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ODFL Old Dominion Freight Line

Participants
Earl Congdon Executive Chairman
David Congdon Vice Chairman and CEO
Adam Satterfield CFO, SVP, Finance and Assistant Secretary
Albert Delco Stephens Inc.
Amit Mehrotra Deutsche Bank AG
Allison Landry Crédit Suisse AG
Ariel Rosa Bank of America Merrill Lynch
Christian Wetherbee Citigroup Inc
Ravi Shanker Morgan Stanley
Todd Fowler KeyBanc Capital Markets
Matthew Brooklier The Buckingham Research Group
Jason Seidl Cowen and Company
Scott Group Wolfe Research, LLC
Willard Milby Seaport Global Securities
Zachary Rosenberg Robert W. Baird & Co.
Call transcript
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Operator

Good morning, and welcome to the Fourth Quarter 2017 Conference Call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through February 18, by dialing 719-457-0820. The replay passcode is 6862987. The replay may also be accessed through March 8 at the company's website. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion's expected financial and operating performance.

statements historical this to fact statements. any not that be purpose, of statements may this made call during are forward-looking For be deemed limiting plans, believes, are Without to the similar intended statements. and expressions anticipates, forward-looking identify foregoing, the expects words

publicly differ statements The of these company company's release. and in important Executive undertakes and forth conference any forward-looking be affected Dominion's in or this no from sir. forward-looking Earl future I'd Mr. Exchange And Commission information, filings operations Chairman, opening with whether obligation otherwise. materially result this that factors, cautioned the by Please to may discussed others, news like a among for consequently, results to hereby actual Instructions]. go in turn results ahead, At may update time, over statements. as the events Congdon. You're and morning's [Operator statements, new set remarks, Old the the to the Securities the

Earl Congdon

have positive XX.X% Good had to our of quarter we Congdon, feels about year profitable Conference we'll strongest environment fourth the of can strong to as questions. call XXXX, and on brief for Quarter morning, our growth After we growth is and growth. I and me remember. complete CEO; accelerated Dominion fourth some on the the growth Building the take today September, David overall quarter. of since Chairman revenue Vice that began as fourth very the glad CFO. our produced in rate Old had This remarks, quarter welcome Adam Call. an the Satterfield, is outstanding be With and to your Fourth a

initiatives. price, our execution this capacity service the to us Dominion which believe these equipment our strategies remaining include a superior continues decades environment, put for we investing approach at business that providing fair of which by We service win strategies of do fully in The in created favorable can uniquely positioned position, investing us growth, our the to profitable disciplined and that to committed core employees a continuously share in XXXX. the two market in Given Old continue and is from validate differentiates business growth and of competition. our has than record long-term center success our support to to more unique

responsible strengths reflects We success Our our aspects of team again discuss Old improving of all morning, this being each the quarter now, us Thanks thank David team. business. greater been here also fourth Congdon is recognize with for Dominion the members and who detail. to and continuously has for in the

David Congdon

our I couldn't the growth, for and Quality and eighth operated we that for year. our of we investments maintained critical the has the this most past more efficiency I'll and formula our the we be superior prepared that has including a additions profitable but base many ability may capacity our service importantly, us to but at ensure success, have our and also handling performance as that reported rate close Award any by grew times, of not well service broken to increased Mastio These that will total, to second other adding on we Earl, in hired growth. that good I year this record the factor morning. out for were There We but recognition feeling however, our XXXX our year my of customer to superior for family success the know, of of full-time our to growing X,XXX Of adding thanks in network conversations us for believe limiting price to approximately accelerated. all We half by XXXX. employees that a begin our trend. improving ingredients new consistently X,XXX to been for growth. our Thanks, and of don't contributions the about volumes This their in optimistic I and year our macroeconomic employees. XX.X% a a OD standards year. equitable great year. long-term proud are, XXXX. consistent cautiously long-term team's in of team our this like our add with employee We anticipated is ago revenue sound you course, at at straight fair based be our capacity a deliver would in won

we The whether which growth, year. additional for during reflects succeed, expenditures to growth domestic revenue including could budget continue core investment price economy our generated support We're before. believe us LTL We is X.X% XX.X% favorable Our pricing to for in the and the in into XX increased excluding summary, which XX.X%. XX increase to both and the continued improve which increase completed they consistent our feel our and revenue points We day environment in ongoing capital be the allowed operating it environment like continued per productivity-enhancing will growth as with more our account and industry fourth lot market when to education XXXX. basis with their inflation. operating pricing a be or in growth density profitability yield, shape. focuses obtaining support in that our favorable. is to per conditions that well to quarter, to double-digit by pricing fourth LTL in address first XXXX than efficiency XXXX Dominion increases great included philosophy and to a offset need employees surcharges. for everything of commitment Old was improvements growth momentum cost expectations increased and increased achieved carrying giving fourth substantial that ever individual profitable XXXX, in quarters, leverage technology. tons X.X% as on quarter the training with revenue actual have In continued hundredweight yield our fuel our during company's necessary the The share ratio quarter

business We financial well which shareholder model, this are time to your Thanks positioned company produce confident now, expect gains greater in our value. and for the will morning, discuss through will market our fourth of we Adam this earnings quarter that momentum in and proven disciplined is share, leverage results Satterfield additional execution detail.

