WERNER ENTERPRISES INC 10-Q

Item 1. Financial Statements. WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, (In thousands, except per share amounts) 2025 2024 Operating revenues $ 712,114 $ 769,080 Operating expenses: Salaries, wages and benefits 243,225 265,403 Fuel 63,092 77,622 Supplies and maintenance 60,040 61,775 Taxes and licenses 22,344 25,164 Insurance and claims 43,777 36,362 Depreciation and amortization 70,049 74,270 Rent and purchased transportation 206,142 203,925 Communications and utilities 4,357 4,706 Other 4,920 4,265 Total operating expenses 717,946 753,492 Operating income (loss) ( 5,832 ) 15,588 Other expense (income): Interest expense 9,537 7,948 Interest income ( 1,492 ) ( 1,685 ) Loss on investments in equity securities 2 138 Loss (earnings) from equity method investment ( 123 ) 133 Other ( 368 ) ( 261 ) Total other expense, net 7,556 6,273 Income (loss) before income taxes ( 13,388 ) 9,315 Income tax expense (benefit) ( 3,167 ) 3,067 Net income (loss) ( 10,221 ) 6,248 Net loss attributable to noncontrolling interest 123 64 Net income (loss) attributable to Werner $ ( 10,098 ) $ 6,312 Earnings (loss) per share: Basic $ ( 0.16 ) $ 0.10 Diluted $ ( 0.16 ) $ 0.10 Weighted-average common shares outstanding: Basic 61,890 63,472 Diluted 61,890 63,727 See Notes to Consolidated Financial Statements (Unaudited). 4 Table of Contents WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended March 31, (In thousands) 2025 2024 Net income (loss) $ ( 10,221 ) $ 6,248 Other comprehensive income (loss): Foreign currency translation adjustments ( 62 ) 502 Change in fair value of interest rate swaps, net of tax ( 1,434 ) 116 Other comprehensive income (loss) ( 1,496 ) 618 Comprehensive income (loss) ( 11,717 ) 6,866 Comprehensive loss attributable to noncontrolling interest 123 64 Comprehensive income (loss) attributable to Werner $ ( 11,594 ) $ 6,930 See Notes to Consolidated Financial Statements (Unaudited). 5 Table of Contents WERNER ENTERPRISES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands, except share amounts) March 31, 2025 December 31, 2024 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 51,951 $ 40,752 Accounts receivable, trade, less allowance of $ 7,502 and $ 7,169 , respectively 387,075 391,684 Other receivables 24,683 26,137 Inventories and supplies 12,984 14,183 Prepaid expenses 47,632 53,690 Other current assets 14,371 15,327 Total current assets 538,696 541,773 Property and equipment, at cost 2,893,125 2,941,495 Less – accumulated depreciation 1,026,277 1,007,259 Property and equipment, net 1,866,848 1,934,236 Goodwill 129,104 129,104 Intangible assets, net 73,889 76,407 Other non-current assets 378,112 370,717 Total assets $ 2,986,649 $ 3,052,237 LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 113,360 $ 112,429 Current portion of long-term debt — 20,000 Insurance and claims accruals 101,911 93,710 Accrued payroll 49,086 54,560 Accrued expenses 13,887 18,745 Other current liabilities 45,377 56,305 Total current liabilities 323,621 355,749 Long-term debt, net of current portion 640,000 630,000 Other long-term liabilities 54,582 66,173 Insurance and claims accruals, net of current portion 237,039 236,923 Deferred income taxes 257,353 269,516 Total liabilities 1,512,595 1,558,361 Commitments and contingencies Temporary equity - redeemable noncontrolling interest 37,821 37,944 Stockholders’ equity: Common stock, $ 0.01 par value, 200,000,000 shares authorized; 80,533,536 shares issued; 61,924,797 and 61,850,434 shares outstanding, respectively 805 805 Paid-in capital 137,867 137,889 Retained earnings 1,934,007 1,952,775 Accumulated other comprehensive loss ( 19,933 ) ( 18,437 ) Treasury stock, at cost; 18,608,739 and 18,683,102 shares, respectively ( 616,513 ) ( 617,100 ) Total stockholders’ equity 1,436,233 1,455,932 Total liabilities, temporary equity and stockholders’ equity $ 2,986,649 $ 3,052,237 See Notes to Consolidated Financial Statements (Unaudited). 6 Table of Contents WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, (In thousands) 2025 2024 Cash flows from operating activities: Net income (loss) $ ( 10,221 ) $ 6,248 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 70,049 74,270 Deferred income taxes ( 11,612 ) 2,828 Gain on disposal of property and equipment ( 2,843 ) ( 3,568 ) Non-cash equity compensation 2,444 2,250 Insurance and claims accruals, net of current portion 117 ( 4,015 ) Loss on investments in equity securities, net 2 138 Loss (earnings) from equity method investment ( 123 ) 133 Other ( 14,617 ) ( 3,141 ) Changes in certain working capital items: Accounts receivable, net 4,609 27,481 Other current assets 9,540 7,139 Accounts payable ( 4,373 ) ( 5,274 ) Other current liabilities ( 13,602 ) ( 15,904 ) Net cash provided by operating activities 29,370 88,585 Cash flows from investing activities: Additions to property and equipment ( 23,513 ) ( 58,235 ) Proceeds from sales of property and equipment 31,079 39,200 Investment in equity securities ( 6,011 ) ( 11 ) Payments to acquire equity method investment — ( 1,060 ) Collections of notes receivable 816 696 Net cash provided by (used in) investing activities 2,371 ( 19,410 ) Cash flows from financing activities: Repayments of short-term debt ( 10,000 ) ( 21,250 ) Proceeds from issuance of short-term debt 10,000 20,000 Repayments of long-term debt ( 260,000 ) ( 50,000 ) Proceeds from issuance of long-term debt 250,000 — Dividends on common stock ( 8,659 ) ( 8,882 ) Repurchases of common stock — ( 6,550 ) Tax withholding related to net share settlements of restricted stock awards ( 1,879 ) ( 4,087 ) Net cash used in financing activities ( 20,538 ) ( 70,769 ) Effect of exchange rate fluctuations on cash ( 4 ) 208 Net increase (decrease) in cash and cash equivalents 11,199 ( 1,386 ) Cash and cash equivalents, beginning of period 40,752 61,723 Cash and cash equivalents, end of period $ 51,951 $ 60,337 Supplemental disclosures of cash flow information: Interest paid $ 14,422 $ 9,328 Income taxes paid 21,057 1,165 Supplemental schedule of non-cash investing and financing activities: Notes receivable issued upon sale of property and equipment $ 440 $ 402 Change in fair value of interest rate swaps ( 1,434 ) 116 Property and equipment acquired included in accounts payable 6,373 19,765 Dividends accrued but not yet paid at end of period 8,670 8,878 See Notes to Consolidated Financial Statements (Unaudited). 