Old Dominion Freight Line Inc (ODFL) — Q1 2025 Transcript

Thank you, Nick, and good morning, everyone. Welcome to the First Quarter 2025 Conference Call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through April 30, 2025, by dialing 1-877-344-7529, Access code 3942957. The replay of the webcast may also be accessed for 30 days at the company's website. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding Old Dominion's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Old Dominion's filings with the Securities and Exchange Commission and in this morning's news release. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. As a final note before we begin, we welcome your questions today, but ask that you limit yourself to just one question at a time before returning to the queue. At this time, for opening remarks, I'd like to turn the conference over to our President and Chief Executive Officer, Marty Freeman. Marty, please go ahead, sir.

Good morning all, and welcome to our first quarter conference call. With me on the call today is Adam Satterfield, our CFO. After some brief remarks, we will be more than happy to take your questions. Old Dominion's first quarter financial results reflect continued softness in the domestic economy, and our revenue and earnings per diluted share both declined as a result. We are pleased, however, that our yields continue to improve, and our market share remained relatively consistent. In addition, our OD family of employees continue to provide our customers with best-in-class service while also operating efficiently. While we have discussed softness in the domestic economy, along with a challenging operating environment on these calls for the past couple of years, we have continued to affirm our team's commitment to executing on the fundamental elements of our long-term strategic plan. While that absolutely continues to be the case, we want you to understand that our team also continues to focus on maximizing our operating efficiencies and reducing our discretionary spending in an effort to protect our operating ratio. Improving the operating efficiency in our network is very difficult to achieve when a reduction in density is experienced. That is why I'm proud that we improved our platform shipments per hour and P&D shipments per hour in the first quarter despite the 5% decline in our LTL shipments per day. Our team did this while also maintaining the highest level of customer service. We are pleased to once again provide 99% on-time service performance and a cargo claims ratio below 0.1%. We have strengthened our customer relationships over time by consistently providing superior service at a fair price, which has added value to our business. Importantly, our service performance also continues to support our disciplined cost-based approach to yield management. One doesn't happen without the other, and we believe our unmatched value proposition will support our ability to win market share over the long term. As we win share, our operating density will improve and create the leverage that should help drive improvement in our operating ratio. We continue to believe that the path to long-term profitable growth and operating ratio improvement is the balance between operating density and yield management. Both of these initiatives generally require the support of a favorable economic environment. We entered this year with a degree of cautious optimism based on customer feedback and improving macroeconomic data points. Our SIP was that increased clarity around taxes and regulation will lead to greater business confidence, investment, and ultimately, increased freight volumes. We were encouraged to see signs of improved demand for our service in the first quarter, and our LTL tons per day in both February and March tracked in line with normal seasonality. That said, there continues to be uncertainty with the economy, which can mean that a full recovery in our business trends might take additional time. While we can't control the macro environment, we will remain focused on controlling those things that we can, by consistently executing on our long-term strategic plan. Our team's dedication to our customers and commitment to excellence has allowed us to win more market share than any other carrier over the past decade. We continue to believe that providing superior service, maintaining our disciplined approach to yield management, controlling our expenses, and consistently investing in our team and our network, we also are uniquely positioned to respond to an improving economy. There have been plenty changes in our industry over the past couple of years, but nothing has changed our long-term outlook for additional market share opportunities or our belief that we can win more market share over the long term than any of our competitors. As a result, we remain confident in our ability to produce long-term profitable growth and increased value for our shareholders. I appreciate you joining us this morning. And now I'll turn it over to Adam for the first quarter in greater detail.

