OLD DOMINION FREIGHT LINE, INC.

Old Dominion Freight Line, Inc. is one of the largest North American less-than-truckload (LTL) motor carriers, operating in the highly competitive and significantly consolidated LTL industry. In 2024, the LTL industry had revenue of approximately $50.8 billion based on information reported in Transport Topics. The largest 5 and 10 LTL motor carriers accounted for approximately 56% and 81%, respectively, of the domestic LTL market in 2024 according to information reported in Transport Topics. The company believes consolidation in the industry will continue due to increased customer demand for transportation providers that can offer both regional and national service as well as other complementary value-added services.

Old Dominion competes with regional, inter-regional and national LTL carriers and, to a lesser extent, with truckload carriers, small package carriers, airfreight carriers and railroads. The company believes it is able to gain market share by providing high-quality service at a fair price and intends to expand the capacity of its network to accommodate future growth. Management believes the company's transit times are generally faster and more reliable than those of its principal national competitors, in part because of its efficient service center network, use of team drivers and proprietary technology. The company also provides greater geographic coverage than most of its regional competitors, and its diversified mix and scope of regional, inter-regional and national LTL service, combined with value-added service offerings, enables it to provide customers with a single source to meet their shipping and logistics needs.

The company generates revenue primarily from providing regional, inter-regional and national less-than-truckload (LTL) services through a single integrated, union-free organization. More than 98% of the company's revenue has historically been derived from transporting LTL shipments for customers, whose demand for services is generally tied to industrial production and the overall health of the U.S. domestic economy. In addition to core LTL services, the company offers a range of value-added services including container drayage, truckload brokerage and supply chain consulting. Revenue is generated primarily from customers throughout the United States and North America, and for the last three fiscal years, more than 95% of revenue was derived from services performed in the United States and less than 5% of revenue was generated from services performed internationally.

The company's core service is its LTL transportation, which is provided through an expansive network of service centers located throughout the continental United States. LTL services revenue was $5,446,151 thousand ¹ in 2025, $5,761,105 thousand ² in 2024, and $5,804,939 thousand ³ in 2023. The company's LTL service offerings include expedited transportation and are provided through a single integrated network. Through strategic alliances, the company also provides LTL services throughout North America.

Other services, which include container drayage, truckload brokerage and supply chain consulting, generated revenue of $50,238 thousand ⁴ in 2025, $53,705 thousand ⁵ in 2024, and $61,213 thousand ⁶ in 2023. These value-added services complement the company's core LTL offerings and enable it to provide customers with a single source to meet their shipping and logistics needs.

During the period, the company opened a net 16 and 35 service centers over the past five and ten years, respectively, for a total of 260 service centers at December 31, 2025. The company repurchased 4,525 thousand ⁷ shares of common stock for $728,088 thousand ⁸ in 2025, including transaction costs. The company also declared cash dividends of $0.28 per share ⁹ for each quarter of 2025. On May 23, 2025, the company exercised the accordion feature and entered into an amendment to the Credit Agreement to increase the total borrowing capacity from existing lenders by $150.0 million ¹⁰ to an aggregate of $400.0 million ¹¹. The company's Board of Directors approved a new stock repurchase program on July 26, 2023, authorizing the repurchase of up to an aggregate of $3.0 billion ¹² of outstanding common stock, and at December 31, 2025, the company had $1.54 billion ¹³ remaining authorized under the 2023 Repurchase Program.

Total revenue for 2025 was $5,496,389 thousand ¹⁴, a decrease of $318,421 thousand ¹⁵, or 5.5% ¹⁶, compared to $5,814,810 thousand ¹⁷ in 2024. Net income was $1,023,703 thousand ¹⁸ in 2025, compared to $1,186,073 thousand ¹⁹ in 2024, a decrease of $162,370 thousand ²⁰, or 13.7% ²¹. Diluted earnings per share were $4.84 ²² in 2025, compared to $5.48 ²³ in 2024, a decrease of $0.64 ²⁴, or 11.7% ²⁵. The operating ratio was 75.2% ²⁶ in 2025, compared to 73.4% ²⁷ in 2024. Cash flows provided by operating activities were $1,370,133 thousand ²⁸ in 2025, compared to $1,659,283 thousand ²⁹ in 2024.

The company currently estimates capital expenditures will be approximately $265 million ³⁰ for the year ending December 31, 2026. Approximately $125 million ³¹ is allocated for the purchase of service center facilities, construction of new service center facilities or expansion of existing service center facilities; approximately $95 million ³² is allocated for the purchase of tractors and trailers; and approximately $45 million ³³ is allocated for investments in technology and other assets.

The company's growth strategy includes increasing the volume of freight moving through its existing service center network primarily by increasing its market share and selectively expanding its capacity in the United States. The company has increased its revenue and customer base over the past ten years primarily through organic market share growth. The company opened a net 16 and 35 service centers over the past five and ten years, respectively, for a total of 260 service centers at December 31, 2025. Management believes these actions produced increased capacity within the service center network and provide opportunities for future growth. The company expects to continue to expand and upgrade its service center network, purchase additional equipment and increase sales and marketing efforts in connection with its growth strategy.

