Q1 2024 Old Dominion Freight Line Inc Earnings Call

Operator: Good morning, and welcome to the Old Dominion Freight Line first quarter 2024 earnings conference. All participants will be in listen-only mode.

Good morning, and welcome to the old Dominion freight line first quarter 'twenty 'twenty four earnings conference call.

All participants will be in listen only mode.

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I'd now like to hand, the call over to Jack Atkins Director of Investor Relations. Please go ahead.

Jack Atkins: Thank you, Andrea, and good morning, everyone, and welcome to the first quarter 2024 conference call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through May 1, 2024 by dialing 1-877-344-7529, access code 5260631. 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 Security Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion's expected financial and operating costs.

Jack Atkins: Thank you Andrea and good morning, everyone and welcome to the first quarter 2024 conference call for old Dominion freight line.

Jack Atkins: Today's call is being recorded and will be available for replay beginning today and through May one 2024 by dialing one 870 734 475 to nine access code five to 60631 to replay. The webcast may also be accessed for 30 days at the company's website.

Jack Atkins: This conference call may contain.

Jack Atkins: Forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including statements among others regarding old dominions expected financial and operating performance.

Jack Atkins: 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.

Jack Atkins: For this purpose any statements made during this call that are not statements of historical fact may be deemed to be forward looking statements.

Jack Atkins: Without limiting the foregoing the words believes anticipates plans expects and similar expressions are intended to identify forward looking statements.

Jack Atkins: 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, and 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 yourselves to one question at a time before returning to the queue. Thank you. At this time, I would like to turn the conference call over to Mr. Marty Freeman, the company's President and Chief Executive Officer, for opening remarks. Marty, please go ahead.

Jack Atkins: 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 and consequently, actual operations and results may differ materially from the results discussed in the forward looking statements. The company undertakes no obligation to.

Jack Atkins: We update any forward looking statements, whether as a result of new information future events or otherwise as.

Jack Atkins: As a final note before we begin we welcome your questions today, but ask you, but ask that you limit yourselves to one question at a time before returning to the queue. Thank you for your cooperation at this time I would like to turn the conference call over to Mr. Marty Freeman, the company's President and Chief Executive Officer for opening remarks, Marty. Please go ahead Sir.

Kevin Freeman: Good morning, everyone, and welcome to our first quarter conference call this morning. With me on the call today is Adam Satterfield, our CFO. And after some brief remarks, we will be glad to take your questions. Old Dominion's financial results improved during the first quarter of 2024, despite the continued softness in the domestic economy. While the improvement in our results was modest, we produced year-over-year increases in both revenue and earnings per diluted share for the second straight quarter. Our earnings per diluted share of $1.34 also represents a new company record for the first quarter.

Kevin Freeman: Good morning, everyone and welcome to our first quarter Conference call. This morning with me on the call today is Adam Satterfield, our CFO and after some brief remarks, we will be glad to take your questions.

Kevin Freeman: Old Dominion's financial results improved during the first quarter of 'twenty 'twenty four despite the continued softness in domestic economy.

Kevin Freeman: The improvement in our results was modest we produced year over year increases in both revenue and earnings per diluted share for the second straight quarter.

Kevin Freeman: Our earnings per diluted share of $1 34, and also represents a new company record for the first quarter.

Kevin Freeman: To produce these results, our OD family of employees continue to execute on long-term strategic plans that help create one of the strongest records of growth and profitability in the LTL industry. This was evidenced by our team's ability to once again deliver 99% on-time service and a 0.1 cargo claims ratio for the first quarter. Consistently delivering superior service at a fair price is the central element of our strategic plan, and we have created a best-in-class value proposition as a result.

Kevin Freeman: To produce these results are a family of employees continue to execute on our long term strategic plan that helped create one of the strongest records of growth and profitability in the L. P L industry.

Kevin Freeman: This was evidenced by our team's ability to once again deliver 99% on time service and a 0.1 cargo claims ratio for the first quarter.

Kevin Freeman: Consistently delivering superior service at a fair price is the central element of our strategic plan and we have created a best in class value proposition. As a result, this value proposition continues to create opportunities for us to win market share over the long term and has also helped strengthen our customer relationships.

Kevin Freeman: This value proposition continues to create opportunities for us to win market share over the long term and has also helped strengthen our customer relationships. Our customer retention trends have remained steady over the past two years despite a domestic economy that has been sluggish for longer than we originally anticipated.

Kevin Freeman: Yes.

Customer retention trends have remained steady over the past two years, despite a domestic economy.

Kevin Freeman: That has been sluggish for longer than we originally anticipated.

Kevin Freeman: Our customers have had fewer shipments to give us as a result of the slower economic environment, but we are strongly positioned to respond to their needs when demand eventually improves. Demand can very quickly change in the LTL industry, and the OD team has experience dealing with these challenges that rapid growth can present. This is why we focus so intently on our long-term market share initiatives and make decisions to help us achieve these goals, despite the cost implications that may impact us in the short term.

Customers have had fewer shipments to give us as a result of the slower economic environment, but we are strongly positioned to respond to their needs when demand eventually improves.

Kevin Freeman: Demand can quickly can very quickly change in the <unk> industry and the Audi team has experience in dealing with these challenges that rapid growth can present. This is why we focus so intently on our long term market share initiatives and make decisions to help us achieve these goals. Despite the carlson applications that may impact us.

Kevin Freeman: So in the short term.

Kevin Freeman: Our capital expenditure program is a prime example of this, as we invested $757.3 million in total capital expenditures in 2023 and expect to spend approximately $750 million this year to stay ahead of our growth curve.

Kevin Freeman: Our capital expenditure program is a Prime example of this as we have invested $757 $3 million in total capital expenditures in 2023 and expect to stand approximately $750 million. This year to stay ahead of our growth curve.

Kevin Freeman: The resulting depreciation has created some short-term cost headwinds that slightly impacted our first quarter operating ratio, but we have improved our fleet and also have approximately 30% excess capacity in our service center network to support future growth. The LTL industry has seen significant disruption over the past nine months, but we believe the strategic advantages that we have allowed us to outgrow our industry for decades will continue. Other carriers may be able to add service centers or purchase more equipment, but what has differentiated us from other carriers is not so easy to duplicate, which is our culture and our OD family spirit.

Kevin Freeman: The resulting depreciation has created some short term cost headwinds that slightly impacted our first quarter operating ratios that we have improved our fleet.

Kevin Freeman: Also have approximately 30% excess capacity in our service center network to support future growth.

Kevin Freeman: L. P. L industry has has seen significant disruption over the past nine months, but we believe the strategic advantages that we have allowed us to outgrow our industry for decades and will continue the.

Kevin Freeman: The other carriers may be able to add service centers are purchased more equipment, but what has differentiated us from other carriers is not so easy to duplicate which is our culture and our <unk> family Spirit.

Kevin Freeman: Our people are the most important element of our strategic plan, and our entire OD family of employees is committed to a culture of excellence. We invest significantly in our employees to help ensure that we are regularly educating and training our team. We have trained nearly one-third of our current drivers through our internal OD truck driving training program, and we intend to keep using this program to produce safe and qualified drivers.

Kevin Freeman: Our people are the most important element of our strategic plan and our entire OD family of employees is committed to a culture of excellence.

Kevin Freeman: We invest significantly in our employees to help ensure that we are regularly educating and training. Our team. We have trained most one third of our current drivers through our internal O D truck driving training program and we intend to keep using this program to produce safe and qualified drivers.

Kevin Freeman: We also continue to invest in our management and sales training programs, which we believe will help produce the next generation of OD leaders. These are additional examples of decisions that create short-term costs, but we are more willing to incur these costs to be prepared for our future. Our consistent investments in our people, our service, and our network are the key reasons why we have gained more market share than any other carrier over the past 10 years.

Kevin Freeman: We also continued to invest in our management and sales training programs, which we believe will help produce the next generation of <unk> leaders.

Kevin Freeman: These are additional examples of decisions that create short term costs, but are more willing to incur these costs to be prepared for our future our consistent investments in our people our service and our network are the key reasons why we have one more market share than any other carry over the past 10 years.

Kevin Freeman: Having each of these elements in place is also why we continue to believe that we are the best positioned company in the LTL industry to benefit from an improving economy. Delivering superior services is ultimately what wins market share in our industry, and I can assure you that everyone on OD's team is more committed than ever to delivering superior service to our customers and ultimately adding value to our supply chain.

Kevin Freeman: Having each of these elements in place is also why we continue to believe that we are the best positioned company in the L. T L industry would benefit from an improving economy delay.

Kevin Freeman: Delivering superior services. It is ultimately what wins and market share in our industry and I can assure you that everyone on the team is more committed than ever to deliver superior service to our customers and ultimately add value to our supply chain.

Kevin Freeman: We also have the financial strength and consistent returns to support investments needed to help achieve our long-term vision for profitable growth. As we continue to execute on a proven plan to achieve this vision, we believe we can drive further improvement in shareholder value. Thank you for joining us this morning, and now Adam will discuss our first quarter financial results in greater detail. Thank you, Marty, and good morning.

Kevin Freeman: We also have the financial strength and consistent returns to support investments needed to help achieve our long term vision for profitable growth as we continue to execute on our proven plan to achieve this vision. We believe we can drive further improvement in shareholder value.

Kevin Freeman: Thank you for joining us this morning, and now Adam will discuss our first quarter financial results in greater detail.

Adam N. Satterfield: Thank you Marty and good morning old Dominion's revenue for the first quarter of 2024 was $1 $5 billion, which was a one 2% increase from the prior year.

Adam N. Satterfield: Old Dominion's revenue for the first quarter of 2024 was $1.5 billion, which was a 1.2% increase from the prior year. This slight increase in revenue was primarily due to a 4.1% increase in LTL revenue per hundredweight that was partially offset by a 3.2% decrease in LTL tons per day. Our quarterly operating ratio increased 10 basis points to 73.5% as compared to last year, while our earnings per diluted share increased 3.9% to $1.34.

Adam N. Satterfield: This slight increase in revenue was primarily due to a four 1% increase in <unk> revenue per hundred weight was partially offset by the three 2% decrease in <unk> tons per day.

Adam N. Satterfield: Our quarterly operating ratio increased 10 basis points to 73, 5% as compared to last year, while our earnings per diluted share increased three 9% to $1 34.

Adam N. Satterfield: On a sequential basis, our revenue per day for the first quarter decreased 7.0% when compared to the fourth quarter of 2023, with LTL tons per day decreasing 5.5% and LTL shipments per day decreasing 5.2%. For comparison, the 10-year average sequential change for these metrics includes a decrease of 1.3% in revenue per day, a decrease of 1.0% in tons per day, and a decrease of 0.3% in shipments per day. The monthly sequential changes in LTL tons per day during the first quarter were as follows: January decreased 3.9% as compared to December.

Adam N. Satterfield: On a sequential basis, our revenue per day for the first quarter decreased 7.0% when compared to the fourth quarter of 2023.

Adam N. Satterfield: <unk> tons per day, decreasing five 5% and <unk> shipments per day decreased from five 2%.

Adam N. Satterfield: For comparison, the 10 year average sequential change for these metrics includes a decrease of one 3% and revenue per day.

Adam N. Satterfield: A decrease of 1.0% in tons per day, and a decrease of 0.3% and shipments per day.

Adam N. Satterfield: The monthly sequential changes in <unk> tons per day during the first quarter were as follows.

Adam N. Satterfield: January decreased three 9% as compared to December February increased one 9% from January and March increased two 4% as compared to February.

Adam N. Satterfield: February increased 1.9% from January, and March increased 2.4% as compared to February. The 10-year average change for these respective months is an increase of 0.8% in January, an increase of 1.5% in February, and an increase of 4.8% in March. Please remember, however, that Good Friday was in March this year.

Adam N. Satterfield: The 10 year average change for these respective respective months is an increase of 0.8% in January.

Adam N. Satterfield: An increase of one 5% in February and an increase of four 8% in March.

Remember however that good Friday was in March this year and the average sequential change from March one that is the case and an increase of two 5%.

Adam N. Satterfield: And the average sequential change for March, when that is the case, is an increase of 2.5%. While there are still a few workdays remaining in April, our month-to-date revenue per day has increased by approximately five and a half to six percent when compared to April of 2023. Our LTL tonnage per day has increased by approximately 2 to 2.5%, while LTL revenue per hundredweight has increased by approximately 4%. However, our LTL revenue per hundredweight excluding fuel surcharges has increased approximately four and a half percent, which is trending lower than our growth rate in the first quarter.

Adam N. Satterfield: While there are still a few workdays remaining in April our month to date revenue per day has increased by approximately five 5% to 6% when compared to April of 2023.

Adam N. Satterfield: Our <unk> tonnage per day increased by approximately two to two 5% while <unk> revenue per hundredweight is increased by approximately 4%.