7 Table of Contents WERNER ENTERPRISES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND TEMPORARY EQUITY - REDEEMABLE NONCONTROLLING INTEREST (Unaudited) Three Months Ended March 31, 2025 (In thousands, except share and per share amounts) Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders’ Equity Temporary Equity - Redeemable Noncontrolling Interest BALANCE, December 31, 2024 $ 805 $ 137,889 $ 1,952,775 $ ( 18,437 ) $ ( 617,100 ) $ 1,455,932 $ 37,944 Net loss attributable to Werner — — ( 10,098 ) — — ( 10,098 ) — Net loss attributable to noncontrolling interest — — — — — — ( 123 ) Other comprehensive loss — — — ( 1,496 ) — ( 1,496 ) — Dividends on common stock ($ 0.14 per share) — — ( 8,670 ) — — ( 8,670 ) — Common stock issued for stock-based compensation, including tax effects, 74,363 shares — ( 2,466 ) — — 587 ( 1,879 ) — Non-cash equity compensation expense — 2,444 — — — 2,444 — BALANCE, March 31, 2025 $ 805 $ 137,867 $ 1,934,007 $ ( 19,933 ) $ ( 616,513 ) $ 1,436,233 $ 37,821 Three Months Ended March 31, 2024 (In thousands, except share and per share amounts) Common Stock Paid-In Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Stockholders’ Equity Temporary Equity - Redeemable Noncontrolling Interest BALANCE, December 31, 2023 $ 805 $ 134,894 $ 1,953,385 $ ( 9,684 ) $ ( 551,061 ) $ 1,528,339 $ 38,607 Net income attributable to Werner — — 6,312 — — 6,312 — Net loss attributable to noncontrolling interest — — — — — — ( 64 ) Other comprehensive income — — — 618 — 618 — Purchases of 167,818 shares of common stock — — — — ( 6,550 ) ( 6,550 ) — Dividends on common stock ($ 0.14 per share) — — ( 8,878 ) — — ( 8,878 ) — Common stock issued for stock-based compensation, including tax effects, 135,970 shares — ( 4,422 ) — — 335 ( 4,087 ) — Non-cash equity compensation expense — 2,250 — — — 2,250 — BALANCE, March 31, 2024 $ 805 $ 132,722 $ 1,950,819 $ ( 9,066 ) $ ( 557,276 ) $ 1,518,004 $ 38,543 See Notes to Consolidated Financial Statements (Unaudited). 8 Table of Contents WERNER ENTERPRISES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) Basis of Presentation and Recent Accounting Pronouncements Basis of Presentation The accompanying unaudited interim consolidated financial statements include the accounts of Werner Enterprises, Inc. and its subsidiaries (collectively, the “Company” or “Werner”). Redeemable noncontrolling interest on the consolidated condensed balance sheets represents the portion of a consolidated entity in which we do not have a direct equity ownership. In these notes, the terms “we,” “us,” or “our” refer to Werner Enterprises, Inc. and its subsidiaries. All significant intercompany accounts and transactions relating to these entities have been eliminated. These consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and, in the opinion of management, reflect all adjustments, which are all of normal recurring nature, necessary to present fairly the financial condition, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles (“GAAP”). These consolidated financial statements do not include all information and footnotes required by GAAP for complete financial statements; although in management’s opinion, the disclosures are adequate so that the information presented is not misleading. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025. In the opinion of management, the information set forth on the accompanying consolidated condensed balance sheets is fairly stated in all material respects in relation to the consolidated balance sheets from which it has been derived. These consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and accompanying notes contained in our 2024 Form 10-K. Recently Issued Accounting Pronouncements, Not Yet Effective In December 2023, FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures , with the objective of enhancing the transparency and decision usefulness of income tax information through income tax disclosure improvements, primarily related to the rate reconciliation and income taxes paid information. The provisions of this update are effective for annual periods beginning after December 15, 2024, using a prospective approach. Retrospective application is permitted. We are evaluating the impact of adopting ASU 2023-09, and we expect this ASU to impact our disclosures but not our results of operations, cash flows, and financial condition. In November 2024, the FASB issued ASU 2024-03 Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , requiring public business entities to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The provisions of this update are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, using either a prospective or retrospective approach. We are evaluating the impact of adopting ASU 2024-03, and we expect this ASU to impact our disclosures but not our results of operations, cash flows, and financial condition. 