ODFL 10-K & 10-Q changes, risk factors and insider trading

An investment in our common stock involves a variety of risks and uncertainties. The following describes some of the material risks that could adversely affect our business, financial condition, operating results or cash flows. We may also be adversely impacted by other risks not presently known to us or that we currently consider immaterial. Although the risks below are organized by headings and each risk is discussed separately, many are interrelated.

some customers may perceive our environmental, social and governance (“ESG”)sustainability profile to be less robust than that of our competitors, which could influence the selection of their carrier;

Adverse macroeconomic conditions, both in the U.S. and internationally, such as high inflation, continued high interest rates and slower economic growth has, and may continue to, negatively affect our customers’ business levels, the amount of transportation services they need, their ability to pay for our services and overall freight levels, any of which might impair our asset utilization. Additionally, uncertainty and instability in the global economy or widespread outbreak of an illness or any other communicable disease or public health crisis, as we saw with the COVID-19 pandemic, may lead to fewer goods being transported and could have a material adverse effect on our business, financial condition and results of operations. The U.S. government has taken certain other actions that have negatively impacted U.S. trade, including imposing tariffs on certain goods imported into the United States, and several foreign governments have imposed tariffs on certain goods imported from the United States. Any further changes in U.S. or international trade policy could trigger additional retaliatory actions by affected countries, resulting in “trade wars” and increased costs for goods transported globally, which may reduce customer demand for these products if the parties having to pay tariffs or address other anti-trade measures increase their prices, or in trading partners limiting their trade with countries that impose such measures. If these consequences are realized, the volume of global economic activity may be significantly reduced. Such a reduction could have a material adverse effect on our business, results of operations and financial condition, as well as the price of our common stock.

Customers adversely impacted by changes in U.S. trade policies or otherwise encountering adverse economic conditions, including as a result of current inflationary pressures, may be unable to obtain additional financing or financing under acceptable terms. These customers represent a greater potential for bad debt losses, which may require us to increase our reserve for bad debt. Economic conditions resulting in bankruptcies of a concentration of our customers could have a significant impact on our financial position, results of operations or liquidity in a particular year or quarter. Further, when adverse economic times arise, customers may select competitors that offer lower rates in an attempt to lower their costs, and we might be forced to lower our rates or lose freight volumes.

We have security processes, protocols and standards in place to protect our information systems, including through physical and software safeguards, as well as redundant systems, network security measures and backup systems. Nevertheless, it is difficult to fully protect against the possibility of power loss, telecommunications failures, cyber-attacks, and other cyber incidents in every potential circumstance that may arise. The rapid ongoing evolution and increased adoption of emerging technologies such as artificial intelligence (“AI”) and machine learning may make it more difficult to anticipate and implement protective measures to recognize, detect, and prevent the occurrence of any of these events. A significant cyber incident, including system failure, security breach, disruption by malware or ransomware, or other damage, could interrupt or delay our operations, damage our reputation and brand, cause a loss of customers, expose us to a risk of loss or litigation, result in regulatory scrutiny, investigations, actions, fines or penalties and/or cause us to incur significant time and expense to remedy such an event, any of which could have a material adverse impact on our results of operations and financial position. Furthermore, we are subject to an increasing number of cybersecurity reporting obligations in different jurisdictions that vary in their scope and application, creating conflicting reporting requirements. These factors and the time spent to investigate and evaluate the full impact of incidents and to comply may inhibit our ability to quickly provide complete and reliable information about the cybersecurity incident to customers, counterparties, and regulators, as well as the public. Additionally, any failure to comply with data privacy, security or other laws and regulations, such as the California Consumer Privacy Act and other similar laws that have been or are expected to be enacted in the United States, at both the federal and state level, could result in claims, legal or regulatory proceedings, inquiries or investigations. As cyber threats are continually evolving, our controls and procedures may become inadequate and we may be required to devote additional resources to modifying or enhancing our systems in the future. Furthermore, while we maintain insurance intended to address costs associated with aspects of cyber incidents, network failures and data privacy-related concerns, we cannot be certain that we will continue to be able to obtain excess insurance coverage in amounts we deem sufficient, our insurance carriers will pay on our insurance claims, or we will not experience a claim for which coverage is not provided.

