-GAAP Financial Measures.

FLEXIBLE DEBT AND LOW LEVERAGE

DEBT MATURITY SCHEDULE

($ millions)

$640

2025 2026 2027 2028 2029

NET DEBT TO LTM EBITDA1

1.2x

1.0x

0.6x

1.6x 1.7x

12/31/21 12/31/22 12/31/23 12/31/24 3/31/25

HEALTHY BALANCE SHEET

$640M Debt; down $10M sequentially and up 7% Y/Y

55% effectively-fixed rate debt

Long-term, low-cost capital structure

Slightly higher leverage of 1.7x driven by EBITDA

Closed on $300M A/R Securitization Facility

margin compression

1 See attached Reconciliation of Non-GAAP Financial Measures.

DISCIPLINED CAPITAL ALLOCATION

STRATEGIC PRIORITIES

Reinvestments to maintain low-age, safe and modern trucks and trailers

Growth investments, including Technology and Terminals

Quarterly dividends since 1987

Increasing dividends (11% 1Q21, 20% 2Q21, 8% 2Q22 and 8% 2Q23)

3.9M shares remaining under board approved share repurchase program

Align with growth pillars of Werner portfolio

Deliver value and growth; accretive to earnings

Align safety-centric cultures and retain experienced management team

CAPEX REINVESTMENT FOR GROWTH

2025 Net CapEx Priorities:

Ongoing strategic reinvestment, although lower than historical ranges

Track-record of reinvestment while maintaining a low-mile modern fleet

Historical Fleet Reinvestment vs. Growth:

~75-80% allocated to trucks and trailers, net of fleet sales

~20-25% allocated to technology, terminals, real estate and driver schools

CAPITAL ALLOCATION HISTORY 2020-2024

Share Buybacks

$2.3B

15%

Dividends

Liquidity of $777M, Debt of $640M, Equity of $1,436M (as of 3/31/25)

Maintain low and modest net leverage, 1.7x (as of 3/31/25)

Acquisitions

17%

Reinvestment in the Business (Net CapEx) 61%

2025 GUIDANCE METRICS AND ASSUMPTIONS

2025 GUIDANCE

Prior 2025 Guidance

(as of 2/6/25)

Actual

(as of 3/31/25)

Current 2025 Guidance

(as of 4/29/25)

Commentary

TTS Truck Count from BoY to EoY 1% to 5%

(annual)

Net Capital Expenditures $185M to $235M

(annual)

TTS GUIDANCE

Dedicated RPTPW1 Growth 0% to 3%

(annual)

One-Way Truckload RPTM1 Growth 1% to 4%

(1H25 vs. 1H24)

ASSUMPTIONS

Effective Income Tax Rate 25.0% to 26.0%

(annual)

(0.1)%

(1Q25)

$(8)M

Cash Flow Positive

(1Q25)

(0.3)%

(1Q25 vs. 1Q24)

0.3%

(1Q25 vs. 1Q24)

23.7%

(1Q25)

1% to 5%

(annual)

$185M to $235M

(annual)

0% to 3%

(annual)

0% to 3%

(2Q25 vs. 2Q24)

25.0% to 26.0%

(annual)

Dedicated trending towards sequential fleet growth in Q2 and Q3 after streak of Q1 wins. One-Way fleet more uncertain given combination of downside risk from West Coast volumes and upside with increased driver recruitment.

Q1 more used equipment sales vs. CapEx purchases. Tariffs weigh-on rest of year CapEx decisions. Range of outcomes from pullback from low-end of capex range to accelerate in scenario of short-term opportunistic OEM pricing.

Negatively impacted by one fewer business day vs. prior year period, but securing increases with customers and expect to remain within full-year guidance range.

Low-to-mid single digit % contractual rate increases YTD. Elevated deadhead due to network inefficiencies offset ~2 cents in Q1 RPTM lift.

Q1 lower ETR due to lower earnings. Expect elevated rate in future quarters.

1 Net of fuel surcharge revenues. 16

APPENDIX

REVENUES SNAPSHOT

2024 REVENUES

BY SEGMENT

36%

2024 REVENUES

BY VERTICAL

Top 50 Customers

2024 REVENUES

BY CUSTOMER

27%

$3.0B

TOTAL REVENUES

71%

Retail

62%

Top 5

16%

Top 10

48%

14%

Top 25

65%

Manufacturing & Industrial

Food & Beverage

Logistics &

Other

Top 50

77%

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES -

CONSOLIDATED (Unaudited) (In thousands, except per share amounts)

Non-GAAP Adjusted Operating Income (Loss) and Non-GAAP Adjusted Operating Margin (1)

Quarter Ended March 31,

2023 2024 2025

% of Op. % of Op. % of Op.