Adam N. Satterfield: Our <unk> revenue per hundred weight, excluding fuel surcharges increased approximately four 5%, which is trending lower than our growth rate in the first quarter.

Adam N. Satterfield: We want to be clear that the slowdown in this metric does not represent any change in our pricing philosophy or change in the overall pricing environment. However, certain mixed changes are impacting this metric in April, as the change in our LTL revenue per shipment is more comparable with the first quarter. Nevertheless, we will continue with our long-term, consistent approach of targeting yield improvements that exceed cost inflation and support our capital expenditure program, and we believe we can achieve those initiatives this year.

Adam N. Satterfield: We want to be clear that the slowdown in this metric does not represent any change in our pricing philosophy or change in the overall pricing environment.

Adam N. Satterfield: Certain mix changes are impacting this metric in April as the change in our <unk> revenue per shipment is more comparable with the first quarter.

Adam N. Satterfield: Nevertheless, we will continue with our long term consistent approach of targeting yield improvements that exceed our cost inflation and support our capital expenditure program and we believe we can achieve those initiatives this year.

Adam N. Satterfield: We will provide the actual revenue-related details for April in our first quarter Form 10-Q, as usual. Our operating ratio increased 10 basis points to 73.5% for the first quarter of 2024, as the impact of the increase in our overhead costs more than offset the improvement in our direct costs. Many of our fixed overhead costs increased as a percent of revenue due to the flatness of revenue and the significance of our capital expenditures over the past year.

Adam N. Satterfield: We will provide the actual revenue related details for April in our first quarter Form 10-Q as usual.

Adam N. Satterfield: Our operating ratio increased 10 basis points to 73, 5% for the first quarter of 2024 as the impact from the increase in our overhead costs more than offset the increase the improvement rather than our direct costs.

Adam N. Satterfield: Many of our fixed overhead cost increased as a percent of revenue due to the flatness in revenue and the significance of our capital expenditures over the past year.

Adam N. Satterfield: This is most evidenced by the 50 basis point increase in our depreciation cost as a percent of revenue. We were pleased, however, that the improvement in yield and ongoing focus on operating efficiency helped us improve our direct operating costs as a percent of revenue by approximately 100 basis points. This change included improvements in operating supplies and expenses that offset a slight increase in salaries, wages, and benefits as a percent of revenue.

Adam N. Satterfield: This was most evidenced by the 50 basis point increase in our depreciation cost as a percent of revenue.

We were pleased however that the improvement in yield and ongoing focus on operating efficiencies helped us improve our direct operating cost as a percent of revenue by approximately 100 basis points.

Adam N. Satterfield: This change included improvement in our operating supplies and expenses would offset a slight increase in salaries wages and benefits as a percent of revenue.

Adam N. Satterfield: Our team continued to efficiently manage our variable costs, while also delivering best in class service standards, which is not easy to do in an environment with lower operating density.

Adam N. Satterfield: Our team continued to efficiently manage our variable costs while also delivering best-in-class service standards, which is not easy to do in an environment with lower operating density. We continue to believe that the keys to long-term operating ratio improvement are the combination of density and yield, both of which generally require a favorable macroeconomic environment. Once we have those factors working in our favor again, we are confident in our ability to produce further improvement in our operating ratio, and we'll continue to work towards our goal of producing a sub-70% annual operating ratio. Old Dominion's cash flow from operations totaled $423.9 million for the first quarter, while capital expenditures were $119.5 million.

Adam N. Satterfield: We continue to believe that the keys to long term operating ratio improvement or the combination of density and yield both of which generally require a favorable macroeconomic environment.

Adam N. Satterfield: Once we have those factors working in our favor again, we're confident in our ability to produce further improvement in our operating ratio and we will continue to work towards our goal of producing a sub 70% annual operating ratio.

Adam N. Satterfield: Old dominion's cash flow from operations totaled $423 $9 million for the first quarter, while capital expenditures were $119 5 million.

Adam N. Satterfield: We utilized $85 $3 million of cash for our share repurchase program during the first quarter.

Adam N. Satterfield: Cash dividends totaled $56 6 million.

Adam N. Satterfield: Our effective tax rate for the first quarter of 2024 was 25, 6% as compared to 25, 8% for the first quarter of 2023.

Operator: We utilized $85.3 million of cash for our share repurchase program during the first quarter, while cash dividends totaled $56.6 million. Our effective tax rate for the first quarter of 2024 was 25.6% as compared to 25.8% for the first quarter of 2023. We currently anticipate our effective tax rate to be 25.4% for the second quarter. This concludes our prepared remarks this morning. Operator, we're happy to open the floor for questions at this time. We will now begin the question and answer session. To ask a question, you may press the star, then 1 on your telephone keypad.

Adam N. Satterfield: We currently anticipate our effective tax rate to be 25, 4% for the second quarter.

Speaker Change: This concludes our prepared remarks. This morning, operator, we're happy to open the floor for questions at this time.

Speaker Change: Okay.

Speaker Change: We will now begin the question and answer session.

To ask a question you May press Star then one on your telephone keypad.

Speaker Change: If you are using a speakerphone please pick up your handset before pressing magee.

Speaker Change: To withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble the roster.

Speaker Change: And our first question will come from Ravi Shanker of Morgan Stanley. Please go ahead.

Ravi Shanker: Thanks, Good morning, everyone.

Ravi Shanker: Great Great summary of kind of where we got to this point.

Ravi Shanker: It's still Q, the quarter, where kind of we see the best of what this industry. It looks like in a post <unk> environment again, if tonnage picks up and you have 2020 for pricing that comes in and kind of how do we expect to.

Operator: If you are using a speakerphone, please pick up your handset before pressing the button. To withdraw your question, please press star- At this time, we will pause momentarily to assemble the roster. And our first question will come from Ravi Shanker of Morgan Stanley. Please go ahead.

Speaker Change: Q, who are trying to avoid just seasonality. Thank you.

Unknown Executive: Thanks. Good morning, everyone. Greg, great summary of kind of where we got to this point. Is 2Q the quarter where we see the best of what this industry looks like in a post-yellow environment? If tonnage picks up and you have 2024 pricing that comes in, kind of how do we expect 2Q award to trend versus seasonality? Thank you.

Speaker Change: Yes, I think that's.

Speaker Change: A difficult one to answer it's obviously dependent on the top line.

Speaker Change: Typically the second quarter is when we see the big acceleration in revenue.

Speaker Change: Ben.

Speaker Change: Historically speaking the 10 year average increase in revenue from the first and second quarters.

Speaker Change: Eight 7% and we're.

Speaker Change: We're not starting out with that type of growth in April things still feel good to us.

Unknown Executive: Yeah, I think that's a difficult one to answer, because it's obviously dependent on the top line. You know, typically, the second quarter is when we see the big acceleration in revenue. And, historically speaking, the 10-year average increase in revenue from the first to the second quarter is 8.7 percent, and, you know, we're not starting out with that type of growth in April. Things still feel good to us, and we're finally seeing some year-over-year revenue growth, but it's not quite at the levels of getting back to seasonality.

Speaker Change: We're finally seeing some some year over year revenue growth, but but it's not quite at the levels of getting back to the seasonality.

Speaker Change: We have been encouraged that we've seen our volumes increasing.

Speaker Change: Really into February into March and have essentially increased thus far into April, but again not with those normal seasonal levels are so.

Speaker Change: Kind of frame up the second quarter.

Speaker Change: Operating ratio guidance, it's going to be very dependent on what the top line does.

Speaker Change: Think about last year at this point in time, we were at a point, where we werent looking at any sequential revenue growth and we were targeting margins to be flat.

Unknown Executive: We have been encouraged that we've seen our volumes increasing really into February, into March, and have essentially increased thus far into April, but, again, not at what those normal seasonal levels are. So, you know, to kind of frame up the second quarter operating ratio guidance, it's going to be very dependent on what the top line does. If you think about last year at this point in time, we were at a point where we weren't looking at any sequential revenue growth, and we were targeting margins to be flat.

Speaker Change: If we were able to grow at what the normal seasonal levels would be on the top line.

Speaker Change: That would be that eight 7% sequential growth would be about 12% year over year growth.

Speaker Change: So obviously, we're a ways away from that where we are at this sort of 6%.

Speaker Change: I would say, we probably have somewhere in the middle of that sliding scale.

Speaker Change: If we were to stay at 6% year over year growth.

Speaker Change: Then I would probably put us somewhere at a target of maybe about 150 basis points.

Unknown Executive: If we were able to grow at what the normal seasonal levels would be on the top line, that would be, that 8.7% sequential growth would be about 12% year-over-year growth. But, obviously, we're a ways away from that.

Speaker Change: Improvement from the first quarter, so like always the second quarter is going to be dependent upon how much acceleration, we see and we're not while we are encouraged about some things we're not ready to make a call to say that things are definitely accelerating and that we can hit some of those sequential points too.

Unknown Executive: Where we are at this sort of 6%, I would say, you know, we probably are somewhere in the middle of that sliding scale. If we were to stay at 6% year-over-year growth, then I would probably put us somewhere at a target of maybe about 150 basis points of improvement from the first quarter. So, you know, like always, the second quarter is going to be dependent upon how much acceleration we see. And we're not, while we're encouraged by some things, we're not ready to make the call to say that, you know, things are definitely accelerating and that we can hit some of those sequential points as we go through May and June.

Speaker Change: As we go through through May and June, but obviously, hopefully we'll continue to see some acceleration there in.

Speaker Change: That will create operating density for us and will allow us to.

Speaker Change: <unk> margin from the first quarter to the second.

Speaker Change: Thank you.

Daniel Umbrella: The next question comes from Daniel umbrella of Stephens. Please go ahead.

Daniel Umbrella: Okay, Great. Yeah. This is Greg on for Daniel Thanks for taking our questions.

Greg: There was a comment in the release around some recent developments that suggests overall demand for your services, maybe improving could you maybe just provide a little more context around that comment was referring to that weight per shipment comment that impacting some of the yield metrics in April that you discussed earlier and maybe you could also just provide a bit of a update on the underlying demand.

Unknown Executive: But obviously, hopefully, we'll continue to see some acceleration there, and that will create operating density for us and will allow us to improve our margin from the first quarter to the second. Thank you. Thank you. This question comes from Daniel Umbro of Stevens. Please go ahead. Okay, great. This is Grant, on behalf of Daniel.

Greg: Thanks.

Speaker Change: Yes, I would say right now underlying domain has felt relatively consistent but but yeah.

Speaker Change: It does feel like things are improving a bit and obviously like I just mentioned we've seen some sequential acceleration obviously January was hit pretty good with winter weather and we saw the impact of that but.

Unknown Executive: Thanks for taking our questions. There was a question, there was a comment in the release around some recent developments that suggest overall demand for your services may be improving. Could you maybe just provide a little more context around, you know, what that comment was referring to?

Speaker Change: But we increase from there.

Speaker Change: Through February and saw again some of the sequential improvement in shipments through through March and thus far.

Speaker Change: Into April, but I feel like there are several factors that.

Unknown Executive: Is that more of a weight per shipment comment that is maybe impacting some of your yield metrics in April that you discussed earlier? And maybe you could also just provide a bit of an update on the underlying demand environment. Yeah, I would say right now that the underlying domain has felt relatively consistent, but it does feel like things are improving a bit. And obviously, like I just mentioned, we've seen some sequential acceleration. Obviously, January was hit pretty hard by winter weather, and we saw the impact of that.

Speaker Change: That are starting to turn you know we've been at it.

Speaker Change: And a long slow cycle for going back to April of 'twenty, two and maybe to borrow a line from Taylor Swift is that over now we're kind of waiting to see.

Speaker Change: But we saw.

Speaker Change: I assume inflect back above 50 for the first time like you mentioned our weight per shipment has <unk>.

Speaker Change: Increased again, we saw little bit of a change from January to February it dropped a little bit.

Unknown Executive: But we increased from there through February and then saw, again, some sequential improvement in shipments through March and thus far into April. But I feel like there are several factors that are starting to turn. You know, we've been in a long, slow cycle going back to April 22, and maybe to borrow a line from Taylor Swift, is that over now? We're kind of waiting to see. But we saw ISM inflect back above 50 for the first time.

Speaker Change: But then it came back in March and at this point through the through April were up a little bit higher so you sort of balance that with conversations that we've had from customers and we look at our national account reporting on wins and losses.

Speaker Change: There's a lot of good things that feel like Theyre developing.

Speaker Change: History repeats itself, usually a couple months after that <unk> reflect or inflect to the.

Unknown Executive: Like you mentioned, our weight per shipment has increased again. We saw a little bit of a change from January to February. It dropped a little bit, but then it came back up in March.

Speaker Change: Positive we start seeing some improvement.

Speaker Change: In our industrial activity as well and that's something that with steel our retail outperformed our industrial business in the first quarter.

