Old Dominion Freight Line, Inc. Q1 FY2026 Earnings Call

Please note, this event is being recorded. I would now like to turn the conference over to Jack Atkins, please go ahead.

Thank you, Dorwin. Good morning, everyone, and welcome to the first quarter 2026 conference call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through April 29th, 2026 by dialing 1-855-669-9658, Access code 7699494. 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'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's filings with the Securities and Exchange Commission and in this morning's news release. Consequently, actual 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. For opening remarks, I'd like to turn the conference call over to our President and Chief Executive Officer, Marty Freeman. Marty, please go ahead.

Good morning and welcome to our first quarter conference call. With me on the call today is Adam 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 10 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 10 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 into our business. These investments will allow us to stay ahead of our anticipated growth curve to help us ensure that we'll 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 capital expenditures over the past three years and why we plan to invest an additional 265 million in 2026 we've 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 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 advancements for our team but they help ensure that our company is ready to respond when our customers need us the most while we were always focused on 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 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 effectively 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.

Thank you Marty and good morning. I'm a little under the weather today so I'd like to ask you all to bear with me as we get through this call. Old Dominion's revenue totals $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 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 percent when compared to the fourth quarter of 2025 with ltl tons per day decreasing 0.4 percent and ltl shipments per day, decreasing 0.7%. For comparison, the 10-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 LTL tons per 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 10-year average change for these respective months is a decrease of 3.1% in January, an increase of 1.0% 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 7.0% 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 four to four and a half percent as usual we will provide the actual revenue related details for april in our first quarter form 10q our operating ratio increased 80 basis points to 76.2 percent for the first quarter 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 costs as a percent of revenue was primarily due to our continued focus on revenue quality and operating efficiencies. Despite the lack of density in our network associated with the decrease in our volumes, our team did a nice job of matching our labor costs 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's cash flows from operations totaled $373.6 million for the first quarter and 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. dollars. Our effective tax rate for the first quarter of 2026 was 25.0% as compared to 24.8% in the first quarter of 2025. We currently expect our effective tax rate to be 25.0% for the second quarter of 2026. This concludes our prepared remarks this morning. Operator will be happy to open the floor for questions at this time.

We will now begin the question and answer session to ask a question you may press star then one on your touchstone phone if you are using a speakerphone please pick up your handset before pressing the keys if at any time your question has been addressed and you would like to withdraw your question please press star then two at this time we will pause momentarily to assemble our roster the first question comes from jordan alliger with goldman sachs please go ahead yeah hi morning everyone uh thanks for the update um i guess sort of in the context of uh you know some of those trends you've been seeing maybe continue on the trend thought and share some color or thoughts

on direction of or as we move from the q1 to q2 thank you yeah the um the 10-year average change for the operating ratio is three to 300 to 350 basis point improvement from the first to the second quarter and we're comfortable with that range in the second quarter this year assuming that we do see some sequential improvement or volumes from here and that's what we anticipate but obviously there's a lot going on in the world right now but based on what we're currently seeing and we're expecting that increase in volumes and I think we're comfortable with hitting that normal sequential range as a result and that if we do so that'd be the fourth

straight quarter that we've been able to be in or at least beat what our normal sequential change would be thanks and i i don't i don't know if i could ask a follow-up but um just sort of related to that have you seen then a shift in sort of that excess terminal capacity you know has it come in a little bit as we've seen volumes look a little better in terms of our capacity yeah i think you've been at like 30 35 percent terminal capacity the excess. I'm just sort of curious if that's changed at all.

Yeah, we're still a little north of 35 percent. 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's something that we continue to see as an opportunity and will drive part of that operating ratio improvement is we can continue to see sequential volume improvement and then leveraging those fixed costs, those investments that we've made and that depreciation headwind that we've been facing. So leveraging those and some of our other fixed overhead costs, but that benefit of density drive and improvement, both our direct operating costs as well as some of those overhead costs. Thank you.

The next question is from Jason Seidel with TD Kavan. Please go ahead.

Thanks, operator. Morning, Marty, Adam, and Jack, and Adam, I hope you feel better. I'm going to stick on the OR topic a little bit here. You know, as we think about your commentary for 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 sort of where in the range we might want to be.