9 Table of Contents (2) Revenue Revenue Recognition Revenues are recognized over time as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. The following table presents our revenues disaggregated by revenue source (in thousands): Three Months Ended March 31, 2025 2024 Truckload Transportation Services $ 501,875 $ 551,126 Werner Logistics 195,558 202,482 Inter-segment eliminations ( 4,063 ) ( 4,071 ) Transportation services 693,370 749,537 Other revenues 18,744 19,543 Total revenues $ 712,114 $ 769,080 The following table presents our revenues disaggregated by geographic areas in which we conduct business (in thousands): Three Months Ended March 31, 2025 2024 United States $ 675,242 $ 721,861 Mexico 33,612 39,119 Canada 3,260 8,100 Total revenues $ 712,114 $ 769,080 Operating revenues for foreign countries include revenues for (i) shipments with an origin or destination in that country and (ii) other services provided in that country. If both the origin and destination are in a foreign country, the revenues are attributed to the country of origin. Contract Balances and Accounts Receivable A receivable is an unconditional right to consideration and is recognized when shipments have been completed and the related performance obligation has been fully satisfied. At March 31, 2025 and December 31, 2024, the accounts receivable, trade, net, balance was $ 387.1 million and $ 391.7 million, respectively. Contract assets represent a conditional right to consideration in exchange for goods or services and are transferred to receivables when the rights become unconditional. At March 31, 2025 and December 31, 2024, the balance of contract assets was $ 7.0 million and $ 6.3 million, respectively. We have recognized contract assets within the other current assets financial statement caption on the consolidated condensed balance sheets. These contract assets are considered current assets as they will be settled in less than 12 months. Contract liabilities represent advance consideration received from customers and are recognized as revenues over time as the related performance obligation is satisfied. A t March 31, 2025 and December 31, 2024, t he balance o f contract liabilities was $ 2.0 million and $ 1.4 million, respectively. The amount of revenues recognized in the three months ended March 31, 2025 that was included in the December 31, 2024 contract liability balance was $ 1.4 million. We have recognized contract liabilities within the accounts payable and other current liabilities financial statement captions on the consolidated condensed balance sheets. These contract liabilities are considered current liabilities as they will be settled in less than 12 months. Performance Obligations We have elected to apply the practical expedient in Accounting Standards Codification (“ASC”) Topic 606, Revenue From Contracts With Customers , to not disclose the value of remaining performance obligations for contracts with an original expected length of one year or less. Remaining performance obligations represent the transaction price allocated to future reporting periods for freight shipments started but not completed at the reporting date that we expect to recognize as revenue in the period subsequent to the reporting date; transit times generally average approximately 3 days. During the three months ended March 31, 2025 and 2024, revenues recognized from performance obligations related to prior periods (for example, due to changes in transaction price) were not material. 10 Table of Contents (3) Goodwill and Intangible Assets Goodwill represents the excess of cost over the fair value of net identifiable tangible and intangible assets acquired in business combinations. There were no changes in the carrying amount of goodwill by segment for the three months ended March 31, 2025. The following table presents acquired intangible assets (in thousands): March 31, 2025 December 31, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 80,200 $ ( 24,015 ) $ 56,185 $ 80,200 $ ( 22,009 ) $ 58,191 Trade names 24,600 ( 6,896 ) 17,704 24,600 ( 6,384 ) 18,216 Total intangible assets $ 104,800 $ ( 30,911 ) $ 73,889 $ 104,800 $ ( 28,393 ) $ 76,407 Amortization expense on intangible assets was $ 2.5 million for the three months ended March 31, 2025 and 2024, and is reported in depreciation and amortization on the consolidated statements of income. As of March 31, 2025, we estimate future amortization expense for intangible assets will be $ 7.6 million for the remainder of 2025, and $ 10.1 million for each of the five succeeding fiscal years. (4) Leases We have entered into operating leases primarily for real estate. The leases have terms which range from 2 years to 18 years, and some include options to renew. Renewal terms are included in the lease term when it is reasonably certain that we will exercise the option to renew. Operating leases are included in other non-current assets, other current liabilities and other long-term liabilities on the consolidated condensed balance sheets. These assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date, using our incremental borrowing rate because the rate implicit in each lease is not readily determinable. We have certain contracts for real estate that may contain lease and non-lease components which we have elected to treat as a single lease component. