ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations generally discusses our 2025 and 2024 results and year-to-year comparisons between 2025 and 2024. Discussions of our 2024 results and year-to-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the Securities and Exchange Commission on February 25, 2025.
Overview
We are one of the largest North American less-than-truckload (“LTL”) motor carriers. We provide regional, inter-regional and national LTL services through a single integrated, union-free organization. Our service offerings, which include expedited transportation, are provided through an expansive network of service centers located throughout the continental United States. Through strategic alliances, we also provide LTL services throughout North America. In addition to our core LTL services, we offer a range of value-added services including container drayage, truckload brokerage and supply chain consulting. More than 98% of our revenue has historically been derived from transporting LTL shipments for our customers, whose demand for our services is generally tied to industrial production and the overall health of the U.S. domestic economy.
In analyzing the components of our revenue, we monitor changes and trends in our LTL volumes and LTL revenue per hundredweight. While LTL revenue per hundredweight is a yield measurement, it is also a commonly-used indicator for general pricing trends in the LTL industry. This yield metric is not a true measure of price, however, as it can be influenced by many other factors, such as changes in fuel surcharges, weight per shipment and length of haul. As a result, changes in revenue per hundredweight do not necessarily indicate actual changes in underlying base rates. LTL revenue per hundredweight and the key factors that can impact this metric are described in more detail below:
LTL Revenue Per Hundredweight - Our LTL transportation services are generally priced based on weight, commodity, and distance. This measurement reflects the application of our pricing policies to the services we provide, which are influenced by competitive market conditions and our growth objectives. Generally, freight is rated by a class system, which is established by the National Motor Freight Traffic Association, Inc. Light, bulky freight typically has a higher class and is priced at higher revenue per hundredweight than dense, heavy freight. Fuel surcharges, accessorial charges, revenue adjustments and revenue for undelivered freight are included in this measurement, and we regularly monitor the components that impact our pricing. The fuel surcharge is generally designed to offset fluctuations in the cost of our petroleum-based products and is indexed to diesel fuel prices published by the U.S. Department of Energy, which reset each week. Revenue for undelivered freight is deferred for financial statement purposes in accordance with our revenue recognition policy; however, we believe including it in our revenue per hundredweight metrics results in a more accurate representation of the underlying changes in our yields by matching total billed revenue with the corresponding weight of those shipments.
LTL Weight Per Shipment - Fluctuations in weight per shipment can indicate changes in the mix of freight we receive from our customers, as well as changes in the number of units included in a shipment. Generally, increases in weight per shipment indicate higher demand for our customers’ products and overall increased economic activity. Changes in weight per shipment can also be influenced by shifts between LTL and other modes of transportation, such as truckload and intermodal, in response to capacity, service and pricing issues. Fluctuations in weight per shipment generally have an inverse effect on our revenue per hundredweight, as a decrease in weight per shipment will typically cause an increase in revenue per hundredweight.
Average Length of Haul - We consider lengths of haul less than 500 miles to be regional traffic, lengths of haul between 500 miles and 1,000 miles to be inter-regional traffic, and lengths of haul in excess of 1,000 miles to be national traffic. This metric is used to analyze our tonnage and pricing trends for shipments with similar characteristics, and also allows for comparison with other transportation providers serving specific markets. By analyzing this metric, we can determine the success and growth potential of our service products in these markets. Changes in length of haul generally have a direct effect on our revenue per hundredweight, as an increase in length of haul will typically cause an increase in revenue per hundredweight.
LTL Revenue Per Shipment - This measurement is primarily determined by the three metrics listed above and is used in conjunction with the number of LTL shipments we receive to evaluate LTL revenue.
Our primary revenue focus is to increase density, which is shipment and tonnage growth within our existing infrastructure. Increases in density allow us to maximize our asset utilization and labor productivity, which we measure over many different functional areas of our operations including linehaul load factor, pickup and delivery (“P&D”) stops per hour, P&D shipments per hour, platform pounds handled per hour and platform shipments per hour. In addition to our focus on density and operating efficiencies, it is critical for us to obtain an appropriate yield, which is measured as revenue per hundredweight, on the shipments we handle. We focus on the profitability of each customer account and generally seek to obtain an appropriate yield to offset our cost inflation and support our ongoing investments in capacity and technology. We believe the continued execution of this yield-management philosophy, continued increases in density, and ongoing improvements in operating efficiencies are the key components of our ability to further improve our operating ratio and long-term profitable growth.
Our 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 our equipment fleet and service center facilities. We gauge our overall success in managing costs by monitoring our operating ratio, a measure of profitability calculated by dividing total operating expenses by revenue, which also allows for industry-wide comparisons with our competition.
We regularly upgrade our technological capabilities to improve our customer service and lower our operating costs. Our technology provides our customers with visibility of their shipments throughout our network, increases the productivity of our workforce, and provides key metrics that we use to monitor and enhance our processes.
Results of Operations
The following table sets forth, for the years indicated, expenses and other items as a percentage of revenue from operations:
Revenue from operations
Operating expenses:
Salaries, wages and benefits
Operating supplies and expenses
General supplies and expenses
Operating taxes and licenses
Insurance and claims
Communications and utilities
Depreciation and amortization
Purchased transportation
Miscellaneous expenses, net
Total operating expenses
Operating income
Interest income, net
Other expense, net
Income before income taxes
Provision for income taxes
Net income
Key financial and operating metrics for 2025 and 2024 are presented below:
Change
% Change
Work days
Revenue (in thousands)
Operating ratio
Net income (in thousands)
Diluted earnings per share
LTL tons (in thousands)
LTL tonnage per day
LTL shipments (in thousands)
LTL shipments per day
LTL weight per shipment (lbs.)
LTL revenue per hundredweight
LTL revenue per shipment
Average length of haul (miles)
Our financial results for 2025 reflect continued softness in the domestic economy, which contributed to the decline in our revenue, net income and diluted earnings per share. Despite the decrease in our LTL tons, 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 year. This service performance supported the continued improvement in our yield. We also maintained our 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 our operating ratio. As a result, our net income and diluted earnings per share decreased by 13.7% and 11.7%, respectively, as compared to 2024.
Revenue
Revenue decreased $318.4 million, or 5.5%, in 2025 compared to 2024 due to a decrease in volumes that was partially offset by an increase in LTL revenue per hundredweight. LTL tonnage per day decreased 8.8% primarily due to decreases in LTL shipments per day and LTL weight per shipment. This decrease in our volumes was partially offset by a 3.9% increase in our LTL revenue per hundredweight. Our LTL revenue per hundredweight 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 4.8% in 2025 as compared to 2024. We believe the increase in our LTL revenue per hundredweight metric 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.
January 2026 Update
Revenue per day decreased 6.8% in January 2026 as compared to the same month last year. LTL tons per day decreased 9.6%, due primarily to a 9.8% decrease in LTL shipments per day that was partially offset by a 0.3% increase in LTL weight per shipment. LTL revenue per hundredweight increased 3.1% as compared to the same month last year. LTL revenue per hundredweight, excluding fuel surcharges, increased 3.9% as compared to the same month last year.
Operating Costs and Other Expenses
Salaries, wages, and benefits decreased $54.0 million, or 2.0%, in 2025 as compared to 2024, due to a $75.4 million decrease in salaries and wages and a $21.4 million increase in employee benefit costs.
The decrease in salaries and wages in 2025 as compared to 2024 was primarily due to the 5.4% decrease in our average number of active full-time employees, as we balanced our workforce with current shipping trends, and a decrease in performance-based bonus compensation. These changes were partially offset by the annual wage increase provided to our employees at the beginning of both September 2025 and 2024. Our productive labor costs, which include wages for drivers, platform employees, and fleet technicians, increased as a percent of revenue to 24.4% in 2025 as compared to 24.1% in 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% in 2025 as compared to 9.5% in 2024.