Yeah, I'm glad you asked that. Figured fuel would be a topic, a conversation. It's come up a few times. Yeah, exactly. You know, fuel is part of our yield management strategy. We've always talked about we want fuel, which is just a variable component of pricing, to really being different. If fuel goes up or if it goes down, you know, essentially we want the bottom line to be the same. And that's how we look at things on individual account profitability type basis. And I think when you look at what happened from the fourth quarter to the first quarter of this year, you know, we outgrew our normal sequential trend with tonnage by about 200 basis points. And that's really the story of the quarter in a sense of the strong operating ratio performance that we had there. But when you just look, our shipments per day from the fourth quarter to the first quarter were essentially the same. And when you look at, you know, fuel was up 10 percent, bill counts consistent, profitability is relatively consistent, a little bit better overall. But obviously there's other things going on. And I compare that back to the first quarter 2023 compared to the second quarter 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. So obviously there's always a lot of fluctuations, but I think those two sequential periods when you've got similar bill counts, similar mix of freight, kind of shows that fuel can go up or down 10% and overall profitability stay the same. Now, obviously, we're looking at a much larger increase in fuel. And I would probably just point everybody back to the second quarter of 2022. I think this first quarter to second quarter of 26 is probably going to have a lot of similarities to that first quarter to second quarter 22 period when we saw the fuel shock and all the other inflationary impact that that drives.

That's very helpful, and that was my one. Appreciate it, guys.

The next question is from Chris Weatherby with Wells Fargo. Please go ahead.

Hey, thanks, guys. I wanted to get your sense on how you feel about, I guess, demand and then ultimately how you're faring from a market share perspective as you think about coming out of the really strong performance in February and then what you've seen so far in March and April. Just kind of curious if, you know, some improvement has continued or, you know, you feel like there's been, you know, more steady demand. Just kind of get a sense of how you're thinking about things.

Yeah, it definitely feels like it's continued to improve. And, you know, go back to last year. We've had, you know, essentially through March is five months of normal sequential trends for us. And, you know, obviously, like I mentioned earlier, it's through a slower part of the year. But we felt like we started seeing a lot of and hearing optimism from customers and from our sales team late last year. And we started seeing that return to seasonality. We've seen a pickup in our wait for shipment. And, in fact, in April, our wait for shipment is up on a year-over-year basis, a little over 1%. So, you know, that's usually a leading indicator of an improving demand environment. So all those things, the positive ISM trends that we've seen, and we'd expect another positive ISM for April, you know, I think those have all been consistent. The retail side of the sector has probably been driving more of the volume performance at this point, and we're looking for the industrial to start contributing as well. that usually starts performing on a lag basis after you see that positive ISM performance. And I think that what we seem to hear right now, obviously there's some geopolitical risk to everything right now, but it seems like most people are kind of looking through what's going on and I think that supported a positive consumer and these positive trends and thoughts that we're still hearing from customers that whatever can be settled within the next three, four months or whatnot, hopefully we can get back to business, restocking inventories, doing all the things that was starting to contribute freight to us and still is. We'd like to see that momentum continue through the balance of this year.

And is there anything that informs about your sort of revenue assumptions for the second quarter?

I'm sorry, say that again, Chris?

And what you're seeing in the market, does that sort of give you a view on what you think revenue might look like for the second quarter?

You know, I think so. I mean, we're a little bit below normal seasonality right now in April, but I still feel good at just looking at the trend of seeing, you know, how the revenue is performing in our volumes as well. And, you know, we've had good acceleration through the month as well. So it's been good to see. But, you know, it's not a surprise to see things pull back a little bit and some customers showing a little bit of caution. But I still feel like, you know, there's a lot of cautious optimism there from the feedback we're hearing. And we're starting to win more in bids that we're participating in. So there's a lot of positive trends that are developing. But, you know, I think that kind of going back to looking at that 2022 comparison, you know, that was still a growing environment. You know, who knows what's 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 that, you know, we can continue to show good, strong top line improvement and then carry that through from an operating ratio that will produce some pretty good looking numbers from a bottom line standpoint.

Great. Thanks so much. Appreciate it.

Our next question comes from Scott Group with Wolf Research. Please go ahead.

Hey, thanks. Good morning. Feel better, Adam. The last couple quarters, you've given us sort of a range of sort of revenue that you've embedded within the OR sort of guidance. I don't know if you can share something similar. And then bigger picture, the truckload market clearly has gotten a lot tighter. We keep hearing it's more sort of 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's any different of a cycle this time as it relates to the LTL businesses maybe we've seen in the past?

