What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-02-26 compared with 2024-02-26 · 45 added, 42 removed, 110 unchanged (44% of the section changed)

5 unchanged sentences

Our business is subject to overall economic and geopolitical conditions that could have a material adverse effect on our results of operations and financial condition.

We are sensitive to changes in economic or geopolitical conditions that impact customer shipping volumes, industry freight demand, and industry truck capacity.

When shipping volumes decline or available truck capacity increases, freight pricing generally becomes more competitive as carriers compete for loads to maintain truck productivity.

We may be negatively affected by future economic conditions including employment levels, business conditions, fuel and energy costs, public health crises, interest rates and tax rates.

Economic or geopolitical conditions may also impact the financial condition of our customers, resulting in a decreased demand for services or a greater risk of bad debt losses, and that of our suppliers, which may affect negotiated pricing or availability of needed goods and services.

We are sensitive to economic or geopolitical conditions, in particular, those that impact customer shipping volumes, industry freight demand, and industry truck capacity.

Such conditions can include, among others, employment levels, business conditions, fuel and energy costs, public health crises, interest rates, tax rates, political conflict, and global trade policy.

Tariffs or trade regulations may impact the cost or availability of materials, equipment, goods, and fuel.

Impacts from any of the foregoing on (i) our suppliers could affect pricing or availability of needed goods and services and (ii) our customers could weaken their financial condition, increase our risk of bad debt losses, and decrease demand for our services (even if preceded by increased demand in anticipation of a trade regulation or other change).

When conditions cause a decline in shipping volumes or an increase in available truck capacity, freight pricing generally becomes more competitive as carriers compete for loads to maintain truck productivity.

Any of the foregoing may impact our results of operations and financial condition.

Labor and employment matters, including difficulty in recruiting and retaining experienced drivers, recent driver training school graduates and independent contractors, could impact our results of operations and financial condition.

At times, the trucking industry has experienced driver shortages.

Driver availability may be affected by changing workforce demographics, alternative employment opportunities, national unemployment rates, freight market conditions, availability of financial aid for driver training schools and changing industry regulations.

Driver turnover, recruiting and availability may be affected by changes in our customer base, fleet size, and workforce demographics;

alternative employment opportunities and national unemployment rates;

freight market conditions;

availability of financial aid for driver training schools;

and changing industry regulations.

If such a shortage were to occur and driver pay rate increases became necessary to attract and retain drivers, our results of operations would be negatively impacted to the extent that we could not obtain corresponding freight rate increases.

Additionally, a shortage of drivers could result in idled equipment, which would affect our profitability and would limit growth opportunities.

Independent contractor availability may also be affected by both inflationary cost increases that are the responsibility of independent contractors and the availability and cost of equipment financing.

Ongoing federal and state legislative challenges to the independent contractor model could also affect independent contractor availability.

In recent years, the topic of the classification of individuals as employees or independent contractors has gained increased attention among federal and state regulators as well as the plaintiffs’ bar.

Various legislative or regulatory proposals have been introduced at the federal and state levels that may affect the classification status of individuals as independent contractors or employees for either employment tax purposes (e.g., withholding, social security, Medicare and unemployment taxes) or other benefits available to employees (e.g., workers’ compensation benefits and minimum wage).

Recently, certain states have seen significant increased activity by tax and other regulators regarding worker classification, and class action lawsuits alleging misclassification by transportation companies have resulted in significant damage awards or monetary settlements.

Potential changes, if any, that could impact the legal classification of the independent contractor relationship between us and our independent contractors could have a material adverse effect on our ability to recruit and retain independent contractors.

If a shortage of independent contractors occurs, increases in per-mile settlement rates (for independent contractors) and driver pay rates (for company drivers) may become

necessary to attract and retain a sufficient number of drivers.

These increases would negatively affect our results of operations to the extent that we would be unable to obtain corresponding freight rate increases.

Additionally, a shortage of drivers could result in idled equipment, which would affect our profitability and limit growth opportunities.

The impact on independent contractors of inflationary cost increases and the market for and cost of financing equipment may affect their availability to us.

In recent years, the classification of individuals as employees or independent contractors has gained increased attention among tax and other regulators, as well as plaintiffs’ attorneys who have pursued lawsuits against transportation companies alleging misclassification of employees and independent contractors resulting in significant damages.

Changes that impact the classification of the relationship between us and our independent contractors could have a material adverse effect on our ability to recruit and retain them, which could negatively impact our operations.

If pay rates for drivers or per-mile settlement rates for independent contractors increased, our results of operations would be negatively impacted to the extent that we could not obtain corresponding freight rate increases.

During 2023, union organizing efforts occurred at two locations of a U.S.

subsidiary, which resulted in fewer than 30 of our employees being represented by a union.

Additional unionization, if broad-based, could have a material adverse effect on our costs, efficiency, and profitability.

Driver or other employee dissatisfaction and regulations that govern organization procedures could impact our ability to effectively or timely address any organization efforts.