The increase in our employee benefit costs was primarily due to higher costs associated with our group health and dental plans during 2025 that resulted from an increase in the average costs per claim as compared to 2024. Our employee benefit costs were also impacted by a decrease in retirement benefit plan costs that are directly linked to our net income as well as the reduction in our average number of active full-time employees. As a result, employee benefit costs as a percent of salaries and wages increased to 40.0% in 2025 compared to 37.3% in 2024.
Operating supplies and expenses decreased $64.3 million, or 10.1%, in 2025 as compared to 2024, due primarily to decreases in our costs for diesel fuel used in our vehicles and 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 the average price per gallon and consumption. Our average cost per gallon of diesel fuel decreased 4.2% in 2025 as compared to 2024. We do not use diesel fuel hedging instruments; therefore, our costs are subject to market price fluctuations. Our gallons consumed also decreased 8.6% in 2025 as compared to 2024 due primarily to a decrease in miles driven. Additionally, other operating supplies and expenses decreased in 2025 as compared to 2024 primarily due to lower maintenance and repair costs for our fleet.
Depreciation and amortization increased $20.1 million, or 5.8%, in 2025 as compared to 2024. The increase in depreciation and amortization costs was due primarily to 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 2026 capital expenditure plan. While our investments in real estate, equipment, and technology can increase our short-term costs, we believe these investments are necessary to support our continued long-term growth and strategic initiatives.
Our effective tax rate in 2025 was 24.8% as compared to 23.9% in 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-deductible items. In 2025 and 2024, our effective tax rates were favorably impacted by the purchase of federal tax credits. In 2024, our effective tax rate was also favorably impacted by certain other discrete tax adjustments.
Liquidity and Capital Resources
A summary of our cash flows is presented below:
(In thousands)
Cash and cash equivalents at beginning of year
Cash flows provided by (used in):
Operating activities
Investing activities
Financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at end of year
The change in our cash flows provided by operating activities during 2025 as compared to 2024 was due to a decrease in net income and changes in certain working capital accounts.
The change in our cash flows used in investing activities during 2025 as compared to 2024 was primarily due to the reduction in our 2025 capital expenditure program as compared to 2024. Changes in our capital expenditures are more fully described below under “Capital Expenditures.”
The change in our cash flows used in financing activities during 2025 as compared to 2024 was primarily due to a decrease in cash utilized for repurchases of our common stock in 2025. Our return of capital to shareholders is more fully described below under “Stock Repurchase Program” and “Dividends to Shareholders.” Our long-term debt agreement is more fully described below under “Financing Agreements.”
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 Agreements.” We believe we also have sufficient access to debt and equity markets to provide other sources of liquidity, if needed.
Capital Expenditures
The table below sets forth our net capital expenditures for property and equipment for the years ended December 31, 2025 and 2024:
Year Ended December 31,
(In thousands)
Land and structures
Tractors
Trailers
Technology
Other equipment and assets
Less: Proceeds from sales
Total
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 that we believe supports 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. Our capital expenditures were below this range in 2025 and we expect our capital expenditures to remain below this range in 2026 as we continue to utilize available capacity within our existing network for growth.
We currently estimate capital expenditures will be approximately $265 million for the year ending December 31, 2026. Approximately $125 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 $95 million is allocated for the purchase of tractors and trailers; and approximately $45 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.
Stock Repurchase Program
On July 28, 2021, we announced that our Board of Directors had approved a stock repurchase program authorizing us to repurchase up to an aggregate of $2.0 billion of our outstanding common stock (the “2021 Repurchase Program”). The 2021 Repurchase Program began after completion of our prior repurchase program in January 2022 and was completed in May 2024. On July 26, 2023, we announced that our Board of Directors had approved a stock repurchase program authorizing us to repurchase up to an aggregate of $3.0 billion of our outstanding common stock (the “2023 Repurchase Program”). The 2023 Repurchase Program, which does not have an expiration date, began after the completion of the 2021 Repurchase Program in May 2024.
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.
On May 28, 2024, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a third-party financial institution. The ASR Agreement was accounted for as a settled treasury stock purchase and a forward stock purchase contract. The par value of the initial shares received was recorded as a reduction to common stock, with the excess purchase price recorded as a reduction to retained earnings. The forward stock purchase contract was accounted for as a contract indexed to our own stock and is classified within capital in excess of par value on our Balance Sheets. The ASR Agreement was settled with the final number of shares received based on the daily volume-weighted average share price of our common stock over the term of the agreement, less a negotiated discount. Under the ASR Agreement, we paid the third-party financial institution $200.0 million and received an initial delivery of 923,201 shares of our common stock for $160.0 million, representing approximately 80% of the total value of shares to be received by us under the ASR Agreement, and the remaining balance of $40.0 million was settled in November 2024. We repurchased a total of 1,056,213 shares for $200.0 million under the ASR Agreement.
At December 31, 2025, we had $1.54 billion remaining authorized under the 2023 Repurchase Program.
Dividends to Shareholders
Our Board of Directors declared a cash dividend of $0.28 per share for each quarter of 2025 and declared a cash dividend of $0.26 per share for each quarter of 2024.
On February 4, 2026, we announced that our Board of Directors had declared a cash dividend of $0.29 per share of our common stock. The dividend is payable on March 18, 2026 to shareholders of record at the close of business on March 4, 2026. Although we intend to pay a quarterly cash dividend on our common stock for the foreseeable future, the declaration and amount of any future dividend is subject to approval by our Board of Directors, and is restricted by applicable state law limitations on distributions to shareholders as well as certain covenants under our Credit Agreement and Note Agreement. We anticipate that any future quarterly cash dividends will be funded through cash flows from operations, our existing cash and cash equivalents, and, if needed, borrowings under our Credit Agreement or Note Agreement.
Financing Agreements
Note Agreement
The Note Agreement, which is uncommitted and subject to Prudential’s sole discretion, provides for the issuance of senior promissory notes with an aggregate principal amount of up to $350.0 million through March 22, 2026. On May 4, 2020, we issued $100.0 million aggregate principal amount of senior promissory notes (the “Series B Notes”). Borrowing availability under the Note Agreement is reduced by the outstanding amount of the existing Series B Notes, and all other senior promissory notes issued pursuant to the Note Agreement.
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 on May 4, 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.
Credit Agreement
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.
At our option, borrowings under the Credit Agreement bear interest at either: (i) the Secured Overnight Financing Rate (“SOFR”) plus the Term SOFR Adjustment, as defined in the Credit Agreement, equal to 0.100%, plus an applicable margin that ranges from 1.000% to 1.375%; or (ii) a Base Rate, as defined in the Credit Agreement, plus an applicable margin that ranges from 0.000% to 0.375%. The applicable margin for each of the foregoing options is dependent upon our consolidated debt to consolidated total capitalization ratio. Letter of credit fees equal to the applicable margin for SOFR loans are charged quarterly in arrears on the daily average aggregate stated amount of all letters of credit outstanding during the quarter. Commitment fees ranging from 0.090% to 0.175% (based upon our consolidated debt to total consolidated capitalization ratio) are charged quarterly in arrears on the aggregate unutilized portion of the Credit Agreement.
For periods covered under the Credit Agreement, the applicable margin on SOFR loans and letter of credit fees were 1.000% and commitment fees were 0.090%.
The amounts outstanding and available borrowing capacity under the Credit Agreement are presented below:
December 31,
(In thousands)
Credit Agreement limit
Credit Agreement borrowings
Outstanding letters of credit
Credit Agreement availability
General Debt Provisions
The Credit Agreement and Note Agreement contain customary covenants, including financial covenants that require us to observe a maximum ratio of debt to total capital and a minimum fixed charge coverage ratio. The Credit Agreement and Note Agreement also include a provision limiting our ability to make restricted payments, including dividends and payments for share repurchases, unless, among other conditions, no defaults or events of default are ongoing (or would be caused by such restricted payment). We were in compliance with all covenants in our outstanding debt instruments for the period ended December 31, 2025.
