Werner Enterprises, Inc.

Good afternoon and welcome to the Werner Enterprises third quarter 2026 earnings conference call. All lines are in a listen-only mode until after the presentation. All participants are in that listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and one using a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded, and at this time I'd like to turn the floor over to Chris Neil, SVP of Pricing and Strategic Planning. Please go ahead.

Good afternoon, everyone. Earlier today, we issued our earnings release with our third quarter results. The release and a supplemental presentation are available in the investor section of our website at Werner.com. Today's webcast is being recorded and will be available for replay later today. Please see the disclosure statement on slide two of the presentation, as well as the disclaimers in our earnings release related to forward-looking statements. Today's remarks contain forward-looking statements that may involve risks, uncertainties, and other factors that could cause actual results to differ materially. The company reports results using non-GAAP measures, which we believe provides additional information for investors to help facilitate the comparison of past and present performance. A reconciliation of the most directly comparable GAAP measures is included in the tables attached to the earnings release and in the appendix of the slide presentation. On today's call with me are Derek Leathers, Chairman and CEO, and Chris Wikoff, Executive Vice President, CFO, and Treasurer. I will now turn the call over to Derek.

Thank you, Chris, and good afternoon, everyone. We appreciate you joining us today. Before we jump into the details of the quarter, I want to start by thanking our team of committed drivers, mechanics, and office personnel. In an environment marked by rapid macro shifts and operational headwinds, our team's unwavering commitment to safety and service kept our network performing at a high level and enabled us to continue delivering for our customers. Our business generated strong top-line momentum with third-quarter revenues of $951 million, representing 23% year-over-year growth. Non-gap adjusted diluted EPS was $0.16, significantly improved from last year. We delivered these results despite significant near-term cost pressures. We face sharply rising fuel prices, escalating driver onboarding and retention costs, and elevated reserve development. Cumulatively, these items negatively impacted our results by approximately 18 cents per share compared to the second quarter. There are three key messages we want you to take away from our results today. First, our strategy is delivering results. Our one-way network restructuring and dedicated fleet expansion are translating into improved asset productivity, network yield, and structural cost efficiency. This progress is reflected in our revenue growth and our near doubling of adjusted operating income for the quarter. Year-to-date, our adjusted operating income dollars are 2.4 times prior year. Second, we believe we are still in the early innings of a multi-year upcycle. Structural supply contractions continue across the industry, customer demand remains stable, and our pricing discipline remains firm with rates continuing to move upward toward more sustainable, reinvestable levels. Given the opportunities we see ahead, we made a deliberate decision to accelerate investments in driver hiring and retention. We made a significant investment in criminal recruiting, driver training, and onboarding costs to seat trucks and support customer demand. We began to see the results as our TTS fleet increased from beginning to the end of the quarter. Finally, the third takeaway is that the near-term costs impacting our results this quarter do not change the trajectory of the underlying business. None of these items change the structural strength of our business or the progress we are making. In fact, they highlight the resilience of our model and ability to absorb near-term cost friction to better position our fleet, capture strong demand, secure market share and support future growth. Our focus remains on strengthening the core pillars of Werner's business, which we believe positions us to create value for shareholders. Turning to slide five, let's discuss our third quarter highlights in more detail. Looking to dedicated, this business continues to be at the core of our portfolio. Delivering strong demand and solid performance. Including fuel surcharges, total dedicated revenues increased 52% year-over-year, while revenue per truck per week grew nearly 6%. Customer retention remains exceptionally strong at over 95%, and accelerated driver recruitment helped us expand the fleet by 130 net additional trucks sequentially. Bid activity remains at record levels as shippers move to secure reliable, high service capacity in a tightening market. It's been eight months since our acquisition of First Fleet, and the business continues to perform ahead of acquisition targets, delivering high customer retention, stable revenues, and expanding synergy capture. Continuity with drivers, associates, and customers continues to be outstanding. Given First Fleet's strong service and customer relationships, we've achieved a 98% renewal rate on over 85% of the portfolio that has come up for renewal so far. Turning to one-way truckload, our strategic turnaround continues to gain traction. We are continuing to prioritize yield and productivity over share volume, and that is translating into meaningful results. In the third quarter, revenue per truck per week surged by 34% year over year, driven by ongoing improvements in miles per truck and revenue per total mile. These intentional actions led to adjusted operating margin expansion of more than 800 basis points year over year. With a stable fleet, our focus has shifted to building fleet capacity while maintaining the relentless operational discipline that generated these margins. In logistics, Performance rebounded sharply as purchase transportation costs stabilized and higher contract rates gained broader traction across our customer base. Brokerage gross margins expanded by 3.4 million and over 600 basis points sequentially, successfully restoring the segment to positive adjusted operating income. We are also delivering accelerated momentum in our high-value cross-border Mexico and PowerLink offerings. These premium services deliver expanded contribution margins while reinforcing the distinct competitive advantage of a large asset-backed logistics provider, a value proposition that has become increasingly critical for shippers in the wake of the Montgomery ruling. Before Chris discusses our financial results in more detail, let's move to slide 7 to summarize our near-term market outlook. In our view, we remain in the early innings of capacity reductions as a result of enforcement efforts. Greater agency collaboration and data sharing combined with increased use of technology will further accelerate capacity attrition from here. Furthermore, the combination of escalating insurance premiums, aggressive carrier vetting, heightened litigation risk, high fuel prices, and stringent regulatory requirements effectively creates high barriers to entry. Because it's becoming more challenging for new capacity to enter the market, disciplined operators face less threat from non-compliant capacity. This structural floor creates a stronger, more sustainable market backdrop, paving the way for further rate increases, reduced volatility, and healthier operating margins. While there was some easing in spot rates in July and August, tender rejections remained elevated, and we've seen improvement in spot rates more recently. This, combined with our expectation of further capacity attrition and higher volumes during peak season, points to ongoing rate lifts through the remainder of the year. We expect peak revenue to outperform the last couple of years. While high fuel costs and interest rates are pressing consumers to seek value, our strong footprint in discount, grocery, and non-discretionary retail positions us well. With retailers carrying leaner inventories, we believe demand can play a larger role as the freight market recovery progresses. Lastly, the used equipment market strengthened early in the quarter before leveling off later as fuel prices spiked. As a result, we realized higher gains on a sequential basis. OEM manufacturing constraints, a higher average truck age across the industry, and the approaching 2027 EPA emission standards are supportive of demand for high-quality used assets. With that, I'll turn it over to Chris to discuss our third quarter results in more detail.