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ODFL Old Dominion Freight Line

Participants
David Congdon Executive Chairman
Greg Gantt CEO
Adam Satterfield CFO
Allison Landry Credit Suisse
Christian Wetherbee Citi
Brad Delco Stephens
Matthew Reustle Goldman Sachs
David Ross Stifel Nicolaus
Amit Mehrotra Deutsche Bank
Ariel Rosa Bank of America Merrill Lynch
Todd Fowler KeyBanc Capital Markets
Matt Brooklier Buckingham Research
Ravi Shanker Morgan Stanley
Ben Hartford Robert W. Baird
Call transcript
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Operator

Please stand by.

We are ready to begin.

Unidentified Company Representative

Good morning, and welcome to the Third Quarter 2018 Conference Call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through November 3 by dialing 719-457-0820. The replay passcode is 3409151. be November also company's at may site. Web replay accessed XX through the The may statements XXXX, contain of call expected conference This forward-looking performance. operating Securities others, Old Reform financial among and the within Litigation Act statements of including regarding Dominion's Private meaning the

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

results You're hereby company Commission forward-looking new statements. discussed by in filings others, in results cautioned morning's and result that as or operations may Exchange be and Dominion's in the and these set otherwise. undertakes publicly any obligation the affected the The statements release to statements, update whether with Old future and actual news among important events of a Securities may this the factors, differ consequently information, from no forward-looking materially forth

As you remarks, queue. Executive the for At the that note for do to David cooperation. before Congdon. at opening Mr. Chairman, Thank today, time to fairness over to time, sir. ahead, I'd questions this ask, to turn in we to but all, begin, company's a a welcome like before limit a few we yourselves returning your just questions final you conference your the Please we go

David Congdon

ongoing report we'll terms profitability. It many Dominion's us CEO; ability conference years Old Adam be remarks, supported to record-breaking share revenue our strong ago. has strategic market our the been third we your by Financial quarter Greg and the to call. welcome After for of our another which today plan and quarter for pleased was I reflect third the CFO. am implemented for results take to some win financial Satterfield, quarter. Gantt, and me quarter morning, results in and to questions. With are the Good glad call our President brief on

it is there employees While our and are customers. many our people, on to centered plan this elements

tirelessly a have be with our past relationships term Our worked delivering at are all ability an claim-free is ability in employees to we continue afford proposition The grow. a grow our the and as is our can price. service our we Economic as investment that confident with the our differentiated value are results OD pricing to time throughout This to profitable in family constrained have long assets build demonstrated and economic industry volumes. favorable of fair strength capacity coupled continued cycle customers positive we and as continue to provide relationships strengthened those clearly to growth. to by ability so industry continuous indicators well and with environment a

growth in questions persistently we're of begin and our slow have throughout XXXX for investors simply hasn't XXXX. one year best it in the be the from may we continued about to opportunity company's yet. about out While to this when turn years excited history faced domestic operating the economy happened

to communicate Before last unexpectedly Greg, passed respects Scott I a take to Mr. worked turn week. to would XXXX things tremendous had of earnings Britt calls. who away in us Corporate moment pay since team. over Investor a has part with to Communications like was story from I Scott our our we Relations He on went on our and off public our us kicking providing guidance and our helped

Britt sympathy deepest dearly to and We colleagues Corporate will our and miss the offer at his family Communications. and Scott

the Here's Greg to on provide more quarter. third details

Greg Gantt

ratio service a operating team execution profitable The of growth standards business our another to claims produced maintain on-time our and continues increase of with and good a remarkable. of see market is best-in-class the our ratio third XX% drive strategies. I our ability been row. quarter David, believe firmly best-in-class exceeded solid team's that share have our Thanks Dominion year testament in that in service while revenue of for XX.X% morning. our to growing and was X.X%, our Old to quarter to the pleased XX% also like this growth has we and I

Assuming year. volumes normal in of I shipment began quarter our the that sequential September acceleration due the expect growth fourth last late trends, that will slow to in in

this impacted And these we would this meet Many truckload when have service of shipments critical sector. addition so also changes appropriate generally the for some truckload call and to wait late year network the increased shipments made In preserving customers, were of negatively are and transactional these to were industry. in that in the for for second strategic loosens nature, shipment. capacity in likely protect our made anyway, moved away capacity from standards from demand more to the while LTL our us shipments. operational customer quarter We that eliminated

over while our year increases far an to strength fourth yield implications yield of The has have the compound five operating the in term, trends, weight our on long believe the results David growth that expect ongoing due to We and the that favorably growth generally revenue hundredweight. decrease been trend in shipment in the increase continue than given per better third for year ratio. improvement our quarter the contributing strategic end plan in revenue quarter, win average and and during XX rates in term to respectively, following density changes has and market that per these of year-over-year in to short volume thus LTL While referenced The environment would in yield. exceeded X.X% October to these XX.X% our earlier. numbers may share the industry we're we anyone positioned to our revenue the

lower, environment improve to time the on while commitment in the We ratio in spending. discretionary since even business, operating carefully Dominion in continuing opportunities the efficiencies, capacity improve than continue quarter even ratio believe combined win unique ways necessary drive that XXXX to slower in better With In can to to market the operating addition, growth this believe, of third invest same our the focus our was was first managing second a and quarter year. we continue share position LTL to the we to our to with is industry. Old grow our margins operating a the by

value. the in long for greater continue outlook will to in further now economy industry earnings confidence favorable joining detail. Thanks And third produce discuss us financial dynamics and gives Adam for Our and in quarter ability our us gains which this results to our morning. term shareholder be