We do not anticipate financial performance that would cause us to violate any such covenants in the future, and we believe the combination of our existing Credit Agreement and Note Agreement along with our additional borrowing capacity will be sufficient to meet foreseeable seasonal and long-term capital needs.
The interest rate is fixed on the Series B Notes. Therefore, short-term exposure to fluctuations in interest rates is limited to our Credit Agreement. We do not currently use interest rate derivative instruments to manage exposure to interest rate changes.
Contractual Obligations
The following table summarizes our significant contractual obligations as of December 31, 2025:
Payments due by period
Contractual Obligations (1)
Less than
More than
(In thousands)
Total
1 year
1-3 years
3-5 years
5 years
Series B Notes
Operating lease obligations (2)
Purchase obligations and Other
Total
Contractual obligations include principal and interest on our Series B Notes; leases consisting primarily of real estate and automotive leases; and purchase obligations relating to (i) non-cancellable purchase orders for equipment scheduled for delivery in 2026, (ii) non-cancellable purchase orders for information technology agreements, and (iii) federal tax credits.
Lease payments include lease extensions that are reasonably certain to be exercised.
Critical Accounting Policies
In preparing our financial statements, we apply the following critical accounting policies that we believe affect our judgments and estimates of amounts recorded in certain assets, liabilities, revenue and expenses. These critical accounting policies, which are those that have, or are reasonably likely to have, a material impact on our financial condition or results of operations, are further described in Note 1 of the Notes to the Financial Statements included in Item 8 of this report.
Revenue Recognition
Our revenue is generated from providing transportation and related services to customers in accordance with the bill of lading (“BOL”) contract, our general tariff provisions and contractual agreements. Generally, our performance obligations begin when we receive a BOL from a customer and are satisfied when we complete the delivery of a shipment and related services. We recognize revenue for our performance obligations under our customer contracts over time, as our customers receive the benefits of our services in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic
606”). With respect to services not completed at the end of a reporting period, we use a percentage of completion method to allocate the appropriate revenue to each separate reporting period. Under this method, we develop a factor for each uncompleted shipment by dividing the actual number of days in transit at the end of a reporting period by that shipment’s standard delivery time schedule. This factor is applied to the total revenue for that shipment and revenue is allocated between reporting periods accordingly. Changes in economic conditions, customer creditworthiness, pricing arrangements and other factors may significantly impact revenue recognition estimates.
Property and Equipment
Property and equipment are recorded at cost and depreciated on a straight-line basis over their estimated economic lives. We use historical experience, certain assumptions and estimates in determining the economic life of each asset. When indicators of impairment exist, we review property and equipment for impairment due to changes in operational and market conditions, and we adjust the carrying value and economic life of any impaired asset as appropriate.
Estimated economic lives for structures are 7 to 30 years, revenue equipment is 4 to 15 years, other equipment is 2 to 20 years, and leasehold improvements are the lesser of the economic life of the leasehold improvement or the remaining life of the lease. The use of different assumptions, estimates or significant changes in the resale market for our equipment could result in material changes in the carrying value and related depreciation of our assets. Depreciation expense in 2025 totaled $364.7 million. There have been no material effects to estimates related to depreciation expense for the year ended December 31, 2025.
Claims and Insurance Accruals
Claims and insurance accruals reflect the estimated cost of various claims, including those related to bodily injury/property damage (“BIPD”) and workers’ compensation. All related costs associated with BIPD claims are charged to insurance and claims expense, and all related costs associated with workers’ compensation claims are charged to employee benefits expense.
Insurers providing excess coverage above a company’s self-insured retention or deductible levels typically adjust their premiums to cover insured losses and for other market factors. As a result, we periodically evaluate our self-insured retention and deductible levels to determine the most cost-efficient balance between our exposure and excess coverage.
In establishing accruals for claims and expenses, we evaluate and monitor each claim individually, and we use factors such as historical claims development experience, known trends and third-party actuarial estimates to determine the appropriate reserves for potential liabilities. We believe the assumptions and methods used to estimate these liabilities are reasonable; however, any changes in the severity or number of reported claims, significant changes in medical costs and regulatory changes affecting the administration of our plans could significantly impact the determination of appropriate reserves in future periods. Our accrued liability for BIPD and workers’ compensation claims totaled $138.8 million and $137.3 million at December 31, 2025 and 2024, respectively. Claims and insurance accruals are discussed further in Note 1 of the Notes to the Financial Statements included in Item 8 of this report.
Inflation
Most of our expenses are affected by inflation, which typically results in increased operating costs. In response to fluctuations in the cost of petroleum products, particularly diesel fuel, we generally include a fuel surcharge in our tariffs and contractual agreements. The fuel surcharge is designed to offset the cost of diesel fuel above a base price and fluctuates as diesel fuel prices change from the base, which is generally indexed to the DOE’s published fuel prices that reset each week. Volatility in the price of diesel fuel has impacted our business, as described in this report. However, we do not believe inflation has had a material adverse effect on our results of operations for any of the past three years.
Related Party Transactions
Family Relationships
John R. Congdon, Jr., a member of our Board of Directors, is the cousin of David S. Congdon, Executive Chairman of our Board of Directors. We regularly disclose the amount of compensation that we pay to these individuals, as well as the compensation paid to any of their family members employed by us that from time to time may require disclosure, in the proxy statement for our Annual Meeting of Shareholders.
Audit Committee Approval
The Audit Committee of our Board of Directors reviews and approves all related person transactions in accordance with our Related Person Transactions Policy.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact our financial position, results of operations and cash flows due to adverse changes in financial market prices and rates.
We are exposed to interest rate risk directly related to loans, if any, under our Credit Agreement, which have variable interest rates. A 100 basis point increase in the average interest rate on this agreement would have no effect on our operating results as we had no outstanding borrowings under our Credit Agreement at December 31, 2025 or 2024. We have established policies and procedures to manage exposure to market risks and use major institutions that we believe are creditworthy to minimize credit risk.
From time to time, we are exposed to interest rate risk on certain short-term investments as a result of investing in commercial paper and certificates of deposits. These fixed rate securities are subject to interest rate risk, as sharp increases in market interest rates could have an adverse impact on their fair value. Although the fair values of these instruments can fluctuate, we believe that the short-term, highly liquid nature of these debt securities, and our ability to hold these instruments to maturity, reduces our risk for potential material losses. We held no short-term investments as of December 31, 2025 or 2024.
We are exposed to market risk for investments relating to certain assets held within the Company-owned life insurance contracts on certain current and former employees. The cash surrender value in life insurance contracts included on our Balance Sheets at December 31, 2025 and 2024 was $98.5 million and $86.5 million, respectively. The portion of underlying investments with exposure to market fluctuations was $79.4 million and $67.9 million at December 31, 2025 and 2024, respectively. To provide a meaningful assessment of the market risk for investments relating to Company-owned life insurance contracts, we performed a sensitivity analysis using a 10% change in market value in those investments as of December 31, 2025 and 2024. A 10% change in market value would have caused a $7.9 million and a $6.8 million impact on our pre-tax income in 2025 and 2024, respectively.
We are also exposed to commodity price risk related to diesel fuel prices, and we manage our exposure to that risk primarily through the application of fuel surcharges to our customers.
For further discussion related to these risks, see Notes 1, 2 and 9 of the Notes to the Financial Statements included in Item 8, “Financial Statements and Supplementary Data” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
ITEM 8. FINANCIAL STATEMEN TS AND SUPPLEMENTARY DATA
OLD DOMINION FREIGHT LINE, INC.
