Q1 2025 Old Dominion Freight Line Inc Earnings Call
Speaker Change: Good day, and welcome to the Old Dominion Freight Line First Quarter 2025 earnings call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchstone phone. To withdraw your question, please press star then two.
Speaker Change: Please note that this event is being recorded. I would now like to turn the conference over to Jack Atkins, Director of Finance and Investor Relations. Please go ahead.
Jack Atkins: Thank you Nick and good morning everyone. Welcome to the first quarter 2025 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 April 30th, 2025, by dialing 1-877-344-7529. Access code 3942-957
Jack Atkins: The replay of the webcast may also be accessed for 30 days at the company's website.
Jack Atkins: This conference call may contain four lifting statements within the meaning of the Private Security's 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 towards beliefs.
Jack Atkins: Anticipates, plans, expects and similar expressions are intended to identify forward-looking statements.
Jack Atkins: You are hereby caution 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
Jack Atkins: and in this morning's news release. Consequently, actual operations and results may differ materially from the results discussed before looking statements. [inaudible]
Jack Atkins: The company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise [inaudible]
Jack Atkins: As I final note before we begin, we welcome your questions today, but ask that you limit yourself to just one question at a time before returning to the queue.
Jack Atkins: At this time for opening remarks, I'd like to turn the conference over to our president and chief executive officer, Morty Freeman. Morty, please go ahead sir.
Marty Freeman: Good morning all and welcome to our first quarter conference call.
Marty Freeman: Whitney on the call today is Adam Satterfield, our CFO . After some brief remarks, we will be more than happy to take your questions.
Marty Freeman: Old Dominion's first quarter financial result reflects continued softness in the domestic economy, and our revenue and earnings per diluted share both declined as a result.
Marty Freeman: We are pleased, however, that our yields continue to improve and our market share remain relatively consistent.
Marty Freeman: In addition, our OD family of employees continue to provide our customers with best-in-class service while also operating efficiently.
Marty Freeman: While we have discussed softness in the domestic economy, along with the challenging operating environment on these calls for the past couple of years, we have continued to affirm our team's commitment to executing on the fundamental elements of our long term strategic plan.
Well that absolutely continues to be the case.
Marty Freeman: We want you to understand that our team also continues to focus on maximizing our operating efficiencies and reducing our discretionary spending in an effort to protect our operating ratio.
Marty Freeman: Improving the operating efficiency in our network is very difficult to achieve when a reduction in density is experienced. That is why I'm proud that we improved our platform Shimmies per hour and P&D Shimmies per hour in the first quarter despite the 5% decline in our LTO Shimmies per day.
Marty Freeman: Our team did this while also maintaining the high level of customer service. We are pleased to once again provide 99% on-time service performance and a cargo claims ratio below 0.1%.
Marty Freeman: We have strengthened our customer relationship over time by consistently providing superior service at a fair price, which is that it valued our business. Importantly, our service performance also continues to support our discipline cost-based approach to yield management. [inaudible]
Transcription by CastingWords
Marty Freeman: One doesn't happen without the other, and we believe our unmatched value proposition will support our ability to win market share over the long term. As we win share, our operating density will improve and create the leverage that should help drive improvement in our operating ratio.
Marty Freeman: We continue to believe that the path to long-term profitable growth and operating ratio improvement is the balance between operating density and yield management.
Marty Freeman: Both of these initiatives generally require the support of a favorable economic environment.
Marty Freeman: We entered this year with a degree of cautious optimism based on customer feedback and improving macroeconomic data points.
Marty Freeman: I said was that increased clarity around taxes and regulation will lead to greater business competence investment and ultimately increased freight volumes.
We were encouraged to see.
Marty Freeman: Signs have improved the man for our service in the first quarter, and our LPL tons per day in both February and March, tracked in line with Norman, Norman C. Vanality. That said, there continues to be uncertainty with the economy, which can mean that a full recovery in our business trends might take additional time.
Marty Freeman: While we can't control the micro-environment, we will remain focused on controlling those things that we can by consistently executing on our well-in-term strategic plan.
Marty Freeman: Our team's dedication to our customers and commitment to excellence has allowed us to win more market share than any other carrier over the past decade.
We continue to believe that providing superior service, maintaining our discipline and approach to yield management
Marty Freeman: Pardon me, ladies and gentlemen, it appears we have lost connection to our speaker line. Please stand by while we reconnect. Thank you for your patience.
Don't fail.
Speaker Change: Part of me, this is the operator. We have reconnected the speakers and will continue. Please proceed.
Speaker Change: Good morning, I'm sorry for the technical difficulties we had some phone issues here, but I'll continue where I left off, but
Speaker Change: What I meant for you to hear is, while we can't control the micro economic environment, we will remain focused on controlling those things that we actually can, and that's by consistently executing on our long-term strategic plan.
Speaker Change: Our team's dedication to our customers and commitment to excellence has allowed us to win more market share than any other carry over the past decade. We continue to believe that providing superior service, maintaining our discipline as it...
Speaker Change: As it is the yield management controlling our expenses and consistently investing in our team and our network, we also are uniquely positioned to respond to an improving economy.
Speaker Change: There have been plenty changes in our industry over the past couple of years, but nothing has changed our long-term outlook for additional market share opportunities or our belief that we can win more market share over the long-term than any of our competitors. Thank you very much for your time.
Speaker Change: As a result, we remain confident in our ability to produce long-term profitable growth and increased value for our shareholders. I appreciate you joining us this morning and now I'll turn it over to Adam for the first quarter in greater detail.
Adam Satterfield: Thank you, Marty, and good morning. Old Dominion's revenue totalled $1.37 billion for the first quarter of 2025, which was a 5.8% decrease from the prior year.
Adam Satterfield: Our revenue results reflect a 6.3% decrease in LTL times per day that was partially offset by a 2.2% increase in LTL revenue per 100 weight. We also had one less workday than the first quarter of last year.
Adam Satterfield: On a sequential basis, our revenue per day for the first quarter decreased 2.4% when compared to the fourth quarter 2024, with LTL tons per day decreasing 3.5% and LTL shipments per day decreasing 2.6%
Adam Satterfield: For comparison, the 10-year average sequential change for these metrics includes a decrease of 2.1% in revenue per day, a decrease of 1.6% in LTL tons per day, and a decrease of 0.9% in LTL shipments per day.
Adam Satterfield: The monthly sequential changes in the LTL tons per day during the first quarter were as follows.
Adam Satterfield: January decreased 3.8% as compared to December , February increased 1.9% as compared to January , and March increased 4.8% as compared to February .
Adam Satterfield: 10-year-average change for these respective months is a decrease of 0.4% in January , an increase of 1.4% in February , and an increase of 4.9% in March.
Adam Satterfield: While there are still several work days that remain in April , our month-to-date revenue per day has decreased 7% on a year-over-year basis.