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense is reported in rent and purchased transportation on the consolidated statements of income. The following table presents balance sheet and other operating lease information (dollars in thousands): March 31, 2025 December 31, 2024 Right-of-use assets (recorded in other non-current assets) $ 46,717 $ 49,599 Current lease liabilities (recorded in other current liabilities) $ 15,460 $ 15,352 Long-term lease liabilities (recorded in other long-term liabilities) 33,454 36,406 Total operating lease liabilities $ 48,914 $ 51,758 Weighted-average remaining lease term for operating leases 4.63 years 4.75 years Weighted-average discount rate for operating leases 5.0 % 5.0 % 11 Table of Contents The following table presents the maturities of operating lease liabilities as of March 31, 2025 (in thousands): 2025 (remaining) $ 13,135 2026 16,164 2027 8,400 2028 6,654 2029 3,823 Thereafter 5,748 Total undiscounted operating lease payments $ 53,924 Less: Imputed interest ( 5,010 ) Present value of operating lease liabilities $ 48,914 Cash Flows During the three months ended March 31, 2025 and 2024, right-of-use assets of $ 1.2 million and $ 1.9 million, respectively, were recognized as non-cash asset additions that resulted from new operating lease liabilities. Cash paid for amounts included in the present value of operating lease liabilities was $ 4.5 million and $ 2.7 million for the three months ended March 31, 2025 and 2024, respectively, and are included in operating cash flows. Operating Lease Expense Operating lease expense was $ 6.6 million and $ 4.4 million for the three months ended March 31, 2025 and 2024, respectively. This expense included $ 4.5 million and $ 2.7 million for long-term operating leases for the three months ended March 31, 2025 and 2024, respectively, with the remainder for variable and short-term lease expense . Lessor Operating Leases We are the lessor of tractors and trailers (revenue equipment) under operating leases with initial terms of 1 year to 10 years. At times, we also lease or sublease real estate to third parties. We recognize revenue for such leases on a straight-line basis over the term of the lease. Revenues were $ 2.6 million and $ 2.4 million for the three months ended March 31, 2025 and 2024, respectively. The following table presents information about the maturities of these operating leases as of March 31, 2025 (in thousands): 2025 (remaining) $ 6,421 2026 1,693 2027 71 2028 — 2029 — Thereafter — Total $ 8,185 The owned assets underlying our leases as lessor primarily consist of revenue equipment. As of March 31, 2025 and December 31, 2024, the gross carrying value of such revenue equipment underlying these leases was $ 59.9 million and $ 61.8 million, respectively, and accumulated depreciation was $ 25.4 million and $ 26.7 million, respectively. Depreciation expense for these assets was $ 1.9 million and $ 1.8 million for the three months ended March 31, 2025 and 2024, respectively. (5) Fair Value Fair Value Measurement — Definition and Hierarchy ASC 820-10, Fair Value Measurement , defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability, developed based on market data obtained from sources independent of the Company. Unobservable inputs reflect our own assumptions about the assumptions 12 Table of Contents market participants would use in pricing the asset or liability, developed based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels, as follows: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Such inputs include quoted prices in markets that are not active, quoted prices for similar assets and liabilities in active and inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 — Unobservable inputs for the asset or liability, where there is little, if any, observable market activity or data for the asset or liability. In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine fair value. This pricing methodology applies to our Level 1 assets and liabilities. If quoted prices in active markets for identical assets and liabilities are not available to determine fair value, then we use quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable, either directly or indirectly. This pricing methodology would apply to Level 2 assets and liabilities. The following table presents the fair value hierarchy for our assets and liabilities measured at fair value on a recurring basis (in thousands): Level in Fair Value Hierarchy Fair Value March 31, 2025 December 31, 2024 Assets: Other non-current assets: Pay-fixed interest rate swaps (1) 2 $ 165 $ 1,162 Equity securities (2) 1 140 141 Total other non-current assets $ 305 $ 1,303 Liabilities: Other current liabilities: Pay-fixed interest rate swaps (1) 2 $ 70 $ 134 Contingent consideration associated with acquisition 3 9,421 — Total other current liabilities 9,491 134 Other long-term liabilities: Pay-fixed interest rate swaps (1) 2 3,434 2,420 Contingent consideration associated with acquisition 3 — 9,315 Total other long-term liabilities 3,434 11,735 Total liabilities at fair value $ 12,925 $ 11,869 (1) Pay-fixed interest rate swaps are measured on a recurring basis by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates (forward curves) derived from observed market interest rate curves. See Note 7 – Debt and Credit Facilities for further information on our interest rate swaps. (2) Represents our investment in an autonomous technology company. For additional information regarding the valuation of this equity security, see Note 6 – Investments. 