Good morning and welcome to the Old Dominion Freight Line second quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touchtone phone. To withdraw your question, please press star then two. We kindly ask that you limit yourself to one question only. Please note this event is being recorded. I would now like to turn the conference over to Jack Atkins, Director of Investor Relations. Please go ahead. Thank you, Wyatt. Good morning everyone, and welcome to the second quarter 2025 conference call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through August 6, 2025 by dialing 1-877-344-7529, access code 8056479. 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. You are 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. As a final note before we begin, we welcome your questions today, but ask that you limit yourself to just one question at a time before returning to the queue. At this time for opening remarks, I would like to turn the conference over to Old Dominion's President and Chief Executive Officer, Marty Freeman. Marty, please go ahead. Good morning and welcome to our second quarter conference call. With me on the call today is Adam Satterfield, our CFO. After some brief remarks, we would be glad to take your questions. Old Dominion second quarter financial results reflect continued softness in the domestic economy. Although our revenue decreased in the quarter due to a decline in our volumes, our yields improved as our best-in-class service continues to support our disciplined approach to pricing. I want to thank our outstanding team for their unwavering dedication to our customers and continued commitment to executing the core elements of our long-term strategic plan. Although the challenging economic environment has persisted for longer than we anticipated, we have remained focused on what we can control as we work to ensure Old Dominion c ontinues to deliver superior service to our customers while also operating efficiently. In addition, our ongoing investments in our network, technology, and our OD family of employees puts us in an unparalleled position to respond to an inflection in demand when it materializes. Delivering superior service at a fair price to our customers is the cornerstone of our strategic plan and has been central to our success for many, many years. Doing so consistently through the ups and downs of the economic cycle has strengthened our customer relationships over time and allowed us to keep our market share relatively consistent over the extended period of slower economic activity. As a result, we were pleased to once again provide our customers with 99% on-time performance and a cargo claims ratio of 0.1% in the second quarter. This consistency of our execution and our commitment to creating value for our customers does not happen by accident. It is a product of our unique culture and the result of hard work of the OD family of employees across our company. Our team is focused every day on adding value for our customers. By keeping our promises to our customers, we help them create value for their own customers. Our commitment to service excellence continues to support our long-term yield management initiatives with a focus on individual account-level profitability. Our approach to pricing is designed to offset cost inflation and support our ongoing investments in our network, our fleet, and our people. Although these investments have created headwinds to our profitability in the short term, we are confident that our consistent reinvestment back into our business for growth is the right long term approach. We know that having available capacity to grow with our customers and support them during periods of stronger demand is an important component of our proposition. We also believe that these investments are critical to stay ahead of what we expect to be favorable long term demand trends for our industry. I'm very proud of our team and how they continue to find ways to reduce cost and operate as efficiently as possible during the period of uncertain demand. Given that our first priority is to uphold our commitment to delivering superior service to our customers, it can lead to increased operating costs due to the loss of operating density when volumes do decrease. While that was the case in the second quarter, we continue to believe that our business model contains meaningful operating leverage and we remain confident in our ability to improve our operating ratio over the long term. We expect this to become more apparent as the demand environment improves and we are able to leverage our investments in our fleet, our service network and our technology. Over time, our customers have recognized the value of our service by giving us more of their business, which has allowed us to win more market share over the last decade than any other LTL carrier. Looking forward, we believe that the consistency of our execution, unique culture and our team's daily commitment to excellence will allow us to be the biggest market share winner over the next decade as well. Our position is as strong as ever to respond to an improvement in the demand environment. As a result, we are confident in our ability to produce profitable revenue growth and drive increased shareholder value over the long term. Thank you very much for joining us this morning and now Adam will discuss our second quarter in greater detail. Thank you Marty and good morning. Old Dominion's revenue totaled $1.41 billion for the second quarter 2025, which was a 6.1% decrease from the prior year. Our revenue results reflect a 9.3% decrease in LTL tons per day. That was partially offset by a 3.4% increase in LTL revenue per hundredweight. On a sequential basis, our revenue per day for the second quarter increased 0.8% when compared to the first quarter of 2025, with LTL tons per day increasing 0.1% and LTL shipments per day increasing 0.8%. For comparison, the 10-year average sequential change for these metrics includes an increase of 8.2% in revenue per day, an increase of 5.3% in LTL tons per day, and an increase of 6.0% in LTL shipments per day. The monthly sequential changes in LTL tons per day during the second quarter were as follows. April decreased 3.7% as compared to March, May increased 0.5% as compared to April, and June decreased 0.6% as compared to May. The 10-year average change for these respective months is a decrease of 0.7% in April, an increase of 2.5% in May, and an increase of 2.1% in June. For July, our current month to date, revenue per day is down 5.1% when compared to July 2024 with a decrease of 8.5% in our LTL tons per day. As usual, we will provide the actual revenue related details for July in our second quarter Form 10-Q. Our operating ratio increased 270 basis points to 74.6% for the