Old Dominion (ODFL) Q1 2026 Earnings Transcript

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DATE

Wednesday, April 29, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Marty Freeman
• Chief Financial Officer — Adam N. Satterfield

TAKEAWAYS

• Revenue -- $1.33 billion, down 2.9% from the prior year, reflecting continued soft demand despite sequential improvement during the quarter.
• LTL Tons Per Day -- Decreased 7.7%, partially offset by a 5.7% increase in LTL revenue per hundredweight.
• LTL Revenue Per Hundredweight (Excluding Fuel Surcharge) -- Increased 4.4%, supporting yield management objectives.
• Sequential Revenue Per Day -- Rose 0.5% over the fourth quarter of 2025; LTL tons per day fell 0.4%, and LTL shipments per day fell 0.7% in the same comparison.
• January–March LTL Tonnage Trends -- January declined 3.4% from December; February grew 4.9% from January; March increased 4.6% from February.
• April Month-to-Date Revenue Per Day -- Up approximately 7% compared to April 2025, with LTL tons per day down about 6.5%, and revenue per hundredweight (excluding fuel) up 4%-4.5%.
• Operating Ratio -- Worsened by 80 basis points, reaching 76.2%, as higher overhead costs as a percent of revenue offset improvement in direct costs.
• Overhead Cost Drivers -- 60 basis points added from general supplies and expenses, 40 basis points from depreciation, as a percent of revenue.
• Service Metrics -- 99% on-time service, and claims ratio below 0.1% in the quarter, supporting the strategic value proposition.
• Capital Expenditures -- $62.6 million in the quarter; $205 million planned for the year.
• Cash Flow from Operations -- $373.6 million for the quarter.
• Share Repurchases and Dividends -- $88.1 million used for buybacks; $60.5 million paid in dividends.
• Effective Tax Rate -- 25%, up from 24.8% the prior year; management forecasts a full-year rate of 25%.
• Terminal Capacity -- Slightly above 35%; seen as an opportunity for future operating leverage as volumes recover.
• Yield Run Rate Expectation -- Management expects a 4%-4.5% increase in LTL revenue per hundredweight in the second quarter, assuming consistency in weight per shipment.
• Headcount -- Down 7%; management indicates workforce is appropriately sized to accommodate sequential volume growth without significant hiring.
• 3PL Share -- Approximately one-third of revenue is related to third-party logistics providers; 25% of revenue comes from tariff-based general rate increase business.

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RISKS

• Chief Financial Officer Satterfield warned, "we feel like we are going to see some headwinds related to our fringe benefit cost," and also cited higher fuel and variable costs as expected challenges in the coming quarter.
• Management highlighted, "We are still down year over year from a volume standpoint," and indicated April's volume trend is "a little bit softer" than prior months, with sequential growth still uncertain in the near term.
• Increased overhead costs as a percent of revenue, driven by deleveraging and inflation in general supplies and depreciation, contributed to the rising operating ratio.
• "there is still a lot of uncertainty with everything going on in the world," Satterfield said, referencing geopolitical risks and their potential impact on demand improvement and customer behavior.

SUMMARY

Old Dominion Freight Line (NASDAQ:ODFL) reported a 2.9% revenue decline amid ongoing volume pressures, but noted strong sequential improvements in both LTL tonnage and revenue per hundredweight through the quarter. Capital expenditure for the year is targeted at $205 million, with the company actively managing workforce size and leveraging a terminal capacity north of 35% for potential operating gains as demand improves. Management reinforced disciplined yield management with a 4.4% increase in LTL revenue per hundredweight excluding fuel, and reaffirmed the company's ability to absorb incremental volume given current staffing and asset levels.

• Management stated, "We have had good acceleration through the month," but noted volumes remain below normal seasonality and year-over-year trends.
• The company maintained 99% on-time service and a claims ratio below 0.1%, emphasizing continuity in service performance.
• "we try to be consistent, which helps customers know what to plan and budget for," Satterfield said, highlighting the approach to contracting and annual increases.
• Despite competitive initiatives from major peers and sector changes, management characterized the service gap between Old Dominion Freight Line and competitors as "as wide as it has ever been, if not getting wider."
• About one-third of business continues to be routed through third-party logistics providers, with no material change in strategic focus reported for segment mix.
• Terminal capacity and staffing are viewed as sufficient to allow rapid response to cyclical volume recovery, with historical outperformance cited in prior upcycles.
• Chief Financial Officer Satterfield said, "Anything petroleum-based—products—we are going to see inflation," underscoring persistent cost headwinds on multiple fronts.

