Old Dominion Freight Line, Inc. (NASDAQ:ODFL) Q4 2023 Earnings Call Transcript

So obviously, there’s much more than just being on time and claims-free. And so we study that data very intently and look at any feedback in areas where we can continue to improve. And we’ve done that over time, and we’re proud that we won 25 of the 28, we were number one in 25 of the 28 Mastio categories in this most recent year. So we’re always striving to get better. That’s part of our foundation for success is continuous improvement. So we always look for ways and stay engaged with our customers to figure out the things that we can do for them, to drive value, to create win-win scenarios. And so it’s just a never ending battle to try to stay ahead of the curve, particularly with respect to technology, so much is changing there, the things that we can do to try to connect more with our customers, drive some automation on the – in the corporate office and the back end processing and so forth.

So a lot of opportunities there to keep improving the customer service experience and also mitigating cost when it comes to our technology investments.

Eric Morgan: Thank you.

Operator: Thank you. The next question comes from Stephanie Moore with Jefferies. Please go ahead.

Stephanie Moore: Hi. Good morning. I wanted to maybe double click a little bit on your commentary on the labor and adding to headcount this year. I just wanted to maybe compare your view on headcount additions for 2024 versus 2023, I think I was under the assumption that in 2023 that you were able to hold on to some labor, kind of protect as many drivers and physicians as possible kind of waiting for the demand to pick up in 2024. So just trying to compare, I think, that commentary from prior quarters to your outlook for this year. Thanks.

Adam Satterfield: Sure. And we did have some attrition as we work through 2023. So the overall headcount has been lower on a quarter-over-quarter basis as we went through the year. And like I mentioned, in the fourth quarter, in particular, the average headcount was down 4% compared to the fourth quarter of last year, but it was up compared to the third quarter of this year. And so we’re adding some positions. We’re just under 23,000 employees was our average for the fourth quarter, and that compares back to – we were 24,000, 25,000 average full-time employees back in parts of 2022. So it will be shipment driven. Typically, when you look at long-term changes in our shipments per day and long-term changes in our headcount. Those two numbers are very closely aligned.

And so you’re exactly right. We were trying to hang on to as many people as we could, particularly our drivers that we’ve invested so much in, as we progress through this last year, 1.5 years of slower economic times, and that gave us an advantage. I mentioned this earlier, but we had employees that have their CDLs and they were working primarily on the dock. And when we saw that positive inflection in volumes back in the third quarter, that was something that we were easily able to tap into and put those folks right back into a truck. So that worked to our advantage. We’re running our truck driving schools right now to continue to produce more employees that have their CDLs, and will be available to drive as demand continues to improve. So that’s why we’re always trying to keep our focus on the long-term and be prepared for when the demand gets strong and we start seeing the levels of shipment growth like we’ve been able to experience in the past, back in 2021, we grew shipments per day at 19.5% at that year, our competition was up 4%.

And we were able to accommodate that 19% shipment growth, and be able to keep our service metrics best-in-class and so forth. And it’s that investment and trying to stay ahead of the curve with all the things that we do, with all three elements of capacity that allows us to put on significant levels of growth like that when the demand environment dictates.

Stephanie Moore: Got it. And just as a quick follow-up, seeing any difficulties meeting some of those hiring or headcount additions thus far this year? Just trying to get a sense of the strength of the labor environment?

Adam Satterfield: Not at this point. And again, we’re trying to get ahead of it a little bit in the sense of creating some of our own drivers. But I think right now, just the state of the market overall, it’s totally different than, compare and contrast to 2021, when things were so tight everywhere, and it was more of a challenge to get drivers. That’s why we focus so much on keeping everyone that we could through the slow period, but go ahead and starting our schools back up, well ahead of the growth coming at us. We want to make sure that particularly with respect to drivers that we get ahead of it as best we can.

Stephanie Moore: Great. Thank you so much.

Operator: Thank you. The next question comes from Scott Group with Wolfe Research. Please go ahead.