second quarter of 2025 as the decrease in our revenue had a deleveraging effect on many of our operating expenses. This contributed to the 160 basis point increase in our overhead cost as a percent of revenue. Within our overhead cost, depreciation as a percent of revenue increased 80 basis points while our miscellaneous expenses increased 40 basis points. The increase in our depreciation cost as a percent of revenue reflects the ongoing execution of our long-term capital expenditure program, which we believe will support our ability to grow with customers in the years ahead. Our direct operating cost also increased as a percent of revenue despite our team's best efforts to manage these variable costs. The 110 basis point increase in these costs was primarily due to higher expenses associated with our group health and dental plans. As a result, our employee benefit costs increased to 39.5% of salaries and wages during the second quarter of 2025 from 37.2% in the same period of the prior year. Overall, we continue to be pleased with how our team has remained focused on controlling what we can and until the demand environment improves, the OD team has continued to deliver best in class service while operating very efficiently, and we've also managed our discretionary spending. We will, however, continue to make the investments that we believe are necessary to ensure that our business remains well positioned for the long term. Old Dominion's cash flow from operations totaled $285.9 million for the second quarter and $622.4 million for the first six months of 2025 respectively, while capital expenditures were $187.2 million and $275.3 million for those same periods. We utilized $223.5 million and $424.6 million of cash for our share repurchase program during the second quarter and first six months of 2025 respectively, while our cash dividends totaled $59.0 million and $118.5 million for those same periods. Our effective tax rate for the second quarter of 2025 was 24.8% as compared to 24.5% in the second quarter of 2024. We currently expect our effective tax rate will be 24.8% for the third quarter. This concludes our prepared remarks this morning. Operator we'll be happy to open the floor for questions at this time. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone 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 kindly ask each person to limit themselves to one question only. Our first question will come from Chris Wetherbee with Wells Fargo. Please go ahead. Hey, thanks. Good morning, guys. Appreciate the comments. Maybe we could just start with you k now, your thoughts around operating ratio. Obviously it's a challenging environment from a tonnage perspective, at least year over year. Kind of how do you think about sort of the normal progression from 2Q? To 3Q on the OR maybe kind of how you feel like you can fare given the circumstances we're in from a macro backdrop? Sure, yeah. The 10-year average is for us typically flat to up 50 basis points from the second quarter to the third, but that's typically based on sequential revenue growth of about 3%, which is what we typically see. Obviously, given the demand environment, what you just said, you know, we've not really seen that positive inflection yet, unfortunately with our revenue this year. I'm kind of thinking that revenue per day, if it continues to stay flattish on a per day basis, pretty much what we saw in the second quarter, if that continues into the third, that we'll probably see an increase in the operating ratio somewhere in the 80-120 basis point type range. A little worse than what our normal sequential change would be. Just a couple things to point out for that. I'm expecting that we'll see an increase in our salary, wages and benefits line and some of that, as you know, we give a wage increase that's the first of September every year, so that's always in there. We typically have that revenue that offsets a little bit. I'm also expecting that we'll see continued pressure with our fringe benefit costs. I'm thinking that that will be part of the driver. I also think that we'll see our operating supplies and expenses will probably tick up a little bit. Our overhead cost, that was something, they were higher in the second quarter than what I initially expected. You know, we talk about that a lot, but I'm expecting that our overhead cost in aggregate will be up a little bit further in the third quarter. They were about $310 million in the second quarter. We'd been running about $305 million. I'm expecting that we'll see those tick up even further in the third quarter. Probably some pressure in the miscellaneous expenses line will continue, but obviously the overhead cost is revenue dependent. I'm anticipating if it's flattish revenue, then those costs will tick up a little bit further. If we can see some revenue start to come in a little bit better and obviously we'll continue to give our mid quarter update, then that's something that eventually over time we'll get leverage on. Thank you. Our next question will come from Eric Morgan with Barclays. Please go ahead. Hey, good morning. Thanks for taking my question. I wanted to ask about the market share commentary. Just if we look at the ATA's shipment index actually turned positive the past couple months, at least for April and May. I do not know if that's kind of the best data to use. But it's what we have and obviously it's a bit different from what we're seeing from you as well as your publicly traded peers. I guess just curious if you have any thoughts on what's happening among the private carriers where we have kind of less real time insight how they've been responding to this downturn, if that's changed at all in recent months and just how you view your competitive positioning here? Y eah, the best data that we probably get from an industry standpoint that includes the private carriers is really from Transport Topics. That's the data that you'll see us typically quote in the 10-K about the size of the industry and so forth. You really only get an annual read on some of those carriers without the month to month trend. The ATA is good, but I think it typically has always had a much higher report of revenue for the entire industry and it includes, I believe, some ground business from some of the other parcel carriers. That's why we typically have used Transport Topics. I think when we look at that information, Transport Topics just published recently and we saw a pretty consistent trend from market share for us. We've got granular level detail that we get through a proprietary database, but that's out there as well. Overall, I'd like to think that our market share, when you look through this downturn, our strategy is that we want to maintain market share in periods of economic