Adam Satterfield: We anticipate that our revenue per day for the full month of April will decrease approximately 6% plus or minus 50 basis points.
Adam Satterfield: This obviously depends upon our revenue performance for the remaining days of this month. As usual though, we will provide the actual revenue related details for April and our first quarter form 10Q.
Adam Satterfield: Our operating ratio increased 190 basis points to 75.4% for the first quarter of 2025, as the decrease in our revenue had a de-leveraging effect on many of our operating expenses.
Adam Satterfield: This contributed to the 130 basis point increase in our overhead cost as a percent of revenue.
Adam Satterfield: Within our overhead cost, our depreciation as a percent of revenue increased by 70 basis points and we as we have also continued to execute our long term capital expenditure plan [inaudible]
Adam Satterfield: While this strategy has created short-term headwinds for our margins, we believe that investing through the economic cycle is a critical differentiator between a center competition.
Adam Satterfield: History has proved that this strategy has supported our ability to win significant market share when the economy is at its strongest
Adam Satterfield: As a result, and based on the confidence that we have in future market share opportunities, we have spent $1.5 billion on capital expenditures over the past two fiscal years.
Adam Satterfield: We have plenty of capacity within our service center network to accommodate future growth due to these ongoing investments.
Adam Satterfield: As a result, we recently reevaluated each project on our 2025 capital expenditure plan and elected to defer certain projects to future periods.
Adam Satterfield: In addition, we reduced the amount of new equipment that we plan to purchase this year.
Adam Satterfield: We now expect our capital expenditures will total approximately $450 million in 2025, which is a $125 million reduction from our initial plane.
Adam Satterfield: Our direct operating cost also increased as a percent of revenue in the first quarter due primarily to an increase in cost associated with our group health and dental plans.
Adam Satterfield: This resulted in our total employee benefit cost increasing to 38.2% of salaries and wages from 35.6% in the first quarter of 2024.
Adam Satterfield: Overall, we continue to be pleased with our team's efforts to control the costs that we can control while also maintaining a focus on doing what is best for our business over the long term.
Adam Satterfield: Old Dominion's cash flow from operations total $336.5 million for the first quarter of 2025, while capital expenditures were $88.1 million.
Adam Satterfield: We utilize $201.1 million in cash for our SHR Repurchase Program during the first quarter, while our cash dividends totaled $59.5 million.
Adam Satterfield: Our effective tax rate for the first quarter of 2025 was 24.8% as compared to 25.6% in the first quarter of 2004. We currently expect our effective tax rate will be 24.8% for the second quarter of 2025.
Adam Satterfield: This concludes our prepared remarks this morning. Operator will be happy to open the floor for questions at this time.
Thank you.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star, then one, on your touchstone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed, and you would like to withdraw your question, please press star then two. Again, we ask you please them yourself to one question. For any further questions, please rejoin the question queue. Thank you.
Speaker Change: And your first question today will come from Jordan Alliger with Goldman Sachs. Please go ahead.
and then just sort of maybe involved with that.
Speaker Change: You know, given we've been in a two-year freight recession already, if we did have ongoing slowdown or recession, would the impact be more muted since we've already been in a downturn or is that difficult to say? Thanks Thanks.
Speaker Change: Yeah, Jordan, are you talking about seasonality with respect to margins and revenue? Yeah, I guess margins and revenue, I mean, both will be asked, I'm sure [inaudible]
Speaker Change: Yeah, I guess I'll start with the margin in and save the revenue discussion for later, although a lot of the margin discussion depends upon the revenue.
Speaker Change: But our 10-year average is 300-350 basis point, sequential increase from the first to the second quarter, but that's typically based on our revenue growing about 8% from the first to the second quarter which...
Speaker Change: I don't know that we're anticipating that based on what we've seen so far in April and just a general uncertainty with the macro.
Speaker Change: I think kind of the way to look at it is if revenue per day kind of stays splotish with where we've been thus far in April , I think that we would expect to see an improvement in the first to the second quarter or somewhere around the hundred basis points. [inaudible]
Plus Remind us, obviously, whatever happens on the top line.
Speaker Change: I would expect that our salaries, wages and benefits will probably be flatish with the first quarter and that's what we've seen the last couple of years.
Speaker Change: where we've lacked that revenue growth from the first to second quarter.
Speaker Change: Typically, that's where we get a lot of that 300 to 350 basis points on average, about 200 of that.
Speaker Change: Sequential Benefit is on the salary wages and benefits line. So...
Speaker Change: Obviously, that's revenue dependent. We're expecting a little pressure on our operating supplies and expenses. Some of that's probably going to be tariff impact on parks and repairs.
Speaker Change: Our overhead costs, which are more fixed in nature, those have been running about $300-$305 million in total each quarter and so I think that's where a lot of the plus-minus that we might see.
Speaker Change: Yeah, it might come in just to pin on what the revenue does because that total is going to be there just depends on what the top line will look like. So I think just the big variable that we're contending with once again is what the revenue is going to look like. [inaudible]
David Oglenski, David Oglenski, David Oglenski, David Oglenski,
Thank you [inaudible]
Speaker Change: Your next question today will come from Jonathan Chappell with Evercore ISI. Please go ahead.
Jonathan Chappell: Thank you. Good morning. Adam, thanks for the April to-day revenue per day. If you could just provide the breakdown of that, I'm on tonnage and yield-exfuel understanding. There's a few days left and as it relates to that latter part on the revenue-exfuel, have you seen any change in the pricing environment as the tonnage headwinds are maintained a lot longer than I think many expected? Thank you very much.
Jonathan Chappell: Yeah, the right now, because we just had good Friday last week, intentionally didn't give that breakdown.
Jonathan Chappell: for that reason, really the numbers are a little bit skewed. I think just trying to look through...
Jonathan Chappell: Our wait for shipment has dropped as we have come from March into April , so sequentially there.
Jonathan Chappell: A little bit more than what we would typically see, but we saw an acceleration in March that was above what we would normally see. So if you just kind of...
Jonathan Chappell: takes February and roll it forward with normal seasonality. We're about where we are, which is around 1470 pounds so far in the month of April . So that's...
Jonathan Chappell: That's given a little boost to our revenue per 100 weight. I think just looking at where we are right now but the revenue per 100 weight and hoping that we'll see a little bit of acceleration.
Jonathan Chappell: for the remainder of the period. I would thank for the full quarter. We're probably looking at that rev for a hundred of a way, excluding fuel, being somewhere in that five to five and a half percent.
Range, so little acceleration versus what we just had. Imbro, Jack Atkins,
in the first quarter.
Jonathan Chappell: And normal seasonality would put us at the top of that range I just gave but you know again we'll just look at the balance of what continues to happen from an underlying mixed standpoint but overall with respect to the yield environment I mean I can't.