Adam Satterfield

of Thank Fourth and is recorded. fourth grew revenue you, revenue. David, good included we million, Dominion's highest $XXX.X have $XX.X Old XX.X% the which in quarterly revenue morning. to ever quarter million non-LTL quarter the

XX to the $X.XX increased XX.X%, quarter. tax before our increased Our per points Earnings operating ratio improved share XXX% for and basis to diluted income XX.X%.

related and the Jobs Act Tax a These results. $XXX.X nonexecutive liability fourth in Cuts items benefit impacted of to the couple deferred noted our million. these include we paid a As of our of net that $X.X bonus this release in revaluation tax and tax our morning, resulted a employees million for of quarter net special

XXXX an X.X%. increases our the per On day growth above were per the of The improvement average throughout per This in you the day X.X% our on LTL in quarter the accelerated trends, economy to Trend third XXXX were September, well sequential XXXX XX-year recent quarter often growth year-over-year both compared percent day a once quarter for again first day increased quarter. for time improved and operating contribute change XXX year-over-year decrease LTL we discussed. revenue as in third rates included a fourth the on cost last tons employee shipments points with September; yield. in fourth months fourth so December and throughout our since are seasonality as cost LTL X.X% inherent fourth to bonus. XXXX year. LTL compared X.X% per tons wages quarter continued increasing compared in changes exceeded of we pleased increase quarter of our we per domestic X.X% quarter fourth tons how October day XX.X% respective per accelerated earnings growth report the improvement for day December. overhead as November November. increasing of for and shipment to have and of increased January. points to benefit and revenue the compared special growth fourth fourth as and The the to normal revenue decrease shipments in and both approximately the LTL decreased fourth pace LTL our quarter a and despite with compared per tonnage the that in November XX.X% LTL believe percent October, increased model day when monthly LTL Salaries and as same of quarter. October; increased quarter revenue with are The Our LTL we our opportunities that X.X% a our the first day our expenses impact the X.X% variable quarter of for calls, Update tons business XXXX, XXXX. growth ratio X.X% basis basis for XX.X% follows, our versus the of the during but a in of to reflect basis per that discussed the as XX.X% tonnage of was of when to in increased of revenue. per tons XX.X% improved weight the Operating XX decreased

XX.X% and Old our and for in LTL expect XXX projects, and execution for to total network anticipated and $XXX our fourth changes We to of for capital with of the million XXXX, estate $X.X Dominion's $XX.X but to end million focused will the $XXX.X deferred We originally expansion dividend during than $X.XX impacted our expect Today, share XXXX growth anticipated for of the growth per as Act, for quarter XX% our and under to the increase changes the headcount This the $XXX.X XXXX. This which liability on the positively tax cash real annual our higher XXXX together matching service rate XXXX. $XXX.X see first million approximately expenditures would currently other million Act. We and of an for that prior capital Cuts historically result tax Tax they we Tax XXXX quarter of million items. were effective facilities of replacement net Jobs quarter for This the quarter. of for well similar by volumes Jobs trend we rate a discrete anticipate as million tax Capital as favorable closer center have. dividend and our passage year. as flow year. prepared announced for at payout Based the we'll center normal total concludes service the allows subject this returned what remain million year. increase maintain for of is from will in $XXX the however, open to XXX This by to on effective our operations labor capacity morning. shipments a cycle, us should we ratio. revaluation shareholders the happy increase million clarifying and as includes questions. total during the the was to the quarterly fourth remarks Operator, to of $XX.X this totaled guidance floor in expenditures our rate Annual to change, we tax time available. Cuts was for becomes and a be

Operator

Instructions]. [Operator

first Brad to Stephens. We will Delco go with

Albert Delco

you margins call always given Adam, of, have us or David historically incremental on I guidance mean, XX%. it, guys

comments just Because, similar to get get a this moving to Adam, in to at Any like? on the going us where figure out can XXXX I'm where to update what your leverage the chance I think in we're incremental margins keep going kind trying your you we're great guys environment. OR tonnage. your you lower. increasing rate -- employee count heard of look can about You

Adam Satterfield

Thanks, Yes. Brad.

as in If periods do we some the vary, averaged be I were think you equation. can environment higher we're a the the a bottom little just we -- and through talked last there margin little little an about fourth a our range. that with most we helped employee of line. is nice, rate be us, And just pretty focused accelerating it's base money in In as think might of quarter to this and growth, periods did XXXX, year planned hiring can. the of such becomes I catch about to little think the needed closely past we're that, And growth the a progress line And year job growth and thought in nice harder be go probably always tracking of it XX%, that in to -- that's first a that that hiring. to to then that back that accelerating. certainly, a back we where bit much But the bit we from really on beginning XX% incrementals quarter probably it where XX%, we're with a bit for that starting strong lower, was few the obviously. our But towards. as putting have had us And incremental revenue that headwind. XX% the more I the as I quarter of to to the the just and quarters get half does the to But we so with of bit up put playing had revenue likely the may bottom more it fourth mathematics bit

a the the quarter and what in great bottom line we quarter growth as like So well. our was performance of fourth sense felt was

David Congdon

add and continue decent -- healthy a our I'd to said network pretty that as and that across that say additional yield density the a margins with economy, can environment operating structure Brad, and the our in improve. cost when is can And the we to put say. good I'll we've And a mix, revenue past,

