OLD DOMINION FREIGHT LINE, INC.

Previous wording

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Current wording

Item 2. Management’s Discussion and Analysisof Financial Condition and Results of Operations

Previous wording

Key financial and operating metrics for the three-month periods ended March 31, 2025 and 2024 are presented below:

Current wording

Key financial and operating metrics are presented below:

Previous wording

Our financial results for the first quarter of 2025 reflect continued softness in the domestic economy, which contributed to the decline in our revenue, net income and diluted earnings per share. We maintained our commitment to providing superior customer service as we provided our customers with 99% on-time service and a cargo claims ratio below 0.1% during the quarter. This service performance supported the continued improvement in our yield. We also maintained our focus on operating efficiently and controlling discretionary spending during the quarter, although the deleveraging effect from the decrease in revenue and the increase in depreciation expense due to the ongoing execution of our capital expenditure program led to an increase in our operating ratio. As a result, our net income and diluted earnings per share decreased by 12.9% and 11.2%, respectively, as compared to the first quarter of 2024.

Current wording

Our financial results for the second quarter and first six months of 2025 reflect continued softness in the domestic economy, which contributed to the decline in our revenue, net income and diluted earnings per share. We maintained our commitment to superior customer service by providing our customers with 99% on-time service and a cargo claims ratio of 0.1% during the quarter. This service performance supported the continued improvement in our yield. We also maintained our focus on operating efficiently and controlling discretionary spending during the quarter, although the deleveraging effect from the decrease in revenue and the increase in depreciation expense led to an increase in our operating ratio. As a result, our net income and diluted earnings per share decreased by 16.6% and 14.2%, respectively, for the second quarter of 2025 as compared to the same period of 2024 and decreased 14.8% and 12.8%, respectively, for the first six months of 2025 as compared to the same period of 2024.

Previous wording

Our revenue in the first quarter of 2025 decreased $85.2 million, or 5.8%, when compared to the first quarter of 2024 due to a decrease in volumes that was partially offset by an increase in LTL revenue per hundredweight. LTL tonnage per day decreased 6.3% primarily due to a 5.0% decrease in LTL shipments per day and a 1.4% decrease in LTL weight per shipment, reflecting the continued softness in the domestic economic environment. This decrease in our volumes was partially offset by a 2.2% increase in our LTL revenue per hundredweight, which includes the impact of lower fuel surcharges resulting from a decline in the average price of diesel fuel from the comparable period. Excluding fuel surcharges, LTL revenue per hundredweight increased 4.1% in the first quarter of 2025 as compared to the first quarter of 2024. We believe the increase in our LTL revenue-per-hundredweight metrics was driven by the ongoing execution of our yield management strategy. Our consistent, cost-based approach to pricing focuses on offsetting our cost inflation while also supporting additional investments into our business to expand capacity and enhance our technology.

Current wording

The decrease in our volumes was partially offset by an increase in our LTL revenue per hundredweight of 3.4% and 2.8% in the second quarter and first six months of 2025, respectively, as compared to the same periods of 2024. These changes include the impact of lower fuel surcharges that resulted from a decline in the average price of diesel fuel during the comparable periods. Excluding fuel surcharges, LTL revenue per hundredweight increased 5.3% and 4.7% in the second quarter and first six months of 2025, respectively, as compared to the same periods of 2024. We believe the increase in our LTL revenue-per-hundredweight metrics in the second quarter and first six months of 2025, as compared to the same periods of 2024, was driven by the ongoing execution of our long-term yield management strategy. Our consistent, cost-based approach to pricing focuses on offsetting our cost inflation while also supporting additional investments into our business to expand capacity and enhance our technology.

Previous wording

Revenue per day decreased 5.5% in April 2025 compared to the same month last year. LTL tons per day decreased 8.8%, due to a 6.1% decrease in LTL shipments per day and a 2.8% decrease in LTL weight per shipment. LTL revenue per hundredweight increased 3.6% as compared to the same month last year. LTL revenue per hundredweight, excluding fuel surcharges, increased 6.2% as compared to the same month last year.