weakness while also getting increases in our yields. I think when we go back and look at kind of where things were in 2021, 2022, that's effectively what's happened. It always moves up or down a little bit here and there. The key will be continuing to execute our strategy like we've done in the past and then make hay while the sun is shining. I mean, that's what our model is based on. I still feel like we're in a better position than anyone else when the demand environment does eventually inflect back to the positive. I think we're probably better positioned than we've ever been. If you think back to the cycle increases that we saw in 2014, 2015, same thing with 2017 and 2018. We've been able to outperform the market from a tonnage growth standpoint, anywhere from 1,000- 1,200 basis points. We just need a little help from the economy to get back to where we really see that demand environment inflecting back to the positive. Obviously some macro factors are starting to settle a little bit with respect to the tax bill trade. Hopefully at some point soon we'll get an interest rate decrease. I think once some of those measures certainly come back into the market, it will create opportunities for our customers that will create opportunities for us to start growing our volumes again. Thank you. Our next question will come from Jonathan Chappell with Evercore ISI. Please go ahead. Thank you. Good morning, Adam, one of the things you mentioned in response to Chris' question was you expect pressure on operating supplies and expenses. You said the same thing in April and operating supplies and expenses actually improved by 80 basis points as a percentage of revenue in 2Q. Did something happen in 2Q that really helped you on that cost line item that you expect to reverse? In 3Q or how do we. Kind of match up the pretty big sequential improvement in 2Q to ongoing pressure expected in 3Q? Yeah, I would say that we continue to see really good performance from our repairs and maintenance. Our team has done a great job, I think, with managing those costs. I had the expectation that we would see some pressures there from 1Q to 2Q, anticipating that some of our part cost might be increasing due to the impact of tariffs and so forth. I think what we've seen is just some continued changes with our fleet. We've continued to take some of our older equipment out that would have had really high repair cost, if you will. We've continued to pare back some of our fleet in that example. In general, our cost per mile, we've seen improvement this year. If you go back the last few years, we were up double digits from a cost per mile standpoint, 2022 and 2023. I think that was some of the better sequential performance that we had, if you will, from 1Q to 2Q. I'd say part of that driver is that I'm thinking from 2Q to 3Q is, you know, right now, or at least in the second quarter, our average price per gallon for fuel was like $3.56 and we're seeing that elevated right now. I think that's something where those costs as a percent of revenue, if fuel kind of continues to hold at about the range where we are now. Fuel's obviously a big driver in that operating supplies and expense line. Historically what you see and probably the comment of why I wanted to give both of those together, you know, we always talk about as fuel changes, usually you'll see corresponding increase. I like to look at our direct cost in total and how we manage through those. In the short term, if you see if the fuel surcharge goes up, our fuel expenses as a percent of revenue might also go up. You would see the direct labor cost in particular kind of an offsetting decrease there and typically the second quarter to third quarter too. That's where you kind of see those costs all in or kind of flattish, if you will. I'm expecting to see some continued pressure there in the salary, wages and benefits line somewhat. Like I mentioned, we've got the wage increase. We'll get one month of that for the full quarter. Typically we have a little bit of sequential revenue growth that will help offset that. We may still have that for this coming quarter. If we've got flattish revenue growth, then that puts a little pressure on that line item. We've also seen higher fringe benefit cost for the past few quarters and I'm expecting that trend to continue and to probably be even a little bit higher in the third quarter than what we just saw in the second. You know, those couple of factors and as well as the miscellaneous expenses, you know, some of the miscellaneous expenses back to kind of making changes on the fleet. As we've been selling off some of this older equipment, we've had some losses and that goes into that line item. I think we may see some more losses, if you will, coming through on that line item in the third quarter to put a little bit more pressure overall. I would just say in that big bucket of overhead cost. Thank you. Our next question will come from Jordan Alliger with Goldman Sachs. Please go ahead. Hello, Mr. Alliger, your line may be muted. Can you hear me? Go ahead. Sorry. Yeah, so just sort of curious, sort of you gave some color and commentary around the OR revenue per day sort of flattish. I mean, you know, given the easy comps I think that are coming up both in terms of tonnage per day and revenue per day. I'm assuming as we look forward from July, those trends on a year over year basis, I would think have the opportunity to get quite a bit better. Just curious your thoughts on the latter half of this quarter against those comps? Yeah, they would. Jordan. So in the second quarter for the full quarter we were down, just call it 6%, 6.1%. Right now I would say July, just call it, we're down 5%. So it's already getting a little bit better. If we stay the second quarter per day average was about $22 million revenue per day. So if we, we stay in that same ballpark, then we'd be down a little over 4%. If you just sort of held revenue at that $1.4 billion that we just did in the second quarter. If you say that was exactly the same, that's kind of what the trend would be. Now I'll say that the July performance so far, when I look at kind of where our tons are and just the revenue per day level, July is normally a weak month. From a tons per day standpoint, we're usually down about 3% versus June. We're trending down about a little over 2% right now. So we're a little bit better than what our normal sequential trend is. Now I'm not ready to make a call to say that things will turn around and we'll get the acceleration that we typically would see in August and September, but I think that gives us a little bit sense of cautious optimism to say it's outperformance kind of on the downside, will we see some of that acceleration come through? I think that remains the question