Jonathan Chappell: Report, obviously I don't want the other carriers are doing it but I've been really pleased that we've been able to successfully get increases as we've gone through bids and it's not only what we've done in the first quarter and so far in the month of April but it's really what we've done over the last couple of years and
Jonathan Chappell: We're fully committed to our long-term yield management strategy and being consistent and fair in that regard and I think it's proven to be its worth when you look over the long-term and the financial results that we've been able to produce through your strength.
Adam Satterfield, Jack Atkins, Unknown Executive
Speaker Change: Yeah, our calls aren't decreasing. Our calls continue to go up and so that's why we've got to continue to...
to ask for a free increase in...
Speaker Change: You know, the encouraging thing though, we talked about this from a demand standpoint is we won, we've maintained our market share through this period somewhere in that 12 to 13% range but we were starting to see a re-acceleration in our business. You know, we had two months of tonnage that was at. [inaudible]
Speaker Change: C. Vanality, and so we're winning share, we're starting to win share. [inaudible]
Speaker Change: and doing it at our prices and that's encouraging to see. Obviously, we've had a little disruption here like everyone else has so far in April , but hopefully once that gets resolved, we'll see the re-acceleration in the macro environment that we were really hoping for and starting to see early signs of the February and March trend. We'll see the re-acceleration in the macro environment that's encouraging to see the re-acceleration in the macro environment that's encouraging to see.
Got it, thanks a lot, Adam.
Speaker Change: In your next question today, we'll come from Ravi Shanker with Morgan Stanley . Please go ahead
Speaker Change: Maybe it was in credit to ODFL, given your own investment pace, as you mentioned, or maybe even a function of what you're seeing out there kind of broadly in the LTL space.
Speaker Change: Yeah, I think that, uh, likely mentioned on the, uh, earlier, uh...
Speaker Change: and we may have to increase our CapEx budget for a new phone system, so we'll contemplate that afterwards, but...
Speaker Change: The last couple of years when we haven't had growth and shipments per day.
Speaker Change: but we're comfortable in those long-term opportunities and confident that we'll achieve those initiatives and so that's why we've continued to invest but
Speaker Change: You know, within the real estate network, which is usually what we comment on, we've got north of a 30 percent capacity and so we went through each and every project and just talked about it is the right thing to do now versus just waiting until a later period those projects.
Speaker Change: that we've got, and we've reduced the CAPEX for they aren't going to go away, they're just going to be done in a later time, so we felt like that would help us, you know, given the continued uncertainty with the economy to prevent a little bit of depreciation continuing to come on the books. . . .
Speaker Change: because that's how depreciation has been a big driver in the inflation that we've seen in our overhead cost as a percent of revenue.
Speaker Change: over the last couple of years. And then, you know, the fleet was something similar just looking at kind of where our fleet stands right now. We've invested the last couple of years. We had some deferred catbacks.
Speaker Change: Really, when you think about going all the way back to the pandemic, all the growth that we had in 21 and 22 and trying to keep pace, holding on to older equipment, OEMs having challenges.
Speaker Change: So we had some deferred cap-backs in the system but just going through and kind of looking at where our power fleed in particular stands and what we felt like we've got capacity to be able to handle. If our business continued to grow and if we saw some re-acceleration in the trends like we did in February and March.
Speaker Change: that those continued through September where we might be and what we might be able to handle. So, we feel like we've got all three phases of the capacity gain covered with what we have today.
Speaker Change: Service Center Capacity, our fleet capacity and most importantly on the people side and our teams in a great position to handle the business that we have but to handle additional growth that we hope will start seeing this year.
Anderson, thank you
Speaker Change: And your next question today will come from Tom Wadewitz with UBS. Please go ahead.
Yeah, good morning.
Speaker Change: I wanted to see if you could comment on how you think about the importance of...
Speaker Change: Retail customers to LTL overall. I think maybe you have a little more exposure than others, but, you know, LTL is primarily in, you know, lever type industrial. The reason I ask is it seems like
Speaker Change: You know, you, you, at least on the margin there might be more competition for those type of customers. I...
Speaker Change: You know, I suppose, you know, the Amazon question, if, you know, can they do anything in LTL? Will they, if they do, it seems like that would be in retail and kind of inbound to their fulfillment centers. So maybe, you know, it's not your business. You don't care. But
Speaker Change: Also, I get UPS doing a little more of their 100-way product, I don't know, they're...
Speaker Change: You know, maybe that's a little on the margin, I don't know, there might be other players but just wondering how you think about that and also I suppose if there's some impact from imports
Speaker Change: You know, maybe that would come through more on the retail side. So just, you know, how important is retail demand and competition overall LT on market. Thank you.
Speaker Change: Yeah, we really don't see Amazon's LTL offering as a threat to the LTL industry, especially Old Dominion. As I understand it, it's mainly geared towards their own suppliers.
Speaker Change: And I actually see it as an opportunity for us to help them with their logistic needs, if their suppliers need to pick up the same day.
Speaker Change: We certainly cover all 48 states and we're able to help them out with that. So I don't really see that as a material.
Freight to us more of an opportunity in my opinion.
Speaker Change: Yeah, you had a lot of questions and picked into that, but just a...
Speaker Change: I add a little bit more, you know, retail is about 25 to 30 percent of our business overall so, you know, obviously we still see and have a lot of exposure to the industrial environment and I think that the retail opportunity can will continue to be a tailwind for the LTL industry.
and more and more, the retail world moves to e-commerce.
Speaker Change: We've seen it developing over time that that's an opportunity for shipment sizes to become smaller and to be moved through an LTO network and those retailers can leverage
Speaker Change: Our network is part of their supply chain and I think that that will continue to play out the good thing about many of those large retailers that many of them have on time and in full programs in place.
and it puts the burden on the vendor.
Speaker Change: that's controlling the freight charges and choosing the carrier to select a carrier that can help them meet those on time in full metrics and avoid
Speaker Change: Finds in chargebacks, and there's no one with better service than Old Dominion despite what maybe some other carriers might tell you, and I think it was proven by last year's mass tear results, where we won for the 15th straight year, but 99% on time service, the claims ratio that would round down to zero [inaudible]
Speaker Change: if we reported it out and so we've got the best on time claims free service and can help those that are delivering into that retail world and add value to their supply chain. So I think that's something that will continue to see.
Speaker Change: as an opportunity of growth for the industry but an even bigger opportunity for Old Dominion.
Speaker Change: Do you think it's right to say the retail's more important leverage and a little more risk to tariffs?
Speaker Change: Well, I think obviously that's there. There's a lot of imported product.
Speaker Change: You know, again, it's looking for the opportunities that exist and that's what our sales team they'll do. They stay in front of our customers and...
Speaker Change: and talk about how we can help them add value and ultimately save money within their supply chain by choosing the old Dominion. So, you know, that's the sale that will continue to make and I don't think there's anyone with a better value proposition.
Speaker Change: in our industry than what we can offer, so we'll continue to drive that home and...