We rely on third parties to provide us with operational and technical services, such as hosting of our cloud computing and storage needs. The services largely depend on the uninterrupted operation of data centers and the ability to protect computer equipment and information stored in these data centers against damage that may be caused by, among other things, natural disaster, fire, power loss, telecommunications or Internet failure, acts of terrorism, and other similar damaging events. If any of such services were to become inoperable for an extended period, or suffer disruptions to their systems, labor groups, or supply chains that could adversely affect their services, we might be unable to fulfill our contractual commitments. Furthermore, these third parties may have access to information we maintain about our company, operations, customers, employees, vendors, or technology that are critical to or can significantly impact our business operations. Our ability to monitor such third parties’ security measures is limited. Any security incident involving such third parties could compromise the confidentiality, integrity, or availability of, or result in the theft of, our, our customers’, our employees’, or our vendors’ data and could negatively impact our operations. Security processes, protocols and standards that we implement and contractual provisions requiring security measures that we impose on such third parties may not be sufficient or effective at preventing such events. Unauthorized access to data and other confidential or proprietary information may be obtained through break-ins, network breaches by unauthorized parties, employee theft or misuse, or other misconduct. If any of the foregoing were to occur or to be perceived to occur, our reputation may suffer, our competitive position may be diminished, we could face lawsuits, regulatory investigation,investigations, fines, and potential liability, and our financial results could be negatively impacted.

Our CSA scores are dependent upon our safety and compliance experience, which could change at any time. In addition, the safety standards prescribed in CSA could change and our ability to maintain an acceptable score could be adversely impacted. Public disclosure of certain CSA scores was restricted through the enactment of the Fixing America’s Surface Transportation Act of 2015 (the “FAST Act”) on December 4, 2015; however, the FAST Act does not restrict public disclosure of all data collected by the FMCSA. The FMCSA is currently reviewingrefining CSA methodology to addressprioritize deficienciesenforcement identifiedagainst byhigh-risk themotor Nationalcarriers, Academyprovide specific information to assist motor carriers, identify sources of Sciences,unsafe includingdriver the possibility of weak or negative correlation between current safety improvement categoriesbehavior and address vehicle crashmaintenance risk.issues. Nevertheless, if we receive unacceptable CSA scores, and this data is made available to the public, our relationships with our customers could be damaged, which could result in a loss of business.

The engines in our newer tractors are subject to emissions-control regulationsregulations, thatand ongoing regulatory uncertainty regarding zero-emission vehicle mandates could substantially increase operating expenses and futurematerially regulations concerning emissions or fuel-efficiency may have a material adverseadversely impact on our business.

ExpectationsVaried stakeholder expectations relating to evolving ESGsustainability considerations and related reporting obligations expose us to potential liabilities, increased costs, reputational harm, and other adverse effects on our business.

ManyVarious stakeholders, including governments, regulators, investors, employees, customers and otherothers, stakeholdershave arediffering increasinglyexpectations focusedabout ona wide range of evolving ESGsustainability considerations relating to businesses, including climate change and greenhouse gas emissions, and human capital matters. In addition, we mayWe make statements about our goalsvalues, including the environmental and initiativessocietal impact of our business, through our various non-financial reports, information provided on our website, press statements and other communications. RespondingWe toalso thesepursue ESG considerationssustainability and implementation of theseother goals and initiatives involvesthat involve risks and uncertainties, may require investment,investments, and dependsdepend in part on third-party performance, expectations,performance or data that is outside of our control.control, and we may not be able to fully achieve all of our goals and initiatives. Our efforts to advance our business and values, or achieve our goals and further our initiatives, or to align with stakeholders’ expectations, or comply with evolving, varied and at times conflicting federal and state laws, executive orders, regulations and standards, or any failure or perceived failure to do so, can result in adverse reactions by customers and other stakeholders, including the commencement of legal and regulatory proceedings against us, and can materially adversely affect our business, reputation, results of operations, financial condition and stock price.