Unknown Executive: And at this point through April, we're up a little bit higher. So, you know, you sort of balance that with conversations that we've had with customers, and we look at our national account reporting on wins and losses. You know, there are a lot of good things that feel like they're developing.

Speaker Change: So thats something that we can start seeing some recovery there all of those things and factors hopefully we will be increasing the demand for LPL service and we're certainly in a position to take advantage of that opportunity.

Unknown Executive: And if history repeats itself, you know, usually a couple months after that ISM reflects or inflects the positive, we start seeing some improvement in our industrial activity as well. And that's something that still outperformed our retail business in the first quarter. So if that's something that we can start seeing some recovery in, all of those things and factors should hopefully be increasing the demand for LTL service. And we're certainly in a position to take advantage of that opportunity as it presents itself. I appreciate it.

Speaker Change: As it presents itself.

I appreciate it thanks guys.

Speaker Change: The next question comes from Jordan Alegar of Goldman Sachs. Please go ahead.

Jordan Robert Alliger: Yeah, Hi morning, just curious if you could talk to a little bit more the yield side of the equation, perhaps a little more color around mix core pricing youre seeing is youre contracts come up and I.

Speaker Change: I guess broadly.

Jordan Robert Alliger: Is this any way is the yield deceleration.

Jordan Robert Alliger: Is it tied in some way too.

Jordan Robert Alliger: It's more intense competition out there given industry spare capacity.

Unknown Executive: Thanks, guys. This question comes from Jordan Alliger of Goldman Sachs; please go ahead. Yeah, hi, morning.

Jordan Robert Alliger: Yes.

Jordan Robert Alliger: While we wanted to be clear with the comments earlier that we don't see this in any way as being a reflection on the overall environment and certainly there is no change with respect to what our yield management initiatives are we continue to target trying to achieve yield improvement.

Unknown Executive: I'm just curious if you could talk a little bit more about the yield side of the equation, perhaps a little more color around the mix core pricing you're seeing as your contracts come up and, I guess broadly, is this any way, is the yield deceleration tied in some way to... More intense competition out there given industry spare capacity. Thanks.

Jordan Robert Alliger: <unk> leads to our revenue per shipment outperforming our cost per shipment.

Jordan Robert Alliger: Something we've been able to achieve with targeted 100 to 150 basis points.

Unknown Executive: Yeah, that's why we wanted to be clear with the comments earlier that we don't see this in any way as being a reflection of the overall environment, and certainly, there is no change with respect to what our yield management initiatives are. We continue to try to achieve yield improvement that ultimately leads to our revenue per shipment outperforming our cost per shipment. That's something we've been able to achieve, and we've targeted 100 to 150 basis points in the past. Obviously, with the weakness in the volume environment of the past year, we weren't able to achieve that positive spread in 2023, but we kept on investing, and that's created more cost, and we're continuing to invest this year.

Jordan Robert Alliger: Past and obviously with the weakness in the volume environment over the past year, we weren't able to achieve that positive spread in 2023, but we kept on investing and that's created more cost and we're continuing to invest this year I do think we're getting close back to this point and perhaps it will.

Jordan Robert Alliger: <unk> back in the second quarter to where we do see a positive spread probably not to that full 150, 100 to 150 basis points Delta.

But I do think that we can see our revenue per shipment.

Jordan Robert Alliger: Now going back above what our cost per shipment.

<unk>, what otherwise be but where we're continuing to work through contracts as they are coming due.

Unknown Executive: I do think we're getting close to this point, and perhaps it will inflect back in the second quarter to where we do see a positive spread, probably not to that full 100 to 150 basis point delta, but I do think that we can see our revenue per shipment now going back above what our cost per shipment change would otherwise be, but we're continuing to work through contracts as they're coming due. We're winning some new business. Sometimes that can come on board when you look at things on a 100 weight basis.

Jordan Robert Alliger: We're winning some new business, sometimes that can come on board when you look at things on 100 weight basis.

Jordan Robert Alliger: That number can skew and be skewed by multiple factors be it the weight per shipment the length of haul which has been decreasing the class of freight as well, there's multiple things that can move that number around and the year over year growth is just a little bit slower in.

Jordan Robert Alliger: April than where we were in the first quarter, but our revenue per shipment overall.

Jordan Robert Alliger: What matters, the most and that's performing pretty consistent with where we were.

Unknown Executive: That number can skew and be skewed by multiple factors, be it the weight per shipment, the length of haul, which has been decreasing, and the class of freight as well. There are multiple things that can move that number around, and the year-over-year growth is just a little bit slower in April than where we were in the first quarter, but our revenue per shipment overall is what matters the most, and that's performing pretty consistent with where we were in the first quarter, at least on a core basis.

Jordan Robert Alliger: In the first quarter at least from a core basis, it's a little bit.

Jordan Robert Alliger: Higher right now.

Jordan Robert Alliger: Including the fuel, but on a core basis looking at revenue per shipment ex fuel pretty close to where we were in the first quarter. So I still feel good about the environment and certainly seeing.

Jordan Robert Alliger: Seeing the activity that we've had internally and.

Jordan Robert Alliger: And the increases that we continue to achieve.

Unknown Executive: It's a little bit higher right now, including fuel, but on a core basis, looking at revenue per shipment x fuel, pretty close to where we were in the first quarter, so I still feel good about the environment and certainly see the activity that we've had internally and the increases that we continue to achieve. We feel good about things and especially the line of sight to seeing some positive spread once again of revenue per ship outperforming the cost per ship. Thank you. This question comes from Bascome Majors of Susquehanna. Please go ahead.

Jordan Robert Alliger: We feel good about things and especially the line of sight to seeing some.

Jordan Robert Alliger: Positive spread once again of Rev per ship.

Jordan Robert Alliger: Outperforming the cost per ship.

Speaker Change: Thank you.

Bascome Majors: The next question comes from Boscombe majors of Susquehanna. Please go ahead.

Bascome Majors: Thanks for taking my questions.

I think your long term shareholders.

Bascome Majors: Can be happy with the discipline you've held through this two year protracted down cycle on sticking to your guns in the strategy and waiting.

Unknown Executive: Thanks for taking my questions. I think your long-term shareholders can be happy with the discipline you've held through this two-year protracted down cycle of sticking to your guns and strategy and waiting to really monetize the capacity and the better part of the cycle in the future here, especially with all the changes in the competitive landscape and capacity moving around in some of your peers. But as you look forward and wait for that inflection, are there things you are looking for?

Speaker Change: To really monetize the capacity and the better part of the cycle in the future here.

Speaker Change: Especially with with all the changes in the competitive landscape and capacity moving around at some of your peers, but as you look forward in it and wait for that inflection are there things you are looking for.

Unknown Executive: in that the market may have changed and the strategy does require a tweak here or there. I'm just curious internally about what you're watching for to see that things may have shifted in some way, shape, or form in the way that customers are viewing OD. Thank you.

Speaker Change: And that the market may have changed in the strategy does require tweak here or there I'm just curious internally what.

Speaker Change: Youre watching for to see that to see that things may have shifted in some way shape or form.

Speaker Change: And the way that that customers are viewing okay. Thank you.

Unknown Executive: Yeah, I think, you know, certainly time will tell. And it's something that we continue to watch. And, you know, the business levels, our market share trends, all of those are pretty much in line with what we would have otherwise expected. When we go through a slower economic environment, it's something where our market share is generally flattish, and it's a little hard to track market share right now with the disruption post-Yellow's closure. And maybe the way I look at it is slightly different than the way some of you do.

Speaker Change: Yes, I think certainly time will tail and it's something that we continue to watch and.

Speaker Change: The business levels, our market share trends all of those are pretty much been in line with what we would have otherwise expected.

Speaker Change: When we go through a slower economic environment.

Speaker Change: Something where our market share is generally flattish and a little hard to track market share right now.

Speaker Change: With the disruption post yellows closure.

Speaker Change: And maybe the way I look at it is slightly different than the way some of you do but if I compare it.

Unknown Executive: But if I compare at least what we have from a fourth-quarter reporting where all the public areas are reported, it looks like we're in really good shape, if you compare back to the second quarter, so kind of before and after that event. And, you know, we've gained some market share relative to the other public carriers combined. And the largest carrier in the space has gained the most shipments.

Speaker Change: At least what we have from our fourth quarter reporting where all the public carriers have reported.

Speaker Change: It looks like we're in really good shape with if you compare back to the second quarter.

Speaker Change: So kind of before and after that.

Speaker Change: That event.

Speaker Change: We've gained some market share relative to the other public carriers.

Speaker Change: Combined the largest carrier in this space has gained the most shipments.

Unknown Executive: You know, again, second quarter to the fourth quarter, not looking at just a year-over-year percent change but pre-event, post-event, they have. And then there's one other carrier that's grown about the same as us, just a little bit higher shipments per day. And then all the other public carriers are pretty flat when you look at it otherwise.

Speaker Change: Again second quarter to the fourth quarter not looking at just a year over year.

Speaker Change: <unk> change.

But prevent post event.

Speaker Change: And then there's one other carrier that is growing about the same as us just a little bit high.

Speaker Change: Higher shipments per day, and then all of the other public carriers are pretty flat.

Speaker Change: When you look otherwise and so a lot of what we have seen historically is.

Unknown Executive: And so, you know, a lot of what we have seen historically is, you know, similar types of trends. And then when the economy starts inflecting back to the positive, that's the time when OD's model shines the brightest. And we think that will happen once again, once we get some economic recovery, if you will, some real economic improvement, where we've been running against the wind for the past two years. We get some tailwind from the economy.

Speaker Change: Similar types of trends and then when the economy starts.

Speaker Change: <unk> back to the positive that's the time window. These model shines the brightest and we think that will happen. Once again once we get some some economic recovery. If you will some real economic improvement, where we've been running against the win for the past two years, we get some tailwind from the economy.

Unknown Executive: I think you will see that volume growth come through our network, and we'll be able to leverage that improvement in operating density to drive that with an improved operating ratio. So, you know, we don't believe at this point that anything will be any different.

Speaker Change: I think you will see that volume growth come through our network.

Speaker Change: And we will be able to leverage that improvement operating density.

Speaker Change: To drive that with improved operating ratio. So we don't believe at this point that anything will be any different like Marty said earlier, we're really pleased with our customer retention trends.

Unknown Executive: Like Marty said earlier, we're really pleased with our customer retention trends. The way that we've seen business levels change over the past year and a half, and it's been slower, we're in place and ready to respond to our customers' needs when they see their businesses inflecting back to the positive. So, all the things are in place.

Speaker Change: The way that we've seen our business levels change over the past year and a half of it's been slower were in place and ready to respond to our customers' needs when they see their businesses and reflecting back to the positive. So all the things are in place, we just need a little bit more improvement in the underlying freight.

Unknown Executive: We just need a little bit more improvement in the underlying freight demand environment to capitalize on it. And certainly feel like we're closer to that event changing and that inflection point, and there have been some green shoots that if you're looking at things from a glass half full kind of standpoint, which I typically do, that you can read through and see some potential opportunities for perhaps later this year. And so, we're definitely in place.

Speaker Change: Demand environment to capitalize on it and certainly feel like we're closer to that event.

Speaker Change: <unk> and that inflection point and there had been some some green shoots that if youre looking at things from a glass half full kind of standpoint, which I typically do.

Speaker Change: But you can read through and see some potential opportunity for perhaps later this year.

Speaker Change: And so we are definitely in place we feel like all the pieces are there and we said it earlier anyone can go out and you can buy terminals you can buy equipment.

Unknown Executive: We feel like all the pieces are there. And, you know, we said it earlier, anyone can go out and buy terminals, you can buy equipment, but the thing that differentiates us the most is our people and our culture. And those are things that cannot be duplicated, certainly not in any short period of time.

Speaker Change: But the thing that differentiates us the most is our people and our culture and those are things that cannot be duplicated certainly not in any short period of time and I think the commitment that we have from from each of our employees to excellence and delivering superior service for.

Unknown Executive: And I think the commitment that we have from each of our employees to excellence and delivering superior service for our customers is what will allow OD's model to continue to shine into the future and allow us to achieve our long-term market share initiative. Thank you, Adam. The next question comes from Amit Mehrotra of Deutsche Bank. Thanks, Operator. Hi, everybody. Adam, I just want to go back to the OR comment on the second quarter.

Speaker Change: For our customers is what will allow Oh. These model to continue to shine into the future and allow us to achieve our long term market share initiatives.

Speaker Change: Thank you Adam.

Speaker Change: The next question comes from Amit Malhotra of Deutsche Bank.

Speaker Change: Ahead.

Thanks, Operator, hi, everybody.

Amit Mehrotra: Adam I just want to go back to the or comment on the second quarter I mean.