INDUSTRY GLOSSARY

• LTL (Less‐Than‐Truckload): Freight transportation service for shipments that do not require a full truck; carriers consolidate multiple customers' loads in a single vehicle.
• Revenue per hundredweight: A pricing metric in LTL shipping representing the revenue earned by the carrier for moving 100 pounds of freight; used to evaluate yield management.
• Operating ratio (OR): A measure of operating efficiency calculated as operating expenses divided by revenue; lower values indicate better performance.
• 3PL (Third‐Party Logistics): External service providers that manage and execute transportation and logistics functions for shippers, often acting as intermediaries between carriers and end customers.
• ISM: Refers to the Institute for Supply Management's indices, commonly cited as leading indicators of industrial demand trends affecting freight volumes.

Full Conference Call Transcript

Jack Atkins: Good morning, everyone, and welcome to the first quarter 2026 conference call for Old Dominion Freight Line, Inc. Today's call is being recorded and will be available for replay beginning today and through 04/29/2026 by dialing 506-9658, access code 769-9494. The replay of the webcast may also be accessed for 30 days at the company's website. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion Freight Line, Inc.'s expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements.

Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” and similar expressions are intended to identify forward-looking statements. We are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Old Dominion Freight Line, Inc.'s filings with the Securities and Exchange Commission and in this morning's news release. Consequently, operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events, or otherwise.

Finally, before we begin, we note that we welcome your questions today, but ask that you limit yourselves to just one question at a time before returning to the queue. Thank you for your cooperation. At this time, for opening remarks, I would like to turn the conference call over to our President and Chief Executive Officer, Marty Freeman. Marty, please go ahead.

Marty Freeman: With me on the call today is Adam N. Satterfield, our CFO. After some brief remarks, we will be glad to take your questions. Our first quarter results reflect a continuation of the encouraging trends that started to develop late last year. While our first quarter revenue declined on a year-over-year basis, demand for our service improved as the quarter progressed. This contributed to the acceleration in our LTL volumes during the quarter, with strong sequential tonnage growth in February and March. Importantly, during the quarter, our team continued to deliver best-in-class service to our customers and maintained our disciplined approach to yield management.

Providing our customers with superior service at a fair price is the cornerstone of our strategic plan. The consistency of our service performance day in and day out creates significant value for our customers and is something that we take significant pride in. As a result, we were pleased to once again deliver 99% on-time service and a claims ratio below 0.1% in the first quarter. The strength of our unmatched value proposition has differentiated us from our competition and allowed us to win more market share than any other LTL carrier over the last ten years.

Our value proposition will continue to support our ability to grow our business in the years ahead, and we continue to believe that we will be the biggest market share winner over the next ten years as a result. Our best-in-class service also supports our yield management initiatives. Our long-term disciplined approach to pricing is designed to offset our cost inflation and support our ability to make strategic investments back in our business. These investments will allow us to stay ahead of our anticipated growth curve to help us ensure that we will always have the capacity we need to grow.

Our ability to say “yes” when a customer needs us the most is the hallmark of our industry-leading customer service. Business levels in the LTL industry can change very quickly, and being able to respond to growth opportunities in an improving demand environment is one of the primary areas that differentiate us from our competition. We believe it is important to consistently invest throughout the economic cycle despite the short-term cost headwinds associated with this strategy. This is why, despite a challenging operating environment, we invested nearly $2 billion in capital expenditures over the past three years, while we plan to invest an additional $205 million in 2026.

We have also continued to invest in the most important component of our long-term success, which is our OD family of employees. Our people and our unique culture are truly what sets us apart at Old Dominion Freight Line, Inc. As a result, we have worked to ensure that we are providing a competitive wage and benefit package as well as various internal developmental programs like our in-house driver training schools and our management training program. These programs not only provide important opportunities for career advancement for our team, but they help ensure that our company is ready to respond when our customers need us the most.

While we are always focused on the long term, it is critical that we remain diligent in controlling our cost and continue to operate as efficiently as possible without compromising our superior service standards. That remained the case in the first quarter as we continued to find ways to maximize our operating efficiencies and control our discretionary spending. We continue to believe that our business model contains significant operating leverage, which has been enhanced by our ongoing investments in our technologies and continued focus on business process improvements.

We produced solid results in the first quarter by continuing to execute our strategic plan, and I want to thank the entire OD family of employees for their unwavering dedication to our customers and to our company. Due to our consistent execution and investment, we are uniquely positioned to handle incremental volume opportunities as the demand environment improves. As a result, we remain confident in our ability to win market share, generate profitable revenue growth, and increase shareholder value over the long term. Thank you very much for joining us this morning. And now Adam will discuss our first quarter in greater detail.

Adam N. Satterfield: Thank you, Marty, and good morning. I am a little under the weather today, so I would like to ask you all to bear with me as we get through this call. Old Dominion Freight Line, Inc.'s revenue totaled $1.33 billion for the first quarter of 2026, which represents a 2.9% decrease from the prior year. Our revenue results include a 7.7% decrease in LTL tons per day that was partially offset by a 5.7% increase in our LTL revenue per hundredweight. Excluding fuel surcharges, our LTL revenue per hundredweight increased 4.4% compared to the first quarter of 2025, which reflects our long-term disciplined approach to yield management.