I quarter, is that environment to up and the think win share XXXX very is there. good. pricing economy fourth that in The showed we ability well in our and market the believe

to should to margins we ratio. see able operating incremental So our improve to adequate continue be

Albert Delco

your always network with everyone then the and guys fleet think of is give your follow-up. real you Can where you and Great. an because us latent you investments employee now in And tends make. incremental having all your one capacity I maybe just update quickly your base? estate you quick with with on about to your mean, capacity think

Adam Satterfield

try the XX% our we that's the In to network, capacity. service important, keep which about most center network, probably

we've getting as our And XX%. year, last maybe down we And And Given not our our a curve, may with the think were and progress the lagging lot leading so actually XX% We of to and And we employee a year. year, factor growth. that our a normalized so David this good executed be more closer our and limiting we think headcount in say the I a last you now base But positioned make we good a acceleration see well. ahead well would probably that's the XX%. growth network got usually little to where in growth. XX% should to headcount pace headcount It stay now we XX%. the trending for to growth, of to made projects you we want of good anticipated shipment is be that shipments typically, bit mentioned, and sure closer shipment growth see together. plan always I increase

picking up. and trained -- we've shipments are So in got employees the before really, the

So we're I think our shape good network. in with

-- million we've XXX good localized this good that got got going the and in year at a little in specific adding rentals We address necessary little with to, the quarter as we're very some any those probably make well we cost some We've are CapEx to and which we've CapEx got we've fourth place. and but that shape those bit where and of we sure plan now, got capacity. increasing, particular in we're our plan equipment centers our in to that. capacity. a think will keep usually think service of are needs, had tried places, have got And tight to a need $XXX in any employee I I the good with keep

Operator

with go Mehrotra next Deutsche to Bank. We'll Amit

Amit Mehrotra

change expect actual you average? about in in dynamics the the from were and sequential where XX-year the probably then in think to accelerated incremental year-over-year. both I tonnage talk margins the I January, quarter, Adam, could quarter. gave just you in given And just growth that have third they pricing would've

there growth and reacceleration so out, in that see would the the help in first you saw puts the reflective and January benefits helpful. X% added growth if just count Is add maybe incrementals in terms employee -- in you we that takes as us Are can you're maybe Just costs? seeing quarter? can other that of in I a of be did year-on-year You now employees. well

Adam Satterfield

of To when The not of well you is January, increase back we've when fourth XX-year question, only X% of an trend start had into X%, the going increase you above with weight average sequential the a compared X.X%, And that positive there. an so each going on normal so the a when, mentioned performed was had performance the first then the was weight part but quarter. It and month -- December. below surprising August look somewhat that a we recall, in if at basis. XX.X% over to XX-year year-over-year it is it's X.X% really change month our increase average average, I September on that above September we was X to it's sequentials for through a

good to back regards month never the such long got In that's headwinds strong, some quarters Brad, -- that in with over January. that but be the to and cost fourth So were place. might to what nice the I when were be was the we not history, strong complete typically, and, they through said typically X about think we've knew really you But to we that cost really we like be average, had where I continue the a month that in we some that headwinds far mean, XX just think incrementals think volumes we run, David's performance. incrementals, offsets going frankly, -- that next that the our was, we XX%, anticipating, of quarter we the discussing up had And ahead some price. what and under in cases that revenue But quarter there just the may comment targeting that are consider, for. the a of we I I our we're the but growth structure, cost had

XX% think that ratio, of costs in I well. we that operating costs. our I our is if are variable incremental. then operating healthy range. there But overhead And to kind get XX% XX%, now, continue we've that's XX% When the been as costs some XX%, to to variable a down Right break that's of got target able metric. you think you've XX% how a direct base, to good can our

David Congdon

One thing mathematically, I'll call higher growth operating revenue mathematical is, it, point looks lower point out, the that an is X/XX Amit, for, of a the change. It's our thing. incremental

the don't percentages it's growth, we the the So kicking out really little had mathematics we reality. just let When it, margins. fool more it bit from low is revenue high incremental than And very were you. of a

Amit Mehrotra

I which Any heavier kind that tonnage market companies started has terms thoughts you industrial economy? like a that's that market quick spillover LTL share question sort of is, seeing the reporting. seeing spillover also large some follow-up to share, of yet the Is like Yes. seems that and guess you grab But it's shipments, a sort would of of some The was -- the other disproportionate to to occur growth? tonnage strong there very of are it about very, you really lot volumes share in truckload guess One industrial the market driving production, you're respect with you given for the those benefit exposure maybe your the from a seeing, volumes? -- I it comment. certainly talked numbers. me are seems what growth it of relative were

David Congdon

spillover We cannot well. very the really identify

-- tremendous those spillover it's or in truckload, and and a that, those spot like weigh X,XXX come but of the seen category. in in, things have quotes we pound X,XXX that We quotes. spot shipments a lot those Maybe from haven't increase

we orders and it's grew, morning. And weight is to industry reported number economy up shipment, is ordering buyers economically I less saw think on that this Our the bit that improving industry Is is what, in their about? I increased. weight are that's shipment that X.X%. as because believe last per what shipment, I the little the think, quantities but larger more number the believe. we than per was there, the I driven, overall weight up primarily well the per but a I think we related