Thank you, Marty, and good morning. Old Dominion's revenue totaled $1.37 billion for the first quarter of 2025, which was a 5.8% decrease from the prior year. Our revenue results reflect a 6.3% decrease in LTL tons per day that was partially offset by a 2.2% increase in LTL revenue per hundredweight. We also had one less workday than the first quarter of last year. On a sequential basis, our revenue per day for the first quarter decreased 2.4% when compared to the fourth quarter of 2024 with the LTL tons per day decreasing 3.5% and LTL shipments per day decreasing 2.6%. For comparison, the 10-year average sequential change for these metrics includes a decrease of 2.1% in revenue per day, a decrease of 1.6% in LTL tons per day, and a decrease of 0.9% in LTL shipments per day. The monthly sequential changes in LTL tons per day during the first quarter were as follows: January decreased 3.8% as compared to December, February increased 1.9% as compared to January, and March increased 4.8% as compared to February. The 10-year average change for these respective months is a decrease of 0.4% in January, an increase of 1.4% in February, and an increase of 4.9% in March. While there are still several workdays remaining in April, our month-to-date revenue per day has decreased by 7% on a year-over-year basis, although we note that this is impacted by the timing of the Good Friday holiday. The holiday was in April of this year, but it was included in March of last year. We anticipate that our revenue per day for the full month of April will decrease approximately 6%, plus or minus 50 basis points. This obviously depends upon our revenue performance for the remaining days of this month. As usual, we will provide the actual revenue-related details for April in our first quarter Form 10-Q. Our operating ratio increased 190 basis points to 75.4% for the first quarter of 2025 as the decrease in our revenue had a deleveraging effect on many of our operating expenses. This contributed to the 130 basis point increase in our overhead cost as a percent of revenue. Within our overhead costs, our depreciation as a percent of revenue increased by 70 basis points as we have continued to execute our long-term capital expenditure plan. While this strategy has created short-term headwinds for our margins, we believe that investing through the economic cycle is a critical differentiator between us and our competition. History has proved that this strategy has supported our ability to win significant market share when the economy is at its strongest. As a result, and based on the confidence that we have in future market share opportunities, we have spent $1.5 billion on capital expenditures over the past two fiscal years. We have plenty of capacity within our service center network to accommodate future growth due to these ongoing investments. As a result, we recently reevaluated each project on our 2025 capital expenditure plan and elected to defer certain projects to future periods. In addition, we reduced the amount of new equipment that we plan to purchase this year. We now expect our capital expenditures will total approximately $450 million in 2025, which is a $125 million reduction from our initial plan. Our direct operating cost also increased as a percent of revenue in the first quarter due primarily to an increase in costs associated with our group health and dental plans. This resulted in our total employee benefit cost increasing to 38.2% of salaries and wages from 35.6% in the first quarter of 2024. Overall, we continue to be pleased with our team's efforts to control the cost that we can control, while also maintaining a focus on doing what is best for our business over the long term. Old Dominion's cash flow from operations totaled $336.5 million for the first quarter of 2025, while capital expenditures were $88.1 million. We utilized $201.1 million in cash for our share repurchase program during the first quarter, while our cash dividends totaled $59.5 million. Our effective tax rate for the first quarter of 2025 was 24.8% as compared to 25.6% in the first quarter of 2024. We currently expect our effective tax rate will be 24.8% for the second quarter of 2025. This concludes our prepared remarks this morning. Operator, we'll be happy to open the floor for questions at this time.

I was wondering if you could give a little bit of color given all the uncertainty that's going on with tariffs and manufacturing, is a way to think about seasonality as we go from first quarter to second quarter and then just sort of maybe involved with that. Given we've been in a 2-year freight recession, already if we did have ongoing slowdown or a recession, would the impact be more muted since we've already been in a downturn? Or is that difficult to say?

Jordan, are you talking about seasonality with respect to revenue or...

For margins. Yes. I guess, margins and revenue, I mean, both will be asked, I'm sure.

I will begin with the margin discussion and save the revenue points for later, even though much of the margin analysis depends on revenue. Historically, we see a sequential increase in margins of 300 to 350 basis points from the first to the second quarter, which usually corresponds with a revenue growth of about 8% during that same period. However, based on our observations in April and the overall economic uncertainty, I am not confident that we will see that level of revenue growth. If our daily revenue remains stable at the levels we have seen in April, we could anticipate a margin improvement of around 100 basis points in either the first or second quarter, depending on overall revenue performance. I expect our salaries, wages, and benefits to remain consistent with the first quarter, following the trend we've experienced in recent years, where we often lack significant revenue growth from the first to the second quarter. Typically, around 200 basis points of the average sequential benefit comes from the salaries, wages, and benefits line, which, of course, is influenced by revenue. We are also anticipating some pressure on our operating supplies and expenses, partly due to tariff impacts on parts and repairs. Our fixed overhead costs have been running each quarter at approximately $300 million to $305 million. This means the variability we may experience largely hinges on revenue, as those costs remain constant regardless of top-line performance. Therefore, the primary question we face is the expected revenue outlook.