and I think it'll get answered as we go through the quarter and we give our mid quarter updates and so forth. If we were to perform at normal seasonality, and I think that's a big if right now, I'm not saying that that would be the case, then that number would come back more in comparison to revenue with the third quarter last year, I think at full seasonality we'd be down about one and a half percent. So yeah, we'll just continue to monitor it and maybe we'll be somewhere in that one and a half to 4% just depending upon how things continue to materialize as we make our way through the quarter. Thank you. Our next question will come from Tom Wadewitz with UBS. Please go ahead. Yea h, so wanted to see if you could offer a little more perspective just on pricing and kind of how you think about revenue per 100 weight ``ex fuel in 3Q and just whether the pricing, I mean, you know, your commentary is pretty consistent over time that you see stability and discipline in the market. Is anything changing on that front? Is there any kind of areas where you see increased competition as the downturn extends? Yeah, I would say overall, just really we've got to go by what everyone reported in the first quarter. I think most carriers, their reported yields have continued to be positive overall and obviously we continue to execute on our plan. I think our plan is different. We look at things from a cost based standpoint and we want to be consistent through the cycle and feel like getting those consistent cost based increases are obviously important to the long term operating ratio improvement that we've had. Right now for the third quarter I'm kind of looking at, I think that number will probably be the yield ex fuel will probably be up in the 4%-4.5% range and that's about where we are in July. I think we'd expect to see a consistent sequential increase in that reported number. It'll probably come in a little bit. That's not a reflection on any kind of change or anything like that. It's just a function of kind of where we were last year. We continue to expect to see increases and we're getting increases when we go through renewals. That's one of the things that's been tough about this environment. Back to thinking about that market share question from earlier. As we're going through our renewals, we're continuing to win business. We get reporting for our national accounts, that business that we've won or business that we've lost and we're continuing to keep customers and get increases on those accounts that we're keeping. We're also winning some new business overall. Obviously the volumes are down, but I think that that lends itself to maybe a quick turnaround, if you will, when we do see that volume environment reflect back to the positive. I think a lot of people believe that that's coming sooner than later. Obviously we felt like it was coming before. We've had a few head fakes from an economic standpoint, but now that some of the bigger picture things are being resolved from a macro standpoint, I feel like some of the optimism that we saw late last year and kind of saw it in the improvement in ISM in the early part of this year, we hope to see kind of that turn back around and that optimism come back to the market and lend itself to increased freight opportunities. I think that's part of our value proposition is having capacity. While capacity is not at a premium right now, just given how weak demand has been for so long, we have heard commentary from customers about some competitors that are not able to make pickups consistently in some markets and they are increasingly calling us. I feel like when you have true demand recovery, those inbound calls will likely accelerate. That is what we have seen in the past. I referenced some of those periods earlier. You go back to 2014 when we grew tons at 17%, the market is up 5%. In 2018, we are up 10%, the market is up one and a half percent. You know what we did through the 2021 and 2022 cycle where we put $2 billion of cumulative revenue growth on the books then. We feel like we are sitting in a great position to capitalize. We just need a little bit of help from the economy right now. Our next question will come from Daniel Imbro with Stephens. Please go ahead. Yeah. Hey, good morning, Marty, Adam, Jack. Hope you're doing well. Adam, maybe following up on that last. Discussion just on competition out there, I mean, you guys specifically have been a leader in a lot of the high. Service parts of the industry, whether it's. SMB or grocery, kind of anything with a must arrive by date. A lot of your peers are talking about trying to grow here. So I guess are you seeing the better offerings from some of your peers? Making any encroachment on your business as you go to market? I guess if not, what do you think the public markets under appreciate about why that will be harder for o thers to take from you guys being the leader there? You know, I think that any customer that we have, obviously we've got a target on our backs, if you will. We're competing with every account. We're competing with the other carriers and we have been for years. I don't think anything has changed with that. I think there's this perception that we've got some secret segment of the market that the other carriers haven't figured out until now. That's just not the case. I mean, we're competing with all the other national carriers in some markets, with the regional carriers as well. Our service product, when you think about the 15 years of Mastio wins, there's more to service than just being able to pick up and deliver on time and without damages. We do those core things better than anyone else. It's continuing to figure out ways that we can add value to our customers. Ultimately that's the business that we're in, is how do we work with our customers, create win-win scenarios where we can help each other and add value. I think those are the things that we'll continue to look at and leverage. You know we've got about 12% market share and there's a tremendous amount of share opportunity out there within an industry that we think continues to have tailwinds for it. We continue to believe that E-commerce effect on supply chains will continue to shrink shipment sizes and have truckload to LTL conversion. I think if near shoring and reshoring opportunities continue to play out, that creates inbound and outbound opportunities for us as well. Just supply chain sophistication. With the interest rates higher today, there's a cost of carrying inventory. That's a value add that we can have where our customers know they can rely on our on-time and claims-free service. It's figuring out how to go into each and every customer account, figuring out the problems that they're having and delivering a solution for that