Eric Morgan • Barclays

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EVP & CFO Adam Satterfield explained that ODFL relies on Transport Topics data, which shows consistent market share. He reiterated the strategy of maintaining share during downturns while securing yield increases, stating ODFL is better positioned than ever for a demand recovery, citing historical tonnage outperformance of 1,000-1,200 basis points in past cycles.

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EVP & CFO Adam Satterfield explained that Old Dominion prefers Transport Topics data, which includes private carriers and shows ODFL's market share has been relatively consistent. He reiterated their strategy is to maintain share during downturns while securing yield increases, positioning them to outperform significantly when the economy recovers.

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CFO Adam Satterfield responded that margin improvement is contingent on top-line revenue growth to leverage overhead costs. He believes a return to normal seasonality could enable revenue growth and margin expansion, particularly in the second half of the year, but framed the return to their sub-70% OR goal as a multi-year process.

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CFO Adam Satterfield explained that October's year-over-year tonnage comparison is skewed by a competitor's cybersecurity issue last year which temporarily boosted ODFL's volume. He noted that sequential trends are encouraging and close to normal seasonality. For the operating ratio, Satterfield projected a 300-350 basis point sequential deterioration in Q4, citing revenue risk on overhead and higher fringe benefit costs.

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Chairman & CEO Derek Leathers explained that he anticipates a supply-driven upcycle due to ongoing carrier attrition and constrained OEM production, rather than a significant demand surge. He noted that the temporary demand increase was a 'flight to quality' from customers with urgent needs, which Werner supported through its flexible One Way network. Leathers sees this as a positive indicator of customer confidence in Werner's capabilities at a potential market inflection point.

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CEO Derek Leathers acknowledged that rising buy rates will pressure Logistics gross margins in the short term. However, he expects productivity gains from the new EDGE TMS platform to offset this, with margin expansion occurring by mid-year as customer contracts are repriced. While mid-single-digit operating margins are the long-term goal, he stated the immediate focus is on consistently achieving 3-4% margins.

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Chairman & CEO Derek Leathers and EVP, Treasurer & CFO Chris Wikoff conveyed that returning to the target margin range in a single calendar year is unlikely, but it is achievable within a multi-year up-cycle as key drivers improve. Regarding Dedicated guidance, Mr. Leathers explained that providing a finer point is difficult due to the variable timing of positive truck add-backs versus a few planned strategic fleet exits in Q4.

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EVP & CCO Kevin Boone attributed expected volume acceleration to the resolution of several customer outages from Q2 and easier year-over-year comparisons. EVP & CFO Sean Pelkey noted that despite higher volumes, Q3 margin faces headwinds from contractual wage increases (~$20M), a restructuring charge ($15-20M), and the reversal of favorable Q2 cost items.

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Executive Adam Miller stated that while they expect length of haul to improve, the exact amount is uncertain until they progress through bid cycles with the newly integrated DHE network. Executive Andrew Hess called the DHE acquisition a "game changer" for accessing the California market, which is now opening up new long-haul opportunities and customer demand that should serve as a tailwind.

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