Adam Satterfield

billion good by these on a to XX.X%. XX.X% increase per improved company also XX.X% is $X.XX. combination our benefited operating from before $X.X believe Earnings Greg, increase income Thank to us ratio effective industry. The tax diluted lower to the you, a tax and rate and grew our morning. Dominion's share factors Old allowed for XX% which the record revenue we to and and

Our sequential our the factors the increases and the the of LTL fuel shipments of in per capacity revenue both in weight described per XX.X% of LTL strength and sequential Greg. changes industry. supported per and the X.X% increased per LTL revenue quarter On increase XXXX primarily XX-year decrease partially to X.X% LTL per transportation was LTL which mix XXXX and third tons X.X%. second by basis, the compared a by increased to again included by third of of hundredweight of X.X% as with day quarter shipments average which day domestic quarter the growth shipment, the increased compared That surcharges. third was increase for caused which X.X% economy in freight day. below volumes offset when a the X.X% in as by quarter were increased both LTL yield just type is the within excluding

LTL were also sequential long-term per tons expected day As our below average.

year, the the strength increased as of revenue is average in that which revenue to the quarter average. our the our This outperformed XX-year straight the Given long-term per however sequential was yields increase compares X.X%. trend favorably to X.X% sequential quarter second compared of sixth this day

the our growth will We revenue in expect tonnage that moderate quarter. and fourth rates

on the increased revenue per has particularly XX%. that approximately acceleration our approximately revenue X%. material thus per day October, began increased day shipment into year-over-year has our the in weight far LTL a tons of September Given in per XXXX, But and basis

revenue expenses as overhead Our ratio basis is density quality of point and and to network percent XXX us allowed improve costs third growth improved quarter a operating operating direct revenue. our both

our the fourth this in our As major stated of current is in do release changes during any not morning, believe I size we the headcount quarter. and appropriate anticipate workforce

second to up keep Going our at accelerated quarter growth. last of pace an hired had the back we year, with to

expenditures the in line and now cash the But Some totaled trending productivity of normal flow ahead third nine we daily Old $XXX.X some seasonality. shipment nine of quarter metrics more are and respectively. a $XXX.X for can year. regain from taken million first operations and those the Capital million months as third months believe of were result. first for counts quarter the $XXX.X ground have that our our of lost for Dominion's million $XXX.X with XXXX we

to year-to-date of capital $XX.X projects. amount including of We on million We $XXX.X shares share certain our estate the subject Total continue the of third expenditures paid approximately returned real and $XXX capital to quarter, million. was repurchase during $XX.X expect for year, to for million dividends of total timing million shareholders the repurchases. the period

to compared fourth certain open primarily quarter in Act for anticipate rate we the to XX.X% well the for third due rate quarter. XXXX, the note adjustments the quarter. quarter made tax XX.X% floor as be for as tax effective the during XX.X% final questions. Cut was to of One effective as Our our before discrete the Tax currently of and Jobs third XXXX We

a Christmas our we quarter. in that new this providing our to We year. employees as This is will workday longer no count fourth holiday a will begin Eve

second quarter, may XX will time. a work this the impact there certain Operator, The expect XX XXXX and don't the XX revenue. be to this fourth be happy of the on in quarter day will an now this While third floor days. at our XX to be Work have for questions and be trends, will fourth open our there in in we on per year and quarter. metrics prepared concludes remarks quarters quarter the we morning. for impact days first significant This

Operator

ahead. will Instructions] Thank Landry you. from [Operator Please take Allison Suisse. go our with And Credit first we question

Allison Landry

of would wanted a I trends length e-commerce to that, shorter. quickly think a sequential maybe been ask that increase, which the maybe couple getting morning. quarters about just of it's and Good whatnot be haul, Hi. seen might with I

So I maybe understand driving what's just that? what, wanted to

Greg Gantt

our picking we're it stayed and second bit day relatively to little day typically next longer in that lanes good a be second our lanes that, just that in. It see miles, continue to will moved share point, lanes more Allison, up in relatively may think freight a I of some has our day term consistent a haul be service of there we these has day lanes length your longer percent hard shorter bit. may of next But consistent. that be I that's we opportunity maybe and it's few believe that but to have north market it - quietly and that in skewing little say, haul more think very up the stayed certainly