Unknown Executive: I mean, If I just look at revenue per day, I assume it should accelerate given maybe easier comps the rest of the quarter. So you're growing maybe revenue amidst the high single digits in the second quarter. And so the implied, you know, incrementals on that are like 25 to 30% to get to the OR in 2Q. And I would have just imagined, with all the pricing that's been taken in the industry and, you know, the front-end loaded nature of the cost, that we could do better than that. I don't know if that's a fair view or not, but I'd love to get your opinion on that.

Amit Mehrotra: If I just look at revenue per day, I assume it should accelerate given maybe easier comps.

Amit Mehrotra: Rest of the quarter, so youre growing maybe revenue.

Adam N. Satterfield: The mid to high single digits.

Adam N. Satterfield: In the second quarter, and so the implied incrementals on that or by.

By 25% to 30% to get to the MLR in.

Adam N. Satterfield: <unk> and I would just imagine with all the pricing that's been taken in the industry.

Adam N. Satterfield: The front end loaded nature of the cost.

Speaker Change: Could do better than that.

Speaker Change: I don't know if that's a fair fair view or not but I'd love to get your opinion on that and then and then maybe more higher level on the or you've got.

Unknown Executive: And then maybe a higher level on the OR, you know, you've got, I think right now, probably 18% of your revenue is direct cost if I'm doing my calculations right. And it's been as low as maybe 16%, so you've got a couple hundred basis points there. And then there's obviously leverage on mix and variable costs. Can you just talk about some of the levers to improve margins? Over the next couple of years, if we do get a recovery, because there is this view that, you know, there's not much more to go when you're already doing a 72-73 OR.

Speaker Change: I think right now probably 18% of your revenues direct cost if I'm doing my calculations right and it's been as low as maybe 16%. So you've got a couple of hundred basis points. There and then Theres, obviously leverage on mix and variable cost could you just talk about kind of the levers to improve margins.

Speaker Change: Over the next couple of years, if we do get into a recovery because there is this view that theres not much more to go when you're already doing a 70 273 or.

Unknown Executive: Well, you know, if you remember, we did a 69.6 and a 69.1 in the second and third quarters of 2022 when we had more revenue growth going on and felt like we had room to go from there. So nothing's changed with respect to where we feel like we can take the operating ratio long term, part of the reason why we repeated the goal of being able to achieve a sub-70 annual operating ratio. But there are a few things to try to unpack from that question.

Speaker Change: Well yeah.

Speaker Change: You remember we have done 69, six and $69 one in the second and third quarters of 2022, when we had more revenue.

Speaker Change: Growth going on and felt like we had room to go from there. So nothing has changed with respect to where we feel like we can take the operating ratio long term.

Speaker Change: Part of the reason why we repeated the.

Speaker Change: Goal of being able to achieve a sub 70.

Speaker Change: Annual operating ratio, but.

Speaker Change: But there is a few things to try to unpack from from that question and I would say that when we were initially in the upswing.

Unknown Executive: I would say that when we're initially in the upswing, get into an environment where we start seeing revenue growth again, you know, eventually when you get into it, that's periods of higher incremental margins for us, but you've got to get to the point where you've got enough revenue to kind of recover some of the fixed overhead costs and the growth that, you know, improvement or increase rather in some of the other variable costs that go along with And, you know, we've already instituted some of those costs.

Speaker Change: Get into the environment, where we start seeing revenue.

Speaker Change: Again.

Speaker Change: Eventually when you get into it that's periods of higher incremental margins for us, but you got to get to the point, where you've got enough revenue to kind of recover some of the fixed overhead cost.

Speaker Change: And the growth.

Speaker Change: Improvement or increase rather than some of the other variable costs that go along with preparing for growth.

Speaker Change: We've already.

Speaker Change:

Speaker Change: Instituted some of those costs. For example, we've added about 500 people since September of last year, we were averaging 51000 shipments per day in September.

Unknown Executive: For example, we've added about 500 people since September of last year. We were averaging 51,000 shipments per day in September of last year, and now we're at about 48,000. So we've tried to continue to do all the things to get ahead of anticipated growth, and we're having to manage all of those costs, and we do. We manage the efficiency of all elements of our operation and are trying to manage and match all those costs with our revenue trends.

Speaker Change: Last year and now we're at about 48000 so.

Speaker Change: We've tried to continue to do all the things to get ahead of anticipated growth and we're having to manage all of those cost and we do we manage.

Speaker Change: The efficiency of all elements of our operation.

Speaker Change: And trying to manage a match all of those cost with our revenue trends, but but I would say that the uncertainty with the second quarter is just whether or not revenue will continue to accelerate.

Unknown Executive: But I would say that the uncertainty with the second quarter is just whether or not revenue will continue to accelerate or what we end up seeing. If we continue to improve from here, that's going to be an improvement in operating density, and that will drive further improvement in our direct cost performance. If you pull our operating ratio in the first quarter apart, I think you may have said it in the inverse, but our direct costs, which are all the costs associated with moving freight, most of which are variable, were about 53 percent of revenue. Our overhead costs, which are more fixed in nature, were between 20 to 21 percent of revenue.

Speaker Change: Or what we end up seeing.

Speaker Change: We continue to improve from here, that's going to be an improvement in operating density and that will drive further improvement in our direct costs.

Speaker Change: Performance.

Speaker Change: If you pull our operating ratio in the first quarter apart.

Speaker Change: I think you may have said it in the inverse but our direct cost.

Speaker Change: Are all the costs associated with moving freight most of which are variable where about 53% of revenue.

Speaker Change: Our overhead cost, which are more fixed in nature is between 20% to 21% of revenue. So those costs are somewhere around $300 million little.

Unknown Executive: So, you know, those costs are somewhere around $300 million, a little bit higher than that in the first quarter. That $300 million is going to be there in the second quarter, and it's probably going to be closer to $305 million, plus or minus. So you've kind of got that base cost to bounce around. But those being at 20 to 21 percent, to one of your other points, yeah, that's been as low as 16 percent in the past when you're really leveraging up, in particular, all the investments that we've made in capital expenditures and driving improvement there.

Speaker Change: A little bit higher than that in the first quarter at $300 million is going to be there in the second quarter, and it's probably going to be closer to 305, plus or minus so you've kind of got that base cost to bounce around but.

Speaker Change: Those being at $20 to 21% to one of your other point, yeah, that's been as low as 16% in the past when you're really leveraging up.

Speaker Change: In particular, all the investments that we've made in capital expenditures and.

Speaker Change: Driving an improvement there on the direct cost side, though that 53%.

Speaker Change: Just as late as the third quarter of last year those costs were around 51%.

Speaker Change: And that was still in a tough operating environment.

Unknown Executive: On the direct cost side, though, 53 percent, just as late as the third quarter of last year, those costs were around 51 percent, and that was still in a tough operating environment. So we definitely have further room for improvement from a direct cost basis, and then obviously there's a lot of leverage there on the overhead side, and those factors are what give us confidence that we can get the operating ratio back to under 70. But we're not going to make decisions that would help costs in the short run that may jeopardize opportunities in the long run.

Speaker Change: We definitely have got further room for improvement from a direct cost basis, and then obviously, there's a lot of leverage there on the overhead side and those factors are what gives us confidence that we can get the operating ratio back to a sub 70, but we're not going to.

Speaker Change: To make decisions that would help cost in the short run that may jeopardize the opportunity in the long run. It. The reason we've been able to outgrow our competitors and strong growth periods like 2018 to 2021, where our tonnage growth can be 1000 basis points or more higher than the industry as the cause of.

Unknown Executive: The reason we've been able to outgrow our competitors in strong growth periods, like 2018, 2021, where our tonnage growth can be 1,000 basis points or more, higher than the industry, is because of the decisions we make in tougher times. We've got the financial strength to be able to invest in service center growth, to be able to invest in our equipment, to invest in employees, and do all the things to be ready for that growth.

Speaker Change: The decisions, we make in tougher times, we've got the financial strength to be able to invest in service center growth to be able to invest in our equipment to invest in employees.

Speaker Change: And do all the things to be ready for that growth and that's why oftentimes in those strongest growth periods, we're growing double digit volumes and a lot of our competitors are flattish and those periods. So all of those same strategic advantages. The pre investment ahead of the growth curve all of those continue to be in place and we will get the most leverage on them.

Speaker Change: When we get into a real accelerating in growth environment again.

Speaker Change: But Adam if I could just quickly follow up on that for a second because the strategy seems to be we're going to sit around and wait for somebody to screw up and that's when the market share opportunity is going to come and that maybe had been the case for the last 10 to 15 years, but.

Unknown Executive: And that's why oftentimes in those strongest growth periods, we're growing double-digit volumes, and a lot of our competitors are flattish in those periods. So all those same strategic advantages, the pre-investment ahead of the growth curve, all of those continue to be in place, and we'll get the most leverage on them when we get into a real acceleration and growth environment. But Adam, if I could just quickly follow up on that for a second, because the strategy seems to be, you know, we're going to sit around and wait for somebody to screw up.

What's plan B like what happens if no national player screws up because everybody is focused on service and they actually deliver.

Speaker Change: What what is the plan of action that.

Speaker Change: But we're not just sitting back doing nothing.

Speaker Change: We're fighting every day to get better and working with each one of our customer accounts to make sure.

Unknown Executive: And that's when the market share opportunity is going to come. And that may have been the case for the last 10 or 15 years. But what's plan B?

That we're in there we're having conversations about how we're going to be able to grow with them, but we also don't have to feel the need to go out and try to chase volume, which many of our competitors.

Unknown Executive: Like what happens if no national player screws up because everybody's focused on service and they actually deliver? What what is the plan of action then? Look, we're not just sitting back doing nothing, we're fighting every day to get better and working with each one of our customer accounts to make sure that we're in there, we're having conversations about how we're going to be able to grow with them, but we also don't have to feel the need to go out and try to chase volume, which many of the competitors have done in the past, and then they get their network full and they're unable to grow.

Speaker Change: Have done in the past and then they get their network full and they're unable to grow so the point I was making earlier about there has not been as much growth. When you look at what has happened sequentially over the last couple of quarters.

Speaker Change: From the third quarter to the fourth quarter and when you look I see that our share has improved from second quarter to fourth quarter from third quarter to fourth quarter as well. So we're doing this.

Speaker Change: And in an environment that is not creating a lot of freight activity.

Speaker Change: I think that when we get out of this environment I think the time to challenge our model would be if we're an environment where.

Unknown Executive: So the point that I was making earlier about there's not been as much growth when you look at what has happened sequentially over the last couple of quarters, from the third quarter to the fourth quarter, and when you look, I see that our share has improved from second quarter to fourth quarter, and from third quarter to fourth quarter as well. So we're doing this in an environment that is not creating a lot of freight activity.

Speaker Change: There is robust economic growth and we're not able to achieve anything but we are a long ways from there.

Speaker Change: Okay. Thank you very much appreciate it.

Speaker Change: The next question comes from Eric Morgan of Barclays. Please go ahead.

Eric Thomas Morgan: Hey, good morning, Thanks for taking my question.

Eric Thomas Morgan: Wanted to follow up on the demand environment and in particular, how you would characterize the depths of this two year slump in volumes because.

Unknown Executive: I think that when we get out of this environment, I think that the time to challenge our model would be if we were in an environment where there was robust economic growth and we were not able to achieve anything, but we are a long ways from there. Thank you very much.

Eric Thomas Morgan: Obviously, the industry is underperform industrial production quite a bit since early trying to.

Eric Thomas Morgan: But if we benchmark 2019 and tried to kind of look through the pandemic. Both are kind of somewhat flat. So just curious if we think we have overcorrected and could see a bit of a catch up on the upside. If there is some macro improvement or if you think maybe we're more in equilibrium now and you should see more of kind of industrial production type.

Unknown Executive: Appreciate it. Q&A, Morgan of Barclays, please go ahead. Hey, good morning.

Unknown Executive: Thanks for taking my question. I wanted to follow up on the demand environment and, in particular, how you would characterize the depth of this two-year slump in volumes. You know, obviously, the industry has underperformed industrial production quite a bit since early 22, but if we benchmark 2019 and try to kind of look through the pandemic, both are kind of somewhat flat. So just curious if we think we've overcorrected and could see a bit of a catch-up on the upside if there is some macro improvement or if you think maybe we're more in equilibrium now and should see more of type Yeah, I mean, certainly the past two years have felt more like the 2009 recession.

Eric Thomas Morgan: Growth from here. Thanks.

Eric Thomas Morgan: I mean, certainly in the past two years have felt more like the 2009.

Eric Thomas Morgan: Recession, when you look back last year and see double digit tonnage in some periods and overall for the year.

We were down 9% and it was a very tough operating environment, but again, we continue to try to to power through it and position ourselves for future market share opportunities and I think that's what we've done.

Eric Thomas Morgan: Managing all of our other incremental cost along the way to keep producing what is by far and away the.

Eric Thomas Morgan: Best operating ratio in our industry and so.

Eric Thomas Morgan: I think that when you get back to an environment, where transportation in general the truckload market in particular has been incredibly weak.