Yeah, that definitely has been happening. And I think, you know, that's something that you obviously see what's going on in the truckload market with their rates and capacity changes, I think, is driving a lot of that. But we started hearing late last year, I think a lot of shippers were anticipating that this environment would finally turn this year. And I can think to a couple of large accounts that had mentioned part of their supply chain strategy the last year or so had been taking advantage of that market, consolidating some loads and whatnot, and that they were going to revert back to moving more freight by LTL. And so, you know, I can look at a couple of specific customer accounts and see that that trend has reversed. But just bigger picture, you know, we know that's something that's been a headwind for us, you know, for the probably the last couple of years. And it's something that we felt like was going to need to sort of fix itself, that being the truckload world, to take some of the pressure off some of those load consolidation opportunities that shippers have been taking advantage of. So, you know, I do think that's something that will unwind and will be a big benefit to the industry and something that I think that we'll be able to benefit from as we start getting back to market share opportunities and taking advantage of those.

Okay. And then the first part was just like, if there is like a revenue range or assumption for the quarter?

Yeah, I didn't really give, I didn't go through that this time. I think that, you know, obviously there's some volatility based on what fuel is going to do. And, you know, hopefully we'll see that continue to decline. But just, you know, thinking about the volumes, you know, as I mentioned, we're trending a little bit below from a ton of standpoint, what our normal sequential change would be at this point. And so, you know, that's something that will probably be, I might expect, unless we have, you know, strong performance like we did in February and March, you know, that may be something where the volumes come in a little bit lighter than what our normal sequential change would be. But just, you know, too many factors to try to figure out to give a top line range. But I think that, you know, based on right now, like we mentioned, April is down 7%. So if you just kind of hold that bogey or up 7%, sorry, you know, if you hold that bogey across and then just sort of move here and there as we give our mid-quarter updates and see what fuel is doing and that volatility there, it will allow you to kind of flush that through your model, hopefully.

Okay. Very helpful. Feel better. Thank you.

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

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, so just curious if you could speak to the drivers there. I think waper shipment was pretty consistent throughout the quarter. And then I think you said 4% to 4.5% in April, maybe waper shipment a little bit more of a mixed impact at this point. So just wondering what kind of the right run rate is here for 2Q, just how we should calibrate that.

Yeah, I think that four to four and a half percent for the for the full quarter is still appropriate. And we will be looking at wait for shipment. If trends can hold, it should be up around one percent or so for the full quarter. Like I mentioned, we're up a little over one percent at this point in April. So hopefully that will continue to hold. And we'd love to see that number continued 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. But yeah, the first quarter yield came in a little bit stronger overall. And I mean, you know, just a little bit. I think we'd said 40 or up four percent and but i was probably anticipating a little bit more wait for shipment headwind than what we got it was still nice to see is the first quarter in some time where we've had a year-over-year increase in wait for shipment but overall you know i think our results just reflect what our consistent long-term strategy is and you know we always want to be consistent and fair with our customers and get cost-based increases and you know i think that that's that's what we've done over time we've been able to do it over the last couple of years when the environment's been slower and we can continue to maintain that measured approach as we go forward you know that gives us really strong revenue per shipment especially as the the weight for shipment starts improving and that's really what we've ultimately got to get back to is a positive revenue per shipment over cost per shipment spread and we're not there yet but we're certainly starting to to close the gap if you will, and can 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.

Thank you. Our next question comes from Ravi Shankar with Morgan Stanley. Please go ahead.

Great, thanks. Morning, everyone. So Adam, again, sorry to keep screening your voice here, but just on the 2Q OR walk, I'm a little bit surprised that kind of you're not pointing to maybe doing better than the normal seasonality just given some of the positive trends, kind of with April up 7% and such. Is that just you guys being conservative? Is that just a higher starting point with 1Q? Or can I just talk about some of the moving parts that can maybe help you kind of stop that normal seasonality? Thanks.

Yeah, I think that it's probably a couple of things. One, you know, as a known, I feel like we're going to see some headwinds as it relates to our fringe benefit costs. They came in a little bit better than what I'm forecasting for the entire year in the first quarter. And already looking at the April trend, that's something that we expect we're going to see higher costs there for the full quarter. And then just as fuel changes, it creates a lot of headwinds from a variable cost standpoint that may get overlooked. And that's why pointing people back to 2022 might be a good sort of measure to look at. But obviously, anything petroleum-based products, any of those, we're going to see inflation. But other overhead type costs, things you wouldn't think of like credit card fees and the percent of bad debt write offs that we have, things like that, you know, it's just going to create other ancillary costs. So, you know, it's not to say that if we get business levels that continue to pick up that that we can't beat the guidance like we just did in the first quarter. And as you mentioned, we do have a pretty good starting point, if you will, with our 1Q performance. But I feel like that's a good starting point. And, you know, that's based on us talking about probably being a little bit lower than what our normal sequential trend would be from a Tundra standpoint as well. So I feel like if we can kind of execute on some of those broad numbers that we just talked about, you know, We're starting to kind of map that out, and you're looking at double-digit type of earnings growth. So, you know, all those numbers flowing through the model, you know, it certainly can get better. But I think this is a good starting point to start finally seeing things back in the green for us.