Our through was we and though unique regional business regional model and provide company national one service. that,

and weight haul our growing regional are well. little lanes lanes more, can And as But there so be times and those growing in may longer a longer national certainly in where be longer just we good well. per will haul space, general LTL would length transportation term, shipments industry, of envision and to the which be be in as shortening we for declining, the

Allison Landry

helpful. That's Okay. really

of in see couple to in bit does similar on a of the of too of obviously to sounds the have talked per guys you And expect QX but uptick? know it something do read a quarters I so shipment, your not per earlier little terms much a sequential to normally into. it about sequential in basis be missed weight you changing sort know strategy sort this shipment the or I you last And apologize, way but if you QX like,

Greg Gantt

Normally I out. here don't changes a major a bit slightly and from lot of little anticipate it increases really

way per You It went we up the September was pounds. in eight And pounds December. accelerated of there weight know X,XXX X,XXX when the it in had September last our of year or significant months year the were seeing been last first have pounds X,XXX to was and year to a so if acceleration. recall shipment you all X,XXX to

we were we know were in saw X,XXX made And at so shipment. operational step you some in pounds, July X,XXX changes discussed June our of we that an these when In we weight pounds. immediate per down Greg

So for we decrease see and as that's you'll talking quarter we go through I shipment think weight the were about. bigger what that fourth in a

and like hold got we'll be per strong We current even weight coming in report. an trends wider but trends if that continue volumes our shipment in impact quarter we daily could and feel fourth to shipment get Our will have the good. shipment weight of shipment more tonnage the delta on we that we've per that

Allison Landry

got so much. Thank you Okay, That's helpful. it. super

Greg Gantt

Thanks, Allison.

Operator

We Citi. Please from Wetherbee Chris with go will take our question next ahead.

Christian Wetherbee

of to wanted Yes. Good Thanks. bit decline. sort to pace certainly in the seems are maybe be speaking maybe the of customers some to trends sort the know on getting guys. of morning, tougher think your at comps activity you're you about a and terms I touch of tonnage little least that seeing from What and of

a but actions Is related you bit customer are to markets you seeing actually you are something or deceleration a maybe of say, know softness sort in of than more know that should that. seeing wise? price seeing you're some growth certain little I You end it

Greg Gantt

in we that sure the that you There seeing. We felt network transact at we you demand, haven't LTL we and have continued capacity them service and be to heavy softness of calls in nature protecting that weighted that to if price. make from that were continued in were seen strength more up network eliminate demand are to to average the heavier if to their is the shipments reason shipments know shipments. or in the LTL ability we are. shipments decisions will again ongoing more moving demand that the or transactional strength some the But move are protecting Certainly, XX,XXX we the that's LTL from shipments fine strong of to some the why we're that still and any pounds customer just the inbound that move we're decision made we and part weighted continue right the to the these weighted and seeing wanted those we were for like really

any look haven't we be point, would this numbers at seen that So slowdown. anything suggest kind feedback or that macroeconomic at customer the at of we

Christian Wetherbee

day do think and be of Okay, that's as in you bit more obviously yield out to go profitable sort out think yield tonnage implies the you focus the or be revenue sustainable you to network of helpful. XXXX, expect you? you between pretty the tonnage get on a doing are XXXX it us think can little gave overweight relationship And do update side when very on into places it I big a terms beyond October an you and to for you some per work what you How XXXX. for in yield the certain restrict guys as the Should what's probably of number.

Greg Gantt

now right boosted yield of number. certainly has a the standpoint the from in kind Well, wafer that shipment decrease

increase continue know the and longer effect at or this holds see on renewals, you in that know you was contractual it contractual wafer rate any we then revenue to it And level But may were side optics and X.X%. we'll ballpark is typically if don't shipments there our put very current volume same in a targeting are trend in, to in we somewhere renewals at look per the lower. we certainly positive general trend know give hundredweight just like know that and how but would shipment continue You sometimes the higher June the trend.

Christian Wetherbee

about me just of of for at then the the sort comments conference beginning And last conceptually overall call. one just the Okay. quick thinking

you've historically about been benchmarks incremental margins, outperforming. obviously given You've some us

those quarters, work course think of couple over time you. of you look any over last right the Thank be the of thoughts know, what at of the the sort we I as numbers new be the can company? with should

Greg Gantt

through I not, two in the and I a don't know ratio know again in the XX% certain said And margin times margins costs the we're have the the quarter you to on that's update margins. we the math in term we guess I long we've of XX% Yes. for now at XX% XX%. with sort get operating that think think call But got have a strong terms ratio can some fourth term certainly range good here know as the you XX% today you that's I that direct to I at I we've strong know and don't the of costs ready least row may that know why overhead range we new relationship long to the but closer with we're in we it versus think gone we've in to operating long-term many what incremental a to our is point we've in incremental where give that range not if quarters, the incremental, think it but seen us, really opportunity quarters generate that.

Adam Satterfield

next year. into And

Christian Wetherbee

the Got very I it. morning. this for time much it. Thanks appreciate

Operator

from We next Please question will take our go Delco ahead. with Brad Stephens.