On a sequential basis, our revenue per day for the first quarter increased 0.5% when compared to the fourth quarter of 2025, with LTL tons per day decreasing 0.4% and LTL shipments per day decreasing 0.7%. For comparison, the ten-year average sequential change for these metrics includes a decrease of 2.8% in revenue per day, a decrease of 2.5% in LTL tons per day, and a decrease of 1.6% in LTL shipments per day. The monthly sequential changes in the LTL tons per day during the first quarter were as follows: January decreased 3.4% as compared to December, February increased 4.9% as compared to January, and March increased 4.6% as compared to February.

The comparative ten-year average change for these respective months is a decrease of 3.1% in January, an increase of 1% in February, and an increase of 4.5% in March. While there are still a couple of workdays remaining in April, our month-to-date revenue per day has increased by approximately 7% when compared to April 2025. This includes a decrease in our LTL tons per day of approximately 6.5% and an increase in our revenue per hundredweight excluding fuel surcharges of 4% to 4.5%. As usual, we will provide the actual revenue-related details for April in our first quarter Form 10-Q.

Our operating ratio increased 80 basis points to 76.2% for the first quarter of 2026 as the increase in overhead cost as a percent of revenue more than offset the improvement in our direct cost. Our overhead cost increased as a percent of revenue primarily due to the deleveraging effect associated with the decrease in our revenue as well as an increase in our general supplies and expenses. This resulted in the 60 basis point increase in our general supplies and expenses and 40 basis point increase in our depreciation cost, as a percent of revenue. All of our other combined costs improved as a percent of revenue for the quarter on a net basis.

The improvement in our direct operating cost as a percent of revenue was primarily due to our continued focus on revenue quality and operating efficiencies. Despite the lack of density on our network associated with the decrease in our volumes, our team did a nice job of matching our labor cost with current revenue trends and this will be a key focus for us over the balance of the year. That said, we currently believe we have an appropriately sized workforce to handle a sequential increase in volumes during the second quarter. Old Dominion Freight Line, Inc.'s cash flows from operations totaled $373.6 million for the first quarter; capital expenditures were $62.6 million.

We utilized $88.1 million for our share repurchase program during the first quarter and our cash dividends totaled $60.5 million. Our effective tax rate for 2026 was 25% as compared to 24.8% in 2025. We currently expect our effective tax rate to be 25% for 2026. This concludes our prepared remarks this morning. We will now open the call for questions.

Operator: We will now begin the question and answer session. First question comes from Jordan Robert Alliger with Goldman Sachs. Please go ahead.

Jordan Robert Alliger: Yes. Hi, morning, everyone. Thanks for the update. I guess, in the context of some of those trends you have been seeing, maybe on the trend thought and share some color or thoughts on direction of OR as we move from Q1 to Q2? Thank you.

Adam N. Satterfield: Yes. The ten-year average change for the operating ratio is a 300 to 350 basis point improvement from the first to the second quarter, and we are comfortable with that range in the second quarter this year, assuming that we do see some sequential improvement in our volumes from here, and that is what we would anticipate. Obviously, there is a lot going on in the world right now, but based on what we are currently seeing, we are expecting that increase in volumes, and I think we are comfortable with hitting that normal sequential range as a result.

If we do so, that would be the fourth straight quarter that we have been able to be in, or at least beat, what our normal sequential change would be.

Jordan Robert Alliger: Thanks. And I do not know if I could ask a follow-up, but just related to that, have you seen a shift in sort of that excess terminal capacity? Has it come in a little bit as we have seen volumes look a little better? I think you have looked at like 30% to 35% terminal capacity; I am just curious if that has changed at all.

Adam N. Satterfield: We are still a little north of 35%. Our volumes are still down on a year-over-year basis and, obviously, this is the slower time of the year in the first quarter, but that is something that we continue to see as an opportunity and will drive part of that operating ratio improvement as we can continue to see sequential volume improvement and then leverage those fixed costs—those investments that we made and that depreciation headwind that we have been facing. So we will leverage those and some of our other fixed overhead costs, with the benefit of density driving improvement in both our direct operating cost as well as some of those overhead costs.

Operator: Thank you. The next question is from Jason H. Seidl with TD Cowen. Please go ahead.

Jason H. Seidl: Thanks, operator. Good morning, Marty, Adam, and Jack. Adam, I hope you feel better. I am going to stick on the OR topic a little bit here. As we think about your commentary on the normalized sequential moves from 1Q to 2Q, can you help us frame up the impacts in 1Q for both fuel as well as weather so we could figure out where in the range we might want to be?