Thank you, Ed.

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

Thank you. Maybe Marty can answer this one, give you a break, Adam. February obviously did a lot better than typical seasonality or your long-term averages. March was a smidge better, maybe in line, and now it sounds like April's maybe dipping a bit lower. Do you get a sense that there was any pull forward into the first quarter, and has that helped framing kind of the way you're thinking about the second quarter as well as maybe borrowing a little bit from 2Q to get into 1Q? And then also I just want to raise this too.

I mean it feels like June is a really easy comp it was difficult last year in that tariff environment so could it be a thing where you end the quarter on a higher note just based on a comp perspective Jonathan I'll answer your pull forward we're not hearing any major pull forward comments from our large customers as they visit our corporate office you know as Adam said earlier we see you know some of this truckload volume that LTL went to last year and the year before we see some of that coming back because of the tightness of the drivers and so forth so we're not hearing the pull forward comment at all yeah and I think you know obviously just as we go through the

balance of the quarter you know there's just still a lot of uncertainty out there with with you know everything that's going on in the world and you know I'd love to have a clear crystal ball to say that we'll have may and june performance similar to what we had in february and march but um you know it's hard to uh to kind of pinpoint that at this point um you know certainly feel like there's a lot of opportunities out there and um and you know i think that's a good thing about us given our mid-quarter update when we see the actual results from may you know we'll be able to talk about those trends as they're developing and you know do we see a continuation of the the positive trends but you know i think we've heard more optimism from customers really through the balance of the year and like marty said i don't i don't think that there was any uh pull forward per se that helped boost the numbers i think it was just we got through that first quarter we expected continued strength and um and you know it's not totally unexpected given everything going on that, you know, people pulled back just a little bit. Still overall, you know, good performance in April. Pleased with what we've been able to do and, you know, what our numbers are looking like. But, you know, certainly hope that we'll see a continuation of the buildup that, you know, not only through June, but this is what we'd expect really from now through September. Great. Thanks, Adam and Marty.

Our next question comes from Ken Huckster with Bank of America. Please go ahead.

Hey, great. Good morning, Marty, Jack, and Adam. It's spring, so hopefully you get well soon. Those truckload volumes you're talking about, are they good quality freight or bet? I'm always confused if that's stuff you want. And then if volumes are trending below seasonality, I just want to clarify, is this a share loss indication or are market volumes not as good as we're all expecting. And then my other one is just the average employee is down 7%. You were talking, I think, in an answer before about the kind of the add-on and employees or thoughts on employees and your ability to scale. If you do get that inflection, is that something you're focused on?

Yeah, I'll answer that one first. I think that, you know, we talked about this for the last few quarters, that I think where we're positioned now, you know, we're in a really good spot in terms of having people to be able to respond to sequential growth from here on out 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, if you will, as we go through the balance of this quarter. And we certainly have got the capacity from a people standpoint we've got you know plenty of service center capacity and we've got the fleet to be able to accommodate sequential growth as well and now i don't think that the april trend is any any type of market share loss um at all i think it's just um you know it's just the numbers are a little bit softer from a volume standpoint um than you know what we had been seeing typically you see a little drop off anyways in April. And so, you know, it is what it is. But, you know, I think that we're probably going to exit the month at a pretty good run rate. And we'd expect, you know, these trends that I've seen this past week and all last week as those continue to work our way through the balance of the quarter, you know, feel pretty good about saying that we're anticipating sequential improvement, if you will, from where we are now until getting to the end of June. So, you know, how strong will that be? That still remains to be seen. But I think there's a lot of opportunities out there, and that's what I referenced earlier. We're seeing a lot of wins as we're participating in bids right now and a lot of behavior that's pretty consistent with the environment turning overall. So, you know, a lot of good things. Hopefully this is the early stage of recovery that, you know, we typically outperform our competitors the most. And, you know, when you look back over time, it's, you know, the early stages of recovery, those high growth years where, from a volume standpoint, we've been able to outperform our competitors somewhere around 900 to 1,000 basis points. So, you know, hopefully this is what's kicking off now, but, you know, just keeping everything in check, if you will, with, you know, the risk that we see in the economy right now and that uncertainty that's out there just to be able to truly, you know, draw a line in the sand and say, yeah, the race has started, but definitely not any indication of any loss of share. And the final comment about truckload, you know, it's not that it's a full truckload of freight that's now coming in and we're moving a, you know, 40,000 pound load. It's just with load optimization software that's out there a lot of customers in a weak truckload environment you know many 3pls have got mode optimization tools and things like that and so they can consolidate some different loads and do some things to move freight at a lower cost but you know i think that um i haven't started necessarily seeing that completely unwind yet but i think that we're in some early stages of that as well just from looking through the the underlying data of our 3PL business right now so that's something that should continue or start providing rather a little bit more of a tailwind probably getting little bits and pieces

