Old Dominion Freight Line, Inc. (ODFL) Earnings

Management highlights

- Marty Freeman noted first quarter results continued encouraging trends with improved service demand, acceleration in LTL volumes in February and March, 99% on-time service and claims ratio below 0.1%. The company's value proposition differentiates it, allowing market share gain over 10 years. They invested nearly $2 billion in CapEx over 3 years and plan $205 million in 2026, focusing on employees with competitive wages, benefits, and training programs. They aim to control costs and operate efficiently while maintaining service standards. - Adam N. Satterfield discussed revenue, operating ratio, cash flows, etc. Revenue was $1.33B, operating ratio 76.2% in Q1, cash flows from operations $373.6M, CapEx $62.6M, share repurchase $88.1M, dividends $60.5M, effective tax rate 25% for 2026.

Guidance

- Adam Satterfield said the ten-year average change for operating ratio is 300 - 350 basis points improvement from Q1 to Q2, and they are comfortable with that range assuming sequential volume improvement. - He mentioned April month-to-date revenue per day increased ~7% vs April 2025, and compared historical sequential periods to assess current trends.

Segment performance

Old Dominion Freight Line, Inc.'s revenue for the first quarter of 2026 was $1.33 billion, a 2.9% decrease year-over-year. LTL tons per day decreased 7.7% but LTL revenue per hundredweight increased 5.7%. Excluding fuel surcharges, LTL revenue per hundredweight increased 4.4% year-over-year. Sequentially, first quarter revenue per day increased 0.5% compared to the fourth quarter of 2025, with LTL tons per day decreasing 0.4% and LTL shipments per day decreasing 0.7%. The LTL tons per day had monthly sequential changes: January decreased 3.4% vs December, February increased 4.9% vs January, March increased 4.6% vs February. Month-to-date revenue per day in April 2026 increased ~7% vs April 2025, with LTL tons per day decreasing ~6.5% and revenue per hundredweight excluding fuel surcharges increasing 4%-4.5%.

Risks & headwinds

- Geopolitical risk could impact consumer and industrial restocking, affecting freight volume. - Fuel price fluctuations and related costs can create cost headwinds. - Fringe benefit costs and other ancillary costs like credit card fees and bad debt write-offs pose potential cost pressures.

Analyst Q&A

• Q: In the context of trends, share color or thoughts on direction of OR as we move from Q1 to Q2?

  A: 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 we see sequential improvement in volumes.

• Q: Have you seen a shift in excess terminal capacity?

  A: We are still a little north of 35%. Volumes are still down year-over-year and this is the slower time of the year in the first quarter, but we continue to see this as an opportunity driving part of the operating ratio improvement as we see sequential volume improvement.

• Q: Frame up impacts in 1Q for both fuel as well as weather to figure out where in the range we might want to be?

  A: Fuel is part of yield management strategy. When comparing sequential periods, if you have similar bill counts and mix of freight, fuel can go up or down 10% and overall profitability can stay the same. The first quarter to second quarter of 2026 is probably going to have a lot of similarities to the first quarter to second quarter 2022 period with fuel shock and other inflationary impacts.

• Q: Sense on demand and market share perspective coming out of strong Feb and what seen in March and April, and if it informs revenue assumptions for 2Q?

  A: Demand has continued to improve. We have seen a pickup in weight per shipment, positive ISM trends, and retail driving volume performance with industrial expected to contribute. Revenue for 2Q is a little below normal seasonality in April but still feel good about the trend, with good acceleration through the month and positive trends developing.

• Q: Share range of revenue embedded within OR guidance and if seeing spill from truckload back into LTL?

  A: There is some volatility based on fuel. We are seeing spill from truckload back into LTL as shippers revert back to moving more freight by LTL due to truckload market conditions. It has been a headwind but will unwind benefiting the industry and market share opportunities.

• Q: Speak to drivers of pricing and yields, 4.4% in quarter ahead of guidance, drivers and 2Q run rate?

  A: 4% - 4.5% for full quarter is still appropriate, looking at weight per shipment. First quarter yield came in a little stronger, and we want to see positive revenue-per-shipment over cost-per-shipment spread, typically 100 - 150 basis points.

• Q: On 2Q OR walk, not pointing to maybe doing better than normal seasonality given April up 7%, is that conservative or higher starting point with 1Q?

  A: It is a couple of things, including fringe benefit cost headwinds and fuel-related variable cost headwinds. But if business levels continue to pick up, we can beat the guidance, with a good starting point from 1Q performance.

• Q: Feb did better than typical seasonality, March smidge better or in line, April dipping a bit lower, sense of pull-forward and how thinking about 2Q and June comp?

  A: Not hearing major pull-forward from large customers. There is still uncertainty, but we have heard more optimism from customers through the balance of the year, and we hope to see continuation of positive trends through June and beyond.

• Q: Truckload volumes - good quality freight or better, April trend share loss indication or volumes not as good as expected, and average employee down 7% focus on scaling?

  A: Truckload volumes moving back to LTL are good freight as it moves at profitable LTL pricing. April trend is not market share loss, just softer volume than seen. They are in a good spot with staffing to respond to sequential growth, having capacity from people, service center, and fleet standpoints.

• Q: April seasonality ten-year average and competitive landscape impact?

  A: April normal seasonality is down 1%, competitive landscape shows service gap with them as widest, seeing more wins in bids and optimism for balance of year, not seeing specific carrier initiative having material impact.

• Q: Cost pressures excluding fuel, and competition in grocery and expedited freight bid cycles?

  A: Fringe benefit headwind, general supplies and expenses expected to improve, depreciation cost leverage expected. Competing in all lines of business, they have a better service product and focus on enhancing services to keep service gap.

• Q: FedEx Freight spin impression and Easter timing impact on April?

  A: Easter had impact on April trend. FedEx is a good competitor but competitive landscape not really changed, they have to go through separation changes. Their service offerings not really changing customer perception compared to them.

• Q: Recovering lost volume in downturn and upcycle, ability and timeline, and impact of competitive environment, macro, idiosyncratic actions?

  A: They maintain market share through downturn and win significant share in upcycle. They have invested in capacity, aim to stay ahead of growth curve, and are optimistic with caution due to geopolitical risk, expecting sequential volume improvement and return to positive year-over-year later in the year.

• Q: Color on weight per shipment improvement from regions, industries, or units per pallet?

  A: Generally more widgets per pallet, following industrial performance. Retail has driven past five months' positive performance, with industrial expected to contribute to weight per shipment ticking higher.

• Q: Capacity, specifically private capacity, color on broader industry?

  A: Once Yellow closed, some service centers went to private, but shipments per day per service center data shows industry has ~5% - 10% excess capacity but less than some think, and will be more capacity-constrained moving forward.

• Q: Pricing, yields, contract renewals strength and universality across book, and percent of book tied to 3PL?

  A: About a third of business is 3PL. They are consistent with increases, taking different approach than competitors, aiming for reasonable increases to offset cost inflation and support investments.

• Q: Focus on improving mix of business with service as yield driver, and end markets/services leaning into with better value add?

  A: Service includes on-time delivery, claims-free, being able to talk to human, billing accuracy, and they lead industry in all these components.