Adam N. Satterfield: Glad you asked that. I figured fuel would be a topic of conversation. Fuel is part of our yield management strategy. We have always talked about wanting fuel, which is just a variable component of pricing, to really be indifferent—if fuel goes up or if it goes down, essentially, we want the bottom line to be the same, and that is how we look at things on an individual account profitability basis.

When you look at what happened from the fourth quarter to the first quarter of this year, we outgrew our normal sequential trend with tonnage by about 200 basis points, and that is really the story of the quarter in the sense of the strong operating ratio performance we had there. Our shipments per day from the fourth quarter to the first quarter were essentially the same. Fuel was up 10%, bill count was consistent, profitability was relatively consistent, a little bit better overall, but obviously there are other things going on.

When I compare that back to 2023, compared to the second quarter of 2023, a lot of similar circumstances: bill count was the same between those two periods, fuel was down 10% between those two periods, so you had revenue impact on the downside of fuel, but profitability was consistent between those two periods. Obviously, there are always a lot of fluctuations, but I think those two sequential periods—when you have got similar bill counts, similar mix of freight—show that fuel can go up or down 10% and overall profitability can stay the same. Now, we are looking at a much larger increase in fuel, and I would probably point everybody back to the second quarter of 2022.

I think this first quarter to second quarter of 2026 is probably going to have a lot of similarities to that first quarter to second quarter 2022 period when we saw the fuel shock and all the other inflationary impact that drives.

Operator: The next question is from Christian F. Wetherbee with Wells Fargo. Please go ahead.

Christian F. Wetherbee: I wanted to get your sense on how you feel about demand and then ultimately how you are faring from a market share perspective as you think about coming out of the really strong performance in February and then what you have seen so far in March and April. Has some improvement continued or do you feel like there has been more steady demand? And does what you are seeing inform revenue assumptions for the second quarter?

Adam N. Satterfield: Yes, it definitely feels like it has continued to improve. Go back to last year: through March we had five months of normal sequential trends for us. Obviously, like I mentioned earlier, it is the slower part of the year, but we started hearing optimism from customers and from our sales team late last year, and we started seeing that return to seasonality. We have seen a pickup in our weight per shipment; in April, weight per shipment is up on a year-over-year basis a little over 1%. That is usually a leading indicator of an improving demand environment. Add in the positive ISM trends that we have seen, and we would expect another positive ISM for April.

The retail side of the sector has probably been driving more of the volume performance at this point, and we are looking for the industrial to start contributing as well—that usually starts performing on a lag basis after you see the positive ISM performance. There is some geopolitical risk, but most people seem to be looking through what is going on, supporting a positive consumer and positive trends we are still hearing from customers that whatever can be settled within the next three or four months, hopefully we can get back to restocking inventories and doing all the things that contribute freight to us. We would like to see that momentum continue through the balance of this year.

On revenue for the second quarter, we are a little bit below normal seasonality right now in April, but I still feel good just looking at the trend of how the revenue is performing and our volumes as well. We have had good acceleration through the month, which has been good to see. It is not a surprise to see things pull back a little bit and some customers showing a little bit of caution, but there is a lot of cautious optimism from the feedback we are hearing, and we are starting to win more in bids that we are participating in. There are a lot of positive trends developing.

Going back to looking at that 2022 comparison, that was still a growing environment. Who knows what is going to happen with May and June, but if we can continue to see some sequential improvement in our volumes, which I believe we will, then I think we can continue to show strong top-line improvement and then carry that through to an operating ratio that will produce some pretty good-looking numbers from a bottom-line standpoint.

Operator: Our next question comes from Scott H. Group with Wolfe Research. Please go ahead.

Scott H. Group: Hey, thanks. Good morning. Feel better, Adam. The last couple of quarters you have given us a range of revenue embedded within the OR guidance—can you share something similar? And bigger picture, the truckload market clearly has gotten a lot tighter; we keep hearing it is more supply driven. Are you seeing any of that typical spill from truckload back into LTL? And do you think a supply tightening in truckload means it is any different of a cycle this time as it relates to LTL versus the past?

Adam N. Satterfield: That definitely has been happening. You see what is going on in the truckload market with rate and capacity changes driving a lot of that. Late last year, a lot of shippers anticipated this environment would finally turn this year. I can think of a couple of large accounts that said part of their supply chain strategy over the last year or so had been taking advantage of that market by consolidating some loads, and that they were going to revert back to moving more freight by LTL. I can look at a couple of specific customer accounts and see that trend has reversed.

Bigger picture, that has been a headwind for us for the last couple of years, and it was something we felt would need to fix itself in the truckload world, taking some of the pressure off load consolidation that shippers have been taking advantage of. I do think that will unwind and will be a big benefit to the industry and something that we will be able to benefit from as we get back to market share opportunities. On the revenue range, I did not go through that this time. There is some volatility based on fuel, and hopefully we will see that continue to decline.