of it here and there from customer specific activities but i think that's something that that will probably provide more opportunities as the demand environment continues to improve Again, also, it is good freight because many of these customers that transition some of their business over to full truckload, we're 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 that we have in effect for them. So it is good freight.

Very helpful. Thanks, Marty. Thanks, Adam.

Our next question comes from Tom Wadwitz with UBS. Please go ahead.

Yeah, thanks. I wanted to see if you could just tell us what, I know you said it's a little worse than seasonality in April, but I guess down six and a half year over year. What would the tenure average in normal seasonality be? Just so we can make the clear assessment, I don't think you said that. And then I guess the broader question, you know, I think Ken asked a little bit about this, but we have seen some improvement from other players in the market. Like, I mean, you know, TFI is talking a lot about service improvement, unfavorable trend in their volumes. But, you know, they say they're a low price point in the market. I just don't know if you see them. You know, ArcBest is active with their dynamic pricing and, you know, FedEx Freight eventually makes investments, probably can be a better competitor looking out of ways.

So I just wonder, looking historically, do you tend to see it when others improve service or is it a big enough market that you say, really, you know, it's just a cycle in our own performance as opposed to what you know this LTL or that LTL are doing thank you yeah I would I would say that based on all the data that we have and feedback that we get the service gap between us and our competition is as wide as it's ever been if not getting wider so you know don't don't want to comments necessarily on anyone specific. But, you know, I think other carriers obviously have got their own initiatives and things that they're working on. And, you know, all we can speak to is what we see with our business and our customers. And like I said, you know, I still feel like we've got a lot of optimism. We're starting to win more business and bids that we're participating in. And that's what gives us optimism to go through the balance of the year and start working our numbers. We're still down on a year-over-year basis from a volume standpoint, but five straight months of sequential performance and may take a break on that this month for April, but we'll see where we go through the balance of the year. But we need to get back to getting our numbers back to neutral, if you will, from a tonnage and a shipments per day standpoint relative to last year and start getting back to what we do best, which is growth. And, you know, we're looking like we're going to have revenue growth in the second quarter and, you know, and that should lend itself to good earnings growth as well. And, you know, we'll look and see where we get through the balance of the year. But I don't think that any specific carrier initiative right now is having any material impact on us. I feel like we're seeing more wins than anything when I look at our individual bid performance.

What about just the numbers for what April was? I don't know if you want to say sequential versus what's your assessment of normal seasonality or the tenure. I don't know if you gave us the specific numbers.

Yeah, I didn't give the specific number, and I hate to give it because the month to date you know it depends on the last couple of days um it's kind of comparing apples and oranges but it's you know the the normal would be down one percent and we'll see what these next couple of days tomorrow should be a really big day for us and it'll skew the month date number up and or bring that number up uh today and tomorrow will so uh but but it's still um you know based on what the uh the trend is we'll be not below that one percent number but but uh but i'm comfortable where we are. And again, the run rate that we have today and just knowing what I know for how these trends generally develop, you know, I feel pretty good about saying that we should have sequential growth as we get into May and the June to close out the quarter.

Okay, but you don't want to say what that month to date is versus the down 1% normal?