Speaker Change: You know, with some of these other changes, we've talked about the other long-term opportunity for the LTL industry will be near-shoring and reshoring. So if we see increased manufacturing activity in North America, I would say, I think that creates a tremendous opportunity for us as well, both inbound product. [inaudible]
Ron Materials, and so forth, going into those plants.
Speaker Change: But as well as us being able to get the finish good out the back door and like I mentioned earlier just leveraging our network as part of our customer supply chains.
Speaker Change: to get products moved throughout the U.S. and more and more of that product has got to be staged closer to the consumer to be delivered in the shortest window possible. And in those fulfillment centers, they want to maximize the number of skews they can have. And those are very minimal inventory quantities, typically to do so, which is why they want to make sure when they make an order that is delivered on time and without damage. So, you know, again, I think that's...
Speaker Change: of the ongoing opportunity for us and those two components there will continue to be tailwinds for the industry where I think we can be the biggest beneficiary.
Great. Thank you.
Speaker Change: Your next question today will come from Scott Group with Wolf Research. Please go ahead.
Speaker Change: Hey, thanks, morning guys. Adam, the O.R. commentary you gave for Q2.
Speaker Change: I missed what the revenue assumption was were you saying that that's if revenues basically flat from Q1 to Q2 I just want to understand that and then maybe just more broadly if you could just talk about pricing and the competitive dynamic and
Speaker Change: If you're still able to get like the ones at two points of price above inflation, or if it's getting any harder, more competitive, some high level foster. Thank you.
Speaker Change: Yeah, so that guidance was based on if the revenue per day that we're seeing if it just kind of stays flatish with what we've seen so far in April and ignoring Good Friday. Good Friday is typically about 60% of a normal work day, so kind of take that day out of the mix.
Speaker Change: But, you know, if we followed a long kind of flatish per day, it didn't seem the acceleration in the business.
That would put us...
Speaker Change: with revenue in total for the quarter of about 1.4 billion. So that'd be 5% down compared to the second quarter of last year. If we got on the optimistic side, if some of these things get settled, then we can see some re-acceleration in the business. We're going to see some of these things coming up in the next quarter of last year.
Speaker Change: You know, probably the most optimistic would be if we can get back to normal seasonality and I'm not expecting this right now but normal seasonality
Speaker Change: in May and June would put us at about 1.5 billion, so we're getting back to closer to the flattish with last year on an overall revenue standpoint.
Speaker Change: I don't want to give the pessimistic side because I think we're seeing pretty consistent trends overall.
Speaker Change: as we've gone really through the month of April . So...
Speaker Change: Yeah, but we'll obviously continue to give our statistics as we go through the period, we'll give the full April and our 10Q, 10Q.
Speaker Change: and then we'll give our mid-quarter update to talk about what the matrix is looking like, but
Adam Satterfield, Jack Atkins, Unknown Executive
and any, any, any pricey thoughts? [inaudible]
Dr. Oglenski, Dr. Oglenski, Dr. Oglenski, Dr. Oglenski
Speaker Change: Well, we talked a little bit about that earlier and regardless of what the other carriers are doing,
Speaker Change: We're continuing to get our increases and that's what was so encouraging is we've been consistent.
through this last couple of years and...
Speaker Change: and because our costs have only increased as well. And so we've been consistent and are asking, you know, I think that's the sort of getting back to this is a relationship business. We always want to be consistent with our customers. That's what we're saying.
Speaker Change: and we would continue to do so when the environment is accelerating. We look at things from a cost-based.
Speaker Change: I continue to invest in new capacity from a service center and real estate standpoint.
Speaker Change: as well as continuing to invest in new technology. So, obviously, we continue to have success with our yield management initiatives in the first quarter and that's continuing.
Speaker Change: into the second as well. And it was looking like we were having that acceleration in the business given, you know, those sequential increases that we saw in February and March. So, you know, I think obviously at some point there's got to be an inflection in the macro. And I think we're better positioned than we've ever been in the sense of the discipline that we've shown over the last couple of years. And I think we're better positioned than we've ever been in the sense of the discipline that we've shown over the last couple of years.
Speaker Change: When things really start to accelerate, that's when the O.D. model shines the brightest. And I think we've got the ability to put a significant amount of volumes into our system. That's going to create a significant amount of leverage.
Speaker Change: I think it puts his right back on track with being able to achieve the long-term operating ratio improvement.
that we're looking for and we still...
Speaker Change: to maintain that we want to achieve a sub-70 OR goal. I think we've controlled what we can control during these last couple of years. If I go back to 2022, that was our best operating ratio from an annual standpoint of 70.6.
R-Direct, Um,
Speaker Change: and Variable Cost as a percent of revenue are about the same in the first quarter
Speaker Change: as they were then at about 53% of revenue but our overhead cost are 22% of revenue versus 17% for the full year.
Speaker Change: in 2022. So, you know, once we start growing again, our network is built for more shipments per day than what we're handling right now, but it's going to create tremendous leverage there on this overhead cost. And we'll get leverage on our variable cost as well, but that's what's going to allow us to continue to drive this operating ratio lower over time. Thank you for your time.
Speaker Change: And your next question today will come from Brandon Oglinski with Barclays. Please go ahead.
Brandon Oglenski: Hi, thanks for taking the question, so maybe following that line there, Adam, or even Marty
Speaker Change: But at some point we just got to call a spade a spade, right? Like LTL is definitely pricing modal substitution here. So at what point do you need to think strategically if the market is going to continue to remain down? Is that just what you want to track? Or do you need to start thinking differently about this longer term? [inaudible]
Speaker Change: Well, I think, obviously, LTL is a market into itself and there's at the fringe.
Some modal consolidation opportunities that we've seen.
Speaker Change: where the truckload market has been so weak that customers have been able to consolidate some heavier loads into one. But at the end of the day, when shippers move in 1,500 pounds of loads...
Speaker Change: and loads that have got specific appointment times when you've got delivery, they need to leverage the real estate network that us and other LTO providers have built.
Speaker Change: Truckload Terriers can't really solve that need and obviously we've got to keep cost [inaudible]
Speaker Change: In mind, as we go, and that's what we do every day. We're thinking every day about how do we manage and keep our cost inflation in check and
in the three and a half to four percent range.
Speaker Change: And obviously we target trying to achieve a hundred to a hundred fifty basis points of positive spread above that. But, yeah, when you look at our industry.
We're down about 15% tonnage relative to 2021.
Speaker Change: And while GDP has been positive, I think that us and other carriers have felt the brunt of...
The overall volume of the environment being down.
Speaker Change: And so we've not seen anything that we changed from a big picture standpoint. Obviously, this downturn has lasted a lot longer.
Speaker Change: But the continuous conversations that our teams have with our customers
Yeah, we're thinking and planning out.
