Old Dominion Freight Line, Inc. (NASDAQ:ODFL) Q4 2022 Earnings Call Transcript

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And so, I think that that’s strengthened the relationships that we have with our customers. And we have got a lot of continuity within our customer base anyway. So, I think those — everything that’s happened over the last couple of years has really strengthened those customer relationships. So, I think that one of the things you said as part of your questions though gives us a little confidence in terms of when those orders for our customer product start picking up again in the sense that in prior cycles like 2016 or 2019 where we may have lost a few lanes or lost a customer account, we were always confident that the business would return to us in many case because the customer told us that they wanted to bring this back in when they could.

But we had to wait until the next bid cycle before we got that opportunity. Customers are keeping us in place. They are keeping their contracts current, pricing terms updated. And so, I feel like that whenever those orders start picking up, we may be getting three shipments instead of two at every pick up. And volumes should return to us quicker than perhaps they have in prior down cycles.

Amit Mehrotra: Right. Okay, very good. Thank you.

Operator: Next question comes from Ari Rosa with Credit Suisse. Please go ahead.

Ari Rosa: Great. Thanks. Good morning, everyone. And, congrats Greg, it’s certainly been an impressive run that you have, and congrats also to Marty on some big shoes to fill here. So, I wanted to ask about you guys have talked about for some time the ability to get the OR into the 60s. I understand obviously there are different puts and takes on kind of economic uncertainty, maybe some cost inflammation, but also talking about this inflection that’s expected for second quarter, it seems like there is some optimism there around the ability to perhaps improve OR year-over-year which would certainly suggest that you are kind of bumping up against that ability to get the OR to the 60s. I just want to get your updated thoughts kind of given the progression of OR improvement that we have seen over the last couple of years, do you think that OR in the 60s is achievable whether it’s 2023 or into 2024?

Adam Satterfield: Well, again I think we were saying earlier, certainly 2023 just given the environment it’s certainly going to be a little bit more challenging. And we are continuing to keep our eye for the future. We are investing or planning to invest $800 million in capital expenditures this year when the economy is certainly soft right now. And we may end up being in a flattish type of revenue environment. So, revenue will certainly dictate a lot. But I think that just given the comparison to the two years that we have talked about, you can make your own assessments into what you think revenue may end up being for us this year. But if we are in a flattish revenue environment, then certainly we have seen the operating ratio increase slightly in those years.

But the positioning that we are going through is to make sure that we are in a great position to be able to respond when that inflection does happen and we get back to a revenue growth environment. And we’ve averaged to 11% to 12% of revenue growth per year over the last 10 years. And we think of ourselves as a growth company. But, we are certainly going to be disciplined in periods where the economy is softer. And we have seen flattish type of revenue in those environments in the past when the economy has been slower. So, I think certainly a lot of depends on that. But, we had many type of OR degradation in the short run. I mean just for this year, the positioning in the recovery year is usually pretty doggone strong. And so, we continue to stand behind our goal of wanting to get to a sub-70% operating ratio.

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