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

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We didn’t put a timeframe behind that when we laid it out last year, at this time, for this sole reason; we don’t want to be beholden to something that’s, in the short-run, that may jeopardize our opportunity for producing strong profitable growth in 2024, ’25, and beyond. And I’m confident that we’ll certainly be able to get to sub-70% for the year. We certainly did it for two quarters this year, in the second and third quarters. And so, I think we’ve shown that it can be done. And just to be clear, we continue to say that that is our next goal, but it will not be the final goal. We think that we can continue to go further from there, but we’re going to keep that goal in sight for now. And once we achieve it, then we’ll lay out where the next stop might be in this long-term OR journey.

Ari Rosa: Got it, understood. And then I wanted to ask also, as I think about the conditions that you’ve kind of been describing for 2022, where volumes have been a little bit softer than what you would have hoped for. Obviously, we’ve seen the headcount come down. And yet, your earnings growth was obviously strong this year, at 35%-plus. To what extent, when you’re going out and talking to customers who maybe were a little bit squeezed on capacity during COVID conditions, as supply chains normalize, does that put a little bit of a headwind on your ability to go to customers and ask for rate increases? Or conversely, do they push back and say, “Look, we gave you rate increases when capacity was really tight,” but now the supply chain’s kind of normalized a little bit, are they pushing back any more on some of the rate increases relative to what they were over the past 12 to 18 months?

Greg Gantt: I think the answer to that is yes. They push harder when they know they — either they are in a position to do so. And certainly with the conditions being soft like they’ve been, yes, they’re pushing us for not as big of an increase, and that kind of thing. But you got to remember, we don’t necessarily go into a customer and start talking about price. We talk about the value that we provide that customer, and that’s what we will continue to sell them. We sell them value. And many times, value and price are pretty darn close, if you know what I mean, because if you’re not getting value, what does the price matter? So, that’s what we’ll continue to sell. And thankfully, I think our customers have seen that, and in what OD has delivered over the years. And that’s a huge reason for the success that we’ve had. So, we’ll continue to focus on selling value, and not price. And honestly, try not to have those conversations.

Marty Freeman: I wanted to thank our sales team who does a fantastic job of sharing our costing with our customers, especially our large customers. We’re an open book; we actually show them what we’re paying for equipment, how much it costs not to put — freight, pick it up, sort and flag it, whatever the cost may be. And once you explain to them what our costs are, it’s a lot easier to swallow a general rate increase. So, I think most of our customers understand what our costs are. And we try to explain that to the best of our ability.

Ari Rosa: Okay, makes a lot of sense. Thanks for the time and the thoughtful answers, and congrats again, Greg and Marty.

Marty Freeman: Thanks.

Greg Gantt: Thanks.

Operator: The next question comes from Jeff Kauffman with Vertical Research Partners. Please go ahead.

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