Brad Delco

Hey, guys. good morning,

Greg Gantt

Brad. Hey,

Adam Satterfield

morning. Good

Brad Delco

I flat shipments on trend that on Adam, It's line in count previously up the stood touched me the think up I that you expect And a basis, employee that out expecting were with XX.X%. you in were fourth to you FTEs guess year-over-year said something X.X%. quarter.

you overstaffed in you're be? So, to do you it have the it productivity excess now maybe network. some is versus some provide expect you you like where comments or right feel like capacity Because can where on seems

Greg Gantt

then the overstaffed an at may since of We I number. behind back be we continued it's our we as this make little at were but in adjustments maybe we've as certainly think hired slightly little they we'll our behind bit very, this numbers peak time, We point, staffed a see with if we Brad, they if adequate make at earlier with those need are will as got I are Certainly anything volumes are point year needed, times, but think a we've very in adjustments but employees. the definitely we slight. be and fit.

Adam Satterfield

we I'll to to this that this part bit. we strong making is year just add Adam. making year Brad, XXXX. a hires and a little say decision is continue the But the into of expect

just also next that going to of appropriate current may only our we also the but out and runs So, that's running year make line still are last we're we transportation additional for we workforce sure little year, into little decreased may accelerating. we a last that we is trends, slightly that but bit wanted purchase outsource what not see had took of the that a our had bit volumes year when haul that to have

Brad Delco

Okay. Got makes it. That's and good sense. that color

Greg Gantt

sense some Brad, anything Getting the you of really basis if weekly will. makes also everybody. hours type those a to more really, overworked were normal numbers if for probably our on of adjusted folks

workforce So, can't you know kill if mean. the what I you

Brad Delco

then sense. one. that, you up is October model a give I more tonnage and in And I September follow-up what my got us don't tonnage if makes And quick have thus have nitpicky. this then in that either you you But maybe June were did far? tell Adam, shipments could

Adam Satterfield

on And basis September September On a results, count then tons in were up up per was the X.X%. shipment X.X%. day year-over-year

Brad Delco

shipments for October? Including

Adam Satterfield

that in that it's - the the weight X%. will, it's now bigger you Right if can is impact shipment right Again one and terms see of the that October having. you per trend second, Yes. now gap approximately

Brad Delco

have - Hurricane I know did trends? effect any Noticeable? model I Michael ODFL, when think of don't excuses, And the make I money. But think October Michael Yes. make of that on did we we

Adam Satterfield

Hardly.

Brad Delco

Okay.

Adam Satterfield

make And to excuse on. was with hardly. and and it but, There take was an move But we some there we impact But hardly. - some not we impact it. going but definitely we're

Brad Delco

good guys color the for and thanks results talk you soon. Cool, to guys,

Adam Satterfield

Okay, thanks, Brad.

Operator

from will Reustle take Sachs. ahead. with go Please We Matt our next Goldman question

Matthew Reustle

here. Hey, good morning guys. question Thanks for my taking

impact do terms about shift? any that short-term just to weight to shipment. see your the as talk that impact to mean expect impact in Just term longer that and you you'd business Can stick and you shift see towards way cycle. that of per business lower in the through I consider this you

Greg Gantt

already like terms I loosened if of we transactional was felt capacity freight up, more think have some would we've moved said short-term seen impact that on and was that weren't the this we ours. like -

customers find may it have us been that they're And traffic capacity and that try [indiscernible] directly managing. coming so for to through continue or the were handling business we to either a shippers from to

outflow of So I to think will. you control it, the that were if you we able know the -

And not capacity more are seen so decisions our a and it waiting we like But we've might versus appropriate might volume to these make result. in felt sector. seeing go impact some the on or some and on trends ahead change was already as when of truckload ourselves change

Matthew Reustle

like, of how Understood. much And follow-up continuing is, in just business share grow? a is that market that the customers is on towards that, to versus that space

Greg Gantt

of to of think that and Our market just our largest LTL back if share one continue growing not to terms I just model. market when continues we in long period to long-term in grow, be gets general that is any over the time, the of biggest you look when the beneficiaries,

continue to to capacity and give a grow. very we've We got at fair the service price good

they else in for got So than those anyone perhaps together space. have three and elements us think the work to work all better I

what and continue can we said, business our in we've to believe As to can do continue grow.

reinvest of the to grow to going service continue long-term we're our be any to and ability continue don't there so, certainly opportunity for center slowing give and the to us. down And we ourselves signs to will network in see

Matthew Reustle

business, in ask differentiation I it segment seeing that any the per rate growth in guess, growth lower higher in you of of wage? are terms versus I different way,

Adam Satterfield

These are you proportion. just but percentage a very just for it's out too No, not you shipments. they're - can know share be blown weighted be know us, to large of heavy

ability overall got company one necessarily it average pound it's per pounds, you grow. to our pounds XXXX but our meaningful XX,XXX on the shipment between know certainly, XXXX shipment, So it weight not to that versus you've can impact have if an