Unknown Executive: When you look back last year and see double-digit tonnage in some periods and overall for the year, We were down 9%, and it was a very tough operating environment, but again, we continue to try to power through it and position ourselves for future market share opportunities, and I think that's what we did, managing all of our other incremental costs along the way to keep producing what is, by far and away, the best operating ratio in our industry.

Eric Thomas Morgan: There has been some spillover volumes.

Eric Thomas Morgan: That have gone into that industry.

Eric Thomas Morgan: Just given the overall weakness there and players that are.

Eric Thomas Morgan: Willing to move freight take some maybe large heavy weighted <unk> shipments.

Eric Thomas Morgan: For cost or less and their cost to operate just to kind of keep the trucks rolling.

Eric Thomas Morgan: Thats been another challenge if you will that we've had to contend with but that will all change.

Unknown Executive: So, I think that when you get back to an environment where transportation in general, and the truckload market in particular, has been incredibly weak, and I think there has been some spillover of volumes that have gone into that industry, just given the overall weakness there and players that are willing to move freight, take some maybe large, heavy-weighted LTL shipments for cost or less than their cost to operate, just to kind of keep the trucks rolling.

Eric Thomas Morgan: Change as the economy improves just like we've seen in prior cycles, and I think that our industry will be tight once again.

Eric Thomas Morgan: I continue to believe that despite some other carriers, adding service centers that we will be a capacity challenge the industry.

Eric Thomas Morgan: In the future as well and ultimately all of the service centers and door capacity that existed with yellow.

Unknown Executive: That's been another challenge, if you will, that we've had to contend with, but that will all change as the economy improves, just like we've seen in prior cycles, and I think that our industry will be tight once again. I continue to believe that, despite some other carriers adding service centers, we will be a capacity-challenged industry in the future as well, and ultimately, all of the service centers and door capacity that existed with Yellow, not 100% of that, is going to come back into the market, as we've already seen with the process that it played out over the last nine months.

Eric Thomas Morgan: Not 100% of that is going to come back into the market as we've already seen.

Eric Thomas Morgan: With the process that it's played out over the last nine months.

Those are all things that we think will end up creating opportunities for us again, and I think that once we have that tailwind coming at us from a overall industry demand standpoint that we'll be able to capitalize and.

Eric Thomas Morgan: Being able to significantly grow our volumes like we've been able to do in the past and then leverage that growth through the operating ratio. If you look back in any periods past when we lost the operating ratio in any given year or.

Eric Thomas Morgan: Period and go back to 2009.

Unknown Executive: So, you know, those are all things that we think will end up creating opportunities for us again, and I think that once we have that tailwind coming at us from an overall industry demand standpoint, we'll be able to capitalize and be able to significantly grow our volumes like we've been able to do in the past, and then leverage that growth through the operating ratio. And if you look back at any periods in the past when we've lost the operating Once we get the power of leverage in the model, we more than recover anything that we've lost, and in that example, in 2010, when things really were robust again, we were able to improve the OR by 360 basis points.

Eric Thomas Morgan: And look at that will offset the operating ratio deteriorated 270 basis points that year. Once we get the power of leverage in the model, we more than recover anything that we've lost in that example in 2010 when things really were robust again.

Eric Thomas Morgan: We were able to improve the or by 360 basis points.

Eric Thomas Morgan: I feel like though from getting to the improvement cycle that it feels similar to 2017 were.

Eric Thomas Morgan: Things are kind of on the edge of getting ready to start showing improvement again and hopefully we'll continue to see some growth as we go through the middle part of the year some year over year growth and further sequential improvement and then.

Eric Thomas Morgan: Things really start start taken off.

Speaker Change: And we'll go from there, but that's the good thing about our mid quarter updates is we're going to give it to you as we go along so youll see the final April results will put in our 10-Q the final <unk> results from a revenue standpoint.

Speaker Change: And you'll know it as developing versus me having to look through the crystal ball and predict when we're going to see the big inflection in revenue coming.

Unknown Executive: So, you know, I feel like, from getting to the improvement cycle, that it feels similar to 2017, where, you know, things are kind of on the edge of getting ready to start showing improvement again, and hopefully, we'll continue to see some growth as we go through the middle part of the year, some year-over-year growth and further sequential improvement, and then, you know, things really start taking off, and we'll go from there. But, you So, you'll see the final April results, which we'll put in our 10-Q, the final May results from a revenue standpoint, which we'll publish, and you'll know how it's developing versus me having to look through the crystal ball and predict when we're going to see, you know, the big inflection in revenue coming. I appreciate it. Chan of Stifel, please go ahead.

Speaker Change: Appreciate it.

Speaker Change: Yeah.

Speaker Change: The next question comes from Bruce Chan of Stifel. Please go ahead.

Jizong Chan: Thanks, and good morning, everyone, Jack Congrats and Adam did take you for a Swift D, but maybe if I can borrow a line from her as well just a question about the tortured pricing department here.

Jizong Chan: We've heard from a couple of shippers.

Jizong Chan: With that.

Jizong Chan: Yes, Theres, one last push going on for lower rates, especially some of those that may be negotiated in the first quarter of 'twenty three kind of felt like they missed a little bit of the ride. There have you have you seen any of that and specifically have you seen any pull forward in bid activity early in the year any extra color on the pricing trends for this year and certainly helpful.

Jizong Chan: Yes.

Speaker Change: I've got a teenage daughters, so I can't help, but but he or certain types of music in the house, but.

Unknown Executive: Hey, thanks. And good morning, everyone. Jack, congratulations. And Adam, you know, I didn't take you for a swifty, but maybe I can borrow a line from her as well, just a question about the tortured pricing department here. We've heard from a couple shippers, you know, that, you know, there's one last push going on for lower rates, especially, you know, some of those that may be negotiated in the first quarter of 23, and they kind of felt like they missed a little bit of the ride there. Have you seen any of that?

Speaker Change: But on the pricing front.

Speaker Change: Yeah, we've not really seen any material change in activity or bid activity and for us it's pretty consistent through the year.

Speaker Change: Turns of how bids come in and so it's pretty much just business as usual there and again like we said earlier.

Speaker Change: You're going to get the same types of increases on a core basis.

Speaker Change: That we've seen in the past.

Unknown Executive: And, you know, specifically, have you seen any pull-forward in bid activity early in the year? Any extra color on the pricing trends for this year? Certainly helpful. Yeah, I've got a teenage daughter, so I can't help but hear certain types of music in the house.

Speaker Change: Okay. That's helpful. Thank you.

Speaker Change: The next question comes from Kenn Hoekstra of Bank of America. Please go ahead.

Kenn Hoekstra: Alright, Thanks, Adam <unk> on for Ken Hester.

Jim and Jack I hope the other sides treating you well.

Kenn Hoekstra: So why don't you get back to the excess capacity comment you noted about 30%.

Unknown Executive: But on the pricing front, yeah, we've not really seen any material change in activity or bid activity. And for us, it's pretty consistent through the year in terms of how bids come in. And so it's pretty much just business as usual there, and again, like we said earlier, continuing to get the same types of increases on a core basis that we've seen in the past. Okay, that's helpful. Thank you. The question comes from Ken Hoexter of Bank of America. Please go ahead. Hi, thanks. This is Adam Roszkowski on behalf of Ken Hoexter, the team, and Jack.

Kenn Hoekstra: Could you remind us what the current capacity expansion plan meeting the near term or the next couple of years, and then average head count was up slightly sequentially.

Kenn Hoekstra: How should we think about the head count run rate for the balance of the year and maybe to this service a potential cost lever. Thanks.

Speaker Change: Yeah from a.

Speaker Change: Head Count standpoint, I mentioned that we've added about 500 people since September of last year. So I feel like we're in good shape there.

Speaker Change: The other thing is that we are running our truck driving schools and so some of the people that we pulled from our platform position and put them into a truck in the fall to respond to that sequential acceleration in business, we've been able to backfill those those platform rolls with the hiring but.

Unknown Executive: I hope the other side is treating you well. So I wanted to get back to the excess capacity comment. You noted about 30%. Could you remind us of the current capacity expansion plan, maybe in the near term or over the next couple years? And then average headcount was up slightly sequentially. How should we think about the headcount run rate for the balance of the year, and maybe could this serve as a potential cost lever? Thanks.

Speaker Change: I also have trained more drivers to have those employees and drivers and ready reserve. If you will to respond to an increase in demand. If it continues to accelerate from here. So it's.

Speaker Change: It's pretty much in balance right now with the change in full time employees with shipments and that's something that generally is balanced.

Unknown Executive: Yeah, from a headcount standpoint, I mentioned that we've added about 500 people since September of last year, so I feel like we're in good shape there. The other thing is that we are running our truck driving schools, and so some of the people that we pulled from a platform position and put them into a truck in the fall to respond to that sequential acceleration in business, we've been able to backfill those platform roles with the hiring, but also have trained more drivers to have those employees and drivers in ready reserve, if you will, to respond to an increase in demand if it continues to accelerate from here.

Speaker Change: Balanced over the long term.

Speaker Change: Feel like we tried to get a little bit ahead of it but we're cautiously optimistic about and had been for the last quarter. So that was why we went ahead and tried to invest there and that employee growth but.

But we'll continue to watch and we're little bit ahead of it we've got different levers that we can pull.

Speaker Change: If volumes are accelerating to where you don't have to hire on a one for one basis with with growth, but but we're in a good spot may be kind of flattish from here, but depending on if we see further acceleration.

Unknown Executive: So, you know, it's pretty much in balance right now with the change in full-time employees with shipments, and that's something that generally is balanced over the long term, but I feel like we tried to get a little bit ahead of it, but we're cautiously optimistic about it and had been for the last quarter, so that was why we went ahead and tried to invest there in that employee growth, but we'll continue to watch, and, You know, we've got different levers that we can pull if volumes are accelerating to where you don't have to hire on a one-for-one basis with growth, but we're in a good spot.

Speaker Change: Coming through say now to anticipate.

Speaker Change: Through September than.

Speaker Change: And that might require some further hiring but.

Speaker Change: But no real immediate needs at this point to do anything in a material way I felt like our.

Speaker Change: Our employee count is pretty well balanced with.

Speaker Change: The volumes that we're seeing there.

Speaker Change: Maybe Marty I'll address the service center capacity from a capacity standpoint, we always try to maintain at least 25%.

Kevin Freeman: With the 30 that we have now some of that comes from what we started as a.

Kevin Freeman: Enlarging some of our docs.

Kevin Freeman: That we had experienced some tight.

Unknown Executive: You know, maybe kind of flattish from here, but depending on if we see further acceleration coming through, you know, say now to anticipate through September, then that might require some further hiring, but no real immediate needs at this point to do anything in a material way. I feel like our employee count is pretty well balanced with the volumes that we're seeing. And maybe Marty will address the service center capacity.

Kevin Freeman: Pressure in which we keep a door pressure report going on a monthly basis, but some of those things are finishing up from expansion in 2022. Thus the reason for the 30%, but we always try to keep excess capacity because we were confident this economy is going to turn for us.

Kevin Freeman: If not this year beginning of next year so.

Kevin Freeman: There's nothing worse than gaining an influx and promises from customers for additional business and not having enough capacity to handle it. So that's why we try to keep that 25% to 30% at all times.

Speaker Change: Thank you.

Speaker Change: The next question comes from Stephanie more of Jefferies. Please go ahead.

Unknown Executive: Yeah, from a capacity standpoint, we always try to maintain at least 25%. And, you know, with the 30 that we have now, some of that comes from what we started as, you know, enlarging some of our docks that we had experienced some tight door pressure on, which we keep a door pressure report going on a monthly basis. But some of those things are finishing up with expansions in 2022. That's the reason for the 30%.

Stephanie: Great. Thanks, Good morning, everybody and this is Joe Hoffman on for Stephanie I hate to ask again on the capacity question, but you've mentioned a couple of times, how you think that.

Speaker Change: In the past and continue to work and the environment itself will become tight but with sort of all of the rest of the national players essentially copying the the old Dominion playbook and trying to keep a 20% to 30% excess capacity figure themselves. How are you thinking about keeping incremental capacity or adding incremental capacity.

Unknown Executive: But we always try to keep excess capacity because we're confident this economy is going to turn for us and, you know, if not this year, then beginning next year. So, you know, there's nothing worse than getting an influx and promises from customers for additional business and not having enough capacity to handle it. So that's why we try to keep that 25 to 30% at all times. Thank you.

Speaker Change: Do you think that the industry overall.

Speaker Change: With everybody trying to be like old Dominion does that lead to the industry, just having excess capacity more than there was in the prior decade.

Speaker Change: Yes, I think that at the end of the day capacity is not what wins business that allows you to achieve market share initiatives.

Unknown Executive: The next question comes from Stephanie Moore of Jeffries. Please go ahead. Great, thanks. Good morning, everybody. This is Joe Hafling on behalf of Stephanie.