investor sentiment with respect to our policies or efforts on ESGsustainability matters;

Our financial results for 20242025 reflect continued softness in the domestic economyeconomy, thatwhich contributed to the decline in our revenue.revenue, net income and diluted earnings per share. Despite the decrease in our LTL tons, we maintained aour commitment to providing superior customer service toby support the continued improvement in our yield as we providedproviding 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, but the increase in costs andalthough 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 4.3%13.7% and 2.7%,11.7%, respectively, as compared to 2023.2024.

Revenue decreased $51.3$318.4 million, or 0.9%,5.5%, in 20242025 compared to 20232024 due to a decrease in volumes that was partially offset by an increase in LTL revenue per hundredweight. LTL tonnage per day decreased 3.6%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 2.4%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 5.0%4.8% in 20242025 as compared to 2023.2024. We believe the increase in our LTL revenue-per-hundredweightrevenue metricsper 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.

Revenue per day decreased 4.2%6.8% in January 20252026 as compared to the same month last year. LTL tons per day decreased 7.1%,9.6%, due primarily to a 5.4%9.8% decrease in LTL shipments per day andthat was partially offset by a 1.7%0.3% decreaseincrease 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 4.5%3.9% as compared to the same month last year.

Salaries, wages, and benefits increaseddecreased $59.6$54.0 million, or 2.3%,2.0%, in 20242025 as compared to 2023,2024, due to a $46.1$75.4 million increasedecrease in salaries and wages and a $13.5$21.4 million increase in employee benefit costs. The increase in salaries and wages was due primarily to the annual wage increase provided to our employees at the beginning of both September 2023 and 2024.

The cost attributable to employee benefits increased $13.5 million, or 1.9%, in 2024 compared to 2023 due primarily to the annual wage increase as well as an increase in our employee benefit costs was primarily due to higher costs associated with our group health and dental plans.plans Thisduring 2025 that resulted from an increase in the average costs per claim as compared to 2024. Our employee benefit costs waswere partiallyalso offsetimpacted by lowera decrease in retirement benefit plan costs that are directly linked to our net income.income Ouras 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 remainedincreased relativelyto consistent40.0% atin 2025 compared to 37.3% in 2024 compared to 37.5% in 2023.2024.

Operating supplies and expenses decreased $83.0$64.3 million, or 11.6%,10.1%, in 20242025 as compared to 2023,2024, 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 14.6%4.2% in 20242025 as compared to 2023.2024. We do not use diesel fuel hedging instruments; therefore, our costs are subject to market price fluctuations. Our gallons consumed also decreased 3.5%8.6% in 20242025 as compared to 20232024 due primarily to a decrease in our miles driven. OurAdditionally, other operating supplies and expenses as a percent of revenue decreased in 20242025 as compared to 20232024 primarily due primarily to lower maintenance and repair costs,costs as we improved the average age offor our fleet by consistently executing on our capital expenditure programs.fleet.

Depreciation and amortization increased $20.1 million, or 6.2%,5.8%, in 20242025 as compared to 2023.2024. The increasesincrease in depreciation and amortization costs werewas due primarily to the assets acquired as part of our 20232024 and 20242025 capital expenditure programs. We believe depreciation costs will continue to increase in future periods based on our 20252026 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 20242025 was 23.9%24.8% as compared to 24.8%23.9% in 2023.2024. 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 raterates waswere favorably impacted by the purchase of federal tax creditscredits. andIn 2024, our effective tax rate was also favorably impacted by certain other discrete tax adjustments.

The change in our cash flows provided by operating activities during 20242025 as compared to 20232024 was due primarily to the $139.5 million increase in certain other working capital accounts partially offset by the $53.4 milliona decrease in net income.income and changes in certain working capital accounts.