Thinking about volumes, as I mentioned, we are trending a little bit below what our normal sequential change would be at this point from a tons standpoint. Unless we have strong performance like we did in February and March, volumes may come in a little lighter than our normal sequential change. Too many factors to give a precise top-line range, but based on right now, April revenue per day is up about 7%. If you hold that bogey across and adjust with our mid-quarter updates and what fuel is doing, that should allow you to flush that through your model.

Operator: Our next question comes from Eric Thomas Morgan with Barclays. Please go ahead.

Eric Thomas Morgan: Hey, good morning. Thanks for taking my question. I wanted to ask on pricing and yields. I think the 4.4% in the quarter was a bit ahead of your guidance. Could you speak to the drivers there? I think per shipment was pretty consistent throughout the quarter. You said 4% to 4.5% in April, maybe per shipment a little bit more of a mix impact at this point. What is the right run rate here for 2Q and how should we calibrate that?

Adam N. Satterfield: I think that 4% to 4.5% for the full quarter is still appropriate, and we will be looking at weight per shipment. If trends can hold, it should be up around 1% or so for the full quarter. We are up a little over 1% at this point in April, and we would love to see that number continue to move higher and be even more of a headwind, if you will, relative to our revenue per hundredweight performance, because it would indicate that the economy is continuing to get stronger and we would continue to be winning business.

The first quarter yield came in a little bit stronger overall—just a little bit; we had said up 4%—and I was probably anticipating a little more weight-per-shipment headwind than what we got. It was still nice to see it is the first quarter in some time where we have had a year-over-year increase in weight per shipment. Overall, our results reflect our consistent long-term strategy. We always want to be consistent and fair with our customers and get cost-based increases, and I think we have done that over time, including over the last couple of years when the environment has been slower. We can continue to maintain that measured approach as we go forward.

That gives us really strong revenue per shipment, especially as the weight per shipment starts improving, and that is what we ultimately have to get back to: a positive revenue-per-shipment over cost-per-shipment spread. We are not there yet, but we are starting to close the gap and get those numbers moving back in the right direction. Typically, we want to see 100 to 150 basis points of positive revenue-per-shipment over cost-per-shipment spread.

Operator: Our next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.

Ravi Shanker: Great, thanks. Good morning, everyone. On the 2Q OR walk, I am a little bit surprised that you are not pointing to maybe doing better than normal seasonality, given some of the positive trends like April up 7%. Is that just being conservative? Is that a higher starting point with 1Q? Can you talk about some of the moving parts again that may help you beat normal seasonality?

Adam N. Satterfield: It is probably a couple of things. One unknown is we feel like we are going to see some headwinds related to our fringe benefit cost. They came in a little better than what I am forecasting for the entire year in the first quarter, and already looking at the April trend, we expect higher cost there for the full quarter. As fuel changes, it creates headwinds from a variable cost standpoint that may get overlooked. That is why pointing people back to 2022 might be a good measure to look at.

Anything petroleum-based—products—we are going to see inflation, but other overhead-type costs you would not think of, like credit card fees and the percent of bad debt write-offs, will create ancillary costs. It is not to say that if business levels continue to pick up we cannot beat the guidance like we just did in the first quarter. As you mentioned, we do have a pretty good starting point with our 1Q performance. That is based on us talking about probably being a little bit lower than our normal sequential trend from a tonnage standpoint as well. If we can execute on those broad numbers we just talked about, we are starting to map out double-digit type earnings growth.

All those numbers flowing through the model certainly can get better, but I think this is a good starting point to finally see things back in the green for us.

Operator: Our next question comes from Jonathan B. Chappell with Evercore ISI. Please go ahead.

Jonathan B. Chappell: Thank you and good morning. Maybe Marty can answer this one, give you a break, Adam. February did a lot better than typical seasonality; March was a smidge better or maybe in line, and now it sounds like April is dipping a bit lower. Do you get a sense that there was any pull-forward into the first quarter, and does that help frame how you are thinking about the second quarter? Also, it feels like June is a really easy comp given the difficult environment last year—could you end the quarter on a higher note based on a comp perspective?

Marty Freeman: Jonathan, I will answer your pull-forward question. We are not hearing any major pull-forward comments from our large customers as they visit our corporate office. As Adam said earlier, we see some of this truckload volume that LTL went to last year and the year before coming back because of the tightness of the drivers and so forth. We are not hearing the pull-forward comment at all.

Adam N. Satterfield: As we go through the balance of the quarter, there is still a lot of uncertainty with everything going on in the world. I would love to have a clear crystal ball to say that we will have May and June performance similar to what we had in February and March, but it is hard to pinpoint that at this point. We feel like there are a lot of opportunities out there. The good thing about us giving our mid-quarter update is that when we see the actual results for May, we will be able to talk about those trends as they are developing and whether we see a continuation of the positive trends.