Current wording

Revenue per day decreased 4.5% in July 2025 as compared to the same month last year. LTL tons per day decreased 8.3%, due to a 7.2% decrease in LTL shipments per day and a 1.1% decrease in LTL weight per shipment. LTL revenue per hundredweight increased 4.2% as compared to the same month last year. LTL revenue per hundredweight, excluding fuel surcharges, increased 4.6% as compared to the same month last year.

Previous wording

Salaries, wages, and benefits decreased $10.3 million, or 1.5%, in the first quarter of 2025 as compared to the first quarter of 2024, due to a $16.6 million, or 3.4%, decrease in salaries and wages that was partially offset by a $6.3 million, or 3.6%, increase in employee benefit costs.

Current wording

Salaries, wages and benefits decreased $11.7 million, or 1.7%, in the second quarter of 2025 as compared to the second quarter of 2024, due to a $16.9 million, or 3.4%, decrease in salaries and wages that was partially offset by a $5.2 million, or 2.8%, increase in employee benefit costs. Salaries, wages and benefits decreased $22.0 million, or 1.6%, in the first six months of 2025 as compared to the same period of 2024, due to a $33.5 million, or 3.4%, decrease in salaries and wages that was partially offset by an $11.5 million, or 3.2%, increase in employee benefit costs.

Previous wording

The decrease in salaries and wages was primarily due to the 4.7% decrease in our average number of active full-time employees compared to the first quarter of 2024 as we balanced our workforce with current shipping trends. Our productive labor costs, which include wages for drivers, platform employees, and fleet technicians, increased as a percent of revenue to 24.7% in the first quarter of 2025 as compared to 24.1% in the first quarter of 2024. Despite the decrease in network density that generally results from the decline in volumes, we continued to operate efficiently in first quarter of 2025. Our P&D and platform operations improved in the first quarter of 2025 compared to the first quarter of 2024, which helped offset the reduction in our linehaul laden load factor. Our other salaries and wages as a percent of revenue increased to 10.0% in the first quarter of 2025 as compared to 9.7% in the first quarter of 2024.

Current wording

The decrease in salaries and wages in the second quarter and first six months of 2025, as compared to the same periods of 2024, was primarily due to the decrease of 4.8% and 4.7%, respectively, in our average number of active full-time employees as we balanced our workforce with current shipping trends. Our productive labor costs, which include wages for drivers, platform employees, and fleet technicians, increased as a percent of revenue to 24.4% and 24.5%, respectively, in the second quarter and first six months of 2025, as compared to 23.7% and 23.9%, respectively, in the same periods of 2024 as a result of the decrease in network density. Despite this decrease in network density that generally results from the decline in volumes, our team continued to deliver superior service to our customers while also focusing on operating efficiencies. Our other salaries and wages as a percent of revenue increased to 9.8% and 9.9%, respectively, in the second quarter and first six months of 2025, as compared to 9.5% and 9.6%, respectively, in the same periods of 2024.

Previous wording

The costs attributable to employee benefits increased in the first quarter of 2025 as compared to the first quarter of 2024 primarily due to higher costs associated with our group health and dental plans. The increase in group health benefit costs were primarily due to increases in costs per claim in the first quarter of 2025 as compared to the first quarter of 2024. As a result, employee benefit costs as a percent of salaries and wages increased to 38.2% in the first quarter of 2025 from 35.6% in the first quarter of 2024.

Current wording

The costs attributable to employee benefits increased in both the second quarter and the first six months of 2025, as compared to the same periods of 2024, primarily due to higher costs associated with our group health and dental plans. The increase in group health benefit costs was primarily due to increases in the average costs per claim in the second quarter and the first six months of 2025. As a result, employee benefit costs as a percent of salaries and wages increased to 39.5% in the second quarter of 2025 from 37.2% in the comparable period of 2024 and increased to 38.9% in the first six months of 2025 from 36.4% in the comparable period of 2024.