BALANCE SHEETS
December 31,
(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
Customer receivables, less allowances of $ 7,924 and $ 9,272 , respectively
Income taxes receivable
Other receivables
Prepaid expenses and other current assets
Total current assets
Property and equipment:
Revenue equipment
Land and structures
Other fixed assets
Leasehold improvements
Total property and equipment
Less: Accumulated depreciation
Net property and equipment
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Compensation and benefits
Claims and insurance accruals
Other accrued liabilities
Income taxes payable
Current maturities of long-term debt
Total current liabilities
Long-term debt
Other non-current liabilities
Deferred income taxes
Total long-term liabilities
Total liabilities
Commitments and contingent liabilities
Shareholders’ equity:
Common stock - $ 0.10 par value, 560,000,000 shares authorized, 208,556,788 and 212,984,747 shares outstanding at December 31, 2025 and December 31, 2024, respectively
Capital in excess of par value
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
The accompanying notes are an integral part of these financial statements.
OLD DOMINION FREIGHT LINE, INC.
STATEMENTS O F OPERATIONS
Year Ended December 31,
(In thousands, except per share data)
Revenue from operations
Operating expenses:
Salaries, wages and benefits
Operating supplies and expenses
General supplies and expenses
Operating taxes and licenses
Insurance and claims
Communications and utilities
Depreciation and amortization
Purchased transportation
Miscellaneous expenses, net
Total operating expenses
Operating income
Non-operating (income) expense:
Interest expense
Interest income
Other expense, net
Total non-operating income
Income before income taxes
Provision for income taxes
Net income
Earnings per share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
Dividends declared per share
The accompanying notes are an integral part of these financial statements.
OLD DOMINION FREIGHT LINE, INC.
STATEMENTS OF CHANGES I N SHAREHOLDERS’ EQUITY
Capital in
Common Stock
Excess of
Retained
(In thousands, except per share data)
Shares
Amount
Par Value
Earnings
Total
Balance as of December 31, 2022
Net income
Share repurchases, including transaction costs
Cash dividends declared ($ 0.80 per share)
Share-based compensation and share issuances, net of
forfeitures
Taxes paid in exchange for shares withheld
Balance as of December 31, 2023
Net income
Share repurchases, including transaction costs and
settlements under accelerated share repurchase
programs
Cash dividends declared ($ 1.04 per share)
Share-based compensation and share issuances, net
of forfeitures
Taxes paid in exchange for shares withheld
Balance as of December 31, 2024
Net income
Share repurchases, including transaction costs
Cash dividends declared ($ 1.12 per share)
Share-based compensation and share issuances, net
of forfeitures
Taxes paid in exchange for shares withheld
Balance as of December 31, 2025
The accompanying notes are an integral part of these financial statements.
OLD DOMINION FREIGHT LINE, INC.
STATEMENTS O F CASH FLOWS
Year Ended December 31,
(In thousands)
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Noncash lease expense
Loss (gain) on disposal of property and equipment
Deferred income taxes
Share-based compensation
Changes in assets and liabilities:
Customer and other receivables, net
Prepaid expenses and other assets
Accounts payable
Compensation, benefits and other accrued liabilities
Claims and insurance accruals
Income taxes, net
Other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of property and equipment
Proceeds from sale of property and equipment
Purchase of short-term investments
Proceeds from maturities of short-term investments
Other investing
Net cash used in investing activities
Cash flows from financing activities:
Payments for share repurchases
Dividends paid
Principal payments under long-term debt agreements
Other financing activities, net
Net cash used in financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Interest paid
Capitalized interest
The accompanying notes are an integral part of these financial statements.
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
Business
We are one of the largest North American less-than-truckload (“LTL”) motor carriers. We provide regional, inter-regional and national LTL services through a single integrated, union-free organization. Our service offerings, which include expedited transportation, are provided through an expansive network of service centers located throughout the continental United States. Through strategic alliances, we also provide LTL services throughout North America. In addition to our core LTL services, we offer a range of value-added services including container drayage, truckload brokerage and supply chain consulting. We have one operating and reportable segment as described in Note 11.
Basis of Presentation
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Unless the context requires otherwise, references in these Notes to “Old Dominion,” the “Company,” “we,” “us” and “our” refer to Old Dominion Freight Line, Inc.
Revenue and Expense Recognition
We recognize revenue based upon when our transportation and related services have been completed in accordance with the bill of lading (“BOL”) contract, our general tariff provisions and contractual agreements with our customers. Generally, our performance obligations begin when we receive a BOL from a customer and are satisfied when we complete the delivery of a shipment and related services. We recognize revenue for our performance obligations under our customer contracts over time, as our customers receive the benefits of our services in accordance with Accounting Standards Codification (“ASC”) Topic 606. With respect to services not completed at the end of a reporting period, we use a percentage of completion method to allocate the appropriate revenue to each separate reporting period. Under this method, we develop a factor for each uncompleted shipment by dividing the actual number of days in transit at the end of a reporting period by that shipment’s standard delivery time schedule. This factor is applied to the total revenue for that shipment and revenue is allocated between reporting periods accordingly. Payment terms vary by customer and are short-term in nature. Expenses are recognized when incurred.
The composition of our revenue is summarized below:
Year Ended December 31,
(In thousands)
LTL services
Other services
Total revenue from operations
Allowances for Uncollectible Accounts and Revenue Adjustments
We maintain an allowance for uncollectible accounts for estimated losses resulting from the inability of our customers to make required payments. We estimate this allowance by analyzing the aging of our customer receivables, our historical loss experience and other trends and factors affecting the credit risk of our customers, including anticipated changes to future performance. Write-offs occur when we determine an account to be uncollectible and could differ from our allowance estimate as a result of factors such as changes in the overall economic environment or risks surrounding our customers. Additional allowances may be required if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments. We periodically review the underlying assumptions in our estimate of the allowance for uncollectible accounts to ensure that the allowance reflects the most recent trends and factors.
We also maintain an allowance for estimated revenue adjustments resulting from future billing corrections, customer allowances, money-back service guarantees and other miscellaneous revenue adjustments. These revenue adjustments are recorded in our revenue from operations. We use historical experience, trends and current information to update and evaluate these estimates.
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist principally of customer receivables and, when held, short-term investments. We perform initial and ongoing credit evaluations of our customers to minimize credit risk. We generally do not require collateral but may requ ire prepayment of our services under certain circumstances. Credit risk is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographic regions. We generally expect our short-term investments will be diversified over various high-quality issuers. Such short-term investments may also subject us to concentrations of credit risk.
Cash and Cash Equivalents
We consider cash on hand and deposits in banks along with certificates of deposit and short-term marketable securities with original maturities of three months or less as cash and cash equivalents.
Short-term Investments
From time to time, the Company invests in commercial paper and certificates of deposits with an original maturity of greater than three months, which are classified and accounted for as trading securities and are reported in “Short-term investments” on our Balance Sheets. These investments are measured at fair value on a recurring basis each reporting period, with gains or losses recorded in “Non-operating (income) expense” on our Statements of Operations. As of December 31, 2025 and 2024 , we held no short-term investments.
Property and Equipment
Property and equipment are recorded at cost. Major additions and improvements are capitalized, while maintenance and repairs that do not improve or extend the lives of the respective assets are charged to expense as incurred. We capitalize the cost of tires mounted on purchased revenue equipment as a part of the total equipment cost. Subsequent replacement tires are expensed at the time those tires are placed in service. We assess the realizable value of our long-lived assets and evaluate such assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.
Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the related assets. The following table provides the estimated useful lives by asset type:
Structures
7 to 30 years
Revenue equipment
4 to 15 years
Other equipment
2 to 20 years
Leasehold improvements
Lesser of economic life or life of lease
Depreciation expense was $ 364.7 million, $ 344.5 million and $ 324.0 million for 2025, 2024 and 2023 , respectively.