Speaker Change: What we think this environment is going to look like on the other side and those conversations with customers are really why we were confident in investing in capital expenditures like we have over the last couple of years. We don't make those decisions.
Speaker Change: Lightly and on a whim, they're grounded in multiple conversations with our customers. And so I think that's what we just got to continue is staying in front of our customers.
Speaker Change: and continue to work towards what the environment is going to look like on the other side. I don't think you see anyone else from when you look across the industry that's...
Speaker Change: really doing anything a lot different for market share. Here it is.
Speaker Change: was decreasing, for example, then that might be a point to try to re-evaluate things, but right now...
Speaker Change: We've maintained our market share. We've done everything that we say we'll do. It's just in a slow environment.
Speaker Change: maintaining market share, maintaining discipline with respect to yield management and continuing to build out incremental capacity to prepare for the other side of growth. And we've done all those things.
Speaker Change: while maintaining an operating ratio. We don't like to see our operating ratio up, but we're still, I think about 1200 basis points better than our competition.
Speaker Change: We're going to continue to do all those things but continue to stay in front of our customers and do right things right by them.
Speaker Change: And I think we'll come out of this on the other side a lot stronger, a lot better, get back to growth, you know, we've...
Speaker Change: Got a lot of ambitions in terms of what we think our market share can grow to.
Speaker Change: And so you just got to do the day-to-day and month-to-month and quarter-to-quarter and year-to-year execution to make sure that we're going to be prepared for those better days, but we're confident that they're ahead.
Thank you, Adam.
Speaker Change: And your next question today will come from Bruce Chan with Stiefel. Please go ahead.
Bruce Chan: Hey, good morning, Marty. Morning, Adam. You know, maybe just to pick up on that pricing conversation a little bit. I don't know if I missed it, but did you talk about what you're seeing in terms of renewals? And then, you know, any customers that may be pulling bids forward, or I don't know, even pushing them back, or, you know, any pushback on on increases?
Bruce Chan: and then just a quick follow-up. We've got potentially changed in the NFC coming up. Any thoughts on what the impact might be on yields there and any potential disruption from that change in framework? Thank you very much for your time.
Bruce Chan: Yeah, we just did the General Yield commentary, we obviously...
Bruce Chan: I've got renewals and bids that are happening every day, and a lot of times that bid activity increases when
Bruce Chan: The environments week, and we've had a week operating environment now for a couple of years, unfortunately, but...
Bruce Chan: But, you know, we go through those and just sit in front of our customers and talk about ways that, you know, we can continue to win together and the need that we have from a yield standpoint and the reasons why.
Bruce Chan: But there's sometimes ways that you can achieve yield improvement that's not always by price and those are the conversations that we have with our customers as well.
Bruce Chan: and it could be looking at all the cost-based data that we have and figuring out ways that we can help.
Bruce Chan: Us save money, be more efficient with our customers that may help prevent as much of a price increase. And so, you know, those are the...
Bruce Chan: You know what we try to achieve as we go through those, but I think we've been fairly consistent in terms of what we've been able to get from a yield increase standpoint.
Bruce Chan: Overall for the last couple of years and that's certainly continuing. [inaudible]
Bruce Chan: as we progress through 2025. Not to say it's not ever challenging, it always is. I mean, we're generally more expensive than our competition.
Bruce Chan: And so that's why we've got to go in and it's why it's so important that our sales team talks about the value proposition and what we can offer and ways that we can help our customers save money and their supply chain not just looking at an invoice to invoice cost comparison.
Bruce Chan: But the second part of your question, the change that's coming, obviously it's going to be a lot of change for customers, but overall I don't see that as being anything that should change.
Bruce Chan: You know, the yields overall. I think that for us, one of the advantages that I believe we have is we understand our cost. [inaudible]
Bruce Chan: We share that cost and information with a customer and we try to price appropriately based on those factors and so
Bruce Chan: while the classifications might change and so forth. If we've done everything right, it should be minimal impact to the customer. But I don't think the customer, if they changed their classification.
Bruce Chan: We think that their pricing will go up or are down materially one way or the other just because of that change and so for us we just want to make sure that it's basically revenue and income neutral for whatever change might happen.
Thank you
Speaker Change: And your next question today will come from Bascome Majors with Susquehanna. Please go ahead.
Speaker Change: Thanks for taking my questions. One of the follow-up on Tom's discussion from earlier.
Speaker Change: With the UPS leaning more into the lower weight, kind of tweener, freight parcel shipments up.
Is that business that you or any of your peers?
Speaker Change: I'm really that interested in that kind of 150 to 300 pound weight retail to start with and do you think that will have a competitive landscape on the industry and
Speaker Change: You know, just zooming out the sort of competitive landscape discussion broader. I mean, you talked about retail a lot earlier. Any thoughts on any shifting in the 3PL environment or specific to direct industrial customers would be helpful. Thank you.
Speaker Change: Yeah, let me see if I can try to remember all those, but on the industrial maybe to just start there, still 55 to 60% of our business and industrial outperformed our retail and our company average in the first quarter.
Speaker Change: and which is not a surprise given that we had seen the acceleration in ISM and we were above 50 there.
Speaker Change: in January and February and unfortunately went below 50 in March.
Speaker Change: and I guess would be below 50 again for April , but we've seen pretty steady performance there in the industrial.
Adam Satterfield, Jack Atkins, Unknown Executive
Speaker Change: That performed a little bit better than the company average in the first quarter as well. That's something that will continue to watch. And it's, um...
Speaker Change: felt like we had started seeing some trends of the wait for shipment in the 3PO world.
Speaker Change: Starting to increase, you know, a lot of the 3PLs have got mode consolidation types of tools and software and so forth and we feel like some of that load consolidation that had happened and moved into the truckload world .
Speaker Change: We feel like that's going to swing back into LCL eventually, and that's probably going to be the first place that we see that movement.
Speaker Change: Coming back, because at the end of the day, like I was saying earlier, you know, five to ten thousand pound shipments really aren't made to move by truckload and the truckload carriers don't like doing it. They only do it when the environment is weak and they're trying to get some payload on the truck.
Speaker Change: And, you know, that will go away, we believe, and normalize eventually as demand does.
Speaker Change: Overall, so that'll be something to continue to watch. But, you know, while that's kind of at the fringe as well, I mean that truckload market is obviously much bigger and can have a little bit more impact on the LTO carriers, but I think the mode consolidation there LTO to truckload is probably a little bit greater than what happens on the lower end of the scale and. [inaudible]
Speaker Change: You know, moving shipments that are a hundred, a couple hundred pounds, it's tough to make money on those. And when you compare that to, you know, our 15, 16 hundred pounds, an average weight for shipment, we just don't have a lot of that and I don't think that...
Speaker Change: No, it's probably that big for the industry either. And I think what's happening with the change with the UPS, you know, I believe that kind of goes with hand-to-hand with the TFI.