Adam, thanks for the April-to-date revenue per day. If you could just provide the breakdown of that on tonnage and yield excluding fuel understanding there's a few days left. And as it relates to that latter part on the revenue excluding fuel, have you seen any change in the pricing environment as the tonnage headwinds are maintained a lot longer than I think many expected?

Yes, due to Good Friday occurring last week, I didn't provide that breakdown because the numbers are a bit skewed. However, when forecasting what we might see, our weight per shipment has decreased as we moved from March to April. Sequentially, the figures are slightly above what we usually experience, but we did see an acceleration in March that exceeded normal levels. If we take February and project it forward with typical seasonality, we are around 1,470 pounds so far in April, which has positively impacted our revenue per hundredweight. Currently, I anticipate the revenue per hundredweight, excluding fuel, for the full quarter to be in the 5% to 5.5% range, indicating a slight acceleration from the first quarter. Normal seasonality could position us at the higher end of that estimate. We will continue to monitor the ongoing balance of underlying mix factors. Regarding the yield environment, while I cannot comment on other carriers, I am pleased that we've been able to secure increases during bids, not just in the first quarter and April, but also over the past two years. We remain committed to our long-term yield management strategy while maintaining fairness, which has been reflected in our long-term financial results. Our costs continue to rise, necessitating ongoing requests for price increases. Encouragingly, we have maintained our market share in the 12% to 13% range and are witnessing a reacceleration in our business after two months of tonnage aligned with seasonality. We are beginning to gain market share at our prices, which is promising. While we have faced some disruptions in April like everyone else, we hope that once resolved, the macro environment will reaccelerate as indicated by early trends in February and March.

So just on the CapEx, can you help us understand kind of how much of the CapEx is just purely related to macro versus maybe idiosyncratic to ODFL, given your own investment pace, as you mentioned, or maybe even a function of what you're seeing out there kind of broadly in the LTL space?

Yes. I think that, like we mentioned earlier, we may have to increase our CapEx budget for a new phone system. So we'll contemplate that afterwards. But I think that we've talked the last couple of quarters about how we've continued to invest in our system. And look, we sit down from a real estate standpoint and look at where we think we're going to be long term from a market share standpoint. And we always want to stay ahead of the growth curve. And we've continued to invest pretty significantly the last couple of years when we haven't had growth in shipments per day, but we are comfortable in those long-term opportunities and confident that we'll achieve those initiatives. And so that's why we've continued to invest. But within the real estate network, which is usually what we comment on, we've got north of 30% capacity. And so we went through each project and I just talked about it, is it the right thing to do now versus just waiting until a later period. Those projects that we've got. And we reduced the CapEx for, they aren't going to go away. They're just going to be done at a later time. So we felt like that would help us give the continued uncertainty with the economy to prevent a little bit of depreciation continuing to come on the books because that's how depreciation has been a big driver in the inflation that we've seen in our overhead cost as a percent of revenue over the last couple of years. And then the fleet was something similar. Just looking at kind of where our fleet stands right now. We've invested in the last couple of years. We had some deferred CapEx really when you think about going all the way back to the pandemic, all the growth that we had in '21 and '22, and trying to keep pace holding on to older equipment, OEMs having challenges. So we had some deferred CapEx in the system, but just going through and looking at where our power fleet in particular, stands and what we felt like we've got the capacity to be able to handle if our business continues to grow. And if we saw some reacceleration in the trends like we did in February and March, if those continued through September, where we might be and what we might be able to handle. So we feel like we've got all three phases of the capacity gain covered with what we have today. And that's service center capacity, our fleet capacity, and most importantly, on the people side. And our team is in a great position to handle the business that we have, but to handle additional growth that we hope we'll start seeing this year.