Claims and Insurance Accruals
We carry a significant amount of insurance with third-party insurance carriers that provides various levels of protection for our risk exposure, including protection in the areas of property, casualty, cyber, management, and group health, with coverage limits and retention and deductible levels that we believe are reasonable given historical claim activity and severity. We believe that our policy of maintaining self-insured retentions or deductibles under these various insurance programs for a portion of our risks, supported by our safety, claims management and loss prevention programs, is an effective means of managing insurance costs. We periodically review our risk exposure and insurance coverage applicable to those risks and believe that we maintain sufficient insurance coverage.
Claims and insurance accruals reflect the Company’s estimated cost of claims for cargo loss and damage, bodily injury/property damage (“BIPD”), workers’ compensation, group health and group dental. These accruals include amounts for future claims development and claims incurred but not reported, which are primarily based on historical claims development experience. The related cost for cargo loss and damage and BIPD is charged to “Insurance and claims” on our Statements of Operations, while the related costs for workers’ compensation, group health and group dental are charged to “Salaries, wages and benefits” on our Statements of Operations.
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Our liability for claims and insurance totaled $ 168.8 million and $ 164.2 million at December 31, 2025 and 2024 , respectively. The long-term portions of those reserves were $ 89.9 million and $ 91.4 million at December 31, 2025 and 2024 , respectively, which were included in “Other non-current liabilities” on our Balance Sheets.
Share-Based Compensation
We have various share-based compensation plans for our employees and non-employee directors. Our share-based compensation includes awards of restricted stock, phantom stock, and performance-based restricted stock units (“PBRSUs”) which are accounted for under ASC Topic 718, Compensation - Stock Compensation . All share-based compensation expense is presented in “Salaries, wages and benefits” for employees and “Miscellaneous expenses, net” for non-employee directors in the accompanying Statements of Operations. Total compensation expense recognized for all share-based compensation awards was $ 12.9 million, $ 11.3 million and $ 11.1 million during 2025, 2024 and 2023 , respectively. The total tax benefit recognized related to these awards was $ 3.6 million, $ 6.9 million and $ 3.3 million during 2025, 2024 and 2023, respectively.
Awards of restricted stock, phantom stock and PBRSUs are accounted for as equity under ASC Topic 718. We recognize compensation cost, net of estimated forfeitures, for restricted stock awards and phantom stock awards on a straight-line basis over the requisite service period of each award. Compensation cost, net of estimated forfeitures, for market-based PBRSUs granted in 2025 (“2025 PBRSUs”) was based on the fair value of the awards at the grant date measured using the Monte Carlo simulation model and is recognized as expense on a straight-line basis over the three-year performance period. Compensation cost, net of estimated forfeitures, for financial performance metric-based PBRSUs granted prior to 2025 (“Prior PBRSUs”) was recognized using the accelerated attribution method over the requisite service period of each award. At the end of each reporting period, for Prior PBRSUs, we reassessed the probability of achieving the financial performance targets and any changes to our initial assessment were reflected in the reporting period in which the change in estimate occurred.
Advertising
The costs of advertising our services are expensed as incurred and are included in “General supplies and expenses” on our Statements of Operations. Advertising costs charged to expense totaled $ 35.1 million, $ 34.5 million and $ 34.6 million for 2025, 2024 and 2023 , respectively.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are:
Level 1 — Quoted prices for identical instruments in active markets;
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and
Level 3 — Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.
Our long-term debt, including current maturities, is measured at fair value and further described in Note 9. Our other financial securities in current assets and current liabilities approximate their fair value due to the short-term maturities of these instruments.
Stock Repurchase Program
On July 28, 2021, we announced that our Board of Directors had approved a stock repurchase program authorizing us to repurchase up to an aggregate of $ 2.0 billion of our outstanding common stock (the “2021 Repurchase Program”). The 2021 Repurchase Program began after completion of our prior repurchase program in January 2022 and was completed in May 2024. On July 26, 2023, we announced that our Board of Directors had approved a new stock repurchase program authorizing us to repurchase up to an aggregate of $ 3.0 billion of our outstanding common stock (the “2023 Repurchase Program”). The 2023 Repurchase Program, which does not have an expiration date, began after the completion of the 2021 Repurchase Program in May 2024.
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
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.
On May 28, 2024, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a third-party financial institution. The ASR Agreement was accounted for as a settled treasury stock purchase and a forward stock purchase contract. The par value of the initial shares received was recorded as a reduction to common stock, with the excess purchase price recorded as a reduction to retained earnings. The forward stock purchase contract was accounted for as a contract indexed to our own stock and is classified within capital in excess of par value on our Balance Sheets. The ASR Agreement was settled with the final number of shares received based on the daily volume-weighted average share price of our common stock over the term of the agreement, less a negotiated discount. Under the ASR Agreement, we paid the third-party financial institution $ 200.0 million and received an initial delivery of 923,201 shares of our common stock for $ 160.0 million, representing approximately 80 % of the total value of shares to be received by us under the ASR Agreement, and the remaining balance of $ 40.0 million was settled in November 2024. We repurchased a total of 1,056,213 shares for $ 200.0 million under the ASR Agreement.
At December 31, 2025 , we had $ 1.54 billion remaining authorized under the 2023 Repurchase Program.
Dividends to Shareholders
Our Board of Directors declared a cash dividend of $ 0.28 per share for each quarter of 2025 , declared a cash dividend of $ 0.26 per share for each quarter of 2024 and declared a cash dividend of $ 0.20 per share for each quarter of 2023.
On February 4, 2026 , we announced that our Board of Directors had declared a cash dividend of $ 0.29 per share of our common stock. The dividend is payable on March 18, 2026 to shareholders of record at the close of business on March 4, 2026 . Although we intend to pay a quarterly cash dividend on our common stock for the foreseeable future, the declaration and amount of any future dividend is subject to approval by our Board of Directors, and is restricted by applicable state law limitations on distributions to shareholders as well as certain covenants under our Credit Agreement and Note Agreement. We anticipate that any future quarterly cash dividends will be funded through cash flows from operations, our existing cash and cash equivalents, and, if needed, borrowings under our Credit Agreement or Note Agreement.
Comprehensive Income
The Company has no components of other comprehensive income. Accordingly, net income equals comprehensive income for all periods presented in this report.
Recently Adopted Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. We adopted ASU 2023-09 in the fourth quarter of 2025 on a retrospective basis. While the new accounting rules did not have any impact on our financial condition, results of operations or cash flows, the adoption of the new accounting rules resulted in additional disclosures, which are included in Note 4.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. ASU 2024-03 requires public entities to disclose additional information about the nature of expenses included on the statements of operations as well as information about specific types of expenses included in the expense captions presented on the statements of operations in the notes to the financial statements on an interim and annual basis. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. While the new accounting rules will not have any impact on our financial condition, results of operations or cash flows, the adoption of the new accounting rules may result in additional disclosures.
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. ASU 2025-05 provides a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. This guidance, which must be applied prospectively, is effective for fiscal years beginning after December 15, 2025, and for interim periods within those fiscal years, with early adoption permitted. We plan to adopt ASU 2025-05 on a prospective basis in the first quarter of 2026 and we do not anticipate the adoption will have a material impact on our financial condition, results of operations or cash flows.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 amends certain aspects of the accounting for and disclosure of software costs under Accounting Standards Codification 350-40, Internal-Use Software Accounting & Capitalization. ASU 2025-06 eliminates project stages and requires capitalization of software costs to begin when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. When evaluating if a project is probable to be completed, significant development uncertainty must be assessed. Additionally, disclosures for property, plant and equipment will be required for all capitalized software costs. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027 and for interim periods within those fiscal years, with early adoption permitted. The new accounting rules can be adopted prospectively, retrospectively or using a modified transition approach. We are currently evaluating the impact of this guidance on our financial condition, results of operations and disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting. ASU 2025-11 provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact of adopting ASU 2025-11.