$ Rev. $ Rev. $ Rev.

Operating income (loss) and operating margin - (GAAP)

$ 53,386

6.4%

$ 15,588

2.0%

$ (5,832)

-0.8%

Non-GAAP adjustments:

Insurance and claims (2)

1,387

0.2%

485

0.1%

1,511

0.2%

Amortization of intangible assets (3)

2,772

0.3%

2,518

0.3%

2,518

0.3%

Non-GAAP adjusted operating income (loss) and

non-GAAP adjusted operating margin

$ 57,545 6.9%

$ 18,591 2.4%

$ (1,803) -0.3%

Non-GAAP Adjusted Net Income (Loss) Attributable to Werner and Non-GAAP Adjusted Diluted Earnings (Loss) Per Share (1)

Quarter Ended March 31,

2023 2024 2025

Diluted Diluted Diluted

$ EPS $ EPS $ EPS

Net income (loss) attributable to Werner and

diluted earnings (loss) per share - (GAAP)

$ 35,224

$ 0.55

$ 6,312

$ 0.10

$ (10,098)

$ (0.16)

Non-GAAP adjustments:

Insurance and claims (2)

1,387

0.02

485

0.01

1,511

0.02

Amortization of intangible assets, net of amount

attributable to noncontrolling interest (3)

2,600

0.04

2,346

0.04

2,346

0.04

Loss on investments in equity securities (4)

138

Loss (earnings) from equity method investment (5)

133

(123)

Income tax effect of above adjustments (6)

(1,048)

(0.01)

(879)

(0.02)

(971)

(0.02)

Non-GAAP adjusted net income (loss) attributable to Werner and non-GAAP adjusted diluted earnings (loss) per share

$ 38,244 $ 0.60 $ 8,535 $ 0.13 $ (7,333)

$ (0.12)

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES -

CONSOLIDATED (Unaudited) (In thousands, except per share amounts)

Non-GAAP Free Cash Flow (1), (7)

Year Ended December 31,

YTD

March 31,

2020 2021 2022 2023 2024 2025

$ $ $ $ $ $

Net cash provided by operating activities - (GAAP) Non-GAAP adjustments:

(Additions) to property and equipment, net of proceeds from

$ 445,909

$ 332,819

$ 448,711

$ 474,366

$ 329,734

$ 29,370

the sale of property and equipment (266,241) (193,049) (317,579) (408,698) (234,887) 7,566

Non-GAAP Free cash flow $ 179,668 $ 139,770 $ 131,132 $ 65,668 $ 94,847 $ 36,936

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES -

CONSOLIDATED (Unaudited) (In thousands, except per share amounts)

Non-GAAP Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA); Non-GAAP Net Debt; and

Non-GAAP Net Debt to EBITDA Ratio (1), (8)

Year Ended December 31,

LTM

March 31,

2021

2022

2023

2024

2025

Net income - (GAAP) Add:

Depreciation and amortization

$ 261,478

267,700

$ 245,580

279,923

$ 112,290

299,509

$ 33,570

290,405

$ 17,101

286,184

Interest expense

4,423

11,828

33,535

39,212

40,801

Income tax expense

84,537

79,206

35,491

8,912

2,678

Non-GAAP EBITDA

$ 618,138

$ 616,537

$ 480,825

$ 372,099

$ 346,764

As of December 31,

As of March 31,

2021

2022

2023

2024

2025

Current portion of long-term debt

$ 5,000

$ 6,250

$ 2,500

$ 20,000

$ -

Long-term debt

422,500

687,500

646,250

630,000

640,000

Total Debt - (GAAP) Less:

Cash and cash equivalents

427,500

54,196

693,750

107,240

648,750

61,723

650,000

40,752

640,000

51,951

Non-GAAP Net debt

$ 373,304

$ 586,510

$ 587,027

$ 609,248

$ 588,049

Net debt to EBITDA Ratio - (non-GAAP)

0.6x

1.0x

1.2x

1.6x

1.7x

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - TRUCKLOAD

TRANSPORTATION SERVICES (TTS) SEGMENT (Unaudited) (In thousands)

Non-GAAP Adjusted Operating Income and Non-GAAP Adjusted Operating Margin (1)

Quarter Ended March 31,

2023 2024 2025

% of Op. % of Op. % of Op.

