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

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Greg Gantt: Well, I think that again, the revenue environment will have a lot to say about that, more broadly speaking, we’ve talked and kind of pointed everyone to our performance in 2016 and 2019, when we’ve been in a flatter revenue environment, certainly, given the planned investment of about $800 million in capital expenditures this year. And with some pressures that we’ll see on depreciation, starting earlier in the year than normal, we will have some pressures, if you will, on those overhead costs. And we saw a little bit of that in the fourth quarter already where overhead costs as a percent of revenue were flat in 4Q ’22 versus 4Q ’21. But like we did in ’16 and in ’19, the focus when we’re in a flat to a down revenue environment will be managing our variable costs flat, and we’d love to see improvement, but trying to hold all those costs flat.

And then, any deterioration if there is anything would be in those overhead costs in particular, on the depreciation side. And so, I think that in ’16, we certainly saw a little bit of a decrease in the operating ratio or an increase, rather depending on how you look at it. But I think our operating ratio deteriorated 60 basis points that year. And that was something that was right in line with the change in the depreciation line item. And then, ’19 was the same thing, where we had 30 basis points deterioration there. So, we’ll take it quarter-by-quarter, certainly, and we’ll talk as we get to the end of next quarter’s call about what we think we may be able to do in 2Q, but certainly feel like we’re probably going to have a little bit more pressure on the overhead side this year if we are in fact a flat to slightly down revenue environment, but there’s still a lot up in the air when it comes to the top line for this year.

Christian Wetherbee: Okay, that’s very helpful. Thanks for the time, guys. Appreciate it.

Operator: Our next question comes from Scott Group with Wolfe Research. Please go ahead.

Scott Group: Hey, thanks. Good morning, guys, and again, congrats, Greg and Marty. I was wondering, can you give us some of the yields ex-fuel accelerated in Q4, is any color, is underlying pricing accelerating here? And then, Adam, I think you talked about 13% total yield growth in January, anyway you can just help us on the gross and on the net of fuel, I just want to understand that that net of fuel is continuing to accelerate? Thank you.

Adam Satterfield: Yes, net of fuel in January was about 8.5%. So, fairly consistent with what we just did in the fourth quarter overall. And we are starting to see a decrease in fuel. And we’ll see how that continues to trend this year. And so, perhaps the yield with and without the fuel, those two numbers will maybe be a little bit more consistent. I think that fuel hold steady with where we are right now, it certainly becomes a headwind as we get into the later quarters of the year, but nonetheless, I think that certainly there’s always mix changes that can drive that number, higher or lower. But I think it’s pretty consistent with what our long-term philosophy has been. We certainly dealt with higher cost inflation on a per shipment basis in 2022 than then what at least I initially expected I thought we would see some cost moderation as we got into the back-half of the year, which obviously did not happen.

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