Note 2. Long-term Debt
Long-term debt, net of unamortized debt issuance costs, consisted of the following:
December 31,
(In thousands)
Senior notes
Credit agreement borrowings
Total long-term debt
Less: Current maturities
Total maturities due after one year
Note Agreement
On May 4, 2020, we entered into a 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 Note Agreement, which is uncommitted and subject to Prudential’s sole discretion, provides for the issuance of senior promissory notes with an aggregate principal amount of up to $ 350.0 million through March 22, 2026. On May 4, 2020, we issued $ 100.0 million aggregate principal amount of senior promissory notes (the “Series B Notes”). Borrowing availability under the Note Agreement is reduced by the outstanding amount of the existing Series B Notes, and all other senior promissory notes issued pursuant to the Note Agreement.
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 our third amended and restated credit agreement, dated March 22, 2023, with Wells Fargo Bank, National Association serving as administrative agent for the lenders ( as subsequently amended, the “Credit Agreement”) or other senior promissory notes issued pursuant to the Note Agreement.
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Credit Agreement
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.
At our option, borrowings under the Credit Agreement bear interest at either: (i) the Secured Overnight Financing Rate (“SOFR”) plus the Term SOFR Adjustment, as defined in the Credit Agreement, equal to 0.100 %, plus an applicable margin that ranges from 1.000 % to 1.375 %; or (ii) a Base Rate, as defined in the Credit Agreement, plus an applicable margin that ranges from 0.000 % to 0.375 %. The applicable margin for each of the foregoing options is dependent upon our consolidated debt to consolidated total capitalization ratio. Letter of credit fees equal to the applicable margin for SOFR loans are charged quarterly in arrears on the daily average aggregate stated amount of all letters of credit outstanding during the quarter. Commitment fees ranging from 0.090 % to 0.175 % (based upon our consolidated debt to total consolidated capitalization ratio) are charged quarterly in arrears on the aggregate unutilized portion of the Credit Agreement.
For periods covered under the Credit Agreement, the applicable margin on SOFR loans and letter of credit fees were 1.000 % and commitment fees were 0.090 %.
The Credit Agreement replaced our previous five-year, $ 250.0 million senior unsecured revolving credit agreement dated as of November 21, 2019 (the “Prior Credit Agreement”). For periods in 2023 covered under the Prior Cr edit Agreement, the applicable margin on LIBOR loans and letter of credit fees was 1.000 % and commitment fees were 0.100 %.
There were $ 37.5 million and $ 37.7 million of outstanding letters of credit at December 31, 2025 and 2024, respectiv ely. As of December 31, 2025, we had $ 362.5 million of borrowing availability under the Credit Agreement after taking into account outstanding letters of credit.
General Debt Provisions
The Credit Agreement and Note Agreement contain customary covenants, including financial covenants that require us to observe a maximum ratio of debt to total capital and a minimum fixed charge coverage ratio. The Credit Agreement and Note Agreement also include a provision limiting our ability to make restricted payments, including dividends and payments for share repurchases, unless, among other conditions, no defaults or events of default are ongoing (or would be caused by such restricted payment).
Note 3. Leases
We lease certain assets under operating leases, which primarily consisted of real estate leases for certain service center locations and automotive leases for private passenger vehicles. Certain operating leases provide for renewal options, which can vary by lease and are typically offered at their fair rental value. We have not made any residual value guarantees related to our operating leases; therefore, we have no corresponding liability recorded on our Balance Sheets.
The right-of-use assets and corresponding lease liabilities on our Balance Sheets represent payments over the lease term, which includes renewal options for certain real estate leases that we are likely to exercise. These renewal options included in the right-of-use assets and corresponding lease liabilities begin in 2026 and continue through 2035 , and range from three year s to five years in length. Short-term leases, which have an initial term of 12 months or less, are not included in our right-of-use assets or corresponding lease liabilities.
Of our total operating lease liabilities, $ 17.2 million and $ 15.7 million are classified as current and are presented within “ Other accrued liabilities ,” and $ 84.2 million and $ 92.6 million are classified as non-current and are presented within “ Other non-current liabilities ” on our Balance Sheets as of December 31, 2025 and 2024 , respectively. Our right-of-use assets totaled $ 96.8 million and $ 104.2 million and are presented within “ Other assets ,” which is classified as long-term, on our Balance Sheets as of December 31, 2025 and 2024, respectively.
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Future lease payments for assets under operating leases, as well as a reconciliation to our total lease liabilities as of December 31, 2025, are as follows:
(In thousands)
Lease Payments
Thereafter
Total lease payments
Less: imputed interest
Total lease liabilities
The weighted average lease term for our operating leases was 5.3 years and 6.2 years at December 31, 2025 and 2024 , respectively. The discount rate used in the calculation of our right-of-use assets and corresponding lease liabilities was determined based on the stated rate within each contract when available, or our collateralized borrowing rate from lending institutions. The weighted average discount rate for our operating leases was 4.8 % and 4.9 % as of December 31, 2025 and 2024, respectively.
Cash paid for amounts included in the measurement of our lease liabilities was $ 21.2 million and $ 21.3 million for the years ended December 31, 2025 and 2024 , respectively. Certain operating leases include rent escalation provisions, which we recognize as expense on a straight-line basis. Lease expense is presented within “Operating supplies and expenses” or “General supplies and expenses,” depending on the nature of the use of the leased asset. Aggregate expense under operating leases was $ 23.8 million, $ 23.3 million and $ 24.5 million for 2025, 2024 and 2023, respectively. During the years ended December 31, 2025 and 2024 , we increased our right-of-use assets by $ 10.2 million and $ 5.0 million, respectively, in exchange for new operating lease liabilities.
Note 4. Income Taxes
The components of the provision for income taxes are as follows:
Year Ended December 31,
(In thousands)
Current:
Federal
State
Deferred:
Federal
State
Total:
Federal
State
Total provision for income taxes
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
The following is a reconciliation of income tax expense and the effective tax rate calculated using the U.S. statutory federal income tax rate to our provision for income taxes for 2025, 2024, and 2023:
Year Ended December 31,
(Amounts in thousands)
Amount
Rate
Amount
Rate
Amount
Rate
Income tax expense at U.S. statutory rate
Federal tax credits
Federal other, net
State income taxes, net of federal benefit
Total provision for income taxes
The majority of the State income taxes, net of federal benefit for 2025 is comprised of California, Georgia, Illinois, Indiana, Kansas, Minnesota, Pennsylvania, Virginia and Wisconsin. The majority of the State income taxes, net of federal benefit for 2024 is comprised of California, Georgia, Iowa, Illinois, Indiana, Kansas, Pennsylvania, Tennessee, and Virginia. The majority of the State income taxes, net of federal benefit for 2023 is comprised of California, Georgia, Iowa, Illinois, Indiana, Kansas, Minnesota, Pennsylvania, and Virginia.
Deferred tax assets and liabilities are included in “Deferred income taxes” on our Balance Sheets and consist of the f ollowing:
December 31,
(In thousands)
Deferred tax assets:
Claims and insurance reserves
Accrued vacation
Deferred compensation
Other
Total deferred tax assets
Deferred tax liabilities:
Depreciation and amortization
Other
Total deferred tax liabilities
Net deferred tax liability
We are subject to U.S. federal income tax, as well as income tax of multiple state tax jurisdictions. We remain open to examination by the Internal Revenue Service for tax years 2022 through 2025 . We also remain open to examination by various state tax jurisdictions for tax years 2021 through 2025 .
The Company’s liability for unrecognized tax benefits was immaterial as of December 31, 2025 and 2024. Interest and penalties related to uncertain tax positions, which were immaterial in 2025, 2024 and 2023, are recorded in “Provision for income taxes” on our Statements of Operations. Changes in our liability for unrecognized tax benefits could affect our effective tax rate, if recognized, but we do not expect any material changes within the next twelve months.