customer. That's what we, I think we do better than anyone else and that's why we're so confident in what our long-term market share opportunities are. Hey Daniel, as you referenced in the retail industry, including grocery, there's a penalty if this freight is not on the shelf on time and in full. They're called fines. Many of our competitors, they can go out and talk about meeting those expectations with fancy marketing material and so forth. Until they can stop those fines in our customers' pocketbooks, nothing's going to change. We figured out how to do that many, many years ago, especially in the grocery industry. So. We do not see anybody getting close to what we can offer from a service standpoint in the retail industry. Thank you. Our next question will come from Ken Hoexter with Bank of America. Please go ahead. Great. Good morning Marty, Adam, Jack, just want to understand maybe a little bit more on the backdrop here. The stock's down about 8%. The easier comps are coming up, right. Revs are down 5% in July. Do you expect to get that to maybe flat for the quarter? Others reported a deceleration in tons and pricing despite easier comps. A peer mentioned this morning they're implementing an early GRI. I think you mentioned deceleration in yields at 4%-4.5%. That's also a deceleration versus 3%. Are we getting a more competitive environment, you know, that just consistently is beating this market while we're in a decelerated market? Just want to understand your view of the backdrop and then the holding share. I'm still confused by that one, because every public carrier reported stronger percentage gains. Does that mean we're looking at just the private guys? I want to revisit that question earlier. Is it just the private guys that are losing relative share? Maybe if you can just expand a. Little more on that. I think that one with respect to the yields, I think what we're looking at will be a continued increase sequentially. If we are kind of in the middle of that 4%-4.5% range, that would be up 1.5%-2% sequentially in the last few years. When you look at the 10-year average, the sequential increase there from 2Q to 3Q is a little bit stronger. When you look at the last five years, that really skews that average, so to speak. If you looked at a 10-year average sort of pre-COVID, you know, it was more in that kind of 1.5% range, about where we were thinking about being. You know, we're not seeing any change with respect to what our thinking is from an overall yield management standpoint. I think that when you think about the industry as well, most carriers have kind of figured out that yields are important. When you go back over the last 10-15 years, when they've taken a focus off yield, it has had pretty negative impacts on their overall profitability. I think that's why we've seen such consistency in the industry over this last three years where demand has been soft overall. From a market share standpoint, I think that since really Yellow closed their doors, there has been a lot of choppiness in terms of figuring out where share is. We obviously report that and report it by region overall in our deck that's out on our investor relations website. You can kind of see how share may be changing in one region versus the next. You know, it's something that when we look at the overall market, again, kind of factoring in what I just said about using the data out of Transport Topics, it looks like our share is relatively consistent with where we've been really over the last couple of years. It's not to say that when we've gone through periods in the past of slow markets that were flat or could be down slightly, whatever, it's about the same. We've continued to execute a plan, we've continued to manage our costs, our service has gotten better, and I think we're in a really strong position. It's just overall change that we sort of look at. We feel good about where we are, but feel better about what the opportunities looking forward will be. Our next question will come from Scott Group with Wolfe Research. Please go ahead. Hey, thanks. Morning. This is a big picture question. Maybe it's similar with what you just sort of answered, but if you look at the numbers, you're one of the leaders on yields right now. You're the biggest laggard on tonnage, at least among the public eyes. I guess you might say, hey, that's very normal in a more, in a softer market that gets a little bit more competitive, we stay more disciplined on price than anybody. I guess what feels different is just like the duration of this environment. Like we're three years into this and now we still have tonnage down high single digits. Does the duration of this change your thoughts at all in any way? Or is it, hey, we're just going to do what we keep doing and we'll wait this out and eventually the cycle will come or because the cycle's lasting so much longer. Do you think about it any differently? Yeah, I mean, obviously it's been, we talk about these numbers from a quarterly perspective, annual perspective. There's a lot of day to day that's going on behind the scenes that doesn't get discussed. I mean, every day we're working with customers and figuring out ways to identify new opportunities. And you know, it's been a tough few years going through this soft demand, you know, initially. And then you had the big industry event that happened. And so the flux of being down, being up short lived and then being down again, you know, there's been a lot to try to manage through. You know, I'd love for revenue to be higher and I'd love for this cycle to turn. You know, there have been a couple of times that we felt like it was turning. And think back to late 2023, we had started reinvesting, running our truck driving schools and hiring folks to be prepared for what we thought was going to be sustained improvement there and then kind of hit another roadblock from a demand standpoint. Overall, when I think about our model and how important revenue is, when you just look at the sequential performance through the second quarter. We don't normally talk about sequential incremental margins, but the reality is that little bit of revenue that we put on the books between the first and second quarter, we had about 60% incremental margins on that business. It shows, I think, the power of the model once we start getting revenue on the books. We don't feel like we need to go out and try to chase bad revenue that doesn't fit in our thinking for the long term. I think that's what we've done. We've also continued to manage our costs very well. When I talk about splitting our operating ratio apart, the 74.6% that we just did in the second quarter, about between 52-53% of revenue were our direct variable cost. That's pretty much the same where we were in the second quarter