Operator

Allison to Landry Suisse. next Crédit go We'll with

Allison Landry

sequential the talked you about January sequentially So the January did missed but and yields trends, if I tonnage I in but from December? this, to guys apologize speak you

Adam Satterfield

you've XX.X%. didn't. I tonnage gave that overall is then mean, revenues I which and number, the got about was I XX.X%

can about of in seen recent into. most back it's where kind So this at we've the same you quarter. least or trending But it range

Allison Landry

a Okay. I per hear coming is shipment January. right? sequentially And off weight little in bit that Did

Adam Satterfield

December December, to It pounds. bumped X,XXX January. was to back You up, did. that our X,XXX It trended was highest. at Compared the in

and where time. been And to continuing bump got fairly so longest minus, there. weight that September, saw consistent September had we or that per initially in for bump the we from in stayed X,XXX plus And shipment, then pounds see it nice we

in back 'XX. most kind of where really range for early the of we're kind XXXX So part we of saw of and the

LTL we truckload, really that the in now mode that some can't so and moving got it So shipments truckload with weight the it's truckload some feedback up been kind and freight we've should, customer of been necessarily should've anyways economy. shippers we the of capacity tightening to And David's think. where or multi-stock point, shipments, fine in shippers may definitely it that heavier that -- some just on have think

Allison Landry

Okay.

that online the are Is guys more networks? been in LTL was you all? December that impacting as what trends by driven you spillover. could've TL would suggest heavy you trend, which characterize is saw moving Any -- goods that unusual, there like to maybe any at sounds So

Adam Satterfield

shippers XX% quarter, that, bit we early XX% industrial-related, is revenue And continuing revenue about that bit saw our see industrial. than retail-related shippers. of mind retail. retail little we're growth for the fourth keep in still, our success good be with -- that a It may probably more with to But but little I in think a that

as are many it's starting is success So think, goes is smaller into believe, long-term a carriers, sophisticated but And just windows more chains I component become it conducive tighter. supply centers delivery there. plays today fulfillment of more ourselves. of to the see -- like it's for going LTL and a built, to high some more to carrier are LTL, it and thesis be That to certainly quantity more freight really we we're service

And a continue the many on next charged so think of And a one reasons, those freight when be conversation to think share. back that's for start you I of the from that just market point thinking the to win a about big deal from we changes to are carrier part fines the proposition. total that what it can shippers, value discount to why we

Allison Landry

looking at Okay, long-term smaller Or into trend. But guess, all? are you'd on future, I at that residential need trucks. your the that, going that's within you not that I something what of you that maybe definitely in core some think is? of competency following interesting course, do And is mean, in up terms does that at? yourselves, see point you, guys fit

David Congdon

at are go residential do short with service that neighborhoods. every multiple have we now -- liftgate have we And center. We multiple deliveries some trailers that into

someday the in not focused but on priority not but don't not we it's do future, now. into we grow -- it And deliveries. to we're really won't that business, residential right so trying to get we our And say

Allison Landry

as either ask sense. XXXX, it how makes to way if productivity or there's in sales. just to lastly, then that maybe of there's out. that to terms you extent wanted that percent about you're I quantify if thinking in the have, carved buckets dollar any And any And you've it, Got a about

Adam Satterfield

we've quarter, got P&D saw pretty and most about year, we believe [indiscernible] In continued were opportunities the for performance line-haul shipments up gains our operations. with in X%. our This recent productivity. We P&D nice

the quarter. average as a dock load Our the the fourth up for was little Probably just us biggest under on next in year is opportunity line-haul well. X%

Our shipments hour about dock down were per X%.

hired awful we employee that opportunity But dock I the got of that weren't hired back volumes some accelerating, additions think fire, lot we've people and in were So were were of the the most performances, year as and of an into employees was an jumping that right this of of newer the there. as productive. year, so really the sort aren't it half

always can our and we in all we focused better of ways with get some continuous So operation. got certainly on improvement aspects opportunity we're running there,

Allison Landry

Okay, got it.

it the like sounds in from half thinking another their under So least potentially fair productivity year? standpoint second productivity at you employee belts, of more that Is the the see the year could cadence? in with about

Adam Satterfield

fuel out we were next to have the may our to basis early that is now. for of we where think a more expect and it. in I months, certainly on basis benefit than the the going some of going trending a that we per-shipment year base mentioned when it. cost see there, later in you some some employee that to X% part it's we see, the fuel is we But in release, of into I in and place We're higher would on so starting improvement take mean, overall, cost obviously, year-over-year probably now right XXXX. believe to increased be range in cost, X.X% And inflation

So into total that going as we'll costs inflation always And pricing about we're opportunities X%. can control, as can that do were offset spending, we think got with this for might best. And then check, be cost of focused thinking just and about year cost types other and that consistent slightly and well will we we've we the finished our the if philosophy, keep there, cost better. inflation that target on in I there, we And on increases maybe year, the our side, us. that flip discretionary

Operator

Rosa We'll of Ari America Lynch. to go next Bank Merrill with

Ariel Rosa

us the new a of of time little what's Maybe hire between a employees drivers. of give more were up the me divisions to versus remind levels breakdown you color could start to if new kind was those full with hires. dock then of just So for hires. sales kind And the wanted new which again consistent on and with you what hiring usual kind for experienced line productivity ramp versus to -- into