Greg Gantt

near shipment. of what second at the we and rates raise Matt. end the This pounds get in couldn't back XX,XXX their were quarter were taken XX,XXX we When was customers when they moved peak truckloads great. the happening, pounds is

and over LTL them our we know some in in Letting cases, were ability trucks two, we what truckloads to that's up And we had four our instead ship day an own. of just up restricted and three, and it period. our limited you them was on these move because so

So kind those shipments cut were our They a the we percentage so out. did they we shipment. of were were were But heavy, of they never doing. on weight what large per have an impact

So did those we we and that are when shipments we of the the eliminated raise types did. what rates

were said, doing. Adam part like So, never what big a were real of we

Matthew Reustle

average Understood. at the We're per medium weight I look guys. guess rather the very helpful. shipment Thanks not - but than but

Operator

will ahead. Stifel. with take next go from Please Ross our question David We

David Ross

morning good Yes, gentlemen.

Greg Gantt

Good morning, David.

Adam Satterfield

morning. Good

David Ross

having is X% pricing, per I'm the help I X% it about on down shipment yield. the me way question impact that yield, with hoping So in positive relatively but sequential to you mainly understand was just going can like was a start flat. understand than growth only more whole

I I'm understanding, maybe just guess So, commodity there's or class something yields, freight the we're in jump a big not that missing? adjustment

Adam Satterfield

it a the got June, full we September. had year second in last if quarter third to the effective our versus the we in comparing in of second this quarter was you're for did of quarter this it quarter to - impact quarter we get of so quarter Well, year, third GRI effect year's

trying ways, underperforming been accounts, So, we've some yield cases and trying throughout we've address that in the and multitude be it year, to ways been try that we underperforming But tables, yields. could to may it in be improving accounts fuel address and to certainly multiple a helped. of different address

to on some will underperformers the if account individual philosophy long-term for focus is the our department that's the address does because environment maybe that think carriers our of have given favorable some that and the every help able and pricing profitability all been us of that's be you so probably very to to what to I obviously day. needed has support that that

Greg Gantt

accounts on that them accounts. I'll new and density program, we good the forth. on profitability these new our more when of so them on an oftentimes year of are you some not bring We certain as not accounts, add were to standpoint. you only and David, new from a in earlier thought growing and accounts they as were lot bring under LOR assumptions, brought pricing existing with we [ph] gaining a and And

So and are we the large accounts. we and of with addressing the type those with we profitability, we can began have systems track the way and cost

As we we servicing our keep volumes those continue accounts. felt to like address you had know and our to grow

bit me that's helped year you know I it And yield So addressing little a later. accounts. was early new

David Ross

That percentage roughly And of then, is makes GRI? that the business Adam sense. what by impacted

Adam Satterfield

so. About XX% or

David Ross

talking versus about know in of you remind does the and any the And you whether for past just David XXXX-XXXX know Greg, you environment than question how period XXXXs so guess XXXX you or then this more you're last would I freight compare back economic environment really into time others? cycles LTL the

David Congdon

of freight it's the strongest environments year been seen… this probably one Overall we've that

Greg Gantt

Ever.

David Congdon

ever. --

one started and of one XXXX really the environments. going the cranking been into just has it of it So in strongest up XXXX

that of we've still our service book solid blessed service. And the a and for struck might comparisons priced right start that know levels generally smaller we book concerned price our customers a our looking solid year-over-year is the fair are business we've and were got but services of now to that of claim-free we You perform. growth with performing in well terms a is asked appreciate

asked services perform. the to that And so and we're

margins we we're to good, and our And for and we're but just we're of think - XXXX. opportunities the growth year-over-year are year, about not for a improving so look because next the optimistic as tough may still forward growth there continued comparisons strong looking the

David Ross

Great, thank you.

Greg Gantt

look revenue strong comparisons the year excellent. is very top the Regardless very what to - a start strong with. the like, With base of line base

Operator

from question with Amit next go ahead. Mehrotra our take Deutsche Please will Bank. We

Amit Mehrotra

in guess Hi much just tonnage forward. with of growth, everybody. Operator. to how growth decline difference headcount? much is you incremental the about maybe the I bring Thanks, One at more way and way lack quick the the network headcount can on shipments the the more the one, adding comment a shipments release it, respect going headcount per shipments given look How but to out better without of shipment,

Greg Gantt

It's as say, our definitely stand some now right do in have can but for stands, some growth without capacity we adding. hard it to we sure workforce I think

a that's thing. good So,

as the improve all. even I putting more focus to our workforce us. for productivity an point some one think to thing this that's and That's we're really at becomes productive, where better try

think So and in some that's cases heading. you we're where can do I with more less

about… good feel So

Amit Mehrotra

Yes.