Previous wording

Operating supplies and expenses decreased $22.6 million, or 13.1%, in the first quarter of 2025 as compared to the first quarter of 2024 due primarily to decreases in our costs for diesel fuel used in our vehicles as well as lower maintenance and repair costs. The cost of diesel fuel, excluding fuel taxes, represents the largest component of operating supplies and expenses, and can vary based on both average price per gallon and consumption. Our average cost per gallon of diesel fuel decreased 10.5% in the first quarter of 2025 as compared to the first quarter of 2024. We do not use diesel fuel hedging instruments; therefore, our costs are subject to market price fluctuations. Our gallons consumed decreased 6.6% in the first quarter of 2025 as compared to the first quarter of 2024 due primarily to a decrease in miles driven. Additionally, our other operating supplies and expenses as a percent of revenue decreased between the periods compared, due primarily to lower maintenance and repair costs. The improvement in the average age of our fleet by consistently executing our capital expenditure programs contributed to the improvement in our maintenance and repair costs.

Current wording

Operating supplies and expenses decreased $18.6 million, or 11.5%, and $41.1 million, or 12.3%, in the second quarter and first six months of 2025, respectively, as compared to the same periods of 2024, primarily due to decreases in our costs for diesel fuel used in our vehicles as well as lower maintenance and repair costs. The cost of diesel fuel, excluding fuel taxes, represents the largest component of operating supplies and expenses, and can vary based on both average price per gallon and consumption. Our average cost per gallon of diesel fuel decreased 10.9% and 10.6% in the second quarter and first six months of 2025, respectively, as compared to the same periods of 2024. We do not use diesel fuel hedging instruments; therefore, our costs are subject to market price fluctuations. Our gallons consumed decreased 8.0% and 7.3% in the second quarter and first six months of 2025, respectively, as compared to the same periods of 2024, primarily due to a decrease in miles driven. Additionally, our other operating supplies and expenses decreased between the periods compared primarily due to lower maintenance and repair costs driven by improvement in the average age of our fleet that resulted from our consistent execution of our capital expenditure programs.

Previous wording

Depreciation and amortization costs increased $4.6 million, or 5.4%, in the first quarter of 2025 as compared to the first quarter of 2024, due primarily to the increases in depreciation costs of the assets acquired as part of our 2024 and 2025 capital expenditure programs. We believe depreciation costs will continue to increase in future periods based on our 2025 capital expenditure plan. While our investments in real estate, equipment, and technology can increase our costs in the short-term, we believe these investments are necessary to support our continued long-term growth and strategic initiatives.

Current wording

Depreciation and amortization costs increased $6.1 million, or 7.2%, and $10.7 million, or 6.3%, in the second quarter and first six months of 2025, respectively, as compared to the same periods of 2024, primarily due to the increases in depreciation costs of the assets acquired as part of our 2024 and 2025 capital expenditure programs. We believe depreciation costs will continue to increase in future periods based on our 2025 capital expenditure plan. While our investments in real estate, equipment, and technology can increase our costs in the short-term, we believe these investments are necessary to support our continued long-term growth and strategic initiatives.

Previous wording

Our effective tax rate for the first quarter of 2025 was 24.8% as compared to 25.6% for the first quarter of 2024. Our effective tax rate generally exceeds the federal statutory rate due to the impact of state taxes and, to a lesser extent, certain other discrete or non-deductible items. In the first quarter of 2025, our effective tax rate was favorably impacted by the timing of federal tax credit purchases.

Current wording

Our effective tax rate was 24.8% for both the second quarter and first six months of 2025, as compared to 24.5% and 25.0%, respectively, for the second quarter and first six months of 2024. Our effective tax rate generally exceeds the federal statutory rate due to the impact of state taxes and, to a lesser extent, certain other non-taxable or non-deductible items.

Previous wording

The change in our cash flows provided by operating activities during the first quarter of 2025 as compared to the first quarter of 2024 was due to decreases in net income and in certain working capital accounts, primarily related to changes in customer and other receivables.