Speaker Change: and separating those businesses and them initially marketing that service is what I understand, so may just be moving back into UPS's house, but I just don't see that as a needle mover.
Speaker Change: and not even to the same level that we see shipments moving back and forth between us and truckload.
Thank you for all of that
Speaker Change: And your next question today will come from Ken Hoexter with Bank of America. Please go ahead.
Ken Hoekstra: Hey, great good morning, Adam Marty. You hit on a lot, so I just want to clarify maybe a few things.
Speaker Change: You talked about accelerating in the revenue to 100 weight, up to 5, 5, and a half percent.
Ken Hoekstra: Maybe just talk about what's driving that given it looks like you decelerated into the upper threes on growth.
Ken Hoekstra: growth rate in March, you know, if I just look at the deceleration you had through the quarter and then your April data is that implying tonnages down 10% from down 5% in March, so is that just the timing of
Ken Hoekstra: of Good Friday and us, you're trending straight through it at kind of an upper single digit that you've been at earlier in the year, or is there something they be leading to the deceleration?
Ken Hoekstra: So I think so just to kind of start with those numbers and this is where MIX can you know have a big impact. So in February our weight
Ken Hoekstra: In general, was 1476 pounds on average for February this year, and then that accelerated to 1495 pounds in March. So, you know that had a little bit of a driver of the
Ken Hoekstra: Growth in our revenue per 100-way, you know, from a month to a month standpoint there [inaudible]
Ken Hoekstra: Now the spar into April were down to 1,470 pounds so the way for shipment has come back down a little bit and obviously that generally yields a higher revenue per hundred weight. So I think that's why we're seeing that metric right now a little bit higher. It's my hope that we'll see.
Ken Hoekstra: that week for shipment continued to rise a bit and the revenue per hundred weight sort of normalized but...
Ken Hoekstra: You know, I think big picture of what we always talked about and want to see is that we're seeing consistent [inaudible]
Ken Hoekstra: and sequential increases in just reported revenue per 100-way, you know, taking any type of mix change out and that's what we would hope to see if we're going through bids and we do on a day-by-day basis that we're negotiating in the increase and ultimately. Thank you very much.
Ken Hoekstra: that metric is going to be reported higher. So, you know, right now it looks like it's a little bit stronger than what we just achieved in the first quarter, but it's getting a little bit of boost optically by the lower.
and just with respect to the...
Ken Hoekstra: The metric overall, I mean, that's why I mentioned earlier that didn't even really want to get into the details of that breakdown. There's just still some uncertainty.
Ken Hoekstra: out there with respect to how the month finishes and where we think we'll end up being but
Ken Hoekstra: But you know I think that when you just take that good Friday that obviously is going to impact revenue and your weight and shipment per day type of metrics.
when you only have 60% of a normal day.
Ken Hoekstra: But we think that that overall revenue, if you just think about it broadly, right now we're projecting to be down about 6% plus or minus for April .
Ken Hoekstra: And then I gave a couple of bigger picture metrics where if we stay kind of flatish revenue per day, from here out through the remainder of the quarter, we'd be down about 5% for the full quarter compared to the second quarter last year.
Ken Hoekstra: You know, could be up, could be down, just depending on how each month comes in, but, you know, I would just think broader brush looking at what the overall revenue is going to do and then let you kind of fill in the gaps from an allocation of weight versus yield.
Speaker Change: And so just to follow up there, the weight coming down, you mentioned ISM being down again, is that something you'd expect to continue on that trend? Just given whatever tariff impact and pressure on economics, or is that something that just fluctuates on the weight just based on whatever is moving?
Speaker Change: You know, I don't know if Nostradamus could answer that question, I can hear him, but...
Speaker Change: I think there is so much uncertainty out there right now that it is hard to really say. Bye.
Speaker Change: You know, obviously we're seeing consistent trainings overall from just a revenue per day standpoint.
Speaker Change: and that's kind of coming in when we started out this month of April . We saw a surge through the month of March and really going back to February , we saw a good performance week by week through February , a really strong finish to that month that was really encouraging. And then we saw a consistent performance week by week. [inaudible]
Speaker Change: through the month of March as well and similarly had a really strong close to that month. Now we started some of that could have just been pulling forward of Freight and that helped boost.
Speaker Change: The March numbers a bit. We did see a little bit of a drop off that first week of April , but it's come back pretty consistently with what we would expect.
Speaker Change: since that time. So I've been pleased with our week by week trends and hopefully we'll see that continue on, but I just think that when...
Speaker Change: We've pulled our sales team and obviously they're staying in front of our customers every day and most of the feedback that we're getting from the field is customers are reporting uncertainty.
as it relates to tariffs.
Speaker Change: You know, that's just something that us and each one of our customers are having to deal with right now and how they make investment decisions and ultimately that's going to impact freight volumes but I am pleased that to see the consistency on a day by day basis of our revenue per day. So I would like to think that we stay at least there at that consistent level and not see another leg down. Thank you very much.
Thanks for the time. Appreciate it.
Speaker Change: Your next question today will come from Chris Wetherbee with Wells Fargo. Please go ahead
Thanks, good morning.
Just maybe a follow-up, but it so sounds like- [inaudible]
Speaker Change: April , maybe if they're softness in April , it was more concentrated earlier in the month, and then things have maybe kind of stabilized or potentially improved. I guess I just wanted to make sure I understood that comment Adam, and then I guess when you think about the normal seasonality for the Revenue Parandroid Exfuel, which I think you said was five to five and a half, maybe a little bit at the high end of that. [inaudible]
Speaker Change: Is there a, what is the sort of weight-per-shipment underlying that? Do you see normal sequential improvement from this April 1470 to something maybe a little bit more meaningfully higher than that? Just trying to get a sense of maybe all the moving parts here?
Speaker Change: Yeah, the way for shipment, you know, typically it's a little bit softer in April anyways.
Speaker Change: But, you know, we're looking like we're down one and a half to two percent sequentially. The longer term average is down like half a percent to one and then, kind of stays flatish from that point forward. So, you know, typically you'd get. [inaudible]
Speaker Change: We typically would see a little bit lower weight per shipment. [inaudible]
Speaker Change: That gives a little bit of boost to that number. But again, you know, we're down a little bit more. I'm hoping that we'll see some recovery there in that wait for shipment. Thank you very much.
Speaker Change: Number as we progress through the period, and it's kind of reverted back to average. It was a little bit lighter earlier in the period. We've seen probably a little bit more activity when I look at the weighting of our national account versus local field accounts. [inaudible]
Speaker Change: A little bit higher percentage of national account, which typically has a higher weight per shipment, but that's where we're seeing more of a decrease. So I think each account is different when I look through our top 50 accounts, we've got some that have got double-digit increases.
Speaker Change: and Weight Presipment. We've got some that have got double-digit decreases in Weight Presipment and the account business may be flatter up slightly.