The change in our cash flows used in investing activities during 20242025 as compared to 20232024 was primarily due to the timing of purchases and maturities of short-term investments and an increasereduction in expenditures under our 20242025 capital expenditure program. Additionally, we had lower proceeds from the sale of property and equipment in 2024program as compared to 2023.2024. Changes in our capital expenditures are more fully described below inunder “Capital Expenditures.”

The change in our cash flows used in financing activities during 20242025 as compared to 20232024 was primarily due to highera decrease in cash utilized for repurchases of our common stock, as well as an increasestock in dividend payments to our shareholders during 2024.2025. 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 Arrangements.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 Arrangements.Agreements.” We believe we also have sufficient access to debt and equity markets to provide other sources of liquidity, if needed.

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 inthat orderwe tobelieve supportsupports our long-term plan for market share growth. There could be years, however, where our annual capital expendituresexpenditure 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.

The Series B Notes bear interest at 3.10% per annum and mature on May 4, 2027, unless prepaid. The first twothree principal payments of $20.0 million each were paid on May 4, 20232023, 2024 and 2024, respectively.2025. The remaining $60.0$40.0 million will be paid in threetwo equal annual installments of $20.0 million throughin May 4,2026 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.

The Credit Agreement, which matures in MayMarch 2028, providesinitially provided for a five-year, $250.0 million senior unsecured revolving line of credit and a $150.0 million accordion feature,feature. whichOn ifMay fully23, 2025, we exercised the accordion feature and approved,entered wouldinto expandan amendment to the Credit Agreement to increase the total borrowing capacity upfrom existing lenders by $150.0 million to an aggregate of $400.0 million. Of the $250.0 million line of credit commitments under theThe Credit Agreement,Agreement allows for up to $100.0 million mayto be usedutilized for letters of credit.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 total capitalization ratio) are charged quarterly in arrears on the aggregate unutilized portion of the Credit Agreement.

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 LTL 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:

Our financial results for the second quarter and first quartersix months of 2026 reflect aan decreaseincrease in revenuerevenue, net income, and earnings per diluted share compared to the firstsame quarterperiods of 2025,2025. primarilyThe duestrength toof lowerour volumes.financial Whileresults revenuereflects declinedthe year-over-year,continued improvement in demand trends improved asand the first quarterbenefits of 2026our progressed.long-term focus on yield discipline and operational execution. We continued to maintain our commitment to superior customer service by providing our customers with 99% on-time service and a cargo claims ratio belowof 0.1% during the quarter.second Thisquarter serviceand performancefirst six months of 2026, which supported the continued improvement in our yield. We also maintained our focus on operating efficiently and controlling discretionary spendingspending, duringwhich contributed to the quarter, although the deleveraging effect from the decrease in revenue and an increase in general supplies and expenses led to an increaseimprovement in our operating ratio.ratio to 70.1% and 72.9% in the second quarter and first six months of 2026, respectively. As a result, our net income and diluted earnings per share decreasedincreased by 6.4%30.5% and 4.2%,32.3%, respectively, for the firstsecond quarter of 2026 as compared to the firstsecond quarter of 2025 and increased 12.5% and 14.6%, respectively, for the first six months of 2026 as compared to the first six months of 2025.

Revenue decreasedincreased $40.2$146.3 million, or 2.9%,10.4%, and $106.1 million, or 3.8%, in the firstsecond quarter and first six months of 20262026, respectively, as compared to the firstsame quarterperiods of 2025 due to a decrease in volumes that was partially offset by an increase in LTL revenue per hundredweight.hundredweight that was partially offset by a decrease in volumes. LTL tonnage per day decreased 7.7%4.1% and 5.9% in the firstsecond quarter and first six months of 20262026, respectively, as compared to the firstsame quarterperiods of 2025, primarily due to a decrease in LTL shipments per day.day Thisthat was partially offset by an increase in LTL weight per shipment. The decrease in our volumes was partially offset by a 5.7%an increase of 15.2% and 10.6% in the second quarter and first six months of 2026, respectively, in our LTL revenue per hundredweight, which includesincluded the impact of higher fuel surcharges resulting from anthe increase in the average price of diesel fuel for the comparable period.periods. Excluding fuel surcharges, LTL revenue per hundredweight increased 4.4%5.5% and 5.0% in the firstsecond quarter and first six months of 20262026, respectively, as compared to the firstsame quarterperiods of 2025. We believe the increase in ourthe LTL revenue-per-hundredweightrevenue metricper hundredweight, excluding fuel surcharge, 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.