We have heard more optimism from customers through the balance of the year. Like Marty said, I do not think there was any pull-forward per se that helped boost the numbers. We got through the first quarter; we expected continued strength. It is not totally unexpected, given everything going on, that people pulled back just a little bit. Still, overall good performance in April; we are pleased with what we have been able to do and what our numbers look like, but we certainly hope to see a continuation of the build-up not only through June, but really from now through September.

Operator: Our next question comes from Kenneth Scott Hoexter with Bank of America. Please go ahead.

Kenneth Scott Hoexter: Hey, great. Good morning, Marty, Jack and Adam. It is spring, so hopefully you get well soon. Those truckload volumes you are talking about—are they good quality freight or better? I am always confused if that is stuff you want. Then, if volumes are trending below seasonality, I want to clarify—is this a share loss indication or are volumes not as good as expected? And then my other one is the average employee down 7%. You mentioned your ability to scale if you do get that inflection. Is that something you are focused on?

Adam N. Satterfield: On staffing, we have talked for the last few quarters that where we are positioned now, we are in a really good spot in terms of having people to be able to respond to sequential growth through the balance of this quarter. Not to say there might not be some hiring here and there, but overall, I would expect a pretty similar headcount level as we go through the balance of this quarter. We certainly have the capacity from a people standpoint, plenty of service center capacity, and the fleet to be able to accommodate sequential growth as well. I do not think the April trend is any type of market share loss at all.

The numbers are a little bit softer from a volume standpoint than what we had been seeing. Typically, you see a little drop-off in April, and it is what it is, but we think we will exit the month at a pretty good run rate, and we would anticipate sequential improvement from where we are now into June. How strong that will be is to be seen, but there are a lot of opportunities, and we are seeing a lot of wins in bids. There is a lot of behavior consistent with the environment turning overall. Hopefully, in the early stage of recovery, we typically outperform our competitors the most.

Looking back over time, in the early stages of recovery—those high growth years—we have been able to outperform our competitors somewhere around 900 to 1 thousand basis points from a volume standpoint. Hopefully this is what is kicking off now, while keeping in check the risks we see in the economy. On the truckload comment, it is not that a full truckload of freight is now coming in and we are moving a 40,000-pound load. With load optimization software, a lot of customers in a weak truckload environment—and many 3PLs—have mode optimization tools, so they can consolidate different loads and move freight at a lower cost.

We have not started necessarily seeing that completely unwind yet; I think we are in the early stages as well, just from looking through the underlying data of our 3PL business. That should continue—probably more of a tailwind as demand improves.

Marty Freeman: Also, it is good freight because many of these customers that transitioned some of their business over to full truckload—we were still handling LTL shipments for them, and that pricing is still in effect. So when it moves back over to us, it moves at that profitable LTL pricing we have in effect for them. So it is good freight.

Kenneth Scott Hoexter: Very helpful. Thanks, Marty. Thanks, Adam.

Operator: Our next question comes from Thomas Richard Wadewitz with UBS. Please go ahead.

Thomas Richard Wadewitz: Thanks. I know you said it is a little worse than seasonality in April, down 6.5% year over year. What would the ten-year average in normal seasonality be, just so we can assess clearly? And the broader question: we have seen some improvement from other players—TFI talking about service improvement and favorable trend in volumes at a low price point; ArcBest active with dynamic pricing; FedEx Freight eventually makes investments and can be a better competitor. Historically, when others improve service, does it impact you, or is the market big enough that it is more cycle and your own performance than what this or that LTL is doing?

Adam N. Satterfield: On the competitive landscape, based on all the data and feedback we get, the service gap between us and our competition is as wide as it has ever been, if not getting wider. I will not comment on anyone specific, but we see optimism, we are starting to win more business in bids, and that gives us optimism for the balance of the year. We are still down year over year from a volume standpoint, but we have had five straight months of sequential performance and may take a break this month for April. We need to get back to neutral year-over-year tonnage and shipments per day and then back to what we do best—growth.

It looks like we are going to have revenue growth in the second quarter, which should lend itself to good earnings growth as well. I do not think any specific carrier initiative is having a material impact on us. We are seeing more wins when I look at our individual bid performance. On April seasonality, I did not give a specific number earlier because month-to-date depends on the last couple of days and can be apples to oranges. The normal would be down 1%. Tomorrow should be a really big day for us and will skew the month-to-date number up, but based on the trend, we will be below that 1% number.

I am comfortable where we are, and given the run rate today and how these trends generally develop, I feel pretty good about sequential growth as we get into May and June to close out the quarter.

Operator: Our next question comes from Brian Ossenbeck with JPMorgan. Please go ahead.