Greg Gantt

-- for, our capacity. we some work definitely have

Amit Mehrotra

And and have know the as first structural you margin at we tonnage you've I been book those why talked you XX% it's capacity just then kind some been of all when in calling know - you an just really more these it parts? about don't so, down some just we and you margins, every then you stay profitability business ask positive very know cost you've seems obviously shouldn't don't better you've go XX% to the a to Adam and lower quarter of that than going comps. tough have to you profit look running shipment given going have XX% you at But quite very, visibility I on a a that not incremental standpoint, and contracts to at underlying side, territory. that pricing of levels a guess at strong, - headwind and you obviously perspectively willing or But you little XX%, on mean, forward from have per bit like share seem maybe of lot least. weight with given have seemingly moving incremental

Adam Satterfield

always it. Just like and don't But into said we've got we we've share. visibility yes,

the been the year And that you may on different the versus estate you you got And why centers when our timing. a as you strength reasons mind six capital XX% it manage network. system. we've top the that don't of to that the service in and incremental the those growth network to line incremental that was range some very that's doing was our you support margin you margin stronger weaker and calculated still one revenue XX% that look think slowing. the XXXX that centers versus we in long-term talk added the - when a a prior XXXX the In quarter adding the be. we a to Typically, know as XXXX we're keep know growth is in I we're We've real are you a of be and add for first where need inefficiency know we and a typically, far can be good trend know year in growth period a there's had particular the But when is example, high thus add business revenue know period service we high were this positive and and comes expenditures margins what to of periods, incremental side I where into about periods margin cost incremental think there was has we to lot versus to may growth. a

our long-term the and decisions long-term So to we're are can going support that be. continue revenue growth to right for to make

may sense out those be line sometimes in of sync what of doing. is top the the And

Amit Mehrotra

of in the That's I'm to sure quarter One it's just the me the understand on shipments not again, one more compares I'm up a that of historical provided trying of how to kind and in me. change basis. the you just to slowdown that in if prior if nitpicky September in the sequential strength quarter Yes. the of from a from was really Thanks. tonnage the reflection sequential okay it months and course quick

Adam Satterfield

shipment monthly per and I'll Yes. the I'll with that. give weight start

average that July X.X% per July shipment, in that versus the and a August XX-year was decrease versus weight XX-year a and In average the when sequential was the X.X% normal X.X%. again or an increase XX-year a in average a is And a it X.X% September the point of June increase. was was change versus the but decrease decrease of biggest being a X.X% increase decrease. had X.X% So is we then

So tonnage side. that was the on

X.X%, XX-year versus X.X% June, shipments of August it versus X.X% XX-year September a is decrease the Then in the X.X% average increase was X.X% a On a increase. increase increase. X.X% of the versus July was average And average was decrease.

Amit Mehrotra

per And to the right, was it weak, sure? shipment, tonnage was make first weight just not right,

Greg Gantt

tonnage. Yes,

Amit Mehrotra

appreciate walking Thanks me thanks. I it that. through great, guys. for Okay,

Operator

go next Ariel question from ahead. take Merrill Please will We Rosa with Lynch. America Bank our of

Ariel Rosa

gentlemen. morning, good Hey,

I about first the So operating sequential question, the wanted ask to ratio. change in

fourth basis been LR the from sequential reason over the XXX in to quarter it's look should the to we past think quarter, quarter? there about Is basis of kind XXX we to see that third points any years. this As change from points few fourth that that variance

Greg Gantt

XX I specific over a sequential - trends. year monitor years got we'll obviously to basis year has last We'll give continue but there, bit average little think It's XXX in revenue a normally slowdown growth the to basis a want like been point up about. you're labor-to-revenue five the we've the XXX guidance But is average that talked increase the in don't right. the I points. Well, we've this

we've got just productivity opportunity Greg I some as think side on the mentioned.

we fourth progress through be calls quarter And closely we will so evaluating here. the as

alignment of the statement the income think - and There for trends down things lot a calls us. forth. stars you right were of so those looking the strength at I that and go had lot when we in and quarter, for a some up went third of

you what our always the know aren't so things that standpoint. from in certain expense necessarily from are next - never an to just control quarter one And

Ariel Rosa

Sure. That makes sense.

given to about do of kind the that's ex-fuel. to you X% strong, wanted you migrates know back trending but like historically pricing pretty you about to know the growth was of extent strong guys talked I it pretty question, third the sustainable into range? sounds timing or next to So you that October. have X% guide, quarter X% think kind you ask Obviously it expected I'm still kind that of it's X% what to in targeting think pricing wondering GRIs of

Greg Gantt

has revenue per a hundredweight fuel That's that's long what next so necessarily our that what that's term on basis, not it's range has done. in X% underlying to X% trended pricing and

on per real against cost that compared basis delta you our shipment it and then know positive reinvestment there of technology that demand and in a us. continued to the more support things to other revenue be estate, customers at our per a think we I look shipment and needs there

X% inflation you XXXX, shipment wage which shipment to whereas closer going that X% is up probably say our and about when up per to our cost back had trends look forth. we've so So is the and primarily per closer revenue to