$ Rev. $ Rev. $ Rev.

Operating income (loss) and operating margin - (GAAP)

$ 50,986

8.7%

$ 20,840

3.8%

$ (916)

-0.2%

Non-GAAP adjustments:

Insurance and claims (2)

1,387

0.2%

485

0.1%

1,511

0.3%

Amortization of intangible assets (3)

1,352

0.2%

1,369

0.2%

1,369

0.3%

Non-GAAP adjusted operating income and

non-GAAP adjusted operating margin

$ 53,725

9.1%

$ 22,694

4.1%

$ 1,964

0.4%

Non-GAAP Adjusted Operating Expenses and Non-GAAP Adjusted Operating Ratio (1)

Quarter Ended March 31,

2023 2024 2025

% of Op. % of Op. % of Op.

$ Rev. $ Rev. $ Rev.

Operating expenses and operating ratio - (GAAP)

$ 537,344

91.3%

$ 530,286

96.2%

$ 502,791

100.2%

Non-GAAP adjustments:

Insurance and claims (2)

(1,387)

-0.2%

(485)

-0.1%

(1,511)

-0.3%

Amortization of intangible assets (3)

(1,352)

-0.2%

(1,369)

-0.2%

(1,369)

-0.3%

Non-GAAP adjusted operating expenses and

non-GAAP adjusted operating ratio

$ 534,605 90.9%

$ 528,432 95.9%

$ 499,911 99.6%

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - TRUCKLOAD

TRANSPORTATION SERVICES (TTS) SEGMENT (Continued) (Unaudited) (In thousands)

Non-GAAP Adjusted Operating Revenues, Net of Fuel Surcharge; Non-GAAP Adjusted

Operating Expenses, Net of Fuel Surcharge; Non-GAAP Adjusted Operating Margin, Net of Fuel Surcharge; and Non-GAAP Adjusted Operating Ratio, Net of Fuel Surcharge (1)

Quarter Ended March 31,

2023

2024

2025

Operating revenues - (GAAP)

$ 588,330

$ 551,126

$ 501,875

Less: Trucking fuel surcharge (9)

(88,301)

(72,983)

(57,640)

Operating revenues, net of fuel surcharge - (Non-GAAP)

500,029

478,143

444,235

Operating expenses - (GAAP)

537,344

530,286

502,791

Non-GAAP adjustments:

Trucking fuel surcharge (9)

(88,301)

(72,983)

(57,640)

Insurance and claims (2)

(1,387)

(485)

(1,511)

Amortization of intangible assets (3)

(1,352)

(1,369)

Non-GAAP adjusted operating expenses, net of fuel surcharge

446,304

455,449

442,271

Non-GAAP adjusted operating income

$ 53,725

$ 22,694

$ 1,964

Non-GAAP adjusted operating margin, net of fuel surcharge

10.7%

4.7%

0.4%

Non-GAAP adjusted operating ratio, net of fuel surcharge

89.3%

95.3%

99.6%

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES -

WERNER LOGISTICS SEGMENT (Unaudited) (In thousands)

Non-GAAP Adjusted Operating Revenues, Less Purchased Transportation Expense (1)

Quarter Ended March 31,

2023 2024 2025

$ $ $

Operating revenues - (GAAP) Non-GAAP adjustment:

$ 228,669

$ 202,482

$ 195,558

Purchased transportation expense (10) (188,498) (172,487) (167,158) Non-GAAP Adjusted Operating revenues, less purchased

transportation expense $ 40,171 $ 29,995 $ 28,400

Non-GAAP Adjusted Operating Income (Loss) and Non-GAAP Adjusted Operating Margin (1)

Quarter Ended March 31,

2023 2024 2025

% of Op. % of Op. % of Op.

$ Rev. $ Rev. $ Rev.