Can you share your thoughts on the significance of retail customers for LTL? It seems you may have more exposure than some others, but LTL is mainly connected to the industrial sector. I'm asking because there appears to be increasing competition for those retail customers. Also, I'm curious about Amazon's potential involvement in LTL. If they enter this space, it would likely be in the retail sector, particularly concerning their fulfillment centers. Additionally, UPS has been focusing more on their hundredweight product, which may also play a role. I'm interested to know how you perceive these dynamics, especially regarding any effects from imports that may impact retail. How critical is retail demand and competition within the overall LTL market?

Yes. We really don't see Amazon's LTL offering as a threat to the LTL industry, especially Old Dominion. As I understand it, it's mainly geared towards their own suppliers. And I actually see it as an opportunity for us to help them with their logistics needs. If their suppliers need to pick up the same day, we certainly cover all 48 states and we're able to help them out with that. So I don't really see that as a material threat to us, more of an opportunity, in my opinion.

You had several questions in that, but to expand a bit further, retail accounts for about 25% to 30% of our overall business. Therefore, we still have significant exposure to the industrial sector. Nonetheless, I believe the retail opportunity will continue to benefit the LTL industry. As more of the retail sector shifts to e-commerce, we've observed a trend where shipment sizes are becoming smaller and can be transported through an LTL network. Retailers can utilize our network as part of their supply chain, and I anticipate that this will continue. A positive aspect of many large retailers is that they have on-time and in-full programs, which place the responsibility on the vendor controlling freight charges to choose a carrier that can meet these metrics and avoid fines and chargebacks. Old Dominion offers unparalleled service compared to other carriers, as demonstrated by last year's Mastio results where we achieved the highest ratings for the 15th consecutive year, with 99% on-time service and an almost negligible claims ratio. We provide the best on-time claims-free service and can add value to those delivering into the retail space. I believe this presents a growth opportunity for the industry and an even greater opportunity for Old Dominion.

Do you think it's right to say that retail is more import-levered and a little more risk to tariffs?

Well, I think obviously, that's there. There's a lot of imported products. But I think that again, it's looking for the opportunities that exist. And that's what our sales team will do. They stay in front of our customers and talk about how we can help them add value and ultimately save money within their supply chain by choosing Old Dominion. So that's the sale that we'll continue to make, and I don't think there's anyone with a better value proposition in our industry than what we can offer. So we'll continue to drive that home. And with some of these other changes, we've talked about the other long-term opportunity for the LTL industry will be near-shoring and reshoring. So if we see increased manufacturing activity in North America, I would say, I think that creates a tremendous opportunity for us as well, both inbound product, raw materials, and so forth going into those plants, but as well as us being able to get the finished good out the back door. And like I mentioned earlier, just leveraging our network as part of our customer supply chains to get product moved throughout the U.S. and more and more of that product has got to be staged closer to the consumer to be delivering in the shortest window possible. And in those fulfillment centers, they want to maximize the number of SKUs they can have, and those are very minimal inventory quantities typically to do so, which is why they want to make sure when they make an order that it is delivered on time and without damage. So again, I think that's the ongoing opportunity for us. And those two components there will continue to be tailwinds for the industry, where I think we can be the biggest beneficiary.

Adam, the OR commentary you gave for Q2. I missed what the revenue assumption was. Were you saying that that's if revenue is basically flat from Q1 to Q2? I just want to understand that. And then maybe just more broadly, if you could just talk about pricing and the competitive dynamic and if you're still able to get like the 1 to 2 points of price above inflation or if it's getting any harder, more competitive, just some high-level thoughts there.