Adam Satterfield

our mean, Yes. productive just positions. with early was with quarter. as and at labor and we in seeing. X.X% was of last that drivers And in remember, mainly dockworkers was part And that the growing the our consistent it only growth many first started clerical-type the I year, hired, salaried that were not revenue

the then acceleration third and in fourth we in So quarters a pickup again saw the second, quarter.

of mentioned catch-up help kind last us purchase primarily. our so off transportation, of were And to It line-haul bit pressure we the required little just to were we a like operations a -- of bit. playing take some year before, use I little

to And So make I that training couple employees think months. place. of a It have perfect that can sure take superior service. to we be months, would like X a the delivering of in couple everybody our is

David Congdon

learn quite stuff, productive. someone dunnage trailer it we way of Yes. more trailers but months. the the would could a the there has guy before and how long as of you're in do the then be before, and loading worked together even And never all over racks our they and and they X first not never the and are months to really if and productive learn rate a can. before and trailer packed freight have in puzzle our and like year, rate do quickly a handle And pack X It productive. to next put takes a -- over -- before time freight that the that they period becomes lot as become at it that it become time to old-timers And totally awful that they things use drafts

Ariel Rosa

to a bit. little Sure, of then wanted gears makes And a that lot just switch sense.

relative some to of have guys side, about pricing the a On talked share gaining market in of with terms share into to market Should you in expected wins I and of to XXXX pricing little obviously strategy market or wins. market aggressive share held? that the bit you the maybe less read that getting target going the that, double-digit that maybe is be objective then overall type share

David Congdon

be to gain order in plan aggressive not market do more less to We share.

looking being our not on away its pricing gaining our the overly equitable not aggressive expect and sake to prices, merit customers each individual just for We on to aggressive trying of fair account store but own at with strategy, share. the continue raising fair overly give and and

Ariel Rosa

So be little more maybe let me a specific. bit just

guys still I I an a the think, target on or Is have increase that X% to think past, consistent? x fuel. in annualized price you spoken basis rate about, X.X%

David Congdon

Yes, sir.

Ariel Rosa

from There's on cuts great. just side question for competed maybe the been add lot the people of talk benefits tax truckload then -- last as a me. risks about away capacity. the being of And Okay,

than your get that's risk would a thoughts to a whether LTL in wanted on be Just and/or less of space you it maybe if the that's side? risk think the truckload on

Adam Satterfield

Yes.

their team to carriers, I'm top that fall XXXX. we earning in let bottom revenue capital. same the having at guessing potentially in space going invest a of XX% they're less think carriers and to it were We the the tax consolidated certainly to that profit the cost being and the of it's fact margins intend I start our When conversations industry of are back line able risk, to look the is compete that in don't change you with if way. LTL the a in other so

Operator

Wetherbee next We'll with go Citi. to Chris

Christian Wetherbee

and a to kind going and we're sort what's tightness of the of us higher a little of bit, seeing come typical increases think on in normal LTL there, in what's there's truckload would market. have lot want of I to relate see. than to obviously, happening rate questions in coming increases I pricing trying back And rate to

bit, price we So to because with could get sort year kind sense the increases it X% that in x X.X% Is of Or the of a some trying the where this frame think going end of truckload and should about market? help or relationship, high maybe think to to around little we would kind annual pull that helpful. that of specifically X fuel. it apart more us you up you LTL? the on sort be them can of get the maybe Just as what's about of

Adam Satterfield

Yes.

profitability, continue account increases I pricing conversations we to But separately is how by the other go profitability account addressed. specific have think it. offset at our is long-term look obtain cost are there we issues are want to we back, And with if that better. philosophy is looking you customers at necessary we at our and and that's that account to inflation, and we'll that pricing look our it

you increasing is back as per go X.X%. If far X% back XXXX, hundredweight as and our between revenue

long-term to with have from success. above at and base. increase that with more inflationary to And tight, trying had are in don't that customers necessarily has then times they they're we So discounts our game share roller we've customers well rates loose, feedback something why trying been to market the when that's coaster and go that's when play appreciate

And may same we'll conversations. we're X.X%. our it So the cost inflation than because be types inflation of X% be year be X% higher again may this may to own those between have continue thinking to --

any underperforming So to keep we're to drastic us target key future. will But not should we and be that. or our and growth that past and think we'll changes, where where again, really been help address going rather. long-term we'll to that's make the then basis in are that the And on they'll the continue for have account-by-account be think same we philosophy any to they profitable

Christian Wetherbee

that's a it. appreciate inflation. No, Okay, very That's of just okay. actually I that ask to on sort clear. Wanted cost helpful. question

actually side. when know inflation X.X% on employee if I can don't some X%, the in seeing some you you shipment mentioned employee numbers about us around You've that on that, what about out parse you're maybe inflation of think inflationary or that that expense. kind help benefit a basis release

we're of get Just margins, thinking Obviously, talked a how kind get to trying sense plays incremental context about, behind in to about comment. which specifics that maybe that in. want it a that but some of the you've there's of sense

Adam Satterfield

the a that cut the was people see thing paid wanted wasn't to I in fourth that this this thing, quarter. mean, biggest bonus onetime we I just tax that Yes.