Operating income (Loss) and operating margin - (GAAP)

$ 4,937

2.2%

$ (2,329)

-1.2%

$ (475)

-0.2%

Non-GAAP adjustments:

Amortization of intangible assets (3)

1,420

0.6%

1,149

0.6%

1,149

0.5%

Non-GAAP adjusted operating income (loss) and

non-GAAP adjusted operating margin

$ 6,357

2.8%

$ (1,180)

-0.6%

$ 674

0.3%

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Non-GAAP adjusted operating income (loss); non-GAAP adjusted operating margin; non-GAAP adjusted operating margin, net of fuel surcharge; non-GAAP adjusted net income (loss) attributable to Werner; non-GAAP adjusted diluted earnings (loss) per share; non-GAAP free cash flow; non-GAAP EBITDA; non-GAAP net debt; non-GAAP adjusted operating revenues, net of fuel surcharge; non-GAAP adjusted operating revenues, less purcased transportation expense; non-GAAP adjusted operating expenses; non-GAAP adjusted operating expenses, net of fuel surcharge; non-GAAP adjusted operating ratio; and non-GAAP adjusted operating ratio, net of fuel surcharge should be considered in addition to, rather than as substitutes for, GAAP operating income (loss); GAAP operating margin; GAAP net income (loss) attributable to Werner; GAAP diluted earnings (loss) per share; GAAP net cash provided by operating activities; GAAP net income (loss); GAAP total debt; GAAP operating revenues; GAAP operating expenses; and GAAP operating ratio, which are their most directly comparable GAAP financial measures.

We accrued pre-tax insurance and claims expense for interest related to a previously disclosed excess adverse jury verdict rendered on May 17, 2018 in a lawsuit arising from a December 2014 accident. The Company is appealing this verdict. Additional information about the accident was included in our Current Report on Form 8-K dated May 17, 2018. Under our insurance policies in effect on the date of this accident, our maximum liability for this accident is $10.0 million (plus pre-judgment and post-judgment interest) with premium-based insurance coverage that exceeds the jury verdict amount. We continue to accrue pre-tax insurance and claims expense for interest at $0.5 million per month until such time as the outcome of our appeal is finalized, excluding months where the plaintiffs requested an extension of time to respond to our petition for review. Management believes excluding the effect of this item provides a more useful comparison of our performance from period to period. This item is included in the Truckload Transportation Services segment.

Amortization expense related to intangible assets acquired in our business acquisitions is excluded because management does not believe it is indicative of our core operating performance. This item is included in our Truckload Transportation Services and Werner Logistics segments.

Represents non-operating mark-to-market adjustments for gains/losses on our minority equity investments, which we account for under Accounting Standards Codification ("ASC") 321, Investments - Equity Securities . Management believes excluding the effect of gains/losses on our investments in equity securities provides a more useful comparison of our performance from period to period.

Represents earnings/losses from our equity method investment, which we account for under ASC 323, Investments - Equity Method and Joint Ventures . Management believes excluding the effect of earnings/losses from our equity method investment provides a more useful comparison of our performance from period to period.

The income tax effect of the non-GAAP adjustments is calculated using the incremental income tax rate excluding discrete items, and the income tax effect for 2024 has been updated to reflect the annual incremental income tax rate.

We consider free cash flow (net cash provided by operating activities less net expenditures for property and equipment) to be a useful measure of our liquidity. We believe it is a more conservative measure of cash flow since capital expenditures are necessary for ongoing operations. Free cash flow does not represent residual cash flows available for discretionary expenditures, as the measure does not deduct the payments required for debt service and other contractual obligations. Therefore, we believe it is important to view free cash flow as a measure that provides supplemental information to our consolidated statements of cash flows.

We consider EBITDA to be an important measure of our financial performance and of our ability to generate cash flows to service debt obligations, fund capital expenditures and fund other corporate investing and financing activities. EBITDA eliminates the non-cash effect of depreciation and amortization. Net debt is used in our net debt to EBITDA ratio. We believe the net debt to EBITDA ratio is useful in evaluating our ability to service our debt.

Fluctuating fuel prices and fuel surcharge revenues impact the total company operating ratio and the TTS segment operating ratio when fuel surcharges are reported on a gross basis as revenues versus netting the fuel surcharges against fuel expenses. Management believes netting fuel surcharge revenues, which are generally a more volatile source of revenue, against fuel expenses provides a more consistent basis for comparing the results of operations from period to period.

Management believes excluding purchased transportation expense from Werner Logistics operating revenues provides a useful measurement of our ability to source and sell services provided by third parties.

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Werner En Terpr i Yes Inc. fi 0ne_ Wer ner :6 Bne_Nerner //erner EnEerp‹ises

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Werner Enterprises Inc. published this content on April 29, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 30, 2025 at 00:25 UTC.