13 Table of Contents The following table presents changes in the fair value of our contingent earnout liabilities (in thousands): Three Months Ended March 31, 2025 2024 Balance at beginning of period $ 9,315 $ 8,896 Change in fair value 106 102 Balance at end of period $ 9,421 $ 8,998 The estimated fair values of our contingent consideration arrangements are based upon probability-adjusted inputs for each acquired entity. Additionally, as the liability is stated at present value, the passage of time alone will increase the estimated fair value of the liability each reporting period. Change in fair value is recorded in other operating expenses on the consolidated statements of income. We have ownership interests in investments, primarily Mastery Logistics Systems, Inc. (“MLSI”), which do not have readily determinable fair values and are accounted for using the measurement alternative in ASC 321, Investments - Equity Securities . Our ownership interest in Autotech Fund III, L.P. (the “Autotech Fund”) is accounted for under ASC 323, “ Investments - Equity Method and Joint Ventures .” For additional information regarding the valuation of these investments, see Note 6 – Investments. Fair Value of Financial Instruments Not Recorded at Fair Value Cash and cash equivalents, accounts receivable trade, and accounts payable are short-term in nature and accordingly are carried at amounts that approximate fair value. The carrying amount of our variable-rate long-term debt approximates fair value due to the duration of our credit arrangements and the variable interest rates. (6) Investments Equity Investments without Readily Determinable Fair Values Our strategic equity investments without readily determinable fair values primarily consist of our investment in MLSI, a transportation management systems company. MLSI has developed a cloud-based transportation management system using its SaaS technology, and we have obtained a license. Our investments are being accounted for under ASC 321 using the measurement alternative and are recorded in other noncurrent assets on the consolidated condensed balance sheets. We record changes in the values of our investments based on events that occur that would indicate the values have changed, in loss (gain) on investments in equity securities on the consolidated statements of income. As of March 31, 2025 and December 31, 2024, the value of our investment in MLSI was $ 109.9 million and $ 103.9 million, respectively, and the value of our other equity investments without readily determinable fair values was $ 369 thousand and $ 358 thousand, respectively. No gains or losses were recorded for the three months ended March 31, 2025 and 2024. The following table summarizes the activity related to our equity investments without readily determinable fair values during the periods presented (in thousands): Three Months Ended March 31, 2025 2024 Investment in equity securities $ 6,011 $ — As of March 31, 2025, cumulative upward adjustments on our equity securities without readily determinable fair values totaled $ 64.9 million. Equity Investments with Readily Determinable Fair Values We own a strategic minority equity investment in an autonomous technology company, which is being accounted for under ASC 321 and is recorded in other noncurrent assets on the consolidated condensed balance sheets. As of March 31, 2025 and December 31, 2024, the value of this investment was $ 0.1 million. We recognized a loss of $ 2 thousand and $ 138 thousand on this investment for the three months ended March 31, 2025 and 2024, respectively. For additional information regarding the fair value of this equity investment, see Note 5 – Fair Value. Equity Method Investment In January 2023, we committed to make a $ 20.0 million investment in the Autotech Fund pursuant to a limited partnership agreement. The Autotech Fund is managed by Autotech Ventures, a venture capital firm focused on ground transportation technology. Our interest, which represents an ownership percentage of less than 20 %, is being accounted for under ASC 323, “ Investments - Equity Method and Joint Ventures .” As a limited partner, we will make periodic capital contributions toward this 14 Table of Contents total commitment amount. As of March 31, 2025 and December 31, 2024, the value of our investment in the Autotech Fund was $ 6.8 million and $ 6.7 million, respectively, and is recorded in other noncurrent assets on the consolidated condensed balance sheets. The carrying amount of the Autotech Fund as of March 31, 2025 was updated using operating results through December 31, 2024, as this is the most recent information available to us at this time. The following table summarizes the activity related to our equity method investment during the periods presented (in thousands): Three Months Ended March 31, 2025 2024 Capital contributions $ — $ 1,060 Loss (earnings) from equity method investment $ ( 123 ) $ 133 As of March 31, 2025, our cumulative capital contributions in the Autotech Fund were $ 7.2 million. (7) Debt and Credit Facilities On December 20, 2022, we entered into a $ 1.075 billion unsecured credit facility with a group of lenders (the “2022 Credit Agreement”), replacing our previous credit facilities. The 2022 Credit Agreement is scheduled to mature on December 20, 2027, and has a $ 100.0 million maximum limit for the aggregate amount of letters of credit issued. Revolving credit loans drawn under the 2022 Credit Agreement bear interest, at our option, at (i) the Base Rate (the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50 %, or (c) the one-month Term Secured Overnight Financing Rate (“SOFR”) plus 1.10 %), plus a margin ranging between 0.125 % and 0.750 %, or (ii) Term SOFR plus 0.10 % and a margin ranging between 1.125 % and 1.750 %. Swingline loans drawn under the 2022 Credit Agreement bear interest at the Base Rate, as defined above, plus a margin ranging between 0.125 % and 0.750 %. The 2022 Credit Agreement also requires us to pay quarterly (i) a letter of credit commission on the daily amount available to be drawn under such standby letters of credit at rates ranging between 1.125 % and 1.750 % per annum and (ii) a nonrefundable commitment fee on the average daily unused