of 2022 when we did a sub- 70 operating ratio. We've been able to control what we can control. Our team's done a phenomenal job, I think, of protecting service, managing our cost in a very weak environment. That's hard to do when you don't have density and the network. I'm really pleased with that. Our overhead costs really are what's accelerated and we just need a bigger revenue base to get leverage on those costs again. You know, that's part of our model and our strategy too. We like to invest through the cycle and we've got more capacity than we probably have ever had right now from a service center network standpoint. Yeah, we're carrying a lot of excess cost. Our overhead costs as a percent of revenue were about 22% here in the second quarter. Back in 2022, they were about 17%. Therein lies the leverage for the model once we get back to a strong demand environment. I'm pleased with everything we've done. Obviously, we'd love to be able to flip a switch and see the demand environment improve, but I think from where we sit, when we look at what the other carriers are doing and kind of how revenue has trended for some of the others, we're hanging in there. We've not seen any true variance in our volumes relative to what the entire industry has done. If I look and see the industry is down about 15% from where we were in 2022, our performance is pretty much right in alignment with what the industry has done overall on a net, net basis. Our next question will come from Jason Seidl with TD Cowen. Please go ahead. Thank you, operator. Marty, Adam, Jack. Good morning, gentlemen. One clarification, I think you guys mentioned you expect losses on asset sales. Did I catch that correct? Yeah, Jason, we've been trying to reduce the size of our fleet a little bit just in coordination with where freight volumes are trending. We had some losses in the second quarter. That was part of the reason why you may have seen our miscellaneous expenses ticked up a little bit higher. Normally those costs are about 50 basis points or so. We saw those costs trend a little bit higher in the second quarter. They were up to 90 and I'm thinking that we'll see some continued pressure in the third quarter on those. I was just a little confused because I know other carriers are actually reporting gains on sale and maybe you could walk us through the difference between you and them. In many cases we're selling a tractor. On average, we use a tractor for 10 years. You know, there's probably not as much demand for that, maybe more of a truckload thing, but there's not as much demand for a 10 year old million mile single axle day cab tractor. I guess when you mentioned the sequential move between June and July being slightly better than the historical average, is. Any of this due to maybe some p ull forward when people were worried about the tariffs potentially resetting again in August? Clearly we're getting through some of these deals. Did you get that feedback from any of your shippers that that was occurring? Yeah, there may be some of that. We've not heard material feedback on that. Like when I look at it by region, it's not like we saw a big change in outbound business out of California, for example. You know, most of our regions are trending in about the same kind of range from a revenue performance standpoint. I don't know that there's a big outlier that may be driving that. Thank you, Mr. Seidl. Our next question will come from Bruce Chan with Stifel. Please go ahead. Yeah, thanks operator. Good morning everybody. Maybe another bigger picture question here. You know, we've been hearing pretty regularly in the past couple quarters from you. Know, some of the other carriers about AI and dynamic routing. I know that the OD style has. Always been to kind of quietly implement those things as part of the overall. Playbook in many cases much earlier than peers. Maybe just helpful to get an update on any optimization projects that you've. Got going on right now, and generally. How you're feeling about the various systems. In your tech stack, anything incremental that we should be thinking about as an opportunity. Yeah, I think like you said, I mean, we're always looking at technology. It's a key part of our business and I think has been to help us with our operating ratio. And you know, just to kind of keep reminding, our operating ratio is about 1,500 basis points better than the company average or industry average, I should say. So, you know, regardless of what the other carriers have got as opportunities, we're still materially outperforming there. I think that technology has been a key part of that. You're right, I mean, we don't normally try to announce everything and give totally our playbook away, but we're looking at ways to keep getting better. Continuous improvement is a key component for our foundation of success. We've always got to look at ways that we can make investments that are really going to drive change from a service standpoint ultimately or add value through the lens of driving operational efficiencies. You mentioned line haul optimization. That's kind of been the holy grail and the buzzword for the 21 years I've been in this industry. That's something that we continue to look at and we've got some tools that we've continued to implement and try to refine to drive some optimization there. Same thing within our pickup delivery operations and on the dock. I think our increased use of some of those technologies is part of the reason why we've been able to keep those direct costs. Those direct costs are the primarily variable cost, but the direct costs associated with moving freight. To think that we've been able to manage those costs basically consistent with where we were when our business was running extremely at its optimal state at the time, back in 2022 with a sub- 70 operating ratio I think is pretty astounding when you think about the loss of density in our network now versus what we had in the network then. There's not just one thing to point to, but I think we've got a great team in the field and I think we've got a great group and our technology team that's always looking for ways to get better, to work with their business, to work with our customers. Another key part of the technology investment is how can we do things differently and add value and add stickiness with our customer base as well that differentiate us from our competition. All of those things I think will continue to be strategic advantages for us and will be part of the story of you know how we get our operating ratio back towards that 70 threshold, but you know, continue marching forward and drive long term improvement there in the operating ratio, you know, while we continue to improve density and yield. Thank you, Mr. Chan. Our next