Speaker Change: Having capacity doesn't necessarily mean that anyone's going to be able to grow. It just gives the ability to grow services ultimately what wins share and relationships in this business as well.

Unknown Executive: I hate to ask again about the capacity question, but you've mentioned a couple of times how you think that, you know, the strategy of the past would continue to work and that the environment itself would become tight. But with sort of all the rest of the national players essentially copying the Old Dominion playbook and trying to keep a 20 to 30 percent excess capacity figure themselves, you know, how are you thinking about keeping, you know, incremental capacity or adding incremental capacity?

Speaker Change: <unk> that we've been able to strengthen our customer relationships over time, our sales and our pricing teams the relationships that they form with our customers the consistency of our business practices the consistency of our yield management.

Speaker Change: This is well all of that goes into forming strong bonds between us and our customers and so we continue to look at ways that we can add further value to our customer supply chains, and we look for ways that we can continue to execute on our continuous.

Unknown Executive: And do you think that the industry overall today, with everybody trying to be like Old Dominion, does that lead to the industry just having more excess capacity than, you know, there ever was in the prior decade? Yeah, I think that at the end of the day, capacity is not what wins business. It allows you to achieve market share initiatives. So, you know, having capacity doesn't necessarily mean that anyone's going to be able to grow. It just gives them the ability to grow.

Speaker Change: Improvement process, which is the central element of our foundation for success.

Speaker Change: We've got a better service product than anyone else in our industry. We're proud that we've won the Masstige quality award for 14 years in a row and the service gap between us and the others.

Speaker Change: We got wider.

Speaker Change: In last year's analysis.

Speaker Change: That's something that we'll remain focused on and keep trying to do things that our customers are asking from us.

Unknown Executive: Service is ultimately what wins share and relationships in this business as well. And, you know, I think that we've been able to strengthen our customer relationships over time. Our sales and our pricing teams, the relationships that they've formed with our customers, the consistency of our business practices, the consistency of our yield management practices as well. All that goes into forming strong bonds between us and our customers.

Speaker Change: And to be able to deliver that superior service at a fair price.

Speaker Change: Our customers as well so the.

Speaker Change: Jason it's trying to emulate us.

Speaker Change: I guess, that's one of the say by the imitation being the most sincere form of flattery.

Speaker Change: We'll continue to watch and see what.

Speaker Change: They're doing but it's something that people have been trying to emulate for years.

Unknown Executive: And so, you know, we continue to look at ways that we can add further value to our customer supply chains. And we look for ways that we can continue to implement a continuous improvement process, which is a central element of our foundation for success. So, you know, we've got a better service product than anyone else in our industry. We're proud that we've won the Mastio Quality Award for 14 years in a row.

Speaker Change: Not sit in steel so let someone tried to come up and catch us. We're working hard every day to get better to make sure that service gap and the overall value gap that we add continues to get wider.

Speaker Change: Great and then maybe just on that point have you heard any anecdotes from our customers lately.

Speaker Change: Any service issues or the environment is still weak right now so that has really become an issue.

Unknown Executive: And the service gap between us and the others actually got wider in last year's analysis. So, you know, that's something that we'll remain focused on and keep trying to do things that our customers are asking from us. And to be able to deliver that superior service at a fair price to our customers as well. So, you know, the competition that's trying to emulate us. You know, I guess that's one of the things they say about imitation being the most sincere form of flattery.

Speaker Change: Yeah, I haven't heard anything out of the ordinary things that we wouldn't normally here, but the reporting we've had some improvement in our national account reporting that we get with wins and losses.

Speaker Change: Service issues are starting to increase I would just say generally we're starting to see those start to pick up so.

Speaker Change: Just something thats kind of on the precipice of one other item that's kind of changing in our favor.

Unknown Executive: You know, we'll continue to watch and see what they do. But, you know, it's something that people have been trying to emulate for years, and we're not sitting still to let someone try to come up and catch us.

Speaker Change: Got it thanks, so much for the color.

Speaker Change: The next question comes from Jason Seidl of TD Cowen. Please go ahead.

Jason H. Seidl: Thank you operator, hey team.

Jason H. Seidl: Couple of quick questions here.

Jason H. Seidl: Number one we don't think you're thinking about sort of.

Unknown Executive: We're working hard every day to get better to make sure that that service gap and the overall value gap that we add continues to get wider. And maybe just on that point, have you heard any anecdotes from customers lately about any service issues, or is the environment still too weak right now? So that's really become an issue. Yeah, I haven't heard anything out of the ordinary, things that we wouldn't normally hear.

Jason H. Seidl: Either the tonnage or market share it seems that pre pandemic. It was more of a just in time supply chain that shifted a little bit to just in case now it seems like we're probably moving back a little bit more towards the <unk> is this something that just sort of favors your operational model.

Jason H. Seidl: Service standards and if it does should we expect you to sort of get back to sort of the old ways of old Dominion.

Unknown Executive: But you know, the reporting, we've had some improvement in our national account reporting that we get with wins and losses. And service issues are starting to increase. I would just say, generally, we're starting to see those start to pick up. So just something that's kind of on the precipice of one other item that is kind of changing in our favor.

Jason H. Seidl: Being the market share leader.

Speaker Change: Yes, I think so.

Speaker Change: Jason I agree with you.

Speaker Change: And I felt like post pandemic, we were going to stay in more of a adjusting case.

Speaker Change: Type of inventory management style, but once things get tight and you start managing cost.

Unknown Executive: Thanks so much for the call, Eric. This question comes from Jason Seidl of TD Cowen. Please go ahead.

Speaker Change: I'll have to look at all elements and managing tighter inventory is one way for.

Speaker Change: For shippers to improve their overall bottom lines and so we've been seeing that trend.

Unknown Executive: Thank you, operator. Hey, team. A couple quick questions here. Number one, you know, when we're thinking about sort of, either the tonnage or market share, it seems that, you know, pre-pandemic, it was more of a just in time supply chain, and that shifted a little bit to just in case now, but it seems like we're probably moving back a little bit more towards the JIT. Is this something that just sort of favors your operational model and service standards?

Speaker Change: Work its way back to the JIT and we've had anecdotal feedback from customers that have come in and visited us as well that may have had elevated inventory levels.

Speaker Change: They have now worked through so hopefully that.

Speaker Change: We'll be a good thing for us and it generally is obviously, if you're managing tighter inventory you've got to rely on a shipper that can deliver on time and without damage. If you don't have that.

Unknown Executive: And if it does, should we expect you to sort of get back to sort of the old ways of Old Dominion of sort of being the market share leader? Yeah, I think so. Jason, I agree with you.

Speaker Change: Excess inventory sitting around and you can't afford to have a shipment come in that's completely damage and you've got to deal with a return and reorder type of situation.

Unknown Executive: And I felt like post-pandemic, we were going to stay in more of a just-in-case type of inventory management style. But, you know, once things get tight and you start managing costs, you have to look at all the elements. And managing tighter inventory is one way for shippers to improve their overall bottom lines. And so we've seen that trend kind of work its way back to JIT.

Speaker Change: And so that has supported our ability to win market share over time, but it's something that we think will continue to allow us to win market share as we go forward.

Speaker Change: I mean, it works, both with our industrial and our retail customers, but on the retail side with the on demand and in full programs that many retailers have put in place to manage their inventory that's a tremendous opportunity for continued growth in our business as well and we're able to meet your expectations of those.

Unknown Executive: And we've had anecdotal feedback from customers that have come in and visited us as well that may have had elevated inventory levels that they have now worked through. So, you know, hopefully, that will be a good thing for us. And it generally is.

Speaker Change: Retailers and take the vendor controlled.

Speaker Change: Freight and make sure that that we hit those delivery windows and we're doing at 99% of the time.

Unknown Executive: Obviously, if you're managing tighter inventory, you've got to rely on a shipper that can deliver on time and without damage. If you don't have excess inventory sitting around, you can't afford to have a shipment come in that's completely damaged, and you've got to deal with a return and reorder type of situation. And so, you know, that has supported our ability to win market share over time. And it's something that we think will continue to allow us to win market share as we go forward. And it works both with our industrial and our retail customers.

Without any type of damage. So we're minimizing in some cases millions of dollars of charge backs.

Speaker Change: For our retail related customers that are delivering in to those big box retailers with those on time in full programs in place.

Speaker Change: A lot of good opportunity when we look down the long term curve and it's why we're so confident in our ability to keep winning market share into the future I feel like we continue to have a long runway for growth and that's what dictates and determines our capital expenditure program, we look at where do we see.

Unknown Executive: But on the retail side, with the on-demand and in-full programs that many retailers have put in place to manage their inventory, that's a tremendous opportunity for continued growth in our business as well. And, you know, we're able to meet the expectations of those retailers and take the vendor-controlled freight and make sure that we hit those delivery windows. And we do it 99% of the time and without any type of damage.

Speaker Change: Coming from a.

Speaker Change: A lot of that is based on customer conversations that we're having for how their business levels are going to be changing into the future as well and that dictates. How we continue to expand out our network. So as long as we have line of sight into.

Speaker Change: So the next five years of growth and that's generally what were kind of pre investing for.

Unknown Executive: So, we're minimizing, in some cases, millions of dollars of chargebacks for retail-related customers that are delivering to those big box retailers with those on-time and full programs in place. So, a lot of good opportunity when we look down the long-term curve. And it's why we're so confident in our ability to keep winning market share into the future. I feel like we continue to have a long runway for growth. And that's what dictates and determines our capital expenditure program.

Speaker Change: We will continue to invest the money.

Speaker Change: Into our real estate program and further expand the service Center network, but it's all grounded on.

Speaker Change: Line of sight into the market share opportunities, it's not just a build it and hope they come.

Speaker Change: Right that makes sense, if I could just follow up with a clarification on something you talked about your.

Speaker Change: Your growth rates month to date in April but did I. Miss did you guys give how that compares to historical averages.

Unknown Executive: We look at where we see growth coming from, and a lot of that is based on customer conversations that we're having about how their business levels are going to be changing in the future as well. And that dictates how we continue to expand our network. So, as long as we have a line of sight into the next five years of growth, and that's generally what we're kind of pre-investing for, we will continue to invest the money into our real estate program and further expand the service center network. But it's all grounded in line of sight into market share opportunities. It's not just build it and hope they come.

Speaker Change: It turns on a sequential standpoint, or yes, because I think you mentioned the sequential gain in tonnage in April but I don't know if I missed the historical average comp.

Speaker Change: So far I mean, obviously, we're not completely done, but we're somewhere around 48000 shipments per day. So just up slightly from where we were in March.

Speaker Change: We will see.

Hopefully that will increase a little bit.

Speaker Change: Average count if you will.

Speaker Change: But when we look at what normal seasonality. The 10 year average is a 4% increase from March into April for shipments.

Unknown Executive: Right, that makes sense. If I can just clarify something, you talked about your growth rates month to date in April, but did I miss, did you guys give how that compares to historical? In terms on a sequential standpoint, or not?

Speaker Change: Recall that we had that good Friday is in there.

Speaker Change: In March this year, so in years, where.

Speaker Change: That is the case it would be a 2%.

Unknown Executive: Yeah, because I think you mentioned the sequential gain in tonnage in April, but I don't know if I missed the historical average from the comp. Yeah, so far, I mean, obviously, we're not completely done, but we're somewhere around 48,000 shipments per day, so just up slightly from where we were in March, and, you know, we'll see, hopefully, that will increase a little bit, that average count, But when we look at what normal seasonality is, the 10-year average is a 0.4% increase from March into April for shipments. But, you know, recall that we had Good Friday in March this year, so in years where that is the case, it would be a 2% increase from March to April.

Speaker Change: Increase from March to April.

Speaker Change: Right now trading lower than that that 2% growth, but when you look back at kind of what we were able to achieve in February and March.

Again consistent growth in the tonnage side.

Speaker Change: We saw that just call it 2%.

Speaker Change: Clinical growth from January to February and then about two 5% from February to March.

Speaker Change: Demonstrating a little bit of a pickup in weight per shipment there that kind of help that metric and that metric was essentially in alignment with the 10 year average or rather the adjusted average that.

Speaker Change: Reflects good Friday being in March.

Speaker Change: It's good to see that we're finally seeing.

Unknown Executive: So, right now, we are trending lower than that 2% growth, but, you know, when you look back at kind of what we were able to achieve in February and March, you know, again, consistent growth and, you know, on the tonnage side. You know, we saw the, just call it, 2% sequential growth from January to February and then about 2 12% from February to March, demonstrating a little bit of pickup in weight per shipment there that kind of helped that metric.

Speaker Change: Seeing month over month improvement there.

Speaker Change: Versus.

Speaker Change: I mentioned before from April.

Speaker Change: 'twenty two through December we were kind of in a declining environment and then just flat from December at 47000 shipments per day.