Nothing other than, you know, what we already said with, you know, right now it's running down on a year-over-year basis. yeah about yeah oh okay all right appreciate it thanks for the time our next question comes from brian awesome back with jp morgan please go ahead hey good morning thanks for taking the questions maybe just a couple follow-ups adam um you give some helpful comments about some of the cost pressures that you're seeing maybe excluding the fuels or anything else that you can call out we should be aware of from cost per shipment perspective you already have line of sight too sounds like maybe some healthcare and benefits are moving up here throughout the rest of the year. And then just following up on the last questions about competition, maybe you can give us some perspective because we see a lot of new entrants or new conversations about things like grocery and expedited freight, like how long do those bid cycles last? How long does it really take to get into those markets? Because I'm sure it takes a while, it's easier said than done, But we'd like to hear your perspective on how that really works in practice with some of these higher premium services.

Yeah, on the, you know, I mentioned the fringe headwind that we're looking at. And, you know, obviously anything that's fuel related, we're going to see increased costs. But, you know, on the flip side, we had an increase in our general supplies and expenses in the first quarter. i'd expect to see a little bit of improvement there especially as we get leverage on those costs some of those gna expenses are variable in nature so as revenue continues to go up you'll get a little pressure there but but you know some of those will work more order specific if you will and so should see a little bit of benefit there relative to what our normal trend And depreciation is the other item, you know, relative to what the 10-year average change in depreciation costs from 1Q to 2Q, with our CapEx plan being lower this year, then we shouldn't see that same type of inflation, if you will, in those costs. So we should be able to get a little bit leverage there to offset some of the other headwinds that we're anticipating. And, you know, with respect to other carriers focused on different segments, you know, it's we compete with every carrier as it stands today. And with those same, you know, whatever line of business that you want to talk about, you know, there's no secret part of the market that we've got access to. You know, there's some things that I think we do really well where we add a tremendous amount of value to our customers that we don't see the same value add from some of our competitors, and that's direct feedback from our customers. So, you know, we take none of that for granted, though, and we're always looking at ways that we can continue to enhance our services, you know, be it through technology and other measures to make sure that we keep that service gap there. But, you know, I've heard over my career different competitors that are targeting one segment of business that they think OD's got to lock on versus another. And, you know, it hasn't slowed down our growth over time. And I don't think it changes the trajectory of what our growth opportunities look like over the long term either. As we've said plenty of times before, service is ultimately what wins share in this industry. And I think we've got a better service product than anyone else. And for that reason, I think we'll be the biggest market share winner over the next 10 years, just like we've been over the last 10.

Okay. Thanks very much, Adam.

The next question comes from Raja Harnin with Deutsche Bank. Please go ahead.

Okay. Thank you. Good morning, everyone. So, Adam, I know you said you want to refrain from commenting on competitors, but with FedEx Freight's been right around the corner, I wanted to give a stab at it and try to get your impression. So, you know, earlier this month, we heard that team talk extensively about their differentiated dual service offering, priority, non-priority, as being, you know, again, a key differentiator in the market along with their scale and speed. Just curious if you think these attributes give them an edge, especially as they emerge as an independent entity with a dedicated sales force. And just, you know, broadly would love to get your impression on the strategy they laid out earlier in the month and, you know, what maybe surprised you with respect to their plan, how do you feel about them, and potential for change as a competitor. Also, just a quick clarification one. Does Easter factor into how April's going to progress, you think, the timing of Easter this year versus last year? Does that come into play? Thanks.

Yeah, the Easter was the beginning of the month, and so that certainly has an impact like it always does. We don't count half days. But usually the Good Friday is about a little more than half of a normal workday. So that certainly had an impact on the April trend. And with respect to FedEx, we've been competing against them for years. And the priority in the economy is not a new service offering. So we'd look to see them. They've been a good competitor over time, and we'd expect they continue to be a good competitor, but it doesn't really change the competitive landscape. If anything, it may be they've got to go through a lot of change as they go through that separation and we'll see how they handle all of that. But wouldn't expect that really from a customer standpoint that there would be a lot of change with respect to those service offerings as a shipper would compare them to our service offering. And again, you know, be it through the Mastio measurements that we've won for multiple years in a row now versus being the biggest market share winner over the past 10 years, you know, all those measurements tell me we've got the best service in the industry, but we don't sit around and rest on our laurels. We want to continue to get better every day, and we want to continue to win that Mastio award year after year. And that's why we focus so intently on making sure that we're listening to customers and the things that they need and what they want. That's why we continue to refine our network, make changes. We've made plenty of lane changes where we've had to speed up transit times in the past year. And so we'll continue to move as the market's moving and try to make sure that that we are giving the very best value proposition to our customers ultimately. And I think that's what we've proven over time. And again, it's why we're the biggest market share winner. And that's what gives me the confidence that to keep investing in our business, to keep growing it, preparing it for our future market share opportunities.