amount of the commitment at rates ranging between 0.125 % and 0.250 % per annum. The margin, letter of credit commission, and commitment fee rates are based on our ratio of net funded debt to earnings before interest, income taxes, depreciation and amortization (“EBITDA”). There are no scheduled principal payments due on the 2022 Credit Agreement until the maturity date, and interest is payable in arrears at periodic intervals not to exceed three months. Availability of such funds under the 2022 Credit Agreement is conditional upon various customary terms and covenants. Such covenants include, among other things, two financial covenants requiring us (i) not to exceed a maximum ratio of net funded debt to EBITDA and (ii) to exceed a minimum ratio of EBITDA to interest expense. As of March 31, 2025, we were in compliance with these covenants. We have entered into variable-for-fixed interest rate swap agreements in order to limit our exposure to increases in interest rates on a portion of our variable-rate indebtedness. Under the terms of our interest rate swap agreements, we receive monthly variable-rate interest payments based on one-month Term SOFR and make monthly fixed-rate interest payments as specified in the interest rate swap agreements. We have designated our interest rate swap agreements as cash flow hedges. Changes in fair value of outstanding derivatives in cash flow hedges are recorded in other comprehensive income (loss) in the consolidated statements of comprehensive income until earnings are impacted by the hedged transactions. For additional information regarding the valuation of our interest rate swaps, see Note 5 – Fair Value. On March 27, 2025, the Company and Werner Receivables Company, LLC (“WRC”), a newly-formed wholly-owned subsidiary of the Company, entered into a Loan Security Agreement (“LSA”) with various lenders. The LSA is scheduled to terminate on March 27, 2028, unless extended by the parties and is subject to earlier termination as provided in the LSA. The LSA is a secured borrowing that is collateralized by eligible receivables, for which the Company is the servicing agent. WRC is a bankruptcy remote, special purpose entity and the borrower under the LSA. The Company has contributed and from time to time sells a designated pool of eligible accounts receivables to WRC which, in turn, may borrow funds under the LSA on a revolving basis. The collateral is available to satisfy the claims related to the lenders’ interests in the receivables and unavailable to satisfy claims of the Company and its subsidiaries. The LSA does not qualify for sale treatment. Accordingly, the Company’s eligible receivables remain on our condensed consolidated balance sheets in accounts receivable, trade, less allowance. Subject to eligible receivables, the maximum amount of funding available to WRC is $ 300.0 million, which may increase to $ 350.0 million upon WRC’s request and acceptance by the lenders. Borrowings under the LSA bear interest at (i) a commercial 15 Table of Contents paper rate or (ii) one-month Term SOFR, plus 0.10 %. The LSA also requires us to pay nonrefundable drawn and undrawn fees on the average daily used and unused amounts of the commitment, respectively. The LSA is subject various affirmative and negative covenants, representations and warranties, and default and termination provisions customary for facilities of this type, including a minimum borrower’s net worth covenant. As of March 31, 2025, we were in compliance with these covenants. The following table presents total debt (in thousands): March 31, 2025 December 31, 2024 Current portion of long-term debt 2022 Credit Agreement (1) $ — $ 20,000 Long-term debt, net of current portion 2022 Credit Agreement (1) 390,000 630,000 LSA (weighted average interest rate of 5.17 % at March 31, 2025) 250,000 — Total long-term debt, net of current portion 640,000 630,000 Total debt $ 640,000 $ 650,000 (1) As of March 31, 2025, our outstanding revolving credit loan balance under the 2022 Credit Agreement consisted of: • $ 35.0 million at a weighted average variable interest rate of 5.92 %; • $ 40.0 million which is effectively fixed at 6.45 % with interest rate swap agreements through July 2025; • $ 90.0 million which is effectively fixed at 6.12 % with interest rate swap agreements through July 2026; • $ 75.0 million which is effectively fixed at 6.23 % with an interest rate swap agreement through April 2027; • $ 75.0 million which is effectively fixed at 6.09 % with an interest rate swap agreement through May 2027; and • $ 75.0 million which is effectively fixed at 5.14 % with an interest rate swap agreement through August 2028. Subsequent to the end of the quarter through the date of the filing, we had net borrowings of $ 35.0 million under our credit facilities. Our total available borrowing capacity was $ 725.3 million as of March 31, 2025, consisting of $ 679.1 million under the 2022 Credit Agreement after considering $ 5.9 million in stand-by letters of credit under which we are obligated and $ 46.2 million under the LSA. Availability under the LSA is calculated as follows (in thousands): March 31, 2025 Borrowing base, based on eligible receivables $ 296,243 Less: outstanding borrowings (1) ( 250,000 ) Availability under LSA $ 46,243 (1) Outstanding borrowings are included in long-term debt, net of current portion on the condensed consolidated balance sheets. For information regarding the fair value of our debt, see Note 5 – Fair Value. At March 31, 2025, the aggregate maturities of future debt principal payments are as follows (in thousands): 2025 (remaining) $ — 2026 — 2027 390,000 2028 250,000 Total $ 640,000 (8) Commitments and