Speaker Change: I mean, each one has got their own thing going on, and it's been challenging to kind of figure this out, but I think some of that, like I mentioned,
Speaker Change: Really, if you go back to February and just kind of roll things forward, we'd be in around about 1470 pound threshold if we just followed normal seasonality.
Speaker Change: Waipershipment was right under 1,500 pounds, but what we'd like to see is not just seasonality, we want to get back to where...
Speaker Change: We're seeing that sustained increase in weight-per-shipment that is going to be correlated with an improved economy and then that turn into the multiple shipments coming from the same shippers.
Speaker Change: That's when you see the wave of freight that starts coming at us when we hit that inflection point in the economy, that's when everything starts turning and how we start building that density and getting really strong incremental margins on revenue growth, but we've got to get back to a period of having revenue growth.
Speaker Change: Yeah, I appreciate that. That's really helpful, Colorado. And just real quick follow up the April dynamic with it. It was a little softer earlier in the month. Was that what you were saying?
Speaker Change: Yeah, that first week or so, just really dropped off from the end of March, more so than what we would typically...
Speaker Change: You may see a little bit more like when I look over the last couple of years. [inaudible]
Speaker Change: You miss out a little bit on things drop off a little bit more at the first of the month or you don't see the acceleration into the last week of the month. Typically your first week is always going to be a little bit softer and then you accelerate throughout the month and when you get those really strong periods. [inaudible]
Speaker Change: If we go back to 2018, 2021, you know, environments like that, you're not seen as much drop off at the beginning of the month, and then just
Speaker Change: And that's part of the value proposition is always having equipment and personnel that can be available to help our customers when they need it the most. And you get to the end of the month or end of a quarter and I think that helps some of that surge in March where a customer is demanding more trailers to be dropped at their facility. And if that competitor doesn't have it, guess who they can call. [inaudible]
Adam Satterfield, Jack Atkins, Unknown Executive
here soon on what's going on with trade. David, David, David, David,
Speaker Change: I think we can get right back to an environment where things can accelerate again, but I think that's a big yes [inaudible]
Speaker Change: to hang out there. But I feel good about power position. I feel really good about the improvement that we've seen in our service metrics.
Speaker Change: and we feel like we're better positioned than we've ever been. We just need some help from the economy to achieve what we want. But again, I think when you look over time...
Speaker Change: The acceleration and our ability to outgrow the competition, it really comes when that economy is reflecting and getting really strong and our ability to add people to add equipment to take advantage of all that spare capacity that we have in the system.
Speaker Change: that puts us in a really strong position to be able to grow, produce strong, profitable growth and that leads to increased shareholder value.
Thanks Adam, appreciate it.
Speaker Change: Your next question today will come from Stephanie Moore with Jeffries. Please go ahead
Hi, good morning. Thank you. Thank you.
Speaker Change: You know, maybe, I think a lot of my questions have been answered at this point, but maybe if there's any commentary you can provide about some end-market performance by sector or sub-sector, if you saw any particular strength within the industrial vertical or you called out a 3PL and retail a little bit, but you know, whether it's- [inaudible]
You know, autos or building materials for the likes, any color there would be helpful. Thanks
Speaker Change: Yeah, yeah, we don't normally get that granular, Stephanie within all of our SIC codes.
Speaker Change: I feel really good about the diversification that we have in our business and probably five of our top ten customers or many of them are three PLs that have got diversification underneath and so
Speaker Change: I think that's always the good thing about Old Dominion is any time we get into a period where there may be weakness in one market [inaudible]
Speaker Change: There's strength or at least ability within a different commodity code, so but overall we generally just collapse them into those bigger broad buckets of industrial versus retail and
Speaker Change: and like I said earlier, I think we've seen some good performance better than average performance within the industrial world and typically that ISM is highly correlated with industry volumes
Speaker Change: We were seeing that, and I think that was a driver of some of the acceleration that we were seeing in February and March 4th, so hopefully, like I said earlier, that if we can get some clarity within the markets and really it's the clarity for our customers [inaudible]
so they have confidence to start reinvesting in their business.
Speaker Change: Building inventories, again, you know, doing all those things that create freight opportunities.
Speaker Change: That's when we're going to be able to take it being inch to come in and help those customers and add our capacity and add our industry leading service. And I think that we'll get right back to the winning market share like we have over the long term.
[inaudible]
Appreciate it. Thank you, guys.
Speaker Change: And your next question today will come from Richa Harnane with Deutsche Bank. Please go ahead.
Richa Harnain: Thank you, operator. Nice to meet you all. Thanks for welcoming me onto the call. So...
Richa Harnain: First, I hate to beat a dead horse, but just to clarify on the April commentary, how much of that down 6% plus or minus compared to normal seasonality? I'm just trying to understand how much we fell maybe below seasonality in April or what you're forecasting and what we're assuming for the full quarter, i.e. that down 5% year-round revenue.
Richa Harnain: And basically, what I'm trying to get at is how much contingency, if you will, is in that revenue guide, and that only 100 bits of sequential OR improvement.
Speaker Change: And then, you know, secondly, you know, I think it's pretty impressive that you're continuing to get your price increases [inaudible]
despite the competitive pricing environment across the freight market.
Speaker Change: Yeah, I think we'll go back to trying to just let one question be asked and one that we haven't really discussed is...
Speaker Change: just overall capacity. And so I think that's something that we've talked about, we believe capacity has been reduced in our industry.
Speaker Change: and given yellows closer and even with the reallocation of some of those properties.
Speaker Change: We've looked at least at the publicly traded carriers and from the tenure period of 2014 to 2024, the number of service centers in operation for the six carriers and that includes yellow
Speaker Change: in the 2014 period is down overall 23% and we're obviously up and I'm not including us in that bucket, we're up.
Speaker Change: We've added almost 40 service centers over that period of time and have increased our network 15 to 20% just number of service centers even more if you account for the doors that we've added.
Speaker Change: as well to existing facilities. But when you look at shipments per day, for at least those publicly tried companies, and again, including yellow there, they're down.
An aggregate, about 30 percent.
Speaker Change: So, we're up about 30% over that period of time reflecting the market share that we've won there.
Speaker Change: But that's something that we have said before that we felt like when all was said and done that there would be less capacity as we go forward.
Speaker Change: Yellow was the third largest company they have, I think, only reallocated or repurposed about.
Speaker Change: 60% of the facilities that they had an operation before. So, what was a capacity constrained industry in 2022? Will likely be even more capacities constrained going forward? And, you know, in the LTO world, you've got to have service centers and really you've got to have doors to be able to process the freight and I think that's going to continue to be a differentiator for Old Dominion. We continue to invest ahead of the curve. We continue to invest ahead of the curve. We continue to invest ahead of the curve.
Speaker Change: to make sure that our network is never a limiting factor to our growth potential and we feel strongly that we've got a long runway of growth ahead of us and that's why we've invested as much as we have.
over the last couple of years in particular, but...
