Financial Data and Key Metrics Changes - The fourth quarter revenue reached a record $790 million, reflecting a 0.1% increase compared to the prior year [11] - The operating ratio for the fourth quarter increased to 91.9%, up from 87.1% a year ago, primarily due to increased operating expenses [15][16] - Diluted earnings per share decreased to $1.77 from $2.84 in the same quarter last year [16] Business Line Data and Key Metrics Changes - Shipments per day decreased by 0.5% year-over-year, while tonnage per day declined by 1.5% compared to the fourth quarter of 2024 [7] - Revenue per shipment, excluding fuel surcharge, decreased by 0.5% to $297.57 [11] - The Southern California region experienced an 18% volume decline, resulting in an estimated $4 million revenue reduction for the quarter [8] Market Data and Key Metrics Changes - The company reported a 6.6% increase in contractual renewals in January 2026, indicating strong customer acceptance trends [7] - Despite a challenging demand environment, the company saw a 21% reduction in preventable accident frequency and a 10% decline in lost-time injuries, reflecting improvements in safety metrics [6][18] Company Strategy and Development Direction - The company has invested over $2 billion in capital over the last three years to expand its national network, which is expected to drive long-term profitable growth [5][22] - The focus remains on leveraging the national network to enhance service quality and operational efficiency, with an emphasis on technology investments [22][23] - The company aims to ensure appropriate compensation for its investments as it continues to scale its operations [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for improved performance in 2026, even if macroeconomic conditions remain soft [23] - The company is focused on core execution and believes it can continue to gain market share in a flat market by providing high-quality service [91] - Management noted that the operational challenges faced in January due to weather conditions are expected to normalize, with a positive outlook for the remainder of the quarter [83][88] Other Important Information - The company reported a cargo claims ratio of 0.47% for the fourth quarter, a record low, indicating effective risk management and operational performance [10] - Total operating expenses increased by 5.6% in the quarter, driven by rising self-insurance costs and employee-related expenses [15] Q&A Session Summary Question: Can you discuss monthly tonnage data and its impact on margin seasonality? - Management provided monthly shipment data, indicating fluctuations in tonnage and shipments, with expectations for improved performance in Q1 [26][27] Question: What is the tonnage backdrop for the 100-200 basis points improvement mentioned? - Management indicated that positive macro data could lead to tonnage growth, contributing to the expected operating ratio improvement [36][37] Question: How do new terminals impact profitability and operating ratio? - New terminals are currently a drag on the overall operating ratio but are expected to improve as they mature and contribute to revenue growth [44][45] Question: What is the pricing environment and how does it relate to customer recognition of investments? - Management emphasized the importance of maintaining pricing discipline and noted that the national network enhances the value proposition for customers [51][54] Question: How does the company plan to manage costs and capacity? - Management indicated that they have excess capacity to absorb additional volume and are focused on managing costs effectively [75][76]

Financial Data and Key Metrics Changes - The second quarter revenue decreased year over year by 0.7% to $817.1 million, with operating ratio at 87.8% compared to 83.3% in the same quarter last year [5][14][18] - Revenue per shipment excluding fuel surcharge increased by 2.7% to $298.71, while including fuel surcharge it increased by 1.8% to $351.36 [14][18] - Total operating expenses increased by 4.7% year over year, with salaries, wages, and benefits rising by 5% due to inflationary pressures [15][18] Business Line Data and Key Metrics Changes - Overall shipments for workdays were down 2.8% year over year, with tonnage only up 0.4% from the first quarter [6][8] - Newer terminals (opened less than three years) saw a 4% sequential improvement in shipments per workday compared to the first quarter [7] - Legacy facilities (open longer than three years) experienced a 2% sequential increase in shipments compared to the first quarter, but down 3.5% year over year [7] Market Data and Key Metrics Changes - The company noted muted volume trends due to the macroeconomic landscape, with overall shipment trends reflecting cautious customer approaches [6][8] - The Los Angeles region showed softer trends, impacting overall performance [9][52] Company Strategy and Development Direction - The company is focused on optimizing variable costs and improving network efficiency while maintaining a customer-centric approach [5][10] - There is an emphasis on getting closer to customers and providing unique solutions, which is part of the long-term strategy [21][22] - The company plans to continue investing in network expansion and technology to enhance operational efficiency [17][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to the dynamic environment, despite the lack of typical volume increases in the second quarter [20] - The focus remains on controllable factors, with a commitment to maintaining high service levels and managing costs effectively [10][20] - Future growth is anticipated as the company continues to mature its facilities and optimize its network [11][106] Other Important Information - The company plans to spend approximately $600 million to $650 million in capital expenditures this year, focusing on network expansion and technology investments [17][99] - The cargo claims ratio was reported at 0.5, indicating effective management of claims [10] Q&A Session Summary Question: Outlook on volumes and pricing for Q3 - Management indicated that tonnage comparisons will become tougher due to new terminal openings last year, but they expect to maintain pricing discipline [26][27] Question: Labor reductions and wage increases - Management clarified that wage increases typically occur in the second half of the year, and headcount adjustments are made to align with volume levels [35][36] Question: Industry capacity and pricing recovery - Management believes that LTL capacity is shrinking over time, and they are well-positioned to leverage their investments in the upcoming market recovery [44][46] Question: Volume trends in July - July tonnage is trending flat, with shipments per day down about 2.25%, reflecting ongoing cautiousness in the market [51][52] Question: Contractual renewals and competitive pricing - The 5.1% renewal rate is lower than previous periods, but management emphasized that the pricing environment remains rational and focused on service quality [58][60] Question: Cost management and operating leverage - Management noted that while some cost actions are tactical, they are also building long-term structural gains through network optimization [67][70] Question: Pricing environment and legacy freight - Management is optimistic about pricing opportunities as they continue to optimize their network and improve service levels [73][75]