Contingencies We have committed to property and equipment purchases of approximately $ 94.4 million at March 31, 2025 . We are involved in certain claims and pending litigation, including those described herein, arising in the ordinary course of business. The majority of these claims relate to bodily injury, property damage, cargo and workers’ compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters. We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the knowledge of the facts, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse 16 Table of Contents effect on our consolidated financial statements. Moreover, the results of complex legal proceedings are difficult to predict, and our view of these matters may change in the future as the litigation and related events unfold. On May 17, 2018, in Harris County District Court in Houston, Texas, a jury rendered an adverse verdict against the Company in a lawsuit arising from a December 30, 2014 accident between a Werner tractor-trailer and a passenger vehicle. On July 30, 2018, the court entered a final judgment against Werner for $ 92.0 million, including pre-judgment interest. The Company has premium-based liability insurance to cover the potential outcome from this jury verdict. Under the Company’s insurance policies in effect on the date of this accident, the Company’s maximum liability for this accident is $ 10.0 million (plus pre-judgment and post-judgment interest) with premium-based coverage that exceeds the jury verdict amount. As a result of this jury verdict, the Company had recorded a liability of $ 45.8 million as of March 31, 2025, and $ 44.4 million as of December 31, 2024. Under the terms of the Company’s insurance policies, the Company is the primary obligor of the verdict, and as such, the Company has also recorded a $ 79.2 million receivable from its third-party insurance providers in other non-current assets and a corresponding liability of the same amount in the long-term portion of insurance and claims accruals on the consolidated condensed balance sheets as of March 31, 2025 and December 31, 2024. The Company pursued an appeal of this verdict, and on May 18, 2023, the Texas Court of Appeals overruled Werner’s appeal and affirmed the trial court’s judgment. The Company filed a Petition for Review with the Texas Supreme Court and, on August 30, 2024 the Texas Supreme Court granted the Company’s Petition for Review. Oral argument of the appeal was held on December 3, 2024. No assurances can be given regarding the outcome of the review. We are also involved in certain class action litigation in which the plaintiffs allege claims for failure to provide meal and rest breaks, unpaid wages, unauthorized deductions and other items. Based on the knowledge of the facts, management does not currently believe the outcome of this class action is likely to have a material adverse effect on our financial position or results of operations. However, the final disposition of these matters and the impact of such final dispositions cannot be determined at this time. (9) Earnings (Loss) Per Share Basic earnings (loss) per share is computed by dividing net income (loss) attributable to Werner by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) attributable to Werner by the weighted average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding restricted stock awards. Performance awards are excluded from the calculation of dilutive potential common shares until the threshold performance conditions have been satisfied. Since the Company had a net loss for the three months ended March 31, 2025, diluted loss per share is the same as basic loss per share as the inclusion of potential common shares outstanding would have been antidilutive. The potential shares of common stock that were excluded from the computation of diluted loss per share for the three months ended March 31, 2025, were 182,000 shares. There are no differences in the numerators of our computations of basic and diluted earnings (loss) per share for any periods presented. The computation of basic and diluted earnings (loss) per share is shown below (in thousands, except per share amounts). Three Months Ended March 31, 2025 2024 Net income (loss) attributable to Werner $ ( 10,098 ) $ 6,312 Weighted average common shares outstanding 61,890 63,472 Dilutive effect of stock-based awards — 255 Shares used in computing diluted earnings (loss) per share 61,890 63,727 Basic earnings (loss) per share $ ( 0.16 ) $ 0.10 Diluted earnings (loss) per share $ ( 0.16 ) $ 0.10 (10) Segment Information We have two reportable segments – Truckload Transportation Services (“TTS”) and Werner Logistics. The TTS reportable segment consists of two operating segments, Dedicated and One-Way Truckload. These operating segments are aggregated because they have similar economic characteristics and meet the other aggregation criteria described in the accounting guidance for segment reporting. Dedicated provides truckload services dedicated to a specific customer, generally for a retail distribution center or manufacturing facility, utilizing either dry van or specialized trailers. One-Way Truckload is comprised of the following operating fleets: (i) the medium-to-long-haul van (“Van”) fleet transports a variety of 17 Table of Contents consumer nondurable products and other commodities in truckload quantities over irregular routes using dry van trailers, including Mexico cross-border routes; (ii) the expedited (“Expedited”) fleet provides time-sensitive truckload services utilizing driver teams; (iii) the regional short-haul (“Regional”) fleet provides comparable truckload van service within geographic regions across the United