Current wording

The change in our cash flows provided by operating activities during the first six months of 2025 as compared to the first six months of 2024 was due to decreases in net income and in certain working capital accounts, primarily related to changes in net income taxes and customer and other receivables.

Previous wording

The decline in our cash flows used in investing activities during the first quarter of 2025 as compared to the first quarter of 2024 was due primarily to the reduction in our 2025 capital expenditures plan as compared to 2024. Changes in our capital expenditures are more fully described below in “Capital Expenditures.”

Current wording

The change in our cash flows used in investing activities during the first six months of 2025 as compared to the first six months of 2024 was primarily due to the reduction in our 2025 capital expenditure plan as compared to 2024. Changes in our capital expenditures are more fully described below under “Capital Expenditures.”

Previous wording

We have four primary sources of available liquidity: cash flows from operations, our existing cash and cash equivalents, available borrowings under our third amended and restated credit agreement with Wells Fargo Bank, National Association serving as administrative agent for the lenders, dated March 22, 2023 (as subsequently amended, the “Credit Agreement”), and our Note Purchase and Private Shelf Agreement with PGIM, Inc. (“Prudential”) and certain affiliates and managed accounts of Prudential (as subsequently amended, the “Note Agreement”). The Credit Agreement and the Note Agreement are described in more detail below under “Financing Arrangements.” We believe we also have sufficient access to debt and equity markets to provide other sources of liquidity, if needed.

Current wording

We have four primary sources of available liquidity: cash flows from operations, our existing cash and cash equivalents, available borrowings under our third amended and restated credit agreement with Wells Fargo Bank, National Association serving as administrative agent for the lenders, dated March 22, 2023 (as subsequently amended on May 23, 2025, the “Credit Agreement”), and our Note Purchase and Private Shelf Agreement with PGIM, Inc. (“Prudential”) and certain affiliates and managed accounts of Prudential (as subsequently amended, the “Note Agreement”). The Credit Agreement and the Note Agreement are described in more detail below under “Financing Agreements.” We believe we also have sufficient access to debt and equity markets to provide other sources of liquidity, if needed.

Previous wording

The table below sets forth our net capital expenditures for property and equipment for the three-month period ended March 31, 2025 and the years ended December 31, 2024 and 2023:

Current wording

The table below sets forth our net capital expenditures for property and equipment for the six-month period ended June 30, 2025 and the years ended December 31, 2024 and 2023:

Previous wording

Our capital expenditures vary based upon the projected increase in the number and size of our service center facilities necessary to support our plan for long-term growth, our planned tractor and trailer replacement cycle, and forecasted tonnage and shipment growth. Expenditures for land and structures can be dependent upon the availability of land in the geographic areas where we are looking to expand. We historically spend 10% to 15% of our revenue on capital expenditures each year, and we generally expect to continue to maintain a level of capital expenditures in order to support our long-term plan for market share growth. There could be years, however, where our annual capital expenditures plan is above or below this range as we balance the size of our service center network and operating fleet with anticipated growth.

Current wording

Our capital expenditures vary based upon the projected increase in the number and size of our service center facilities necessary to support our plan for long-term growth, our planned tractor and trailer replacement cycle, and forecasted tonnage and shipment growth. Expenditures for land and structures can be dependent upon the availability of land in the geographic areas where we are looking to expand. We historically spend 10% to 15% of our revenue on capital expenditures each year, and we generally expect to continue to maintain a level of capital expenditures in order to support our long-term plan for market share growth. There could be years, however, where our annual capital expenditure plan is above or below this range as we balance the size of our service center network and operating fleet with anticipated growth.

