Mario Harik: Yeah. So, overall, it’s still a similar strategy, but as we switch to LTL 2.0, the strategy is also around gaining market share. And when — again, when you look at national accounts from a mixed perspective in an LTL network, they create density on a lane per lane basis, which is very important. And we use the metric internally called a lane balance factor in our operation, which as you get closer to a stronger lane balance, that’s overall accretive for your margins. So, when we onboard the national account and we say they’re a good fit for the network, they are improving that lane balance, and using available capacity that we have in the network. Now over time in the current market, we — obviously there is softer freight demand, but as that recovers and you see that pickup in that local channel as well as the nationals we onboarded, that would be a tailwind for both volume and yield.
Now, in terms of the impact on OR, obviously that will depend on many factor because OR will include a combination of volume, yield and cost management as well. So, all of these need to award outcome, but obviously our goal is by 2027 to have improved our operating ratio by at least 600 basis points and we’re confident we’re going to deliver on that.
Chris Wetherbee: Okay. That’s helpful. And then just real quick clarification. For the first quarter adjusted EBITDA up double-digits, can you give us a clean number of what you’re comparing that to? Obviously, given the breakup of the business, I want to make sure I understand what the base is for that. And then your guidance around the LPL adjusted EBITDA as well, that includes $5 million to $10 million of unallocated costs when you’re thinking about being flat or up or down a little bit.
Carl Anderson: Yeah. So, Chris, it’s — if you think about comparing it to corp Q1 of a year ago, that base is $184 million. And then as far as that corporate cost as I referenced in that range $5 million to $10 million, that will still be in that corporate bucket. It will not be part of LTL. LTL will have the additional $20 million approximately that we previous previously said we would be allocating it.
Chris Wetherbee: Thank you very much. Appreciate the time.
Carl Anderson: Thank you.
Operator: Thank you. Our next question comes to line of Jordan Alliger with Goldman Sachs. Please proceed with your question.
Jordan Alliger: Yeah. Hi. At your Analyst Day, you talked about technology and implementation to help with dynamic pricing line haul, reducing other costs like PT. Can you maybe give an update on that, and how it’s shaping up versus your expectations? Thanks.
Mario Harik: Thanks Jordan. We’re making great progress on the rollout of our proprietary technology. As we have discussed in our Investor Day, there are a number of initiatives and proprietary pieces of our tech that helps us drive results. Starting with pricing. This year we’ve made great progress in upgrading our — and we discussed this on the last call, our cost modeling and how we allocate cost to shipments and how we price more efficiently. So, in this environment, we are investing more in our salesforce and we’ve had record numbers of RFPs that we are driving through the system. And having a platform that makes it very easy for our pricing analysts to price that business and have a quick turnaround with the sales team is essential.
And our technology is enabling these things. A similar thing, as you mentioned on dynamic pricing. Our platform is enabling us on the spot business side to be able to onboard more business, and being able to react more quickly to the environment. On the cost management side, we’ve made great progress in our line haul technology platform and how we optimize line haul runs, similarly on the pickup and delivery platform for both our planners and dispatchers. And then finally, for dock efficiency, our solutions with the smart labor platform enables us to improve how we operate our dock shifts and make them commensurate with the volume we are getting. So, great progress across the board with our tech.
Jordan Alliger: Thank you.
Operator: Thank you. Our next question comes in line with — from Brandon Oglenski with Barclays. Please proceed with your question.
Brandon Oglenski: Hey, good morning everyone. Thanks for taking the question. May be helpful if we can just here, because there’s so going on between corporate adjusted EBITDA. Could you just help us like what was comparable margin in 2021 and the LTL network, that’s corporate adjusted for .
Mario Harik: Brandon, you’re coming in very choppy. We couldn’t hear you well, but let me try to ask a question — what you’re asking about the baseline of 2021, 2022 and how corporate expenses are layering and moving forward as well.
Brandon Oglenski: Yeah. That’s right.
Mario Harik: Yeah. I think, Brandon, as you look, we did include in the investor presentation a pretty detailed historical reconciliation on page 27, specifically for the LTL segment that kind of walks the differences on a year-over-year basis and by quarter for all of 2022, as well as full year 2021.
Brandon Oglenski: Yeah. So, I guess looking since this for 1Q, I think you guys said LTL adjusted EBITDA either down slightly, is that correct?
Mario Harik: That’s correct. For LTL EBITDA, we expect it to either be down slightly or up slightly, depending on the demand environment in the month of March.
Brandon Oglenski: I’m sorry, I know you have the numbers in the presentation, but what is that for 1Q 2022?
Mario Harik: Yeah. So, for Q1 of 2022, now that we’ve allocated $20 million, it’s going to be $186 million would be the LTL EBITDA for Q1 of 2022.
Brandon Oglenski: Okay. So, we should be thinking maybe for this quarter?
Mario Harik: That’s correct.
Brandon Oglenski: Okay. So, thank you.
Mario Harik: Okay. Thank you.
Carl Anderson: Thank you.
