Werner CEO Calls Driver Hiring Surge 'Not Structural' As An 18-Cent Drag Hits Earnings
Fuel, insurance reserves and recruiting costs cut third-quarter adjusted earnings by 18 cents a share, and the hiring bill will run into 2027.
Werner Enterprises, the Omaha truckload carrier, said on its third-quarter earnings call Tuesday that a deliberate push to hire drivers will keep costs elevated through the fourth quarter and probably into the first quarter, even as fuel and claims pressure fades. Chairman and CEO Derek Leathers said the spending reflects a choice to move faster, and that "it's not structural labor inflation."
An 18-cent sequential drag
Werner posted third-quarter revenue of $951 million, up 23% from a year earlier, and adjusted earnings of $0.16 a share. Adjusted operating income was $21 million, up 92%.
Executive Vice President, CFO and Treasurer Chris Wikoff said fuel, driver investment and insurance reserve development combined to cut adjusted earnings per share by 18 cents compared with the second quarter. About six cents came from driver investment and about 12 cents mostly from fuel, along with some reserve development on select claims from the First Fleet acquisition.
For the fourth quarter, Wikoff said the company expects modest improvement from $0.16. Easing fuel costs and peak-season pricing should help, but lower equipment sale gains, higher interest expense and tax normalization will offset part of it.
Paying for drivers before trucks earn
Leathers said the company ramped up advertising and recruiting pipelines and added sign-on and transition incentives to staff trucks for freight it had already committed to. Dedicated fleet count rose by 130 net trucks from the prior quarter, much of it seated late in the quarter.
Told by a Wells Fargo analyst's question about recouping the cost, Leathers said the advertising, recruiting and transition-bonus spending "will continue into Q4 and probably into Q1, to be frank." He also said a third-party driver-advertising firm told him rejection rates on driver applications are up 170% year to date, because many applications are noise that must be sifted.
The payoff lags the spending: a new driver is eight to 10 weeks from the first dollar spent to a productive truck delivering loads, Leathers said. Wikoff argued that a small percentage increase in fleet size can produce a much larger rise in operating income.
A fleet built for dedicated work
Werner mainly hauls truckload freight across the United States, with a trucking segment built around dedicated service for single customers and a logistics arm that arranges shipments. Dedicated revenue net of fuel rose 52% to $444 million, and one-way revenue per truck per week jumped 34% after the restructuring of that business.
Management tightened full-year guidance for average truck growth to 16% to 18% and cut its net capital spending range to $190 million to $205 million, from $215 million to $250 million, which Leathers attributed to the timing of manufacturer deliveries rather than a change in plans.
Leathers told analysts that while some cost pressure will extend into the fourth quarter, the company sees the costs as temporary friction rather than structural headwinds.
Sources
- Werner’s (NASDAQ:WERN) Q3 2026 earnings results: revenue in line with expectations — Yahoo Finance
- 3 Truckload Stocks With Pricing Power as Freight Contracts Reset — Yahoo Finance
- Werner Enterprises Reports Third Quarter 2026 Results — businesswire.com