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
The components of income taxes paid are as follows:
Year Ended December 31,
(In thousands)
Federal (1)
State
Total income taxes paid
(1) Includes payments of $ 189.1 million and $ 177.5 million in 2025 and 2024, respectively for purchased federal tax credits to offset estimated tax payments. In 2023, we had no purchased federal tax credits.
On July 4, 2025, the One Big Beautiful Bill Act (the “Act”), which includes a broad range of tax reform provisions affecting businesses, was signed into law in the U.S. The provisions of the Act applicable to our Company did not have a material impact on our financial statements for the quarter or year ended December 31, 2025. We do not expect the Act to have a material impact on our effective tax rate in the future. However, we do anticipate future cash tax benefits due to changes in the laws for depreciation.
Note 5. Related Party Transactions
John R. Congdon, Jr., a member of our Board of Directors, is the cousin of David S. Congdon, Executive Chairman of our Board of Directors. We regularly disclose the amount of compensation that we pay to these individuals, as well as the compensation paid to any of their family members employed by us that from time to time may require disclosure, in the proxy statement for our Annual Meeting of Shareholders.
Note 6. Employee Benefit Plans
Defined Contribution Plan
Full-time employees meeting certain eligibility requirements are automatically enrolled in our 401(k) employee retirement plan, unless the employee elects not to defer any compensation. Employee contributions are limited to a percentage of the employee’s compensation, as defined in the plan. We match a percentage of our employees’ contributions up to certain maximum limits. In addition, we may also provide a discretionary matching contribution as specified in the plan. Our employer contributions, net of forfeitures, for 2025, 2024 and 2023 were $ 96.5 million, $ 112.9 million and $ 119.5 million, respectively.
Deferred Compensation Plan
We maintain a nonqualified deferred compensation plan for the benefit of certain eligible employees, including those whose contributions to the 401(k) employee retirement plan are limited due to provisions of the Internal Revenue Code. Participating employees may elect to defer receipt of a percentage of their compensation, as defined in the plan, and the deferred amount is credited to each participant’s deferred compensation account. The plan is not funded, and the Company does not make a matching contribution to this plan. Although the plan is not funded, participants are allowed to select investment options for which their deferrals and future earnings are deemed to be invested. Participant accounts are adjusted to reflect participant deferrals and the performance of their deemed investments. The amounts owed to the participants totaled $ 119.6 million and $ 109.4 million at December 31, 2025 and 2024 , respectively. Of these amounts, $ 9.2 million and $ 9.0 million were included in “Compensation and benefits” on our Balance Sheets as of December 31, 2025 and 2024 , respectively, and $ 110.4 million and $ 100.4 million were included in “Other non-current liabilities” on our Balance Sheets as of December 31, 2025 and 2024 , respectively.
Note 7. Earnings Per Share
Basic earnings per share is computed by dividing net income by the daily weighted average number of shares of our common stock outstanding for the period, excluding unvested restricted stock. Unvested restricted stock is included in common shares outstanding on our Balance Sheets.
Diluted earnings per share is computed using the treasury stock method. The denominator used in calculating diluted earnings per share includes the impact of unvested restricted stock and other dilutive, non-participating securities under our equity award agreements. Contingently issuable shares under performance-based award agreements are included in, or excluded from, the
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
denominator depending on whether the performance target is deemed to have been achieved, or not to have been achieved, using the assumption that the end of the reporting period is treated as the end of the contingency period.
The following table provides a reconciliation of the number of shares of co mmon stock used in computing basic and diluted earnings per share:
Year Ended December 31,
(In thousands)
Weighted average shares outstanding - basic
Dilutive effect of share-based awards
Weighted average shares outstanding - diluted
Note 8. Share-Based Compensation
Stock Incentive Plan
On May 21, 2025, our shareholders approved the Old Dominion Freight Line, Inc. 2025 Stock Incentive Plan (the “Stock Incentive Plan”) previously approved by our Board of Directors. The Stock Incentive Plan is intended to serve as our primary equity incentive plan, although the terms of the 2016 Stock Incentive Plan (the “Prior Plan”), the 2005 Phantom Stock Plan, as amended, and the 2012 Phantom Stock Plan, as amended, will continue to govern all awards previously granted under such plans, as applicable, until such awards have been settled, forfeited, canceled or have otherwise expired or terminated. Awards may be granted under the Stock Incentive Plan until May 20, 2035, or any earlier termination date set by our Board of Directors. The Stock Incentive Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted awards, performance awards, phantom stock awards and other stock-based awards or dividend equivalent awards to selected employees and non-employee directors. The maximum number of shares of common stock that we may issue or deliver pursuant to awards granted under the Stock Incentive Plan is 6,000,000 shares. The outstanding shares under the Prior Plan, of which 3,467,711 shares were available for award on May 21, 2025, were not carried forward to the Stock Incentive Plan and no further grants will be made under the Prior Plan after May 21, 2025.
Restricted Stock Awards
During 2025, we granted restricted stock awards to selected employees under the Prior Plan and we granted restricted stock awards to non-employee directors under the Stock Incentive Plan. During 2024 and 2023 , we granted restricted stock awards to selected employees and non-employee directors under the Prior Plan. The employee restricted stock awards vest in three equal annual installments on each anniversary of the grant date, and the non-employee director restricted stock awards generally vest in full on the first anniversary of the grant date. In both cases, the restricted stock awards are subject to accelerated vesting due to death, total disability, or change in control of the Company.
Subject to the foregoing, unvested restricted stock awards are generally forfeited upon termination of employment, unless otherwise approved by the Board of Directors or the Talent and Compensation Committee. The restricted stock awards accrue dividends while the award is unvested and only carry rights to receive the accrued dividends once vested.
Compensation cost for restricted stock awards is measured at the grant date based on the fair market value per share of our common stock, net of estimated forfeitures.
The following table summarizes our restricted stock award activity for employees and non-employee directors:
Shares
Weighted Average
Grant Date Fair
Value Per Share
Unvested at January 1, 2025
Granted
Vested
Forfeited
Unvested at December 31, 2025
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
The weighted average grant date fair value per restricted stock award granted during fiscal years 2025, 2024 and 2023 was $ 196.72 , $ 212.19 and $ 179.77 , respectively. The total fair value of vested restricted stock awards for fiscal years 2025, 2024 and 2023 was $ 10.9 million, $ 13.9 million and $ 18.1 million, respectively. At December 31, 2025 , the Company had $ 11.9 million of unrecognized stock-based compensation cost, net of estimated forfeitures, related to unvested restricted stock awards that are expected to be recognized over a weighted average period of 1.6 years.
Performance-Based Restricted Stock Units
During February 2025, we granted the 2025 PBRSUs to selected employees under the Prior Plan. The 2025 PBRSUs were market-based awards that will be earned over a three-year performance period based on a comparison of the total shareholder return (“TSR”) of our common stock compared to the TSR of a group of peer companies identified by our Talent and Compensation Committee. The 2025 PBRSUs earned may range from zero to 200 % of the target award and are subject to accelerated vesting due to death, total disability, retirement, or change in control of the Company. Subject to the foregoing, unvested 2025 PBRSUs are generally forfeited if the minimum threshold performance target is not achieved or upon termination of employment. The unvested 2025 PBRSUs did not include voting rights or dividend participation rights. Shares earned under the 2025 PBRSUs will be issued in the first quarter of the year following the end of the performance period. Compensation cost , net of estimated forfeitures, for the 2025 PBRSUs was based on the fair value of the awards at the grant date measured using the Monte Carlo simulation model and will be recognized as expense on a straight-line basis over the three-year performance period. The key assumptions used in this model include expected volatility, dividend yield and risk-free rate. The estimate of expected for the 2025 PBRSUs was based upon historical stock price and the length of the performance period. The dividend yield was based on the most recent dividends paid and the three-month average stock price. The risk-free interest rate was based on zero-coupon U.S. Treasury bonds. For the 2025 PBRSUs, inputs for expected , dividend yield and the risk-free rate were 35.89 %, 0.53 % and 4.28 %, respectively.