In September 2024, that small group of drivers filed a petition seeking to decertify the union and end their union’s representation.

The union responded by voluntarily ending its representation of those drivers and, as a result, those drivers are no longer unionized.

Unionization, if broad-based, could have a material adverse effect on our costs, efficiency, and profitability.

Increases in fuel prices and shortages of fuel can have a material adverse effect on the results of operations and profitability.

2 unchanged sentences

These programs generally enable us to recover a majority, but not all, of the fuel price increases.

Fuel prices that change rapidly in short time periods also impact our recovery because the surcharge rate in most programs only changes once per week.

Fuel prices that change rapidly

in short time periods also impact our recovery because the surcharge rate in most programs only changes once per week.

Fuel shortages, increases in fuel prices and petroleum product rationing could have a material adverse impact on our operations and profitability.

27 unchanged sentences

Many of those providers face the same economic challenges as we do and therefore are actively and competitively soliciting business.

These economic conditions may

have an adverse effect on the availability and cost of third-party capacity.

These economic conditions may have an adverse effect on the availability and cost of third-party capacity.

If we are unable to secure the services of these third-party capacity providers at reasonable rates, our results of operations could be adversely affected.

1 unchanged sentence

Our results are affected by the success of our operations in Mexico and other foreign countries in which we operate (see Note 13 in the Notes to Consolidated Financial Statements under Item 8 of Part II of this Form 10-K).

We are subject to risks of doing business internationally, including fluctuations in foreign currencies, changes in the economic strength of the countries in which we do business, difficulties in enforcing contractual obligations and intellectual property rights, burdens of complying with a wide variety of international and United States export and import laws, and social, political, and economic instability.

Additional risks associated with our foreign operations, including restrictive trade policies and imposition of duties, taxes, or government royalties by foreign governments, are present but have been largely mitigated by the terms of the United States-Mexico-Canada Agreement (“USMCA”) for Mexico and Canada.

The United States, Canada and Mexico ratified the USMCA as an overhaul and update to the North America Free Trade Agreement, and it became effective in July 2020.

The United States, Canada and Mexico ratified the USMCA as an overhaul and update to the North America Free Trade Agreement, and it

became effective in July 2020.

We believe Werner is one of the largest U.S.

16 unchanged sentences

We rely increasingly on cloud-based technology and depend on the stability, availability and security of our information systems to manage our business.

Much of our software was developed internally or by adapting purchased software applications to suit our needs.

Some of our software was developed internally or by adapting purchased software applications to suit our needs.

Our information systems are used for various purposes including, without limitation, enhancing customer service, planning freight loads, communicating with and dispatching drivers and other capacity providers, billing and collecting from customers, paying vendors and associates, maintaining sensitive or confidential Company or third-party information or employee personal information, and generating financial, operational, and other information.

We rely on strategic vendors for certain services that impact our systems and communications, such as, for example, integrated GPS and satellite communication services and Internet and telecommunications services.

We rely on strategic vendors for certain services that impact our systems and communications, such as integrated GPS and satellite communication services and Internet and telecommunications services.

System disruption or unavailability could occur due to various events, including, without limitation, a power outage, a hardware or software failure, a cybersecurity threat or breach, a catastrophic occurrence, or the disruption of a vendor’s service to us.

If any of our information systems, or those of our providers, become compromised or unavailable, or are taken offline in response to a threat or other event, certain critical functions may be disrupted, subject to manual performance, or fail.

Our mitigation of these risks includes, without limitation, using certain redundant computer hardware, tools and protocols to monitor and respond to threats, the work of a dedicated internal cybersecurity team, incident and crisis response plans, and enterprise-wide information security policies and trainings.

However, the security risks associated with information technology systems have increased in recent years because of the evolving sophistication, activities and methods of cyber attackers.

techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently, may be difficult to detect, and often are not recognized until launched against a target, and we may be unable or fail to anticipate them or to implement adequate preventative measures.

Our mitigation of these risks includes, without limitation, using certain redundant computer hardware, tools and protocols to monitor and respond to threats, the work of a dedicated internal cybersecurity team, incident and crisis response plans, enterprise-wide information security policies and trainings, and the use of artificial intelligence.

However, the security risks associated with information technology systems have increased in recent years because of the evolving sophistication, activities and methods of cyber attackers, including the use of artificial intelligence.

The techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently, may be difficult to detect, and often are not recognized until launched against a target, and we may be unable or fail to anticipate them or to implement adequate preventative measures.

We may incur costs in responding to a specific event.

7 unchanged sentences

or increase our costs, any of which could harm our reputation and adversely impact our business, results of operations, and financial condition.

A public health crisis, such as an epidemic, pandemic, or similar outbreak, has had, and may continue to have an adverse impact on our business, as well as the operations of our customers and suppliers.

The COVID-19 pandemic resulted in a slowdown of economic activity and a disruption in supply chains during 2020 and 2021.

A public health crisis, such as an epidemic, pandemic, or similar outbreak may have an adverse impact on our business, as well as the operations of our customers and suppliers.

