Old Dominion Freight Line (NASDAQ:ODFL) executives told investors the less-than-truckload carrier delivered “solid” fourth-quarter results while continuing to prioritize service, yield discipline, and cost control in what they described as a challenging freight environment. Management also said it is “cautiously optimistic” demand could improve in 2026, pointing to recent trends in shipment weight and a more favorable tone in macro indicators such as the ISM report.
Service performance and strategy focus
President and CEO Marty Freeman said the company’s value proposition continues to center on “superior service at a fair price,” supported by ongoing investments in capacity, technology, and employees. Freeman highlighted service metrics during the fourth quarter, including 99% on-time service and a 0.1% cargo claims ratio.
Fourth-quarter financial results: revenue down, operating ratio higher
CFO Adam Satterfield reported fourth-quarter 2025 revenue of $1.31 billion, down 5.7% from the prior year. The revenue decline reflected a 10.7% decrease in LTL tons per day, partially offset by improved pricing.
- LTL revenue per hundredweight increased 5.6% year over year.
- Excluding fuel surcharges, LTL revenue per hundredweight increased 4.9% compared with the fourth quarter of 2024.
Old Dominion’s operating ratio increased 80 basis points to 76.7% in the quarter. Satterfield attributed the higher operating ratio largely to revenue deleverage, particularly in overhead costs that are more fixed in nature. Overhead costs rose 140 basis points as a percent of revenue, including a 70 basis point increase in depreciation as a percent of revenue tied to the company’s long-term capital investment plan.
Direct operating costs improved 60 basis points as a percent of revenue versus the prior-year quarter, driven primarily by the net impact of annual fourth-quarter adjustments related to third-party actuarial reviews of injury and accident claims. Outside of those items, Satterfield said the company effectively managed direct variable costs to be consistent with the prior year.
Sequential volume trends and January update
On a sequential basis, Satterfield said revenue per day fell 4.1% in the fourth quarter versus the third quarter, with LTL tons per day down 4.8% and LTL shipments per day down 6.5%. Management compared those results with long-term averages, noting the quarter’s sequential declines were larger than the company’s 10-year average seasonal changes.
Satterfield also provided month-to-month detail for sequential LTL tons per day in the quarter: October decreased 5.3% versus September, November increased 2.6% versus October, and December decreased 4.0% versus November.
For January, Satterfield said revenue per day decreased 6.8% versus January 2025, reflecting a 9.6% decrease in LTL tons per day that was partially offset by higher yield. Excluding fuel surcharges, LTL revenue per hundredweight increased 3.9% in January.
Demand commentary: weight per shipment and early signs of improvement
Asked about demand, management pointed to improving weight per shipment as a key internal indicator. Executives said weight per shipment rose from about 1,450 pounds in the September/October timeframe to 1,489 pounds in November and 1,520 pounds in December, outperforming the company’s long-term seasonal pattern. In January, weight per shipment was cited at 1,492 pounds, which management said was consistent with seasonality and affected by operational disruption in the last week of the month, which the company characterized as weather-related.
Satterfield said heavier shipments can pressure revenue per hundredweight metrics, but he stressed the company is focused on revenue per shipment and cost per shipment, with higher weight supporting network density and profitability as volumes recover. Executives also discussed potential normalization in truckload market dynamics and the historical “spillover effect” between truckload and LTL, suggesting the company may be in “early innings” of that normalizing.
Outlook: first-quarter range, margin seasonality, and cost inflation
For the first quarter of 2026, management said revenue per day began “a little bit behind seasonality,” but expressed hope it could normalize as the quarter progresses. Satterfield provided a revenue range for the quarter of $1.25 billion to $1.3 billion, with the low end reflecting continued underperformance versus normal seasonality and the top end reflecting a more typical seasonal pattern.
On margins, management cited the company’s 10-year average seasonal pattern showing a 100 to 150 basis point operating ratio increase from the fourth quarter to the first quarter, and said it expects to be near the top end of that range, targeting about a 150 basis point increase (with an estimated plus or minus 20 basis point range to account for revenue uncertainty).
On cost trends, Satterfield said expected cost-per-shipment inflation is likely to be higher in 2026, estimating 5% to 5.5% core inflation, citing employee benefits, insurance, equipment-related costs, and policy changes such as improvements to paid time off. He added that improved network density could help moderate inflationary impacts over time.
Capital allocation: cash flow, buybacks, dividend, and CapEx
Old Dominion reported cash flow from operations of $310.2 million in the fourth quarter and $1.4 billion for the full year. Capital expenditures totaled $45.7 million in the quarter and $415 million for the year.
The company returned cash to shareholders through repurchases and dividends:
- Share repurchases: $124.9 million in the fourth quarter and $730.3 million for the year
- Cash dividends: $58.4 million in the fourth quarter and $235.6 million for the year
Management said the board approved a quarterly cash dividend of $0.29 per share for the first quarter of 2026, a 3.6% increase compared with the dividend paid in the first quarter of 2025.
Addressing the company’s lower capital spending outlook, Satterfield said the change reflects the prolonged volume environment and the significant investments made in prior years. He noted the company has spent about $2 billion in capital expenditures over the last three years and described the service center network as having a little over 35% capacity, with current volumes around a little over 40,000 shipments per day versus a network designed to handle more like 55,000 or more.
On equipment, Satterfield said the average age of the tractor fleet improved to about 3.9 years, around the company’s preferred level. He also said Old Dominion does not carry excess fleet capacity to the same extent as its facilities, describing excess power as punitive from a depreciation standpoint, and noted the company typically uses a tractor for about 10 years.
Executives also discussed competitive dynamics, arguing industry capacity remains tight based on service-center counts and utilization measures, and reiterated confidence that Old Dominion’s asset ownership and service standards position it to gain share when demand improves.
About Old Dominion Freight Line (NASDAQ:ODFL)
Old Dominion Freight Line is a U.S.-based less-than-truckload (LTL) transportation company that provides regional, inter-regional and national freight services. Founded in 1934 and headquartered in Thomasville, North Carolina, the company has grown from a regional carrier into a national freight network, operating a broad system of service centers and terminals to move shipments for shippers of varying sizes and industries.
The company’s core business is LTL trucking, offering scheduled pickup and delivery for palletized freight that does not require a full truckload.