we -- rate, tax our been and tax net our effective to ongoing that's related the new XX.X%. related XX.X%, rate expense, effective that around income around that'll will think to have our what to We it's be and you is, in can take old the change

of to in employees back their And XX% income provided so plans. XXX(k) net we've historically

economy significantly net-net to So will costs benefit basis, there was And but not That down employees I inflation, is But was tax related that. the think will that the last increase a in wage ongoing our we mean, September. about be a the cost it a year. X% to the bottom as on our for we whole. obviously, line. change great us, only thing biggest for provided element breaking

now just terms will we and on taxes we uncertainty we're that. primarily performance there we things there form investment increase and good side through that some the health that -- inflation that other as trends with we some could have out aware payroll change the not I cost So come of we'll year, overall And taxes. in hit states be may we of I this as good yet, side have fuel hanging the still that's that about We talking may other But benefit are some be some dental there that in get know infrastructure. costs. are taxes and with. well. right benefit costs, may and the from really of was in that could on had come are year, unknowns That other through the then have don't mean, will that there's slightly. There some mentioned, that increasing that that had

Operator

to Morgan next with the go Shanker Stanley. Ravi We'll

Ravi Shanker

having larger months a out growing can tell that players of you about from? some On some that who carriers? it Have for your some accelerate? some Is X the of from there? them gains? here. Or the consolidated the -- of is it couple seen share, is smaller share you of more you're Just ago. the the I target gaining follow-ups the of source difficulties And of share believe regional players were some

David Congdon

put Ravi, break We're on growth strong, everywhere. where whole our mean, it's rates strong you gotten growth the happening and -- finger across your coming have exactly our can't XX network company into regions. I we from.

no really particular There's it's one So region. carrier I'd particular one say across-the-board. or

Ravi Shanker

did But which if mostly Okay. regions in do sorry you terms this. the then which I broad-based? that is Or growth? missed And that -- are kind of growth you of most markets end and say -- showing

David Congdon

and just don't regional it's It's our broad-based. report specifically. things that like We -- patterns

Ravi Shanker

on capabilities any more showed Okay. up We maybe kind EV/ other the on kind assess vehicle to to briefly kind you just of us of the tax last that seeing I'm if [indiscernible] there what time tech had speed front. Tesla kind side. year. their spoke lastly, of wondering on are And out the of truck or of and right after that you've

David Congdon

we're jumping than questions more is on with the our honestly with all with We keeping technologies this eyes wait electrification hydroelectric meetings there. at answers, out to and see. more and and are anything new there's We've kind questions into are and are of And there our tractor there had new several answers And point. not and manufacturers, of tuning. the and with position

Operator

Todd Fowler to next go KeyBanc We'll with Capital Markets.

Todd Fowler

softer in during Adam, trends pretty you're little trends have freight that I'm holidays year seemed the But you the I between and from here X experience of a gave timing and don't I any of competitors here or weather from get bit the maybe about your want just standpoint but December. starting curious, of has unusual to talked January holiday some there because first granular, off too weather. a the a standpoint? sequential consistent for or your X weeks? were January, Or know

Adam Satterfield

you deal at weather events the some and Freight's where events of been sequential average that mean, month pretty recover that I weather through bad well year. trends, January our as And can storms look the the Januaries of that we But and was of XX-year freight. particularly in the we is some reality there consistent. with middle January in I of look days you there when we this are but every I Certainly, with some think Northeast, that Midwest certain as kind the Februaries. impact, and moved at had the dealt

recapturing probably overall, that Some was that was the felt I But we think of pretty out January like. may different mode, a of January pretty that strong. the to And finished some other had freight that move growth was certainly, month freight. way we but in strong, the

Todd Fowler

into with as of percentage the that 'XX? But Okay. noticed peer that docks labor equipment. half equipment? driver and the probably half as own normalize cost availability Or standpoint, you around just as is second of lower just to helps. handle moving Good, trucks, to you're your that a the Would people in 'XX? and first in the freight increased also sits far expect I rentals. from far incremental your transportation from And then capacity base have in your the commentary then you a bringing that as the the And of And understand do I purchased group. than something availability

David Congdon

Yes.

glad strong We've the And was geared earlier, year. of actually operating up We tonnage December, no the December, the have tonnage we saw the how unusual end we part long, long things time -- most of part, we freight of mentioned equipment, that's as be a and a we for little hell end it to the were increasing use feel freight people capacity of people hiring an for to are handle year, the time. January had add it. But the intentions quarter. X,XXX have because We we -- But our December. as not like a we of might in foresight and half and to this people. of trending we're it growth bit may growth transportation. the looking second our big added in I'm at have appropriately, for in the -- hasn't that the in have with purchase our month, It's happened own our

Todd Fowler

ahead, -- go sorry. David I'm And Okay. Adam,

Adam Satterfield

of to of year before. XX going It our year some purchased just a brokerage to that things. and add only supplement, our while the transportation increased about kind most was increase was the really relates XX bit and other last necessary, was we to services as a from it purchased -- basis little transportation truckload point our I to Canadian

swing it just back we with. But had if few was -- a material we those a it that runs so So dealt we be use it increase make of. was -- that minor really wouldn't to can eliminate

Todd Fowler

was stuff up And trucks ask pipeline the to of would from that the docks or internal to are either be sense. I makes wanted the for Okay, progressing of candidates like that that the something David drivers, most that the kind just that.