Speaker Change: December 22, all the way to August when we had the big industry event and that acceleration that we saw pretty much that step function change that happened on an immediate basis.

Speaker Change: It makes sense I appreciate the answers thanks guys.

Speaker Change: The next question comes from Brian often back of Jpmorgan. Please go ahead.

Unknown Executive: And that metric was essentially in alignment with the 10-year average, or rather the adjusted average that reflects Good Friday being in March. So it's good to see that we're finally seeing month-over-month improvement there, versus, you know, I've mentioned before, from April 22 through December, we were kind of in a declining environment, and then just flat from December at 47,000 shipments per day, December 22 all the way to August, when we had the big industry event and that acceleration that we saw pretty much a step function change that happened on an immediate basis. It makes sense. I appreciate the answers.

Brian: Hey, Thanks. Good morning appreciate you taking the question here.

Brian: So Adam just wanted to ask a little bit more about <unk>.

Brian: How you view the truckload market here and I know in the past you said you thought some of the freight moved over and I think you mentioned that earlier.

Brian: How much of that went over I guess, what the disruption with yellow do you still think that can.

Brian: Can come back to <unk> and tighten that up so is that kind of above and beyond what you'd normally see.

Brian: From a from a cyclical perspective.

Brian: Maybe on a related topic are you seeing anything interesting in terms of April.

Unknown Executive: Thanks, guys. This question comes from Brian Offenbeck of J.P. Morgan. Please go ahead.

Brian: Excuse me weight per shipment.

Brian: Is that sort of a leading indicators that you're watching to see early signs of stabilization improvement. Thank you.

Unknown Executive: Hey, thanks, Kimora. I appreciate you taking the question. So, Adam, just wanted to ask a little bit more about how you view the truckload market here. I know in the past you've said you thought some of the freight moved over. I think you mentioned that earlier. But how much of that went over, I guess, with the disruption with yellow?

Kevin Freeman: Yeah. This is Marty.

Kevin Freeman: I agree with Adam.

Some of this this yellow freight did move over to full truck load carriers in the form of stop outs, where they take three or four shipments along with a 75% load.

Speaker Change: Charge, a couple of hundred Bucks to destock, all so they don't really like to do that.

Unknown Executive: Do you still think that, you know, it can come back to LTL and tighten that up? So is that kind of above and beyond what you'd normally see, you know, from a cyclical perspective? And maybe on a related topic, are you seeing anything interesting in truckload? April. Excuse me, wait for shipment.

Speaker Change: Nor do their drivers like to do it but I do believe this moved over there.

Speaker Change: Because of the slowness in the truckload market this year than last year.

And I also agree that this will move back to LPL carriers want the truck load market picks back up so.

Unknown Executive: Is that sort of a leading indicator that you're watching for early signs of stabilization improvement? Thank you. Yeah, this is Marty.

Speaker Change: And I suspect that will happen at the same time, the LPL market starts to flourish again.

Unknown Executive: I agree with Adam that, you know, Some of this yellow freight did move over to full truckload carriers in the form of stop-offs where they take three or four shipments along with a 75% load and you know charge a couple hundred bucks to do stop-offs. They don't really like to do that Nor do their drivers like to do it, but I do believe this moved over there Because of the slowness in the truckload market this year and last year And I also agree that this will move back to LTL carriers once the truckload market picks back up so and I suspect that'll happen at the same time the LTL market starts to flourish again, so That that will come straight back to the LTL, Thanks Marty.

Speaker Change: That will come straight back to the LTM market.

Speaker Change: Hey, Thanks, Marty and any thoughts on weight per wafer.

Weight per shipment and how thats trending and how should we should expect that.

Speaker Change: The rest of the year.

Speaker Change: Yeah.

Speaker Change: Hope to see it continue to increase that's typically an indicator of an improving economy as well like I mentioned that the increase from February to March.

Speaker Change: Increased a little bit from March thus far into April as well.

Speaker Change: So.

Speaker Change: It's something that we're probably on the low end of the scale.

Speaker Change: In terms of how that that metric changes.

Speaker Change:

Unknown Executive: Any thoughts on weight per shipment and how that's trending and how we should expect that throughout the rest of the year? Yeah, we hope to see it continue to increase. That's typically an indicator of an improving economy as well.

Got a little skewed if you will.

Speaker Change: With post yellow and some of the incremental that we saw there.

But historically speaking and a strong demand environment, we've been closer to 600 pounds is an overall average we're still down around 515 pounds.

Unknown Executive: Like I mentioned, it increased from February to March, and it's increased a little bit from March thus far into April as well. So that's something that we're probably on the low end of the scale in terms of how that metric changes. It got a little skewed, if you will, with post-yellow and some of the incremental freight that we saw there, but historically speaking, in a strong demand environment, we've been closer to 1,600 pounds as an overall average.

And so we definitely got some some room to grow there.

Speaker Change: Got to create some that's part of the leverage that you get from an operating ratio standpoint is weight continues to increase you're getting more revenue per shipment.

Speaker Change: And that will help overall offset in kind of close that gap that we've seen with with cost per shipment over the past years. The cost relatively speaking is it should be very similar but youre, just getting more more weight and more revenue.

Unknown Executive: We're still down around 1,515 pounds, and so, you know, we definitely have got some room to grow there, and that, too, creates, and that's part of the leverage that you get from an operating ratio standpoint, as weight continues to increase, you're getting more revenue per shipment, and that will help overall offset and kind of close that gap that we've seen with cost per shipment over the past year. The cost, relatively speaking, should be very similar, but you're just getting more weight and more revenue per load, if you will. Okay, I appreciate it; thank you very much. This question comes from Tom Wadewitz of UBS. Please go ahead.

Speaker Change: Per load if you will.

Speaker Change: Okay. Appreciate it thank you very much.

Speaker Change: The next question comes from Tom <unk> of UBS. Please go ahead.

Tom: Yes, good morning.

Tom: I wanted to it seems to me like the I guess the freight environment improvement is a key.

Tom: Catalysts for for which Youre going to see on the tonnage side and give you a chance to benefit from the capacity and service you can offer.

Tom: What have you seen in terms of industrial customers versus the kind of retail and consumer customers, whether theres any kind of.

Unknown Executive: Yeah, good morning. I wanted to, you know, it seems to me like the, I guess, the freight environment improvement is a key catalyst for what you're going to see on the tonnage side and give you a chance to, you know, benefit from the capacity and service you can offer. What have you seen in terms of industrial customers versus the kind of retail and consumer customers where there's any kind of, you know, difference in behavior or trend or optimism?

Tom: Difference in behavior or trend.

Our optimism and I guess related maybe more to the retail side, it's been surprising that container imports have been.

Tom: Pretty strong for a number of months.

Tom: And yet the domestic freight environment seems like it's still pretty soft.

Tom: So I don't know if you have any thoughts on what might be going on there if there's some inventory but.

Tom: I guess I guess.

And any color on you know differences in customer segments or maybe why the imports are translating to domestic activity. So much. Thank you.

Unknown Executive: And I guess related maybe more to the retail side, it's been surprising that container imports have been, you know, pretty strong for a number of months, and yet the domestic freight environment seems like it's still pretty soft. So, I don't know if you have any thoughts on what might be going on there, if there's some inventory. But, you know, I guess any color on, you know, differences in customer segments or maybe why the imports aren't translating to domestic activity so much. Thank you.

Tom: Yet overall.

Tom: Retail continued to.

Tom: Reflect our the industrial rather reflect the weakness that we've seen in the industrial.

Tom: The economy and in the first quarter.

Tom: We had 1% revenue growth, but it was actually a slight decrease when you look at just our industrial related.

Tom: Counts grouped together, so a little bit better performance on the retail side to offset that.

Unknown Executive: Yet, overall, retail continued to reflect, or the industrial sector rather reflected, the weakness that we've seen in the industrial economy and in the first quarter. We had 1% revenue growth, but it was actually a slight decrease when you look at just our industrial-related accounts grouped together, so a little bit better performance on the retail side to offset that in the first quarter, but again, hopefully, that's something now that we've seen the ISM trend back above 50.

Tom: In the first quarter, but again, hopefully that's something now that we've seen I assume.

Tom: <unk> back above 50.

Tom: It had been below 50 for 16 months.

Tom: Long incredibly slow environment that we've been slogging through.

Tom: But generally speaking that.

Tom: That indicates that improvement in that industrial environment. If we can stay above 50 should be coming in that could be sort of in that may.

Unknown Executive: It had been below 50 for 16 months, so just this long, incredibly slow environment that we've been slugging through, but generally speaking, that indicates that improvement in that industrial environment should be coming, and that could be sort of in that May timeframe, so it's something that we'll continue to watch, but retail continues to perform. We've also seen improvement in the business that's managed by third-party logistics companies, and that's kind of in the early stages as well, but seeing some improvement there, I think is a good sign.

Tom: Timeframe. So it's something that we'll continue to watch, but but the retail continues to perform we've also seen an improvement in the business that is managed by third party logistics companies.

Tom: And that's kind of in the early stages as well, but seeing some improvement there.

Tom: I think is a good sign often times the <unk> that have the systems, they're able to identify some of those stop off shipments that Marty was referencing earlier.

Tom: By being able to look through there.

Tom: Their entire inventory of capacity.

Unknown Executive: Oftentimes, the three PLs that have the systems, they're able to identify some of those stop-off shipments that Marty was referencing earlier by being able to look through their entire inventory of capacity versus shipments, and so if we're starting to see some growth there again with those, then maybe some of that type of truckload versus LTL swing might start reversing course, but again, I think it's just a lot of things are kind of in the early stages that we've got to keep watch on and don't want to get overly caught up in, but keep our fingers on the pulse, if you will, and continue to watch the trends and see if it manifests into the increased LTL demand overall, for which I think that we will more than be able to win our share. This question comes from Scott Group of Wolf Research. Please go ahead.

Tom: Versus shipments and so if we're starting to see some growth there again with those.

Tom: Maybe some of that that type of.

Truckload versus LPL swing might start reversing course, but begin.

Tom: But again I think it's just a lot of things that come in in the early stages that we got to keep watch on it.

Tom: Don't want to get overly.

Tom: Caught up in an but keep our fingers on the pulse if you will and continue to watch the trends and then see if it manifest into the increased L.

Tom: <unk> demand overall for which I think that we will more than be able to win our share.

Tom: The next question comes from Scott Group of Wolfe Research. Please go ahead.

Scott H. Group: Hey, Thanks, Good morning, So Adam I know, we're at the hour Theres been a lot of questions on price already but so some of this may be repetitive, but like this obviously this these LTE stocks are getting hit pretty hard today.

Unknown Executive: Hey, thanks. Good morning. So, Adam, I know we're at the hour, there have been a lot of questions about price ready, but some of this may be repetitive, but like these, obviously these LTL stocks are getting hit pretty hard today. But the April yield numbers, they are what they are. But I just want to make sure that you are, it doesn't feel like it, but are you in any way communicating any kind of change in the underlying pricing environment here, the competitive dynamic? I know you don't share pricing renewals every quarter like some of the other LTLs, but maybe this quarter could be helpful. Are they?

Scott H. Group: The April yield numbers, they are what they are but.

Scott H. Group: I just wanted to make sure are you it doesn't feel like it but are you in any way communicating any kind of change in the underlying pricing environment here the competitive dynamic I know you don't.

Scott H. Group: Share pricing renewals every quarter like some of the other <unk>, but maybe this quarter it could be helpful or are they.

Scott H. Group: Slowing is it.

Scott H. Group: What's changing in your mind.

Yeah.

Scott H. Group: Again to repeat nothing is changing with respect to the.

Scott H. Group: The core contract increases that we're achieving.

Unknown Executive: What's changing in your mind? Yeah, and again, to repeat, nothing is changing with respect to the core contract increases that we're achieving and that we're targeting. We continue to target cost plus increases, and we're getting those. It's just a little bit different in the mix of freight that we're seeing. We've seen a little bit of a decrease in length of haul, some changes and an increase in weight per shipment, as I mentioned. All those factors kind of lead to a lower revenue per 100 weight.

Scott H. Group: And that we're targeting and we continue to target cost plus increases in.

Scott H. Group: We're getting those it's just a little bit difference in the mix of freight that we're seeing.

Scott H. Group: We've seen a little bit of a decrease in length of haul.

Scott H. Group: Some change in increase in weight per shipment like I mentioned all of those factors kind of lead to a lower revenue per hundredweight. So just looking at things on a pure per hundredweight basis.

Unknown Executive: So just looking at things on a pure per 100 weight basis, it's gone from 6.5% growth in the first quarter to 4.5% excluding fuel so far in April. But as we've said before, 100 weight can move around quickly, and that's why internally we focus more on revenue per shipment than anything. That's what we pick up every day are shipments, and that's what we've got to figure out. What's the cost to pick up a shipment?