An epidemic, pandemic or similar outbreak could result in a slowdown of economic activity and a disruption in supply chains.

Our business is sensitive to changes in overall economic conditions that impact customer shipping volumes, industry freight demand and industry truck capacity.

Such conditions may also impact the financial condition of our customers, resulting in a greater risk of bad debt losses, and that of our suppliers, which may affect the availability or pricing of needed goods and services.

Although we took numerous actions to lessen the adverse impact of the COVID-19 pandemic, our future results could be further impacted by the disruptive effects of a future pandemic or outbreak, including but not limited to adverse effects on freight volumes and pricing and availability of qualified personnel.

Our future results could be impacted by the disruptive effects of an epidemic, pandemic or similar outbreak, including but not limited to adverse effects on freight volumes and pricing and availability of qualified personnel.

Such outbreaks could affect our operations and business continuity if a significant number of our essential employees, overall or in a key location, are quarantined from contraction of or exposure to the disease or if future governmental orders prevent our employees or critical suppliers (including individuals that have not received mandated vaccinations) from working.

8 unchanged sentences

These regulatory agencies have the authority to govern transportation-related activities, such as safety, authorization to conduct motor carrier operations and other matters.

The EPA and CARB subject us to emissions and fuel efficiency regulations, and additional regulations by these and other agencies may occur.

EPA and CARB subject us to emissions and fuel efficiency regulations, and additional regulations by these and other agencies may occur.

The Regulations subsection in Item 1 of Part I of this Form 10-K describes several proposed and final regulations that may have a significant effect on our operations including our productivity, driver recruitment and retention, and capital expenditures for tractors, trailers, and other equipment necessary to comply with such regulations.

4 unchanged sentences

If we are involved in a spill or other accident involving hazardous substances, or if we are found to be in violation of applicable laws or regulations, it could have a material adverse effect on our business and operating results.

If we fail to comply with applicable regulations, we could be subject to substantial fines or penalties and to civil and criminal liability.

If we fail to comply with applicable regulations, we could be subject to substantial fines or penalties and civil and criminal liability.

Increasing scrutiny from investors and other stakeholders regarding ESG related matters may have a negative impact on our business.

Companies across all industries are facing increasing scrutiny from investors and other stakeholders related to ESG matters, including practices and disclosures related to environmental stewardship, social responsibility, and diversity, equity and inclusion.

Organizations that provide information to investors and other stakeholders on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.

Such ratings are used by some investors to inform their investment and proxy statement voting decisions.

Unfavorable ESG ratings may lead to negative

sentiment toward us by investors or other stakeholders, which could have a negative impact on our revenues, stock price and access to and costs of capital.

We have developed certain initiatives and goals relating to ESG matters.

Our ability to successfully execute these initiatives and accurately report our progress presents numerous operational, financial, legal, reputational and other risks, many of which are outside our control, and all of which could have a material negative impact on our business.

Companies across all industries are facing increasing scrutiny from investors and other stakeholders related to ESG matters, including practices and disclosures related to sustainability.

Organizations that provide information to stakeholders (including customers and investors) on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.

Such ratings are used by some customers to evaluate their relationship with us and by some investors to inform their investment and proxy statement voting decisions.

Unfavorable ESG ratings may lead to negative sentiment toward us by stakeholders, which could have a negative impact on our revenues, stock price and access to and costs of capital.

While we believe our sustainability programs are balanced in the context of our business and stakeholder demands, we could draw criticism related to all or a portion of our sustainability initiatives.

Our ability to adequately communicate, through corporate sustainability reports and otherwise, the business reasons and stakeholder priorities that influence our sustainability programs, to successfully execute these initiatives and to accurately report our progress presents numerous operational, financial, legal, reputational and other risks, many of which are outside our control, and all of which could have a material negative impact on our business.

Additionally, the implementation of these initiatives imposes additional costs on us.

If our ESG initiatives and goals do not meet the expectations of our investors or other stakeholders, which continue to evolve, then our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively impacted.

Similarly, our failure, or perceived failure, to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards in a timely manner, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.

If our ESG initiatives and goals do not meet the expectations of our customers, investors or other stakeholders, which continue to evolve and may be conflicting, then our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively impacted.

Similarly, our failure, or perceived failure, to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards in a timely

manner, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.

Risks Related to Financial Matters

Our earnings could be reduced by increases in the number of insurance claims, cost per claim, costs of insurance premiums, availability of insurance coverage, or a significant uninsured liability.

We are subject to claims and litigation risks regarding a variety of issues, including without limitation, over-the-road accidents and contractual, labor and employment, environmental, regulatory, workers’ compensation, and data privacy matters.

As a large transportation and logistics company, we are subject to claims and litigation risks regarding a variety of issues, including, without limitation, over-the-road accidents and contractual, labor and employment, environmental, regulatory, workers’ compensation, and data privacy matters.

We are self-insured for a significant portion of liability resulting from bodily injury, property damage, cargo and associate workers’ compensation and health benefit claims.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors