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

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Christian Wetherbee: Hey, thanks. Good morning. Yes, congrats. Absolutely to Greg and Marty, it’s been a heck of a run, certainly, Greg. When I guess I wanted to talk a little bit about how you guys are planning for the potential improvement in tonnage that you may see in the spring, you guys have always been very good at being out in front of potential opportunities. But do you think that there are incremental costs that need to come on the network. Before that happens, are you fairly comfortable being able to sort of let tonnage lead you out of this to drive incremental margins, which obviously, you guys have performed quite well with over time?

Greg Gantt: Yes, I think that, Chris, that some of the conversation earlier about headcount, probably on paper, we may be a little bit heavy now, if you just look at things statistically, if you will. But that’s kind of the point of the, what we’ve said is, I think that we’re in a good spot, with our headcount with our fleet, and certainly with the service center network to be able to let volume start flowing again. And when we talk about increases, just keep in mind that we’re talking about sequential increases, and certainly with the year-over-year comps, particularly in the first-half of the year, we’ve got some tougher year-over-year comparisons there before we get back to, does being able to show year-over-year growth. But I think that’ll be the important thing for us to continue to watch is, are we seeing those types of sequential increases?

And certainly we’ve got a lot of flexibility within our workforce. And I think that, given the team that we have, and the current levels, we should be able to respond to growth when it starts coming at us and get some good leverage, as it does. But certainly we’re looking at right now in the first quarter. Like I mentioned, with the January tonnage levels, we’ve got probably the volumes that are going to be the toughest comp, and certainly, overall, the fourth quarter we were down 9.1%. Our yield performance is still looking good. And we certainly expect to continue to push for core yield increases this year to offset our cost inflation, as well. But there could become some converging factors, if you will, that drive the top line, depending on what the overall fuel environment looks like, and so forth.

But we’re certainly going to continue to look and execute on the same pricing philosophy that we have in the past and look for cost plus increases to offset the cost inflation that we see in the business and to keep supporting these expensive investments that we’re making in our real estate network and technologies that can both improve customer service, but also drive further operating efficiencies for us. So, a lot of things to kind of manage through it particularly the first-half of this year, but I think we’re in a good spot to be able to handle the volumes if they do backflow our way.

Christian Wetherbee: Yes, that’s very helpful. I appreciate that, that color. On the point of pricing, just to follow-up, ex-fuel yield did accelerate, the year-over-year growth that accelerate in the fourth quarter, and I guess they’re guiding the first quarter or roughly speaking to around flattish which may coincide with the worst tonnage, you’re going to see from a year-over-year standpoint. So, when you take a step back and think about 2023, more broadly, is OR expansion on the table, given those circumstances is pricing good enough to be able to offset inflation as we go and tonnage potentially gets less worse as the year progresses?

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