question will come from Bascome Majors with Susquehanna. Please go ahead. Thanks. Good morning. Just as a housekeeping item, can you remind us of typical revenue and margin seasonality for the fourth quarter? Adam, if you look at longer term, not necessarily calling when the cycle will turn, but just thinking about what you think the business will respond like when it does. Can you update us on sort of. The incremental margin or really other sort of profile you think you can deliver when we actually get some tonnage to flow through all the cost adjustment work that you've done over the last couple years. Thank you. Yeah. Typically our revenue per day, the 10-year average is a decrease of 0.3%. So three-tenths of a percent decrease in revenue per day. Our operating ratio is typically up 200-250 basis points. Obviously, we always have, we do an annual actuarial study so there can be changes plus and minus on that insurance and claims line in the fourth quarter. Last year we had a pretty big unfavorable adjustment that we had to take there. Nevertheless, we kind of exclude that from the averages, if you will. That is what the normal performance is. I think from just kind of looking forward in terms of what we can do from an incremental margin, I just mentioned that sequential incremental margin. I do not expect 60% to be the norm. Just thinking about our cost structure and what it is laid out from a direct cost versus overhead cost. Overhead is mainly fixed, but there are some variable costs in there. You know, overall about 70% of our cost or so right now are variable. That is how we have been able to protect our margins through this downturn, is continuing to manage those. Anyways, the 53% of revenue being our direct variable cost and you kind of do the math, that is how we have been able to do sort of 35%-40% incrementals when we are coming out of, you know, kind of on the early side of that demand inflection and then eventually you kind of get back to the point where you have got to add more equipment, you have got to add more people and so forth and it starts compressing back. Our longer-term average incremental has been 35% and I think that still seems reasonable. That would continue to imply that if you run that out for several years of a recovery in revenue growth, we would get back to that sub-70 type of threshold. Thank you. Our next question will come from Ravi Shankar with Morgan Stanley. Please go ahead. Hey guys, thanks for the time. I know this topic has been discussed a fair bit, but if I can just hit it again in a slightly different way. You guys have been masters of calling the cycle over the years and have shown your operating prowess as well. To kind of Scott's point, it's been three years of a downturn and even now I think some of the TLs and rails are actually sounding a little bit better on volumes in the cycle. Even though nobody is kind of high fiving here. How can you guys tell if there is something bigger and more structural going on with the LTL space here rather than just a cycle? Maybe some more permanent share shift to TL, maybe insourcing by shippers, changing supply chains. Are your customers telling you that they will definitively be back with the same level of volumes or higher than upcycle? Yeah. What you just said there at the end is the confidence that we have in our long term market share really is just driven by those customer conversations and how we think supply chains will continue to trend over time. We've seen some market share shift, I think, from LTL to truckload through this cycle. When you look at some statistics in the truckload industry in terms of what they're charging, revenue per mile versus cost per mile, they're willing to operate at break even or worse. I think that's what you're seeing with some of the operating ratios that have been published as well. I think that's some of the trend that we've got to continue to watch as business starts picking back up, they get busier, the rates start going back up. I think that's when you'll start seeing some of this unwinding effect in some of those truckload carriers that do not really want to move multiple shipments on the back of their truck and make multiple stops. That's not their preference. They do not have the network that's set up to really handle it. They only do it when times are tough and they need some payload to make ` truck payment. I think you'll see that business move back into LTL and then we'll continue to see kind of our customers that are continuing to. If we go through a customer, we're seeing a lot of wins, like I mentioned, from just a customer specific standpoint. Customers are continuing to award us the same lanes of business that they've had before, but their overall business levels might be down. Whether that's just the demand for their product, some we know are taking advantage of this truckload opportunity. It's kind of going to be multiple items that I think are driving the increase in demand. I think we'll see more of that share shift back than probably what we've seen in prior cycles. We feel like we're ahead of it though, from a capacity standpoint. I mentioned network capacity from a service center standpoint, but I feel like we're in really good shape in regards to our fleet. We're probably heavy there, in all honesty, but I feel like from a people capacity standpoint as well, we've got a team that's in position and ready and that's the best incremental margin you can get is when we've got a driver that's already making a stop at our customer and now instead of picking up one shipment, they're picking up three. That's typically what we've seen in cycles past and how our volumes can accelerate so quickly on the front end of the inflecting economy. That's what we'd expect to see whenever this economy does eventually inflect back to the positive. Our next question will come from Richa Harnain with Deutsche Bank. Please go ahead. Gentlemen. Thanks for the time. You know, I appreciated all the color around your positioning being as strong as it's ever been to respond to an improving environment. You know, the OD model really makes hay when the sun is shining. Maybe you can talk to us. I get that we're a little reticent to speak to some of the green shoots given all the headaches we've had. Just customer conversations, you talked about maybe fatigue on the tariff side. You know, reactions to the recent bill that passed in Washington to spur growth, interest rate cuts, like, what are shippers telling you about their appetite to give you more business in the future, and then if you can maybe parse out kind of what industries you're maybe more optimistic about versus industries where you're really seeing more malaise set in or more negative trends. Thanks. Yeah, I think that it's been the