All right, thank you, Adam, feel better.

Thank you. The next question comes from Ari Rosa with Bank of America. Please go ahead.

Hey, good morning, gentlemen. So I wanted to ask about the nature of this downturn and potential upcycle relative to past relative past cycles. I hear your point. You've said it a couple of times on on winning the most market share over the past decade. uh very encouraging to hear uh the confidence on winning the most market share for the next decade but if i look at the last three years it's been somewhat anomalous in terms of uh having negative year-on-year growth or volume growth for each of the last three years so just how are you thinking about ability and timeline to recover that lost volume is that something we should be expecting in the next up cycle, how much of that depends on kind of the competitive environment versus kind of macro versus idiosyncratic things that you can do to be a little bit more aggressive to take back share?

Yeah, I think, you know, obviously we're not immune to the economy, and the last three years have been difficult. But, you know, every year we've reaffirmed our strategy. And, you know, typically what you see with our business is we maintain market share through the downturn and then we win a significant amount of market share as the demand environment improves. And, you know, there's a couple of things that drive that. We've been the only carrier that's consistently invested in new capacity over time. And even over these past three years, we've spent $2 billion on CapEx to keep growing our business and to prepare our network to be ready for future growth. And we don't just build this network out with hoping that we'll be able to achieve market share. We do it through conversation with customers and engagement with our sales team and so forth and having the confidence of knowing where we believe we're going to see growth over time. And so that's been a key part of our strategy is to always stay ahead of the growth curve. But, you know, I think that we've seen before how quickly things can change. And I think the first quarter is a pretty good indicator of that. You know, look how quickly the volume changed in February and March and then what we were able to do from an operating ratio standpoint. And so, you know, we may not be able to carry that forward. I was hoping this would be more like a 2017 kind of year. And who knows? It still could be. I mean, we're not writing off what's going to happen in May or June yet. We're just saying that we're still optimistic, but there's a hint of caution there given the geopolitical risk. But I would say that if we can continue to carry forward some sequential improvement with our volumes, We get back to being positive on a year-to-year basis later in the year, or we should, and then we can continue to grow from there. But, you know, when I mentioned some of these high-growth years and the outperformance, I mean, all you got to do is go back and, you know, I know maybe some of the carriers were different, but if you look in kind of the really strong years that we've had, the 2014, 2015, the 2017, 2018, 21, and 22, and the double-digit type of volume growth that we've been able to produce when the competition is in single digits, it's because we run all of this excess capacity, and our industry historically has been capacity constrained. And I know many carriers are talking about having excess capacity today, but the numbers simply don't bear that out, And we still see the industry as being capacity constrained. So that's why we're so confident. And once we see the demand environment start to improve, then we'll get back to outgrowing our competition like we've been able to do in prior cycles.

Very helpful. Thanks. Our next question comes from Jeff Kaufman with Vertical Research. Please go ahead.

Thank you very much. And thank you for squeezing me in. And I was just wondering if you could give us a little bit more color on weight per shipment. I don't know what level of detail you break it down to, but just under the idea, you know, it is improving. But do you have any idea whether that is a region of the country that may be coming back to life, whether it's certain industries that may not have been participating that are giving heavier weights per shipment coming in Or is it just we're throwing another hairdryer on a pallet and going from 49 to 50, and that's kind of how we think about it?

Yeah, generally, it's more widgets per pallet. And it typically follows when you start seeing the industrial performance as well. Typically, that industrial freight is going to be heavier in nature than retail-related freight. And so that's some of the good thing that we're seeing right now. most of our positive performance over the past five months has been in that that retail side of our business and so you know we're looking to start and starting to see some early indications in march of the industrial starting to turn the corner as well but as we get that industrial coming to us in kind of coordination with the positive ism trends that we've seen than we'd expect to see the weight per shipment continue to tack higher. And, you know, right now we're just around 1,500 pounds per shipment. That's about where we were in March and a little bit lighter than that. Normally the weight per shipment falls back a little bit in April versus March as well. So we're trending around 1,490 right now. But when I think back to really strong markets, we've been more like 1,600 pounds per shipment. And so, you know, that's a number that I'd love to see us continue to move up because, again, what that means is it's going to be more revenue per shipment. And generally, the cost per shipment is not going to move in tandem with that. So that's what will help get us back in balance, start moving our cost per shipment back closer to our longer term average of three and a half to four percent. And then have that positive spread of revenue per shipment over cost per shipment.