So, yield a to the trending our revenue get yes know as is back needed than increases year performing out than we the per And gets shipment that. about. in that and But certainly linear metrics the can weight in like we tie stronger changes with formula of that to little - but no rather per think there's go ability to in know weight, and like - changes generally weight the you quarter effect does through and environment I it's been yield that shipment, we've as the and strength and decreases shipment mentioned shipment earlier metrics. the optics the per revenue cost better this the those third by positive hundred yields supported you per favorable that that but those a has necessarily certainly revenue our weight on talked per

Ariel Rosa

OD of this the you to sense. a makes me, start call that cycle. through has at last question for Sure, And David demonstrated grow know just that the ability then mentioned

amount could should I'm know a about how wondering just guys a some to concerned is of managing be added extent, do - if be the a we you slowdown there is that concern, idle what fair that that to in that capacity, up and capacity think maybe obviously OD risk? is You've cycle, with you left current that

Greg Gantt

to Right can company don't that it frankly now, we have we the back longer gets run. the how and grow and concern over believing

competitive have we with has last real that not The the if in amount over that As had as it range, capacity probably growth we've a we you of as we will from the the the past. couple door you closer like excess is to think years. We're have advantage know, the been standpoint. probably that's own to of our pressure a system and estate in capacity that great XX% we

- that open of think service a us know expect quarter. fair managing centers low, us short-term looking not we've the you expectations and about in to probably If centers what bad And I thus got service the as to going so, or at there's - got just next number to really doesn't any to then fourth on short-term of longer-term added we're kind too to centers. hit either. well. depreciation service we've six And to we've one into We've openings then look more continue two out far, would year,

either. And are so, those believe in too us we bad those - hit things are

invested what been and are to we believe - capabilities our invest to those to - in very so are our continue to and And on certainly we long-term capital need supportive do things and in return strong our continue the has want ability ourselves. of invest to

Ariel Rosa

for Thanks time sense. of lot a Makes guys. the

Operator

Todd Our next KeyBanc ahead. Capital go question with from Fowler is Markets. Please

Todd Fowler

this should the coming you forward? as think from Was productivity Thanks XX% benefit and anything that some on slow there we and anything in positive the or and Adam, either or the Great. or standpoint healthcare as morning. just headcount a of employee about salaries growth continue line below see wages like quarter, negative going leverage can you unusual good to revenue. ramps you're on

Adam Satterfield

as we and benefit cost on our there percent and unusual quarter. XX% that a side, this typically the wages fringe salaries was of Nothing give

around bit it north the recall you of just If trend quarter, it year and the half was I a did. in we it commented and XX% little it second expected down, think we trended back it that in the to

on salaries and cost, percent was of cost. in continue cost we're the our labor on a well little strength of the We're we bit still may benefit I a headcount, it be lost that as revenue seeing growth, that revenue So, But despite leverage tremendous productive getting the expected. XX% our growth clerical of productivity. as of something think was our kind that with

of operating us to our the certainly of allowed impacted except just support and that had calls supplies we've the improvement of yield to the and for most volume that leverage everything think I the by revenue primarily expenses were fuel. that growth

Todd Fowler

workforce that back been basis basis and or the And a around Okay. or benefits years within changed the ago, years a year over there item on that years. does rate drifted a that historically think I XX% revenue, you to go higher had that the go XX% that Structurally, back full of revenue, past high maybe of if it's kind the run of then business, as couple line in that model, six or forward? roughly about going of being the on makes things composition have of five

Adam Satterfield

from of runs, it the below particularly and was when some of still XX%, was to our it of in the transportation more our Midwest sort and when line Northeast, XXXX, revenue we XXXX back line. X.X% in haul and back Pacific the the was were Northwest Going XXXX, purchase to outsourcing

we're a as move basis So now PT it points just taken of kind up of operating X.X% and cost supplies and range. a, depreciation well. goes that and of were that there We've as benefits, well into some XXX salaries, call in into that and expenses that PT wages as

the assets is a expensive. more So cheaper, service for the controlling but if back little bit envelope believe of be it albeit has you may it we may look do that been the outsourcing like favorable a controlling us, calculation, and

Todd Fowler

you'd can had truckload of to - would those coming the some the decisions. into that's Greg don't has you be that going are truckload strategically the capacity you are some point to freight weighted not of pricing you've see, just mean, loosened if the visibility, made know loosened. that But pricing you heavier you market you of some tell thought impacted metrics. going your the I comment decisions market market to back that obviously or can helps. back that able made you you the - I And that, spot have made some to freight last I one Okay. was at quarter, third That the had,

or LTL? trying and general looseness tightness with kind Just of of in between the a the in truckload the truckload to and sense relationship the get market spillover

Greg Gantt

of not shipments it that appear some means. does in on demand our by for the has what was, loosened it Todd, periods services it any back is not those peak

appear some. So loosened have does it to

Todd Fowler

morning for guys. the this color Thanks Okay.

Greg Gantt

Thanks.

Operator

Group question Research. go Wolfe next from with Scott ahead. Our is Please

Unidentified Analyst

Hey, for Rob It's guys. morning Scott. on good

Greg Gantt

Rob.