Prior to 2025, we granted Prior PBRSUs to selected employees under the Prior Plan that were earned based on the achievement of stated Company financial performance metrics over a one-year performance period. One-third of the earned Prior PBRSUs vested following the end of the one-year performance period if the financial performance metrics were satisfied, with an additional one-third of the Prior PBRSUs vesting on each of the next two grant date anniversaries. Earned Prior PBRSUs were subject to accelerated vesting due to death, total disability, or change in control of the Company. Subject to the foregoing, unvested Prior PBRSUs were generally forfeited if minimum threshold performance targets were not achieved or upon termination of employment. The unvested Prior PBRSUs did not include voting rights or dividend participation rights. Compensation cost, net of estimated forfeitures, for the Prior PBRSUs was based on the fair market value per share of our common stock at the grant date, with consideration given to the probability of achieving the financial performance targets. At the end of each reporting period, we reassessed the probability of achieving the financial performance targets and any changes to our initial assessment were reflected in the reporting period in which the change in estimate occurred. As of December 31, 2025, there were no outstanding Prior PBRSUs.
The following table summarizes our activity for PBRSUs for employees during 2025:
Shares
Weighted Average
Grant Date Fair
Value Per Share
Unvested at January 1, 2025
Granted
Vested
Forfeited
Unvested at December 31, 2025
The weighted average grant date fair value per share for the 2025 PBRSUs w as $ 248.31 . Prior PBRSUs granted for the 2024 and 2023 performance period were not earned as the financial performance metrics were not met. The total fair value of vested PBRSUs for fiscal years 2025, 2024 and 2023 w as $ 1.6 million, $ 5.8 million and $ 12.3 million, respectively. At December 31, 2025 , we had $ 3.1 million of unrecognized stock-based compensation cost, net of estimated forfeitures, related to unvested 2025 PBRSUs that are expected to be recognized over a weighted average period of 2.1 y ears.
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Phantom Stock Awards
A summary of the changes in the number of outstanding phantom stock awards during the year ended December 31, 2025 is provided below. There were no phantom stock awards granted during 2025.
Total
Phantom
Shares
Weighted Average
Grant Date Fair
Value Per Share
Balance of shares outstanding at January 1, 2025
Settled
Forfeited
Balance of shares outstanding at December 31, 2025
All outstanding phantom stock awards were vested at December 31, 2025. The outstanding phantom stock awards will be settled in shares of our common stock equal to the number of vested shares of phantom stock on the applicable settlement date. The shares of common stock will generally be distributed in twenty-four substantially equal monthly installments commencing on the first day of the sixth calendar month following such settlement date.
Note 9. Fair Value Measurements
Long-term Debt
The carrying value of our total long-term debt, including current maturities, was $ 40.0 million and $ 60.0 million at December 31, 2025 and 2024 , respectively. The estimated fair value of our total long-term debt, including current maturities, was $ 39.1 million and $ 56.5 million at December 31, 2025 and 2024 , respectively. The fair value measurement of our Series B Notes was determined using a discounted cash flow analysis that factors in current market yields for comparable borrowing arrangements under our credit profile. Since this methodology is based upon market yields for comparable arrangements, the measurement is categorized as Level 2 under the three-level fair value hierarchy as established by the FASB.
Note 10. Commitments and Contingencies
We are involved in or addressing various legal proceedings and claims, governmental inquiries, notices and investigations that have arisen in the ordinary course of our business and have not been fully adjudicated, some of which may be covered in whole or in part by insurance. Certain of these matters include collective and/or class-action allegations. We do not believe that the resolution of any of these matters will have a material adverse effect upon our financial position, results of operations or cash flows.
Note 11. Segment Information
We have one operating and reportable segment that provides regional, inter-regional and national LTL services through a single integrated, union-free organization. We derive revenue primarily in North America and manage our business activities on a Company-wide basis. For the last three fiscal years, more than 95 % of our revenue was derived from services performed in the United States and less than 5 % of our revenue was generated from services performed internationally. Additionally, no single customer exceeds 5% of our revenue. The accounting policies of our reportable segment are the same as those described in Note 1.
Our chief operating decision maker (“CODM”) , who is our President and Chief Executive Officer, reviews Company-wide financial information. The CODM uses “Net income” on our Statements of Operations to make capital allocation and spending decisions, which is initially performed as part of our annual strategic planning process. As part of our strategic planning process, we develop an annual budget for capital expenditures to support our forecasted tonnage and shipment growth. This annual capital expenditure plan, and any other spending decisions that the CODM believes will help prepare our Company for future growth, are generally considered our first priorities for allocating capital. Once those decisions are made, other capital considerations may include share repurchases, dividends, and acquisitions. The CODM monitors actual results against forecast throughout the year and evaluates necessary changes in operating activities or capital allocation. Segment assets are reported as “Total assets” on our Balance Sheets but “Total assets” are not used to measure segment performance or allocate resources. Long-lived assets, which consist primarily of property and equipment, net, are all located in the United States.
OLD DOMINION FREIGHT LINE, INC.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
The following table presents financial information with respect to our segment:
Year Ended December 31,
(In thousands)
Revenue from operations
Less significant expenses:
Salaries and wages
Employee benefit costs
Operating supplies and expenses
General supplies and expenses
Operating taxes and licenses
Insurance and claims
Communications and utilities
Depreciation and amortization
Purchased transportation
Miscellaneous expenses, net
Total non-operating income
Provision for income taxes
Segment net income
See the Company’s financial statements for other financial information regarding our segment as there are no reconciling items or adjustments between segment and total Company.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Old Dominion Freight Line, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Old Dominion Freight Line, Inc. (the Company) as of December 31, 2025 and 2024, the related statements of operations, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 24, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Self-Insurance Reserves for Bodily Injury/Property Damage (“BIPD”) and Workers’ Compensation
Description of the Matter
The liability for claims and insurance totaled $168.8 million at December 31, 2025, and the majority of this amount represents the self-insurance reserves for BIPD and workers’ compensation claims. The long-term portion of this liability was $89.9 million, which was included in “Other non-current liabilities”, and the remainder was included in “Claims and insurance accruals” on the Company’s Balance Sheets.
As described in Note 1 to the financial statements, claims and insurance accruals include the estimated cost of claims for BIPD and workers' compensation. These accruals include estimates for both future claims development on reported claims as well as claims incurred but not yet reported. The Company uses historical claims experience, known trends and third-party actuarial estimates to determine the liabilities for each of the BIPD and workers’ compensation reserves. These analyses are complex and require significant judgment as the models utilize multiple valuation methods and reflect subjective assumptions, including 1) the weighting of
such methods, 2) the loss ratio, 3) the loss trend factor, and 4) the loss development factor, among other assumptions.
How We Addressed the Matter in Our Audit
We identified and tested internal controls over management’s review of the estimate for self-insurance reserves for BIPD and workers’ compensation claims, including controls over the completeness and accuracy of data inputs used in the Company’s third-party calculations, the assumptions and reserve calculations, as well as management’s evaluation of service organization controls and user controls over certain of the Company’s claims data that is managed by a third-party administrator.
To test the self-insurance reserves for BIPD and workers’ compensation claims balances, our audit procedures included, among others, evaluating the methodologies used and the significant assumptions discussed above, as well as performing procedures with respect to underlying data and calculations used in the Company’s third-party analyses. We involved our actuarial specialists to assist in our evaluation of the appropriateness of the methods and assumptions used as well as to independently calculate ranges of reasonable reserve estimates developed based on independently selected assumptions and to compare such ranges to the Company’s recorded reserves. We tested claims data by comparing the data to supporting source documentation and payment information as well as performing trend analyses.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1994.
Raleigh, North Carolina
February 24, 2026