AprilJuly 2026 Update

Revenue per day increased 7.6%8.2% in AprilJuly 2026 as compared to the same month last year. LTL revenue per hundredweight increased 14.6%9.3% as compared to the same month last year. LTL revenue per hundredweight, excluding fuel surcharges, increased 4.7%4.2% as compared to the same month last year. LTL tons per day decreased 6.1%1.0% due to a 7.5%3.0% decrease in LTL shipments per day that was partially offset by a 1.4%2.0% increase in LTL weight per shipment.

Salaries, wages and benefits decreasedincreased $19.8$15.3 million, or 3.0%,2.3%, in the firstsecond quarter of 2026 as compared to the firstsecond quarter of 2025 due to a $17.8$2.4 million increase in salaries and wages and a $12.9 million increase in employee benefit costs. Salaries, wages and benefits decreased $4.5 million, or 0.3%, in the first six months of 2026 as compared to the same period of 2025, due to a $15.4 million decrease in salaries and wages andthat was partially offset by a $2.0$10.9 million decreaseincrease in employee benefit costs.

The decrease in salaries and wages in the first quarter of 2026 as compared to the first quarter of 2025 was primarily due to the 7.1% decrease in our average number of active full-time employees that was partially offset by the annual wage increase provided to employees in September of 2025. Our productive labor costs, which include wages for drivers, platform employees, and fleet technicians, decreasedimproved as a percent of revenue to 24.2%21.7% and 22.9% in the firstsecond quarter and first six months of 20262026, asrespectively, comparedfrom to24.4% 24.7%and in24.5% for the firstsame quarterperiods of 2025. Despite the decrease in network density that generally results from the decline in volumes, our teamproductive labor costs improved as a percentage of revenue, reflecting the leveraging effect of the increase in our yield as well as our continued tofocus operateon operating efficiently and deliverdelivering superior service to our customers in the first quarter of 2026.customers. Our platform productivity metrics and linehaul laden load average improved in the second quarter and first quartersix months of 2026 compared to the firstsame quarterperiods of 2025, which helped offset the reduction in our linehaul laden load factor and P&D productivity metrics.

The decreaseincrease in our costs attributable to employee benefits in both the second quarter and first six months of 2026, as compared to the same periods of 2025, was primarily due to aan decreaseincrease in retirement benefit plan costs that are directly linked to our net income,income asand wellincreased ascosts theassociated reduction inwith our group health benefits resulting from higher average numbercosts ofper activeclaim. full-timeAs employees.a Employeeresult, employee benefit costs as a percent of salaries and wages increased to 39.2%42.0% in the second quarter of 2026 from 39.5% in the comparable period of 2025 and increased to 40.7% in the first quartersix months of 2026 asfrom compared to 38.2%38.9% in the firstcomparable quarterperiod of 2025.

Operating supplies and expenses decreasedincreased $3.2$35.2 million, or 2.1%,24.7% and $32.1 million, or 11.0%, in the firstsecond quarter and first six months of 20262026, respectively, as compared to the firstsame quarterperiods of 2025. This was2025 primarily due to lower maintenance and repair costs for our fleet that was partially offset by an increase in our costs for diesel fuel used in our vehicles.vehicles that was partially offset by lower maintenance and repair costs for our fleet. 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 increased 13.5%70.5% and 41.2% in the firstsecond quarter and first six months of 20262026, respectively, as compared to the firstsame quarterperiods of 2025. We do not use diesel fuel hedging instruments; therefore, our costs are subject to market price fluctuations. Our gallons consumed decreased 9.3%5.2% and 7.3% in the firstsecond quarter and first six months of 20262026, respectively, as compared to the firstsame quarterperiods of 20252025, primarily due to a decrease in miles driven.