David Congdon

schools promoted out hiring continuing good tough to drivers experienced just from internal is up and and for become to find trying well. and -- real our we're our It's drivers we're beef We're want more, truck that, that drivers shortage there. And as But our focus and driver be the within. drivers. to on more people

Operator

We'll go next to Matt Research. Brooklier with Buckingham

Matthew Brooklier

talk opening new account the talk year Adam, the center then your also to ended to could in expectations service and service maybe for where you centers 'XX?

Adam Satterfield

estate, in this with get think timing, place, million. subject about we forth. Yes. the plan We XXX in real $XXX XXX of maybe CapEx facilities, that we'll year finished -- XXX somewhere mentioned and the and that's facilities and so just for lot And completing to comments, I around my for to a year with finish year with the projects it's

Matthew Brooklier

Okay.

increased be would pace, guess, 'XX. that openings So to compared of when center in terms service I an

Adam Satterfield

yes. be, It would

Matthew Brooklier

also plan. CapEx talked just you then And Okay. the

the 'XX? trucking, across like But the ability what spending more that, and trucks talk that maybe of of in how expectations the of roughly are question looking tractor forth process of broader trucks supply potentially, obviously, adding year? for there's comes change Obviously, I any think market, a the there growing. that, I down how more incremental that raise the are significant versus to, to thought growth pretty my lot that's CapEx talk there's a put to for fleet And are much maybe replenishment? is work a the is think that net for at concern this also you're purchases more against amount. your Could you to having, grow there price. -- to market's replenish the being guess this replenishments? would you expectations and So you in maybe guys -- to I your fleet is fleet terms

Adam Satterfield

or and that XX million and look, average side, trailers tractors years kind $XXX of cycle each so based maybe did you we what if replacement varies year the as And ago. we on on

David Congdon

that larger. get fleet's larger can because But the

the So be always will replenishment number. a growing

Adam Satterfield

Right. because equipment, remember And kept for last replacement some designated we the our fleet. what we in growth, that had of year,

there bit it at XXXX. average So right good end our was the is shape. is and year fleet's years, very at four little our probably in more replacement. age of a X.X the of But tractors finished the We

of metrics need this progress think we by we'll the So spend the continue to we're we be, this But to as we're execution where -- we'll tractor good trailer year to our as fleet, changes we necessary. look it there million and as and year, counts. in our through when I think. be well and shape. look should And see $XXX and we how evaluate at And efficiency really with at we comes certain make trending

Operator

Seidl Jason to next with go We'll Cowen.

Jason Seidl

of Just quick a ones couple for me.

Looking freight guys, that at negative towards the going in there's should there to exceptional view pushed a normalized XQ think pattern from revert and where seasonal that of the third quarter? this the some clearly, rest was of and XXXX, that's weather to LTL a you sequential there XQ sector. increase tonnage stuff some in probably year? for How more was Should we ELD-related

David Congdon

going to you That's do crystal a real ball question. think happen? is What

Jason Seidl

business, guys I the mean, you the of a see. it's -- X but pricing a there with in favorable guys. freight you looks did funky look, great in storms, pretty have and you kind Well, to little I clearly, we'll think environment obviously, the for job the handling

your could throughout on about I other basis us a quarterly in days XXXX? question remind The working quarter you had, the

Adam Satterfield

XX the on second Yes. third so Hang first in in the XX quarter, and fourth have days one we second XX the That quarter days we'll days XX -- now. in the quarter. in quarter, days

X to up So line last will fourth year. quarters The extra day. quarter X work the first include

Operator

Global go Willard with We'll Milby Securities. to next Seaport

Willard Milby

the any insurance first up things? of lingered of to into kind of here stepped some event wanted that and that half lines. of a QX? look claims kind little of Was kind at expense from of I or I guess couple And has QX. one

Adam Satterfield

fourth and we there conduct each that the an on will adjustments the quarter be actuarial occasionally year, in valuation So we make prior study, year annual to claims.

versus And on which year favorable. to and maybe trend slight highway went probably a so if X.X% I X that was least was think and or incidents most believe be liability yes, slight be I what that through that -- unfavorable quarter fourth unfavorable is of ratio fourth last we to line X.X%, the been in we slightly XXXX. It X.X%, and those This this what fourth than correctly. was in favorable, quarter, we was the adjustment, for 'XX between in the item last year. as here was well, in X.X% cargo in the And are our best-in-class. claims that that auto costs of are less it's continues X.X% said range claims a But that tend year the somewhere at and being year X.X% that we then had quarter slightly

Willard Milby

again onetime guess there's similar know of past, the mean, Was miscellaneous there I for All expenses. or line. in in in And that any a right. And step-up in estate-related from shouldn't expenses of QX? IT-related on real and kind the happen I stuff what question I been that nonrecurring QX kind seen QX? here went and there, charges

Adam Satterfield

of include think stepped not it year probably that consulting expenditures losses item well, some there. Any as a up bit equipment little does things of or multiple had that and reported line as item in I added or in onetime, a of quarter are and gains that increased losses were that some we disposed in older this little So but some we bit the necessarily types expense. fourth