Previous wording

We currently estimate capital expenditures will be approximately $450 million for the year ending December 31, 2025, which is a $125 million reduction from our initial plan due to the current economic environment. Approximately $210 million is allocated for the purchase of service center facilities, construction of new service center facilities or expansion of existing service center facilities, subject to the availability of suitable real estate and the timing of construction projects; approximately $190 million is allocated for the purchase of tractors and trailers; and approximately $50 million is allocated for investments in technology and other assets. We expect to fund these capital expenditures primarily through cash flows from operations, our existing cash and cash equivalents and, if needed, borrowings available under the Credit Agreement or Note Agreement. We believe our current sources of liquidity will be sufficient to satisfy our expected capital expenditures for the next twelve months and in the longer term.

Current wording

We currently estimate capital expenditures will be approximately $450 million for the year ending December 31, 2025. Approximately $210 million is allocated for the purchase of service center facilities, construction of new service center facilities or expansion of existing service center facilities, subject to the availability of suitable real estate and the timing of construction projects; approximately $190 million is allocated for the purchase of tractors and trailers; and approximately $50 million is allocated for investments in technology and other assets. We expect to fund these capital expenditures primarily through cash flows from operations, our existing cash and cash equivalents and borrowings available under the Credit Agreement or Note Agreement. We believe our current sources of liquidity will be sufficient to satisfy our expected capital expenditures for the next twelve months and in the longer term.

Previous wording

Under our repurchase programs, we may repurchase shares from time to time in open market purchases or through privately negotiated transactions. Shares of our common stock repurchased under our repurchase programs are canceled at the time of repurchase and are classified as authorized but unissued shares of our common stock. At March 31, 2025, we had $2.06 billion remaining authorized under the 2023 Repurchase Program.

Current wording

Under our repurchase programs, we may repurchase shares from time to time in open market purchases or through privately negotiated transactions. Shares of our common stock repurchased under our repurchase programs are canceled at the time of repurchase and are classified as authorized but unissued shares of our common stock. At June 30, 2025, we had $1.85 billion remaining authorized under the 2023 Repurchase Program.

Previous wording

Our Board of Directors declared a cash dividend of $0.28 per share for the first quarter of 2025, and declared a cash dividend of $0.26 per share for each quarter of 2024.

Current wording

Our Board of Directors declared a cash dividend of $0.28 per share for each of the first three quarters of 2025 and declared a cash dividend of $0.26 per share for each quarter of 2024.

Previous wording

The Series B Notes bear interest at 3.10% per annum and mature on May 4, 2027, unless prepaid. The first two principal payments of $20.0 million each were paid on May 4, 2023 and 2024, respectively. The remaining $60.0 million will be paid in three equal annual installments of $20.0 million through May 4, 2027. The Series B Notes are senior unsecured obligations and rank pari passu with borrowings under the Credit Agreement or other senior promissory notes issued pursuant to the Note Agreement.

Current wording

The Series B Notes bear interest at 3.10% per annum and mature on May 4, 2027, unless prepaid. The first three principal payments of $20.0 million each were paid in May of 2023, 2024 and 2025. The remaining $40.0 million will be paid in two equal annual installments of $20.0 million in May 2026 and May 2027. The Series B Notes are senior unsecured obligations and rank pari passu with borrowings under the Credit Agreement or other senior promissory notes issued pursuant to the Note Agreement.

Previous wording

The Credit Agreement, which matures in May 2028, provides for a five-year, $250.0 million senior unsecured revolving line of credit and a $150.0 million accordion feature, which if fully exercised and approved, would expand the total borrowing capacity up to an aggregate of $400.0 million. The Credit Agreement allows for up to $100.0 million to be utilized for letters of credit against the line of credit.

Current wording

The Credit Agreement, which matures in March 2028, initially provided for a five-year, $250.0 million senior unsecured revolving line of credit and a $150.0 million accordion feature. On May 23, 2025, we 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 to an aggregate of $400.0 million. The Credit Agreement allows for up to $100.0 million to be utilized for letters of credit against the line of credit, which was unchanged by the amendment.

Previous wording

expectations relating to evolving environmental, social and governance considerations and related reporting obligations;

Current wording

expectations relating to evolving sustainability considerations and related reporting obligations;