Brian Ossenbeck: Hey, good morning. Thanks for taking the questions. A couple of follow-ups, Adam. You gave helpful comments about some of the cost pressures you are seeing—excluding fuel, anything else to call out from a cost-per-shipment perspective you already have line of sight to? Sounds like health care and benefits are moving up through the rest of the year. And on competition, we see a lot of new entrants or conversations about grocery and expedited freight—how long do those bid cycles last and how long does it take to get into those markets? It is easier said than done; would like your perspective on how that really works in practice with higher premium services.

Adam N. Satterfield: On costs, I mentioned the fringe headwind we are looking at, and anything fuel-related we are going to see increased cost. On the flip side, we had an increase in our general supplies and expenses in the first quarter; I would expect to see a little improvement there, especially as we get leverage on those costs. Some G&A expenses are variable in nature, so as revenue goes up, you will get a little pressure there; some are more order-specific, so we should see a little benefit relative to normal trend.

Depreciation is another item: relative to the ten-year average change in depreciation cost from 1Q to 2Q, with our CapEx plan being lower this year, we should not see the same type of inflation in those costs. We should be able to get a little leverage there to offset some of the other headwinds. With respect to other carriers focusing on different segments, we compete with every carrier today in those same lines of business. There is no secret part of the market we have exclusive access to. There are things we do really well where we add tremendous value to our customers that we do not see from some competitors—that is direct customer feedback.

We take none of that for granted and are always enhancing services through technology and other measures to keep the service gap. Over my career, different competitors have targeted one segment they think OD has a lock on versus another; it has not slowed our growth over time, and I do not think it changes our long-term growth trajectory either. As we have said, service is ultimately what we sell in this industry. I think we have a better service product than anyone else, and that is why we believe we will be the biggest market share winner over the next ten years like we have been over the last ten.

Operator: The next question comes from Analyst with Deutsche Bank. Please go ahead.

Analyst: Thank you. Good morning, everyone. Adam, I know you want to refrain from commenting on competitors, but with FedEx Freight’s spin right around the corner, I wanted to get your impression. Earlier this month, we heard that team talk extensively about their differentiated dual service offering—priority and non-priority—as a key differentiator along with their scale and speed. Do these attributes give them an edge as they emerge as an independent entity with a dedicated sales force? Broadly, your impression on the strategy they laid out and what, if anything, surprised you. Also, does the timing of Easter this year versus last year come into play for how April progressed?

Adam N. Satterfield: Easter was at the beginning of the month, and that certainly has an impact like it always does. We do not count half-days, but Good Friday is a little more than half of a normal workday, so that had an impact on the April trend. With respect to FedEx, we have been competing against them for years. Priority and economy are not new service offerings. We expect them to continue to be a good competitor, but it does not really change the competitive landscape. If anything, they have to go through a lot of change as they go through that separation, and we will see how they handle it.

I would not expect a lot of change from a customer standpoint comparing those service offerings to ours. Be it through the Mastio measurements that we have won for multiple years in a row now, or being the biggest market share winner over the past ten years, all those measurements tell me we have the best service in the industry. We do not rest on our laurels—we want to continue to get better every day and continue to win that Mastio award year after year. We focus intently on listening to customers and what they need and want.

We continue to refine our network, make changes, and we have made plenty of lane changes where we have had to speed up transit times in the past year. We will continue to move as the market moves and make sure we are giving the very best value proposition to our customers. That is what we have proven over time, and it is why we are the biggest market share winner and why we keep investing in our business and preparing for future market share opportunities.

Operator: The next question comes from Ariel Luis Rosa with Bank of America. Please go ahead.

Ariel Luis Rosa: Good morning, gentlemen. On the nature of this downturn and potential upcycle relative to past cycles: you have said you won the most market share over the past decade and are confident for the next decade. But the last three years have been anomalous with negative year-on-year volume growth each year. How are you thinking about the ability and timeline to recover that lost volume? Is that something to expect in the next upcycle? How much depends on competitive environment versus macro versus idiosyncratic actions you can take to be more aggressive to take back share?

Adam N. Satterfield: We are not immune to the economy, and the last three years have been difficult. Every year we have reaffirmed our strategy. Typically, we maintain market share through the downturn and then win significant market share as demand improves. A couple of things drive that: we have been the only carrier consistently investing in new capacity over time, even over these past three years—about $2 billion in CapEx—to grow our business and prepare our network for future growth. We do not build out the network hoping to achieve market share; we do it through conversations with customers and engagement with our sales team, having confidence in where we believe we will see growth over time.

We aim to stay ahead of the growth curve. We have seen how quickly things can change; the first quarter is a good indicator—look how quickly volume changed in February and March and what we did from an operating ratio standpoint. We may or may not carry that forward; I was hoping this would be more like a 2017 kind of year, and it still could be. We are not writing off May or June—we are optimistic with a hint of caution given geopolitical risk. If we can carry forward sequential improvement in volumes and get back to positive year-over-year later in the year, we can continue to grow from there.

