Coming off a quarter with not just a net loss but an operating deficit as well, Werner Enterprises CEO Derek Leathers tackled a performance that he said “clearly did not meet our expectations.” “We faced several challenges during the quarter, some industry-wise, some specific to Werner, but we are acting decisively to address them,” he said. In post-market trade, Werner (NASDAQ: WERN) stock was down as much as 5%, and it’s down about 25% in the past three months. A summary of the company’s key earnings metrics can be found here. Here are five takeaways from Werner’s first-quarter earnings call. A historic quarter, but in a bad way Asked by analyst Scott Group whether the operating loss for Werner was a first – Group, a longtime follower of Werner, said he could not recall another – Leathers said that “the quarter is in fact an outlier. So your model is correct.” “We are taking this seriously,” Leathers said. “This does not represent who we are, and we are going to make appropriate near-term moves, but always with an eye toward the reality of ‘this too shall change.’” One positive on the financial side: Werner recently closed a deal for a $300 million receivables-backed credit line. Given that, Leathers said, “we are well-positioned to be opportunistic relative to share repurchases and M&A.” He said liquidity at Werner is “at a high point.” Tariffs and the ‘air pocket’ Leathers, in a discussion about the impact of tariffs on Werner’s business, described what he called “this sort of air pocket that’s been largely talked about over the last several days.” He was referring to the reduction in inbound oceangoing freight from ports in Asia. “That air pocket will have to be filled to some extent,” Leathers said, with other freight movement to substitute for demand that might be expected to slide as a result of that falloff in imports. He said Werner customers have been telling him their inventory levels “are in good shape,” so there won’t be a rescue from those customers needing to increase their freight demand. “We’ll be ready to respond regardless of which direction that demand side of the equation goes,” Leathers said. At Werner, Leathers said the company sees three separate areas of impact. One is on its own capital expenditures. The second is its exposure to Mexico, a significant part of the Werner business. The third is the macroeconomic impact that all companies will need to deal with. Internally, like any trucking company, Werner faces the prospect of higher equipment costs as it rolls over its fleet. “We will continue to invest in trucks, trailers, technology and talent, while maintaining optionality when it comes to evaluating the impact from tariffs on our equipment costs,” Leathers said in his opening remarks. He added that the average age of the Werner fleet is 2.2 years. Leathers said most Mexican business for Werner is in the One Way segment, but he expressed no concerns for that activity. “We have developed strong partnerships with customers and partner carriers as one of the largest transportation providers in the U.S. with a strong presence in Mexico,” which he said is a “competitive advantage.” Mexico represents about 10% of Werner’s business, according to Leathers. As far as the macro impact, Leathers said that so far, even in a quarter in which the company lost money, “the consumer has remained engaged and resilient.” Werner’s longtime role as a key carrier for discount retailers has held up strongly in past economic downturns, Leathers said. Margins in Dedicated Leathers said it was “a misnomer that we constantly hear about” that margins in Werner’s Dedicated segment are “some sort of drag as this market progresses further from here.” Noting that the company has “studied this pretty closely,” he said that “if you look back over the last 10 years, about eight out of 10 years, Dedicated does outperform our One Way margins,” referring to the other major transport part of the company’s Truckload Transportation Services segment. He noted that Werner does not disclose specific margins within its subdivisions but that the margins in Dedicated “stand up very well in both good markets and bad.” The Dedicated segment also has had several recent wins in securing new business, Leather said. The wins in what Leathers said was “a competitive environment right now” will immediately boost operating margin in the Dedicated segment. They have not yet begun so there was no impact to the company’s first-quarter earnings report, he said. Some of the new deals may not show up until the third quarter, Leathers added, but otherwise will be part of the company’s second-quarter results. “The win rate will continue to be pressured based on the competitive environment we’re in,” Leathers said. “But we like the momentum.” Insurance charges and a recent nuclear verdict Werner posted insurance costs of more than $40 million. What Leathers called “elevated insurance costs and claims” had an impact on earnings per share of 9 cents, with 8 cents of that coming from a nuclear verdict late in the quarter. Insurance costs in the first quarter of 2025 were $43.8 million. A year ago, they were $36.4 million. A spokeswoman for Werner told FreightWaves the judgment referred to by Leathers was from a 2019 accident in Louisiana, with the decision handed down in the quarter. With interest, the judgement was approximately $7 million, she said. It is a separate case from the now more than $100 million nuclear verdict Werner was hit with in 2018 in Texas that is now sitting before the Texas Supreme Court. (Oral arguments were in December, and a verdict could come any day … or in weeks or months.) The English language requirement Responding to an analyst question about the executive order signed by President Donald Trump requiring English proficiency to drive a truck, Leathers noted that Werner tests for English proficiency, “so we’re in great shape.” But he added that he doesn’t see any sudden changes in the market as a result of the executive order, noting that the rule has long been in place. But it also had guidance going back to the Obama administration not to be enforced. “It’s difficult to change enforcement overnight at roadside levels,” Leathers said. “It’s harder than people think. But if you tie it back to the core reason why that regulation exists, which was safety, then we certainly support the principle behind the original regulation.” And that principle, he added, was that “drivers need to be able to communicate with first responders at the scene of an accident.” As to what the rule would mean “tomorrow,” Leathers said, “it would be inappropriate for me to guess.” Enforcement levels may vary around the country, according to Leathers. But whether “you have three loads stopped somewhere in the country, or you’ve got 30, you still have freight not moving if a driver was to be put out of service.” A “decent percentage” of drivers cannot speak English, Leathers said. He suggested the industry seems to believe that number is 10% to 15%, but “that doesn’t mean that much capacity leaves tomorrow because of all the enforcement issues I’ve described.” More articles by John Kingston A market on the precipice: 5 takeaways from the April State of Freight TFI’s Bedard upbeat on revamped US LTL operations even as numbers sink 2 more charged in death of Louisiana staged truck accident witness