All right, that was a great color.

The next question is from Stephanie Benjamin with Truist. Please go ahead.

Wow, actually, it's last from the past. It's Stephanie Moore with Jeffries, but still the same person here. Thanks for the question. I wanted to just touch a bit on the capacity. I know this has come up quite a bit over on this call today, but maybe if you could touch specifically on private capacity, I think that, you know, I think that's an area that maybe doesn't get as much airtime, just obviously given the nature of those businesses. But any color you can touch on, because I think, you know, as we know, many of the public names talk a lot about having excess capacity, but would be helpful if we could hear maybe any color you can provide on what you're seeing on broad industry, specifically the privates.

Yeah, sure. And that's good perspective as well. I think that once Yellow closed, it seems like a lot of those service centers went into the private world. And I think that a lot of that market share that Yellow had ended up with the private carriers as well. And obviously, you know, many people took some elements to share there. But, you know, the factor that we look at is shipments per day per service center. And we've been able to, the public carriers, they disclose the number of service centers. So when we look at that type of data, you know, that's what tells us that some of the carriers don't have as much capacity as maybe what they talk about. because the shipments per day per service center are pretty similar at the end of 2025 as where they were in 2022 when everybody was capacity constrained and they couldn't grow. And then when you look at the total number of service centers throughout the industry, both the public and the private carriers, you can see from that 22 to 25 period that shipments per day per service center is down about 3%. So pretty close. I think that there's probably 5% to 10% excess capacity across the industry as a whole, but much less than what some people think about, maybe talk about. But if you think about it from the 100,000-foot level, you had a carrier that did over 50,000 shipments per day and had over 300 service centers. Not all of those service centers have remained in our industry. And what was a capacity-constrained industry in 2022 will be an even more capacity-constrained industry as we move forward.

Thank you. I appreciate the time.

The next question comes from Bruce Chan with Stiefel. Please go ahead.

Hey, gentlemen. This is Matt Mylesk on for Bruce this morning. Thanks for asking me this in. I just want to circle back to pricing. where yields, and I'm assuming contract renewals seem to remain pretty strong, curious if that strength and stability is sort of universal across the entire book, as we've heard about some increased competitiveness around 3PL business, and perhaps if you can share what percent of the total book is tied to 3PL, that'd be great.

Yeah, about a third of our business overall is related to 3PLs, and, you know, As I mentioned earlier, we're pretty consistent with what we target for increases every year, be it with our general rate increase that applies to our tariff-based business, and that's about 25% of our revenue overall, as well as what we try to achieve as we go through contract renewals. Obviously, every account is different. We look at each account on its own merits and uh and what their their profitability uh measurements are but um but we've been pretty consistent with with getting increases and you know it's a different approach that i think that we take versus some of our competitors and uh with with trying to be consistent i think that helps customers know what to plan for what the budget for and and i think it forms what's truly a partnership and a relationship versus just looking at things that uh maybe are more so market driven and so it's it's worked out well for us over time and you know that that'll continue to be the focus for us um is to try to achieve you know those those reasonable increases that are fair but equitable and um and will drive our long-term performance offsetting our cost inflation and supporting our ability to keep investing um in in you know our service center network investing in new technologies that our customers in many cases are demanding but to keep investing in our people to drive our business forward as well the next question comes from joe anderlin with stevens please go ahead hey guys thanks for taking the question um looking at the industry and public peers everyone's focused on service as a means to drive yields higher so with your

position as a service leader what's your focus on when you think about continuing to improve your mix of business and are there any end markets or services you're leaning into currently given you might have a better value add relative to competitors? Thank you.

You know Joe, service is not just delivering on time claims free it's also how you handle issues which relates to superior customer service. You know being able to talk to a human on the phone. We're in a world of bots now but customers still put a lot of stock in being able to pick up the phone and call one of our service centers our corporate office trace a shipment uh talk to a human uh also billing accuracy plays a big part in service uh sending a correct invoice the first time is very important our customers it creates less work for them allows us to get paid faster uh so there's a lot of a lot of components uh when we talk about service or customer service and we feel like we lead the industry and all those factors thank you thank you this concludes our question and answer session i would like to turn the conference back over to marie freeman for any closing remarks uh thank you all uh for your participation today we really appreciate your questions and please feel free to give us a call if you have anything further thanks and have a great day the conference has now concluded thank you for attending today's presentation you may now disconnect