uncertainty that's been hanging out there over the economy that I think has resulted in just the lack of freight volumes overall. Again, I mentioned industry volumes are down about 15% from where we were back in 2021-2022. So it's something that everyone's had to contend with. I think we saw, kind of going back to the fall of last year, we saw some initial optimism with respect to the industrial economy and 55%-60% of our revenue is industrial related. That's important to us. We saw that acceleration in the ISM in December and then it was positive for a couple of months. Then all the tariff conversations started and that just created more uncertainty that seemed to kind of throw cold water on what was developing at the time. It's hard, if you're a manufacturer for example, to figure out what the cost structure is going to be when you don't really know what the final tariff cost might be. I think that's something that we've had a lot of customers trying to figure out and solve for. In some cases you just try to wait things out. That's why we've got a little cautious optimism now that we've seen the tax deal be finalized and the bonus depreciation is something that I think can spur some further investment here. If we start seeing some trade deals come to fruition, that will be something that provides a little bit more confidence for customers. I think the final piece will be do we get some relief on interest rates. Customers that are going through all of their financials and figuring out do they invest or not and what kind of return can they expect on their investment, you know, all those, once you get clarity on those big picture items, I think that's what it's going to take to really kind of spur the economy forward. We feel like we're closer to that now that we're getting clarity on some of these items. We want to turn that feeling into true freight and see it coming on board. I mentioned that we're seeing a little bit better performance right now in July. We'll just continue to watch and see does that really manifest into seeing some sequential improvement versus just what our business has been like for the last three years of kind of flattish to down month over month. Thank you. Our next question will come from Stephanie Moore with Jefferies. Please go ahead. Hi, good morning. Thanks, guys. Just one real quick here. Look, you know, any thoughts on where, you know, the LTL industry fits in in general with this potential transcontinental railroad or potentially two? Obviously, most are talking about these deals, you know, deal impacting long haul truck, truckload. But where does LTL fit here at all? Would love your perspective. Thanks. Yeah, I don't know that I would expect to see, you know, any material impact on LTL overall, meant something that it could be ultimately downstream, something we'll continue to watch and engage with customers on. You know, I think that's kind of on the other end of the supply chain, you know, not necessarily seeing changes with respect to the rail industry kind of filter down to where we can find a correlation to any changes in our business levels. Thank you. Our next question will come from Ari Rosa with Citigroup. Please go ahead. Hey, good morning, gentlemen. I know in reference to Bascom's question, you mentioned the normal seasonal trends. From third quarter to fourth quarter. I was just wondering. It's been such a weird year. We've obviously seen some abnormal seasonal trends so far, year to date. I'm wondering how you think about your ability to outperform normal, normal sequential trends, I guess as we move into the back half of the year, especially in the fourth quarter, and then also how the wage increases play into that and kind of how much discretion you have around that and what's, what's kind of planned, how much, how much pressure that p uts on the OR? Thanks. Yeah, I mean, obviously our costs will be going up with respect to the wage increase. And that's part of what we normally see, that 200 - 250 basis point deterioration from the third to the fourth quarters. You know, you get one month of it in third quarter and then you got the full quarter effect in 4Q. But that's, you know, it's usually a point, a point and a half type of increase. If you look at that 250 change, you know, that's going to be a big driver there. But, you know, to keep sounding like a broken record, I think it's just going to be revenue dependent, you know, the fourth quarter. If we can kind of continue to maintain our revenue per shipment, or not revenue per shipment, but just revenue per day rather, you know, in the same realm of where we are, you know, we'll continue to manage our costs like we have. And I think by the fourth quarter I would hope to see some of this increase that we've had in overall cost, overhead, cost rather start to come in a little bit. And so, you know, those are some other things that can help. But, you know, it's just continuing to manage our costs, manage our operating efficiencies, which our team is doing a great job of kind of mentioning before we're controlling our variable cost, we've got to continue to do that. You know, typically you see volumes a little bit softer in 4Q. It just presents even more of a challenge to our ops team. We just got to continue to stay disciplined really throughout all areas of the operation. You know, everybody's got to participate and we got to continue to manage our discretionary spending and think through if we're spending a dollar, you know, what is the purpose behind it and, you know, is it going to improve customer service, is it going to help us over the long term and, and those types of investments we're willing to make, even though we're trying to protect the short term, we've really got to think, and we do think bigger picture and longer term for what's going to be to the best benefit of Old Dominion over the long run. That's why you've continued to see us make investments and continue to execute on our CapEx program. I've mentioned this three year down cycle but, by the end of this year we'll have spent probably close to $2 billion on capital expenditures. To do so in a soft environment that's created its fair share of cost headwinds, but it's something that we've managed through and I think we'll be happy that we've done these when we get on the other side of this economy and you'll see that the leverage that can come through just like what we saw in the second quarter for that short term benefit. Thank you, Mr. Rosa. This will conclude our question and answer session. I would like to turn the conference back over to Marty Freeman for any closing remarks. All right, thank you all for participating today. We appreciate your questions and feel free to call us 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.