Yes. So that guidance was based on the revenue per day that we're seeing, if it just kind of stays flattish with what we've seen so far in April. And ignoring Good Friday. Good Friday is typically about 60% of a normal workday. So kind of take that day out of the mix. But if we followed a long kind of flattish per day, didn't see any acceleration in the business, that would put us with revenue in total for the quarter of about $1.4 billion. So that would be 5% down compared to the second quarter of last year. If we got on the optimistic side, if some of these things get settled, and we can see some reacceleration in the business, probably the most optimistic would be if we can get back to normal seasonality and I'm not expecting this right now, but normal seasonality in May and June would put us at about $1.5 billion. So we're getting back to closer to flattish with last year on an overall revenue standpoint. And I don't want to give the pessimistic side, but because I think we're seeing pretty consistent trends overall as we've gone really through the month of April. So but we'll obviously continue to give our statistics as we go through the period. We'll give the full April and our 10-Q and then we'll give our mid-quarter update to talk about what the May trend is looking like. But kind of that midpoint of just assuming flatness would give us that 100 basis points of improvement. And then I think you just kind of got to go up or down from there based on what the revenue performance might look like. Well, we talked a little bit about that earlier. And regardless of what the other carriers are doing, we're continuing to get our increases. And that's what was so encouraging is we've been consistent through this last couple of years because our costs have only increased as well. And so we've been consistent in our ask and I think that's sort of getting back to this is a relationship business. We always want to be consistent with our customers, and we would continue to do so when the environment is accelerating. We look at things from a cost-based mindset, and we look at each account on its own operating merits and what their operating ratio is going to be. And we want to be cost plus because that plus helps us continue to invest in new capacity from a service center and real estate standpoint as well as continuing to invest in new technologies. So obviously, we continue to have success with our yield management initiatives in the first quarter, and that's continuing into the second as well. And it was looking like we were having that acceleration in the business given the sequential increases that we saw in February and March. So I think, obviously, at some point, there's got to be an inflection in the macro, and I think we're better positioned than we've ever been in the sense of the discipline that we've shown over the last couple of years. And when things really start to accelerate, that's when the OD model shines the brightest. And I think we've got the ability to put a significant amount of volumes into our system. That's going to create a significant amount of leverage. And I think it puts us right back on track with being able to achieve the long-term operating ratio improvement that we're looking for. We still maintain that we want to achieve a sub-70 OR goal. I think we've controlled what we can control during these last couple of years. If I go back to 2022, that was our best operating ratio from an annual standpoint, of 70.6%. Our direct and variable cost as a percent of revenue are about the same in the first quarter as they were then at about 53% of revenue, but our overhead costs are at 22% of revenue versus 17% for the full year in 2022. So once we start growing again, our network is built for more shipments per day than what we're handling right now, but it's going to create tremendous leverage there on those overhead costs. And we'll get leverage on our variable cost as well, but that's what's going to allow us to continue to drive this operating ratio lower over time.

Following that thought, Adam, or even Marty, while we refer to the last two and a half years as a freight recession, volumes have decreased despite an improving economy, even though the industrial sector has been weak. At some point, we need to face reality. LTL is certainly influencing pricing through modal substitution. When do you need to start thinking strategically about a possibly prolonged downturn in the market? Should this be tracked as is, or do you need to consider a different long-term approach?

LTL is a unique market in itself. We have observed some opportunities for modal consolidation at the edges, especially since the truckload market has been weak, allowing some customers to combine heavier loads into one. However, when shippers are dealing with loads around 1,500 to 1,600 pounds that require specific appointment times for delivery, utilizing the extensive network that we and other LTL providers have built is essential. Truckload carriers cannot adequately meet this need. We are also focused on managing costs, which is something we consider daily. Over the last 10 to 15 years, we have kept our cost per shipment inflation within the 3.5% to 4% range, targeting a positive spread above that of 100 to 150 basis points. Currently, our industry is facing about a 15% decline in tonnage compared to 2021. Although GDP growth remains positive, both we and other carriers are feeling the impact of reduced overall volume. This prolonged downturn has been significant, but our teams maintain ongoing discussions with customers to anticipate what the future landscape will look like, which informs our confidence in investing in capital expenditures over the past few years. These decisions are based on thorough dialogues with our customers rather than made impulsively. We will continue to engage proactively with our customers and plan for future conditions. No one else in the industry appears to be taking markedly different actions, and we have managed to maintain our market share. In a challenging environment, sustaining market share and exercising yield management discipline while expanding capacity in anticipation of future growth has been our focus. We have achieved this while maintaining a favorable operating ratio, which remains about 1,200 basis points better than our competitors. We will keep pursuing these strategies and prioritize our customers, believing that we will emerge from this situation stronger and poised for growth. We have significant ambitions regarding our potential market share growth, and executing consistently from day to day and quarter to quarter will ensure we are ready for better days ahead, which we are confident will come.