The company's growth strategy also depends upon its ability to maintain adequate capacity throughout its service center network to support customer demand. From time to time, the company may utilize third-party transportation services to supplement the capacity of its workforce and fleet. The company believes its current sources of liquidity will be sufficient to satisfy its expected capital expenditures for the next twelve months and in the longer term.

The company's primary cost elements are direct wages and benefits associated with the movement of freight, operating supplies and expenses (which include diesel fuel), and depreciation of its equipment fleet and service center facilities. The company gauges its overall success in managing costs by monitoring its operating ratio. In 2025, the operating ratio was 75.2% ³⁴, compared to 73.4% ³⁵ in 2024. The company believes depreciation costs will continue to increase in future periods based on its 2026 capital expenditure plan. The company expects its capital expenditures to remain below the historical range of 10% to 15% of revenue in 2026 as it continues to utilize available capacity within its existing network for growth.

The company currently estimates capital expenditures will be approximately $265 million ³⁶ for the year ending December 31, 2026. The company expects to fund these capital expenditures primarily through cash flows from operations, its existing cash and cash equivalents and, if needed, borrowings available under the Credit Agreement or Note Agreement. The company believes its current sources of liquidity will be sufficient to satisfy its expected capital expenditures for the next twelve months and in the longer term.

The company's capital expenditure plan for 2026 includes approximately $125 million ³⁷ for service center facilities, approximately $95 million ³⁸ for tractors and trailers, and approximately $45 million ³⁹ for technology and other assets. The company's Board of Directors declared a cash dividend of $0.29 per share ⁴⁰ on February 4, 2026, payable on March 18, 2026. At December 31, 2025, the company had $1.54 billion ⁴¹ remaining authorized under the 2023 Repurchase Program. The company intends to pay a quarterly cash dividend for the foreseeable future, subject to Board approval and other conditions.

The company's financial results for 2025 reflect continued softness in the domestic economy, which contributed to the decline in revenue, net income and diluted earnings per share. Inflationary pressures have been significant in the United States in recent years, impacting the cost to operate the business by putting upward pressure on wages, benefits, real estate, equipment, fuel, parts and repairs, insurance, and other expenses. The company has experienced lower freight volumes due to continued softness in the domestic economy, and decreased demand for LTL freight services can negatively impact shipment volume and lower weight per shipment, which in turn can negatively impact freight density in the network.

The company faces risks from various economic factors such as inflationary pressures or downturns in the domestic economy that could adversely impact profitability and cash flows. Changes in international trade policies, including with respect to tariffs, have decreased demand for the company's services and may continue to adversely impact customers, the industry and the business. The company also faces risks from fluctuations in the availability and price of diesel fuel, which is a critical component of operations and a significant operating expense.

The company faces material risks from its highly capital-intensive business model, with capital expenditures of $415,034 thousand ⁴² in 2025, and any inability to generate sufficient cash from operations or access debt and equity markets could limit growth and affect profitability. The company is exposed to significant insurance and claims expenses, with an accrued liability for bodily injury/property damage and workers' compensation claims totaling $138.8 million ⁴³ at December 31, 2025, and a 10% change in market value of investments relating to company-owned life insurance contracts would have caused a $7.9 million ⁴⁴ impact on pre-tax income in 2025. The company's results are susceptible to fluctuations in the availability and price of diesel fuel, a critical operating expense, and while fuel surcharge programs are in place, the company does not hedge against the risk of diesel fuel price increases. The company's growth strategy depends on increasing market share and selectively expanding capacity, but risks include shortages of suitable real estate, projected freight volume growth differing from actual results, and strain on management and capital resources. The company also faces risks from the potential unionization of its employees, as none of its 20,591 ⁴⁵ full-time employees are currently represented under a collective bargaining agreement, and unionization could increase operating costs and impair the company's ability to compete.

Management's discussion emphasizes that the company's financial results for 2025 reflect continued softness in the domestic economy, which contributed to the decline in revenue, net income and diluted earnings per share. Despite the decrease in LTL tons, management highlights that the company maintained its commitment to superior customer service by providing customers with 99% on-time service and a cargo claims ratio of 0.1% during the year. Management states that this service performance supported the continued improvement in yield. Management also notes that the company maintained its focus on operating efficiently and controlling discretionary spending during the year, although the deleveraging effect from the decrease in revenue and an increase in depreciation expense led to an increase in the operating ratio. Management's strategic priorities for the period ahead include continuing to execute its yield-management philosophy, pursuing continued increases in density, and driving ongoing improvements in operating efficiencies, which management believes are the key components of the company's ability to further improve its operating ratio and long-term profitable growth. Management also states that the company believes its current sources of liquidity will be sufficient to satisfy its expected capital expenditures for the next twelve months and in the longer term.