General supplies and expenses increased $7.2$4.7 million, or 18.0%,11.4%, in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025.2025, Theprimarily increasedue wasto higher costs related to cloud-computing technology. General supplies and expenses increased $11.9 million, or 14.6%, in the first six months of 2026 compared to the first six months of 2025, primarily due to higher costs related to employee training and cloud-computing technology.

Depreciation and amortization increased $3.2$1.0 million, or 3.6%,1.2%, and $4.2 million, or 2.3%, in the firstsecond quarter and first six months of 20262026, respectively, as compared to the firstsame quarterperiods of 2025. The increase in both periods was primarily due to the assets acquired as part of our 2025 and 2026 capital expenditure programs.programs, partially offset by the impact of the disposal of property and equipment. 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 was 25.0% for both the second quarter and first quartersix months of 20262026, as compared to 24.8% for both the second quarter and first quartersix months of 2025. Our effective tax rate generally exceeds the federal statutory rate due to the impact of state taxes and, to a lesser extent, certain other non-taxable or non-deductible items.

The change in our cash flows provided by operating activities during the first quartersix months of 2026 as compared to the first quartersix months of 2025 was primarily due to higher net income, partially offset by changes in certain working capital accounts that were partially offset by a decrease in net income.accounts.

The change in our cash flows used in investing activities during the first quartersix months of 2026 as compared to the first quartersix months of 2025 was primarily due to the reduction in our 2026 capital expenditure program as compared toand the firstincrease quarterin proceeds from the sale of 2025.property and equipment. Changes in our capital expenditures are more fully described below under “Capital Expenditures.”

The change in our cash flows used in financing activities during the first quartersix months of 2026 as compared to the first quartersix months of 2025 was primarily due to a decrease in cash utilized for repurchases of our common stock.stock, partially offset by the change in net borrowings under our credit agreement. We had no activity on our credit agreement in the first six months of 2026 as compared to $130.0 million of net borrowings during the first six months of 2025. Our return of capital to shareholders is more fully described below under “Stock Repurchase Program” and “Dividends to Shareholders.”

The table below sets forth our net capital expenditures for property and equipment for the threesix months ended MarchJune 31,30, 2026 and the years ended December 31, 2025 and 2024:

We currently estimate capital expenditures will be approximately $265$380 million for the year ending December 31, 2026.2026, which is an increase of $115 million from our initial plan. Approximately $125$180 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$155 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. 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.

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 began after the completion of our prior repurchase program in May 2024 and does not have an expiration date. Under the 2023 Repurchase Program, we may repurchase shares from time to time in open market purchases or through privately negotiated transactions. Shares of our common stock repurchased under the 2023 Repurchase Program are canceled at the time of repurchase and are classified as authorized but unissued shares of our common stock. At MarchJune 31,30, 2026, we had $1.45$1.31 billion remaining authorized under the 2023 Repurchase Program.

Our Board of Directors declared a cash dividend of $0.29 per share for each of the first quarterthree quarters of 2026 and declared a cash dividend of $0.28 per share for each quarter of 2025.

On May 4, 2020, we entered into the Note Agreement which provided 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”). The Series B Notes bear interest at 3.10% per annum and mature on May 4, 2027, unless prepaid. The first threefour principal payments of $20.0 million each were paid in May of 2023, 20242024, 2025 and 2025.2026. The remaining $40.0$20.0 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.

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 consolidated total consolidated capitalization ratio) are charged quarterly in arrears on the aggregate unutilized portion of the Credit Agreement.

The Credit Agreement and the Note Agreement, as it relates to the Series B Notes, contain customary covenants, including financial covenants that require us to observe a maximum ratio of consolidated debt to consolidated total capitalcapitalization and a minimum fixed charge coverage ratio. The Credit Agreement and the 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 MarchJune 31,30, 2026.