Maybe just to pick up on that pricing conversation a little bit. I don't know if I missed it, but did you talk about what you're seeing in terms of renewals and then any customers that may be pulling bids forward or, I don't know, even pushing them back or any pushback on increases? And then just a quick follow-up. We've got potentially a change in the NFC coming up. Any kind of thoughts on what the impact might be on yields there and any potential disruption from that change in framework?

Yes, regarding yield, we have renewals and bids happening daily. Typically, bid activity rises in a weak environment, which has been the case for a couple of years now. We engage with our customers to discuss how we can continue to succeed together and address our yield needs, emphasizing that yield improvement doesn't always rely on price increases. We have conversations about analyzing all cost data to identify ways to save money and increase efficiency, which can help minimize the need for price hikes. Overall, we've been consistent in achieving yield increases over the past few years, and that trend is set to continue into 2025. It’s always challenging since we tend to be pricier than our competitors, making it crucial for our sales team to communicate our value proposition and how we can assist customers in reducing their supply chain costs beyond simple invoice comparisons. Regarding the potential changes affecting customers, I don't anticipate those changes will significantly alter overall yields. We have a good understanding of our costs, which we share with customers, and we aim to price accordingly. While classifications might shift, if we've managed everything properly, the impact on customers should be minimal. I don't believe customers will expect substantial pricing changes due to these adjustments. Our goal is to ensure that any changes remain revenue and income neutral.

I wanted to follow up on Tom's discussion from earlier. With the UPS leaning more into the lower weight kind of tweener freight parcel shipments, is that business that you or any of your peers are really that interested in, that kind of 150 to 300-pound weight retail to start with? And do you think that will have a competitive landscape on the industry? And just zooming out the sort of competitive landscape discussion broader, I mean, you talked about retail a lot earlier. Any thoughts on any shifting in the 3PL environment or specific to direct industrial customers would be helpful.

Yes. Let me see if I can try to remember all those. But on the industrial, maybe to just start there, it's still 55% to 60% of our business, and industrial outperformed our retail intercompany average in the first quarter, which is not a surprise given that we had seen the acceleration in ISM, and we were above 50 there in January and February. Unfortunately, went below 50 in March, and my guess would be below 50 again for April, but we've seen pretty steady performance there in the industrial world. From a 3PL standpoint, that's been pretty consistent as well. We've started seeing some improvement late last year with our 3PL customers and the business that we manage that have got 3PL involvement. That performed a little bit better than the company average in the first quarter as well. And that's something that we'll continue to watch and felt like we had started seeing some trends of the weight per shipment in the 3PL world starting to increase. A lot of the 3PLs have got mode consolidation types of tools and software and so forth. And we feel like some of that load consolidation that had happened and moved into the truckload world. We feel like that's going to swing back into LTL eventually. And that's probably going to be the first place that we see that movement coming back. Because at the end of the day, like I was saying earlier, 5000 to 10,000-pound shipments really aren't made to move by truckload. And the truckload carriers don't like doing it. They only do it when the environment is weak, and they're trying to get some payload on the truck, and that will go away, we believe, and normalize eventually as demand does overall. So that will be something to continue to watch. But while that's kind of at the fringe as well, I mean, that truckload market is obviously much bigger and can have a little bit more impact on the LTL carriers. But I think the mode consolidation there LTL to truckload is probably a little bit greater than what happens on the lower end of the scale and moving shipments that are 100- a couple of hundred pounds is tough to make money on those. And when you compare that to our 1,500, 1,600-pound average weight per shipment, we just don't have a lot of that. And I don't think that it's probably that big for the industry either. And I think what's happening with the change with the UPS, I believe that kind of goes hand-in-hand with the TFI and separating those businesses and them initially marketing that service is what I understand. So may just be that moving back into UPS' house. But I just don't see that as a needle mover, and not even to the same level that we see shipments moving back and forth between us and truckload.

Adam and Marty, you hit on a lot. So I just want to clarify maybe a few things. You talked about accelerating in the revenue per hundredweight up to 5%, 5.5%. Maybe just talk about what's driving that, given it looks like you decelerated in the upper 3s on growth rate in March, if I just look at the deceleration you had through the quarter. And then your April data, is that implying tonnage is down 10% from down 5% in March. So is that just the timing of Good Friday, and thus, you're trending straight through it at kind of an upper single digit that you've been at earlier in the year? Or is there something maybe leading to the deceleration?

