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

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Jon Chappell: Thank you. Good morning. Marty, since we have you, as you’re entering, you’re already there. But you’re entering the head seat and the best mousetrap in the industry probably on the precipice of breaking the 70 OR basis. You’ve already laid out your CapEx for this year. But as you think strategically over the next few years, anything you’re thinking about differently as it relates to growth, as it relates to the labor et cetera or is it just kind of ride the cycles of what you’ve had and continue to get incremental productivity out of that mousetrap?

Marty Freeman: Well, one of the reasons we’ve been able to grow like we have over the last years is because we continue to build capacity even during slow times, and I don’t see us moving away from that focus. So, we’ll continue to do that. We’ll continue to buy new equipment and hire employees as needed. So, I don’t see any change from what we’ve been doing, this made us successful in the past.

Jon Chappell: Thanks, Marty.

Operator: Our next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.

Ravi Shanker: Thanks. Good morning everyone. Congrats Greg and Marty and Marty, yes, please don’t change the thing, just do — in that seat and anything. A couple of follow-ups here, do you feel like you have a better ability to capture that spring inflection in growth if it comes versus peers given how much free capacity you have? And do you have a sense of your ability to grow into that volume relative to peers?

Adam Satterfield: I don’t know about relative to peers, but certainly, we feel confident about our ability to grow. And I think you look at things in the past, we’ve certainly have been outgrowing the market relative over the last 10 years, in particular, year in and year out. When we’re in up cycles, that’s when our business shines the brightest. And certainly, our service is what wins us share and have an available capacity to respond to customers when they need us the most. That’s kind of our hallmark. And so, we’re sitting in a very good spot right now to be able to respond to that growth when the phone calls come, we’re going to be picking them up.

Ravi Shanker: Got it, sounds good. And maybe as a follow-up kind of on the fuel topic, I mean, there’s been a lot of speculation in the investment community about like fuel and kind of how much is driven earnings. And I think a lot of you — I mean, you and your lot of your peers have been saying that, hey, there’s a new algorithm when it comes to fuel pricing and it’s stickier than you think, et cetera, et cetera. So, how do we think about how fuel becomes a headwind in the back-half of the year kind of there’s any way to quantify that? And also kind of how much of that fuel can be sticky and kind of convert the base rate over time, do you think?

Adam Satterfield: It’s something that’s — we certainly faced this question before when fuel changes. I think that we got a pretty long period where we were at low fuel prices kind of going back to when that final decrease happened in 2016. And I’d say we had pretty good results between 2016 and 2020 when we were in a lower fuel environment. And again, I think that it’s something that maybe people on the Street, it’s hard to understand if you’re not negotiating with some of these types of contracts. But for us, it’s all about having a good cost model, understanding our cost and knowing what the revenue and the cost inputs are going to be whether fuels at $5 a gallon or $3 a gallon, it’s just something that we’ve got to manage through.

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