Willard Milby

ample Okay. additions to here historically, to 'XX. we doors having X to go capacity to And usage kind year you're dock I to into kind year X of maybe back maybe land different add is know new this for bit we maybe your out current maybe Should locations still I footprint is your strategy? of looked X or under find the a kind just read Or of that, at going kind terminals? a in there of up that terminal maxed stepped and and current guess of XX. and and footprint a is to out

David Congdon

It was across-the-board.

choice a have can but we have have have land We we land that we that and and no go have facilities buy some no new to land we we build and expand, where one. and

facility, all large Atlanta drivers our of in like additional markets, L.A. traffic the to Some trying peddle that always situation we bigger. runs. like city those windshield and Chicago adding do we're that, in markets, have the service and we if more do buy and But with the if a we'll time spin-off capacity, And and cannot of and along run build you to need expand centers go we we'll large can try and or something because that. expand land places we either

Willard Milby

kind where you bigger the Or to go just the service seeing is of of second adding I'm think adding And as And trying more get density. -- are smaller to All a you're around? markets, right. these second? kind just more a of are of, of trying guess third you terminal getting think adding cities to I kind I about in centers, a

David Congdon

and particular where we're network for the markets runs filling in and metro long states talking of to several years that and the service expanding to to peddle centers, deliver that in, last XXX running been part the XXX, large expected a into market. is out part we our of We've both. within It's that serve is grow

some new existing within and are some So markets. are

Operator

Group to with Research. Scott go We'll next Wolfe

Scott Group

February, GRI? us I plans X. Do of to So to have a next you week do GRI, with March think, I guys a kind back or out know YRC's takes similar

David Congdon

made not any as of on We that have yet. decision

Scott Group

a has odd that you to followed else little seem this nobody Do yet?

David Congdon

bit. a little Well,

-- As has you of we'll wait it's have it odd that, yet. just is say followed and else nobody to kind see. But

Scott Group

bit you this asked a I'll little try earlier, think I more but were directly.

based an by negotiations more labor opportunity seems from that you their accelerate? you January, that coming the for if and that is shares now the tell just it can with mean, itself, of them? of is. do you do fast like it to aren't some think GRI us YRC I in there's think Given on But -- your tonnage

David Congdon

trying That's identify either. hard can't of and of and have to Scott. labor target them best our from say, negotiations, business to out ORC we certainly not that because taken because we're go We it

So be not certainly it. that's we're -- -- focused the maybe on it case, may but

Scott Group

just the think bigger benefit a And you Okay. on And then fuel a in there or you'd standpoint the sort would fuel. quarter? first from way Is margin benefit dollar in from quantify quarter? any to see of

Adam Satterfield

I right But impact. to it's when the certainly, around in to Y. some think The year-over-year go per when changes, -- should our program periods we're was try XX% gallon that's can change we've had first a now. surcharge cost that a fuel -- it it gallon was to the there's or the way it say that's always dangerous works a where And $X a be rapid to be about basis, trending spectrum. was the thing or net And of X we quarter more in an neutral. it up where up on And bringing fuel immediate as try now and down up price what fourth do, if is quarter. may right

Scott Group

change maybe curve slope some rising the fuel made as few anymore. given tailwind of your in about a So a think that we ago, -- for of surcharge the you as you fuel a earnings shouldn't years necessarily

Adam Satterfield

range. say -- on good But I down tape try did. and but the address a I the accomplished because yes, spectrum that and it, to increasing that's surcharge we way stayed fuel up you its it. we think in has on to way think falling, end. I address that And fairly we had the Remember, the some to go was low steady it the think as now, and of

Operator

Baird. go with We'll Hartford Ben next to

Zachary Rosenberg

Rosenberg Ben. for actually is on This Zach

and So have it refresh share the I dividend Tax forward increase, and your along higher think increases other the years the trying through going maybe about context in coming how us strategy with the dividend bit cash. the one. maybe through use just you of to a you Thinking CapEx, the and could of on of think and higher Act, just that, little being because repurchase in about if maybe

Adam Satterfield

and started payout the thinking in. that that of prior be we what last we we thought When Yes. the the what sort went kind And the some would of dividend was. was year, annual looked at year's of income net

going impact went year. was last of be that'll the evaluate. XXbX one going in like stock works. we the of maybe many XX% with was And just was and probably obviously, like like would've But so shares the back this continue year. we was change, and as XX% increase. So increase putting to more initially tax go the like on indicate be bit evaluate tax year. it -- buyback of the baking We it a that through and it that we that forward. valuation, grid what increase And the some we what to And to the program the higher elements than and the year, a said thought evaluate But place program, so earlier, basis don't felt felt last for the was want less necessary was primarily got to it we've we we just and as it price we'll we that what might I element the be in we reform think buy bought little a were we

than And our so where grid. the a we as company on buying price was higher were

program to that would reevaluate program the capital we now. through through when And that program a program that But shareholders buyback we'll to evaluating more will on that shareholders. obviously, like we So put dividend. long-term the method to than and return in buyback the anticipate was we capital we are basis XXXX, best felt return in we the place would

Operator

remarks. question-and-answer the turn Congdon session. like would any back This the Earl for does to I conclude call to over closing

Earl Congdon

further your through. And for day. us call to participation questions. feel great Well, a give we'd to we like and a have and please thank all appreciate sure of free you if came you your have questions great any Thanks, and today, ones

Operator

call. does This for conference today's participation. Thank your conclude you

disconnect. now may You