To start with the numbers, the mix can significantly influence our results. In February, our average weight per shipment was 1,476 pounds, which increased to 1,495 pounds in March, contributing to the growth in revenue per hundredweight month-over-month. However, in April so far, we've seen a decrease to 1,470 pounds, which typically helps yield higher revenue per hundredweight. I hope to see the weight per shipment rise again and for revenue per hundredweight to stabilize. Our goal is to see consistent improvements in reported revenue per hundredweight, excluding mix changes, especially as we negotiate increases through our bidding process. Currently, the metric appears stronger than in the first quarter but is somewhat boosted by the lower weight per shipment. There's still some uncertainty regarding the month’s end and what our overall performance will look like. The impact of Good Friday means that revenue metrics will likely be affected by only operating at 60% of a normal day. Overall, we expect to be down around 6% for April. If revenue per day remains stable for the rest of the quarter, we anticipate a decline of about 5% for the quarter compared to last year's second quarter. The exact performance will depend on monthly outcomes, but the focus should be on the overall revenue trends and adjusting for weight versus yield.

I'm sorry, but I would like to follow up on your previous point. You mentioned that the ISM is decreasing again. Should we expect this trend to continue, considering the impacts of tariffs and economic pressures, or is this something that varies based on other factors?

No, I’m not sure anyone could predict that, Ken. However, there’s a lot of uncertainty right now, making it difficult to provide a definitive answer. We have observed consistent trends in our daily revenue. At the beginning of April, there was a surge following a strong performance throughout March. February also showed good week-by-week results, ending strongly, which was encouraging. March continued that positive trend with a solid close. Some of the March numbers may have been boosted by freight being pulled forward. We experienced a slight drop in the first week of April, but have seen a steady recovery since then, which aligns with our expectations. I am pleased with our weekly trends and hope they continue. However, feedback from our sales team indicates that customers are expressing uncertainty concerning tariffs, which could affect their investment decisions and, ultimately, freight volumes. Despite this, I’m encouraged by the consistent daily revenue and hope we can maintain this level without experiencing further declines.

I just wanted to follow up. It seems that in April, if there was any weakness, it was more pronounced at the beginning of the month, and things may have stabilized or potentially improved since then. I wanted to clarify that comment, Adam. Additionally, when considering the usual seasonality for revenue per hundredweight excluding fuel, which you mentioned is around 5% to 5.5%, possibly on the higher end, what is the typical weight per shipment associated with that? Do you expect to see normal sequential improvement from April 14 to something significantly higher? I'm trying to understand all the different factors at play.

Yes, the weight per shipment generally softens a bit in April. Currently, we are experiencing a sequential decline of about 1.5% to 2%. The long-term average typically shows a drop of around 0.5% to 1%, after which it tends to remain stable. Under normal circumstances, we would observe slightly lower weight per shipment, which provides a minor boost to our numbers. However, we are seeing a slightly greater decline this time. I am optimistic that as we progress, the weight per shipment will recover and revert to average levels. Earlier in the period, the weight was somewhat lighter, but we have noticed increased activity, particularly in our national accounts, which usually carry a higher weight per shipment. Unfortunately, that is where we're seeing more of a decrease. Each account varies: among our top 50 accounts, some have experienced double-digit increases in weight per shipment, while others have seen double-digit declines. The overall account business appears to be flat or slightly up, adding to the complexity of the situation. Reflecting on February and moving forward, we would be hovering around the 1,470-pound mark if we adhered to typical seasonal trends. Given the increase in business levels and the ISM above 50, I was hopeful that we would observe a positive uptick in weight per shipment, which usually aligns with an improving economy. The weight per shipment in March was just below 1,500 pounds. However, we aim for more than just seasonal variations; we seek a sustained increase in weight per shipment linked to economic improvement. This would lead to multiple shipments from the same shippers and initiate a wave of freight when we reach the economy's inflection point, driving revenue growth and incremental margins. Thus, we need to return to a phase of revenue growth to attain those incremental margins.

Thank you all for your participation today. We appreciate your questions, and please feel free to give us a call if you have anything further. Thank you, and have a great day.