Speaker Change: We've just invested consistently year after year, and that's why we could grow at the rate that we did back in 2021 when our tonage was up 16% in such a strong environment, the other carriers on average were up 4% [inaudible] money, we've just invested a lot of money, we've just invested
Speaker Change: You know, it's that type of outperformance from a growth standpoint that's only made possible if you've got the service centers to start with, that you've got the fleet capacity and you've got to have a team that can prepare drivers to take on those increased workloads.
Speaker Change: We've got an internal truck driving school that we've created a third of our drivers but we've got an HR infrastructure and safety team that can onboard drivers rapidly and make sure that we're not just getting a driver but someone that comes in
that loves and appreciates our culture and that, you know, it's...
Speaker Change: The OD Family Spirit that we have, the commitment to excellence that we have, you know, all those things are baseline requirements that every individual of this company adheres to and it's why our services so much better than our competition.
Speaker Change: We're accompanying, we take care of our employees, we motivate and reward our employees to take care of our customers [inaudible]
Speaker Change: And that's how we win at the end of the day. And so we're going to continue to...
Speaker Change: Execute on those same values as we go forward, and I think you can't put it in a spreadsheet, but culture is really the differentiator of why Old Dominion is so much better than our competition.
Daniel Imbro: And your next question today will come from Daniel Imbro with Stevens. Please go ahead.
Yep. Good morning, guys. Thanks for taking our question.
Daniel Imbro: You know, Marty, you and Adam both mentioned, I think your market share was relatively stable. I guess on the margin, if share is shifting away from you at this point in the cycle, is it just being one with price or are there certain pockets of better service out there?
Speaker Change: Adam, you just touched on capacity but have your thoughts change it all around what actual cycle to cycle growth?
Speaker Change: is for the LTL industry. I guess, how should you or how should we think about actual growth once we do exit this downturn for the industry? Thanks.
Speaker Change: Yeah, well, yeah, I think I mentioned earlier that volumes for the industry, the data that we get, and this is the entire industry, public and private, is down about 15%.
Speaker Change: versus 2021. And so obviously we've got some ground to make up.
Speaker Change: and I think that when the industry will, and obviously we feel strongly that we'll grow beyond where we were back in 21 and 22, hence the continued investments in our network.
Speaker Change: But, you know, I think that when you look at that before we enter the downturn, back to the prior conversation, if carriers weren't investing in capacity.
Capacity was constrained in the industry. There was...
Speaker Change: of lack of ability to be able to grow. And I think that whatever the strategic rationale we saw more of our competition that we're reducing the number of service centers they had in operation. [inaudible]
Speaker Change: leading up and I would say through year end of 2022. [inaudible]
Speaker Change: You know, that has been part of our strategic advantage. You know, we talked about the tailwinds, we feel like that...
Speaker Change: and opportunities that are out there for our industry and we've been able to win significant market share over the past 10, 15 years by taking advantage of those. It's also been the consistent investment in service.
Speaker Change: that has put us ahead of the game for the past 15 years, winning that Matthew Quality Award is something that...
Speaker Change: that we don't take lightly. We want to make sure that...
Speaker Change: You know, we're improving our service and ultimately that adds value. We feel like to our customers supply chains and
Speaker Change: You know, at the end of the day, to win market share requires service and value, and that's the only way to win, having capacity [inaudible]
having real estate, having tractors and trailers.
Speaker Change: You know, that just gives you the opportunity to be able to add volumes but if you can't add value you can't really grow and that's what I think we've been able to deliver for our customers and why we've been able to build our company up like we have and it's why we've got so much confidence that we can continue to grow our revenues and improve our operate ratios as a result.
Adam Satterfield: Daniel, as it relates to your question about market share, as Adam straighted early our market share, you know, runs between 12 and a half to a little over 13%.
Speaker Change: And I think that's a product of mode shift that we've heard from many of our customers and 3PLs that...
Speaker Change: Much of this Freight has gone over to full truckload carriers with stop-off charges.
Speaker Change: and so I think that's why it moves up and down during a slow economy. As soon as the capacity tights in the truckload sector, I think you'll see those stop-offs come back to the LTL industry, because you'll gain better service and you'll also gain, you know, a little bit more.
Speaker Change: A better rate, so anyway, that's what that's what we're seeing as it relates to.
to that, that subject.
Appreciate that. Best of luck, guys.
Speaker Change: And your next question today will come from Jason Seidl with TD Cowan. Please go ahead.
Jason Sadle: Thanks, operator. Good morning, gentlemen. Two quick things. One, you mentioned a little that you sing a little bit of a poll forward. I was wondering if you could put some numbers behind that. And two, on the cap excite, if you exclude some of your project work.
Jason Sadle: What percent is that sort of equipment purchases down on a year-rear basis?
Yeah, so
Jason Sadle: The, I don't know that I can say that there was any pull forward per se, but my point was that, you know, that acceleration that we saw really throughout the month of March. I mean, that, that's...
to grow our tons 4.8%, that's the Quential Acceleration.
Jason Sadle: That's been a stronger performance that we've had on a month, over a month basis.
Jason Sadle: really since when Yellow closed their doors but but going back for really the early part of 2022.
and so... [inaudible]
Jason Sadle: You know, I think that just given the overall macro in some conversation and then a little bit of that drop-off that we saw the first week of April , just maybe think that, you know, there may have been some acceleration into that end of the period that kind of helped.
Jason Sadle: with that growth there. But, you know, nothing scientific necessarily to put behind...
Jason Sadle: The number of what not just thinking through some of the bigger kind of broad factors, if you will. And Adam, was there any more strength on the consumer side in March versus industrial?
Jason Sadle: Now, I think, like I said, we saw better activity overall through the core with industrial versus retail.
Okay.
and the CapEx.
Jason Sadle: We spent, think about $750 million last year, so we had already planned to spend less this year.
Jason Sadle: When we started the year and the initial plan was 575, but just cutting that back to 450 is, you know, hadn't run the map, but pretty...
sizable decrease versus what we just spent last year. And a little bit lower than, you know, we typically spend 10 to 15%.
of our revenue.
Jason Sadle: on Capitol expenditures every year. And we've had some periods before where we've been below that threshold, but you know, should be below that for this year.
And I have that 450, how much is equipment?
I'm sorry, how much is equipment? [inaudible]
Jason Sadle: So we've got 210 million in total for real estate of that 450 now and 190.
Jason Sadle: is for equipment and that was previously 225 and most of that was just power equipment like I mentioned earlier and then continuing to spend $50 million on IT and other assets.
I appreciate the time is always gentleman.
Jason Sadle: This will conclude our question and answer session. I would like to turn the conference back over to Marty Freeman for any closing remarks.
Marty Freeman: Thank you all for your participation today. We appreciate your questions and please feel free to give us a call if you have anything further. Thank you and have a great day.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.