States; and (iv) the Temperature Controlled fleet provides truckload services for temperature sensitive products over irregular routes utilizing temperature-controlled trailers. Revenues for the TTS segment include a small amount of non-trucking revenues which consist primarily of the intra-Mexico portion of cross-border shipments delivered to or from Mexico where we utilize a third-party capacity provider. The Werner Logistics segment provides non-asset-based transportation and logistics services. Werner Logistics provides services throughout North America and generates the majority of our non-trucking revenues through three operating units. These three Werner Logistics operating units are as follows: (i) Truckload Logistics, which uses contracted carriers to complete shipments for brokerage customers and freight management customers for which we offer a full range of single-source logistics management services and solutions; (ii) the Intermodal (“Intermodal”) unit offers rail transportation through alliances with rail and drayage providers as an alternative to truck transportation; and (iii) Werner Final Mile (“Final Mile”) offers residential and commercial deliveries of large or heavy items using third-party agents, independent contractors, and Company employees with two-person delivery teams operating a liftgate straight truck. The accounting policies of the segments are the same as those described in the summary of significant accounting policies contained in our 2024 Form 10-K. Inter-segment transactions between reporting segments have been recorded at amounts approximating market and are eliminated in consolidation. The chief operating officer of the Company is our chief operating decision maker (“CODM”). Our CODM evaluates the operating results of each individual segment, using monthly divisional financial statements, to asses performance and to allocate resources to each segment. Our divisional financial statements detail the revenues and operating expenses of each individual segment netting to operating income (loss) that allows the CODM to make operational decisions regarding each individual segment. We do not prepare separate balance sheets by segment and, as a result, assets are not separately identifiable by segment. Based on our operations, certain revenue-generating assets (primarily tractors and trailers) are interchangeable between segments. Depreciation for these interchangeable assets is allocated to segments based on the actual number of units utilized by the segment during the period. Other depreciation and amortization is allocated to segments based on specific identification or as a percentage of a metric such as average number of tractors. 18 Table of Contents The following tables summarize our segment information (in thousands): Three Months Ended March 31, 2025 Truckload Transportation Services Werner Logistics Total Revenues from external customers $ 497,812 $ 195,558 $ 693,370 Inter-segment revenues 4,063 — 4,063 Reportable segment revenues 501,875 195,558 697,433 Reconciliation of revenues: Other revenues (1) 18,744 Elimination of inter-segment revenues ( 4,063 ) Consolidated revenues $ 712,114 Less operating expenses: (2) Salaries, wages and benefits 217,703 18,256 235,959 Fuel 62,433 360 62,793 Supplies and maintenance 51,338 2,673 54,011 Taxes and licenses 21,957 223 22,180 Insurance and claims 43,074 622 43,696 Depreciation and amortization 63,046 3,692 66,738 Rent and purchased transportation 38,453 169,219 207,672 Communications and utilities 3,608 357 3,965 Gains on sales of property and equipment ( 3,288 ) ( 299 ) ( 3,587 ) Other segment items (3) 4,467 930 5,397 Reportable segment operating expenses 502,791 196,033 698,824 Reportable segment operating loss $ ( 916 ) $ ( 475 ) $ ( 1,391 ) Reconciliation of operating loss: Other operating loss (1) ( 4,441 ) Consolidated operating loss $ ( 5,832 ) 19 Table of Contents Three Months Ended March 31, 2024 Truckload Transportation Services Werner Logistics Total Revenues from external customers $ 547,055 $ 202,482 $ 749,537 Inter-segment revenues 4,071 — 4,071 Reportable segment revenues 551,126 202,482 753,608 Reconciliation of revenues: Other revenues (1) 19,543 Elimination of inter-segment revenues ( 4,071 ) Consolidated revenues $ 769,080 Less operating expenses: (2) Salaries, wages and benefits 236,531 21,310 257,841 Fuel 76,874 438 77,312 Supplies and maintenance 54,130 1,884 56,014 Taxes and licenses 24,776 240 25,016 Insurance and claims 35,034 1,229 36,263 Depreciation and amortization 66,933 3,667 70,600 Rent and purchased transportation 32,495 174,166 206,661 Communications and utilities 3,634 767 4,401 Gains on sales of property and equipment ( 4,465 ) ( 219 ) ( 4,684 ) Other segment items (3) 4,344 1,329 5,673 Reportable segment operating expenses 530,286 204,811 735,097 Reportable segment operating income (loss) $ 20,840 $ ( 2,329 ) $ 18,511 Reconciliation of operating income: Other operating loss (1) ( 2,923 ) Consolidated operating income $ 15,588 (1) Revenues and operating income or loss from segments below the quantitative thresholds for determining reportable segments. Those segments include driver training schools, transportation-related activities such as third-party equipment maintenance and equipment leasing, other business activities, and corporate related items which are incidental to our activities and are not attributable to any of our operating segments. (2) The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker. Inter-segment expenses are included within the amounts shown. (3) Other segment items for each reportable segment primarily includes costs for professional services. 20 Table of Contents