Scott H. Group: It's gone from just call it six 5% growth in the first quarter to four 5% excluding fuel.

Scott H. Group: So far in April, but we've said before.

Scott H. Group: Wade can move around quickly that's why internally, we focus more on revenue per shipment than anything that's what we pick up every day, our shipments and that's what we've got to figure out what's the cost of the pick up a shipment what's the cost of line haul a shipment.

Unknown Executive: What's the cost to line haul a shipment? Cross docking. Everything that we do is driven on a per shipment basis, and I think we can't get back to having a positive spread of revenue per shipment versus our cost per shipment performance. So that will continue to be the focus. I don't see anything changing with respect to the pricing environment and nothing changing that we've seen as we've gone through renewals and bids and so forth with respect to the other carriers in the industry. Obviously, we'll see their reports when they come out, but we've not seen anything change in that regard.

Scott H. Group: <unk> everything that we do is driven on a per shipment basis.

Speaker Change: But I think we can get back to you.

Speaker Change: Having a positive spread of rent revenue per shipment versus our cost per shipment performance. So that that will continue to be the initiative.

Speaker Change: See anything changing with respect to the pricing environment.

Speaker Change: Nothing changing that we've seen as we've gone through renewals and bids and so forth.

With respect to the other.

Speaker Change: Carriers in the industry and obviously, we'll see what their reports when they come out, but but we've not seen anything.

Change in that regard is just some mix changes that are impacting.

Unknown Executive: It's just some mixed changes that are impacting our revenue per 100 weight metric thus far into April. But just so I'm clear, I don't think you guys talked about revenue per shipment accelerating with this mixed shift, or maybe it is, and I just didn't hear that. No, but it's staying consistent with where we were. The rev for shipment performance in April thus far is pretty consistent with what we just had in the first quarter. We were up 3.8% in revenue per shipment in the first quarter, excluding the fuel surcharge.

Speaker Change: Our revenue per hundredweight metrics thus.

Speaker Change: Thus far into April.

Speaker Change: But just so I'm clear.

Speaker Change: I don't think you guys talked about revenue per shipment accelerating.

Speaker Change: With this mix shift or maybe it isn't I just didnt hear that.

Speaker Change: No, but its staying consistent with with where we were.

Speaker Change: The Rev per shipment performance in April thus far.

Speaker Change: Pretty consistent with what we just had in the first quarter, we were up three 8% revenue per shipment.

Speaker Change: The first quarter, excluding the fuel surcharge.

Unknown Executive: Okay, and then just one more question, you talked about the power of leverage. Now, if I take what you're saying about Q2, you're sort of saying mid single-digit plus sort of top line growth and flat OR. So historically, we get a mid-single digit top line, and we see real OR improvement. How come, maybe it's just a timing issue, why aren't you suggesting we see the power of that leverage right away in Q2?

Speaker Change: Okay and then just one more question you talked about like just the power of leverage now if I take what you're saying about Q2, youre sort of saying mid single digit plus sort of topline growth and flattish show our right. So historically, we get mid single digit top line and we.

Speaker Change: We see real or improvement how come maybe it's just a timing issue how come youre not suggesting we see that the power of that leverage.

Speaker Change: The way in Q2.

Unknown Executive: Well, I think that, you know, that's something that, obviously, depending on how much volume growth we actually see in the quarter or not sequentially, we've invested significantly in many factors that we detailed earlier that create short-term costs. So, you know, if we can see some further improvement and if weight and shipments really accelerate kind of from here forward, then, you know, obviously, there's a lot of leverage that would therefore come from that.

Speaker Change: I think that.

Speaker Change: That's something that obviously.

Speaker Change: Depending on how much volume growth, we actually see.

Speaker Change: In the quarter are not sequentially.

Speaker Change: We've invested significantly.

Speaker Change: And many factors that we detailed earlier.

Speaker Change: Create short term call. So if we can see.

Speaker Change: Some some further improvement in its way.

Speaker Change: And shipments really accelerate.

Speaker Change: Kind of from here forward, then obviously that there's a lot of leverage.

Speaker Change: Therefore come from that but but that's something that if we're if we continue to grow revenue at kind of a <unk>.

Unknown Executive: But that's something that if we continue to grow revenue at kind of a 6% year-over-year rate, like we saw in April, then we tried to give a factor of, okay, maybe we only see 150 basis points of sequential improvement, which would still be year-over-year improvement where we were in the second quarter of last year. But I think it's just going to move on a sliding scale, if you will, based on how much revenue comes in. And, you know, typically, like I mentioned, revenue growth is between 8.5% and 9%, 8.7% from the first quarter to the second quarter. And, you know, we're just not there yet.

The 6% year over year rate.

Speaker Change: We saw in April.

Speaker Change: Then we tried to give a factor of okay. Maybe we only see the 150 basis points of sequential improvement, which would still be year over year improvement, where we were in the second quarter of last year.

Speaker Change: But I think it's just going to move on a sliding scale. If you will based on how much revenue comes in.

Speaker Change: Typically like I mentioned the revenue growth is.

Speaker Change: Between eight and a half of 9% to eight 7% from the first quarter to the second quarter.

Speaker Change: Just not there.

Speaker Change: Yet and hopefully we see further sequential improvement in May and June and obviously, we give those we'll give the update for may.

Unknown Executive: And, you know, hopefully, we see further sequential improvement in May and June. And obviously, we'll give the update for May with our mid-quarter update as we go along. But the improvement that we see in the operating ratio is typically 350 to 400 basis points of improvement. A lot of that improvement comes by way of the direct cost. It's mainly salaries, wages, and benefits and our operating supplies and expenses.

Speaker Change: Our mid quarter update as we go along but the improvement that we see in the operating ratio is typically 350 to 400 basis points of improvement or.

Speaker Change: A lot of that improvement comes by way of.

Speaker Change: The direct cost, it's mainly the salaries wages and benefits in our op supplies and expenses and Thats coming from the improvement in operating density.

Unknown Executive: And that's coming from the improvement in operating density and taking advantage of all that incremental freight that's moving through the system. So, you know, if all those things do develop, then, you know, obviously, we can produce further improvement in those direct costs. So there's opportunity to scale there. But like any other period, it's just going to be top line dependent on how much growth we see and how much of that incremental growth we'll be able to put on the bottom line. Okay, I appreciate that. And sorry, some of that was repetitive.

Speaker Change: And taken advantage of all that incremental freight that's moving through the system. So if all of those things do develop then obviously, we can produce further improvement.

Speaker Change: And those direct cost and like I mentioned earlier from a head count standpoint, I feel good about where we are so it's not like we've got to scale up even more in terms of our hiring practices, but we'll probably be working more hours and doing things like that with the existing workforce. So so theres opportunity to scale there but.

Speaker Change: And like any other period, it's just going to be top line dependent for how much growth do we see and how much of that incremental growth will be able to put to the bottom line.

Speaker Change: Okay, I appreciate that and sorry, some of that was repetitive thanks guys.

Unknown Executive: Thanks, guys. This question comes from Jeff Kaufman of Vertical Research Partners. Please go ahead.

Speaker Change: The next question comes from Jeff Kauffman of vertical Research partners. Please go ahead.

Speaker Change: Yes.

Unknown Executive: Thank you for squeezing me on, and Jack, congratulations. I'm really looking forward to working with you in this role. You know, a lot's been asked of me, so I just want to take a step back. It's been a weird couple of years, right?

Jeff Kauffman: Thank you for squeezing me on and Jack Congratulations really looking forward to working with you in this role.

Jeff Kauffman: A lot's been asked so I just wanted to take a step back it's been a weird couple years right. We had COVID-19 big up big down inflation, we've had inventory destocking. We've had the yellow closure, we've had a lot of growth in private fleets. All of this I think makes it difficult to predict.

Unknown Executive: We had COVID, big up, big down, inflation. We've had inventory destocking. We've had the yellow closure.

Unknown Executive: We've had a lot of growth in private fleets. All of this, I think, makes it difficult to predict what's going to happen with business, but eventually, we do anniversary, all these impacts, and things start to resemble what might be considered a more normal operating environment. When do you think we get back to that? And where is your vision most foggy?

Jeff Kauffman: Whats going to happen with business, but eventually we do anniversary all of these impacts and things start to resemble what might be considered a more normal operating environment.

Jeff Kauffman: When do you think we get back to that and where is your vision most foggy relative to what it would be without these these oddities that have occurred.

Unknown Executive: relative to what it would be without these oddities that have occurred. Yeah, I don't have my Karnak the Magnificent hat here handy to be able to predict when things are going to change. But that's probably the most fuzziest thing, when will the inflection point happen?

Jeff Kauffman: Yes.

Yes, I don't have my carnac, the magnificent happier handy to be able to predict.

Jeff Kauffman: And things are going to change, but that's probably the most fuzziest thing is when will the inflection point happened yeah. We obviously, the it's called cycle for a reason and we will get back into.

Unknown Executive: Yeah, obviously, it's called a cycle for a reason, and we will get back into a robust demand environment at some point. And when we do, we will be able to take advantage of that. And you know, we built the company up, we've been growing our company for years, and continue to believe that we've got a lot of growth opportunities as we look out into the future. So, you know, obviously, we put on a lot of growth; we were able to grow our revenues by $1 billion in each of 2021 and 2022. And then we ran into the slowdown in the economy.

Jeff Kauffman: Robust demand environment, but at some point and when we do we will be able to take advantage of that.

Jeff Kauffman: We built the company up we've been growing.

Our company for years and continue to believe that we've got a lot of growth opportunity.

Jeff Kauffman: As we look out into the future so.

Jeff Kauffman: Obviously, we put on a lot of growth we were able to grow our revenues of $1 billion in each of 2021 and 2022, and then ran into the slowdown in the economy. So we have been making our way through that very well.

Unknown Executive: So, you know, we've been making our way through that very well. Very proud of the operating ratio that we were able to produce last year in a challenging environment. And, you know, we're still in an environment that, you know, we're not out of the woods yet. If you will, we still had a 3% reduction in tons per day and essentially had a flat operating ratio.

Proud of the operating ratio that we were able to produce last year in a challenging environment.

Jeff Kauffman: We're still in an environment that we're not out of the woods yet if you will we still had in the first quarter, a 3% reduction in tons per day, and essentially had a flat operating ratio.

Unknown Executive: But we're able to produce positive earnings per share as well. So, you know, I feel good about the base level of operations where we are today and being able to build on what we've established. So, you know, there's a long runway for growth out there when it comes to the top line, which we believe for our business. And we've got further room to improve our operating ratio as well. And so, you know, that will allow us to achieve our vision of achieving long-term profitable growth that drives an increase in shareholder value. So, all those same elements are in place.

Jeff Kauffman: We're able to produce positive earnings per share as well.

Jeff Kauffman: I feel good about that.

Jeff Kauffman: The base level of operations, where we are today.

Jeff Kauffman: And being able to build on what we've established so.

Jeff Kauffman: Yes.

Jeff Kauffman: A long runway for growth out there when it comes to a top line standpoint that we believe for our business.

Jeff Kauffman: We've got further room to improve our operating ratio as well and so that will allow us to achieve our vision of achieving long term profitable growth that drives an increase in shareholder value. So all those same elements are in place.

Unknown Executive: You know, there may be some different logos that have been moving around in service centers and different customers given all the disruption that's taken place over the last six to nine months. But OD stands ready, and we'll continue to add value to our customer supply chains. And we feel like we'll be able to drive significant growth in our business as we go forward. You know, it's funny, as you were talking about the service centers, I was just thinking you can add all the service centers you want, but that doesn't make your service or your culture equivalent. Thank you for the answer. And that's a great observation.

There may be some different logos that had been moving around on service centers in <unk>.

Jeff Kauffman: Current customers given all the disruption that's taken place over the last six to nine months, but with.

Jeff Kauffman: <unk> stands ready and we will continue to add value to our customer supply chains, and we feel like we'll be able to drive significant growth in our business as we go forward.

Speaker Change: You know it's funny as you were talking about the service centers I was just thinking you can add all the service centers you want but that doesn't make you surface of your culture equivalent.

Speaker Change: Thank you for the answer.

Kevin Freeman: This concludes our question and answer session. I would like to turn the conference back over to Marty Freeman for any closing remarks. Yeah, I'd like to thank all of you today for your participation, and we really appreciate your questions. If you have anything further, please feel free to give us a call, and we'll be glad to answer it, and I hope you have a good rest of the week. Thank you. The conference is now concluded. Thank you for attending today's webinar, and you may now disconnect.

Speaker Change: And that's a great observation.

Speaker Change: Yes.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Marty Friedman for any closing remarks.

Marty Friedman: Yes, I'd like to thank all ready today for your participation and we really appreciate your questions.

Marty Friedman: If you have anything further please feel free to give us a call and I will be glad to answer it and I hope you have a good rest of the Lee. Thank you.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.

Speaker Change: [music].