In prior strong years—2014, 2017, 2018, 2021, 2022—we produced double-digit volume growth while competition was in single digits because we run excess capacity and the industry has historically been capacity constrained. Many carriers are talking about excess capacity today, but the numbers do not bear that out. We still see the industry as capacity constrained. That is why we are confident that once demand starts to improve, we will get back to outgrowing our competition like we have in prior cycles.

Operator: Our next question comes from Jeffrey Kaufman with Vertical Research. Please go ahead.

Jeffrey Kaufman: Thank you very much and thank you for squeezing me in. Could you give a bit more color on weight per shipment? Is improvement coming from regions or industries coming back to life, or is it simply more units per pallet?

Adam N. Satterfield: Generally, it is more widgets per pallet. It typically follows when you start seeing industrial performance as well; industrial freight is usually heavier than retail-related freight. Most of our positive performance over the past five months has been on the retail side. We started to see some early indications in March of industrial turning the corner as well. As industrial comes in conjunction with positive ISM trends, we would expect weight per shipment to continue to tick higher. Right now, we are just around 1.5 thousand pounds per shipment—about where we were in March—and normally weight per shipment falls back a little in April versus March; we are trending around 1.49 thousand right now.

In really strong markets, we have been more like 1.6 thousand pounds per shipment. That is a number we would love to see move up, because it means more revenue per shipment while cost per shipment does not move in tandem. That helps get us back in balance, moving our cost per shipment back closer to the longer-term average of 3.5% to 4% and then having a positive spread of revenue per shipment over cost per shipment.

Operator: The next question is from Stephanie Moore with Jefferies. Please go ahead.

Stephanie Moore: Thanks for the question. On capacity—specifically private capacity—any color you can provide on what you are seeing across the broader industry? Many public names talk about excess capacity, but how do you see it, particularly on the private side?

Adam N. Satterfield: Once Yellow closed, a lot of those service centers went into the private world, and a lot of the market share Yellow had ended up with private carriers as well. Many people took some elements of share. The factor we look at is shipments per day per service center. Public carriers disclose the number of service centers, so when we look at that data, it tells us some carriers do not have as much capacity as maybe what they talk about, because shipments per day per service center were pretty similar at the end of 2025 to where they were in 2022 when everybody was capacity constrained and could not grow.

Looking at total service centers across public and private carriers, shipments per day per service center is down about 3% from 2022 to 2025—pretty close. We think there is probably 5% to 10% excess capacity across the industry as a whole, but much less than some think. At the 100 thousand-foot level, you had a carrier that did over 50 thousand shipments per day and had over 300 service centers—not all of those service centers have remained in our industry. What was a capacity-constrained industry in 2022 will be an even more capacity-constrained industry as we move forward.

Operator: The next question comes from Analyst with Stifel. Please go ahead.

Analyst: Hey, gentlemen. This is Matt Vialas calling for Bruce this morning. Thanks for squeezing us in. Circling back to pricing—yields and contract renewals seem to remain strong. Is that strength and stability universal across the entire book? We have heard about increased competitiveness around 3PL business. Perhaps you can share what percent of the total book is tied to 3PL.

Adam N. Satterfield: About a third of our business overall is related to the 3PLs. We are pretty consistent with what we target for increases every year, be it with our general rate increase that applies to our tariff-based business—that is about 25% of our revenue overall—as well as what we try to achieve as we go through contract renewals. Every account is different, and we look at each account on its own merits and profitability. We have been consistent with getting increases. We take a different approach than some competitors; we try to be consistent, which helps customers know what to plan and budget for. It forms a partnership and relationship versus just looking at market-driven moves.

It has worked well for us over time, and that will continue to be the focus: achieve reasonable increases that are fair and equitable, offset cost inflation, and support our ability to keep investing in our service center network, in new technologies that our customers in many cases are demanding, and in our people to drive the business forward.

Operator: The next question comes from Analyst with Stephens. Please go ahead.

Analyst: Hey, thanks for taking the question. Everyone is focused on service as a means to drive yields higher. With your position as a service leader, what is your focus when you think about continuing to improve your mix of business? Are there any end markets or services you are leaning into currently where you might have a better value add relative to competitors?

Marty Freeman: Service is not just delivering on time and claims-free. It is also how you handle issues, which relates to superior customer service—being able to talk to a human on the phone. We are in a world of bots now, but customers put a lot of stock in being able to pick up the phone and call one of our service centers or corporate office, trace a shipment, and talk to a human. Also, billing accuracy plays a big part in service. Sending a correct invoice the first time is very important to our customers. It creates less work for them and allows us to get paid faster.

There are a lot of components when we talk about customer service, and we feel like we lead the industry in all of those factors.

Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Marty Freeman for any closing remarks.

Marty Freeman: Thank you all for your participation today. We really appreciate your questions. Please feel free to give us a call if you have anything further, and have a great day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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