Unidentified Analyst

near-term we've incremental third obviously feels when thing, could looking the there quarter got spread be similar strong. deceleration given in relative versus of One slowing - improvement we productivity? more be potentially fourth light a we're growth It to like in in additional of and margins or quarter then thinking upside bigger even spread out growth. headcount incremental in that a kind shipment growth uptick that should kind headcount were margins very How of about yield between and

Greg Gantt

you so even is to X% fourth you to we XXXX, what continuing certainly revenue will long-term materially XX%, to XX% time, periods know and we'll see you supported above say in we're we kind certainly to I Rob, XX% when various this what a know pace X% at the You growth I in is and XXXX revenue difference see been to to our in we up rather our and potential going growth the know continue growth to still way you that's revenue up there and now, a of think strength about line in standpoint and is made the come to continue that got of to it's they think in wouldn't there kind whether the shipments long-term and continuing grow I know that I trying quarter of at obviously to know - but strong been materially that's of can to that you know yield yield know of change I over yield the you continue some well know we've strength of is know average, X% and just averages that all have expect you strong just got look anything on lot don't going XX% is. revenue I even it's up going place kind to level below that as maybe the back we growth you think are. top said in give we've that know to slightly that, the make as incremental October, But of it's continuing versus a and you not of from yield because back growth growth plan or in know of tonnage I - margins earlier you know at the change a right when what to we've started that or standpoint the the that absolute growth able any know though you at I comprised generally trending balance shipment there been caught revenue specifics, sort know putting and what X% we're some growth generally from it and the strong those probably think you or was more double-digit

and sets to So, year. have those strong be what finish a you know believe strong up quarter to could fourth it certainly really we a the

Unidentified Analyst

opportunities now surcharges, XXXX as adjustments kind That makes quite quarter With in Adam, talking and to of still nicely leave last kind the question. actually that are make terms want into sense third we you a next to in customer your more couple regard to to where segues your across fuel of of be fuel my - you've there? some been base bit calls, pricing. or component the are just you of of there

Adam Satterfield

overall at as have may earlier so we've a year about of we've it's about $X made table, little improvement places in you off mean, $X.XX. was the sequentially think base increased, and and remained trading good is third a customers that which increased fuel some increase. yield I and rate average versus We year, it's on is had contractual a remained thing. in fuel had relatively fuel know that has gallon multiple is started yield certain has but the the this a I consistent the quarter probably making elements a adjustments there's point the I addressed some lower bit versus

I all been of or improvement of the kind into year. wax goes over the that yield think has ball it

Unidentified Analyst

levels feel that's and seeing basis, recently? where drive to Got there do or is what it. is net-net And of we've from been an it opportunities you strengthen be like all-in some at should more kind

Adam Satterfield

we based now look elements we certainly cost up, just all of fuel then we're cost for at to not to they we paid that being whether the the of cost impact of even that that on north lot petroleum fuel We tried it's But scale. lower when get that many There's make it's prices in total we cost goes in scale of face. and products where the indirect structure. know that don't end I are need and just if that if on prices when where where on to a a customers I left go the even waited of be to we think are the part and we recall contracts it was stay, fuel declined many back stay price we've consistent been now, depending to are fairly and when to it from we our where XXXX and was that address in there's think those appropriately band addressed, where I has at sure the a maybe diesel or because fuel the lower through our use.

cost other of see elements we of cost fuel. diesel and just so And inflation outside roll the

Unidentified Analyst

guys. Makes sense. I the appreciate time

Operator

Brooklier We will Research. question Matt Buckingham our Please from take ahead. next with go

Matt Brooklier

for Good I'll at thanks. third have count do morning. quarter? you Hey quick be service Adam, the end a of try center here. to

Adam Satterfield

Yes. XXX. in We're

Matt Brooklier

looking a as end a for out year-over-year directionally where been terms This total CapEx you growth year has in of could investments, to have up? sense XXXX we're

Adam Satterfield

starting typically having for estate year at now I my We this out the to But CapEx time start - we year point doing would the for another where earlier, to think we sure. of healthy XXXX. this that planning We're anticipate point. our that haven't is finalized of real

Matt Brooklier

helpful. appreciate I That's Okay. the time.

Operator

Our Please ahead. with from Ravi Morgan question Stanley. Shanker is next go

Ravi Shanker

Thanks, guys.

just we year, on you earlier the even OR at XXs front, a Just a a couple follow-ups slowdown was levels-ish. if the or of shared not get of the if the commentary kind in on of call current the expect that next you kind to I little OR here, surprised remain to

current it What Given side, level, the you service. is cost that see lies? more in that we do on think can that OR's that customers on become side, it service price that where confidence the sustainability retain versus you typically kind you of gives is slowdowns, focused

Greg Gantt

drive on do what most Ravi, side year, do some it's equate where we the if - that some some have we of pricing been, to can so we for we've we I surely and been economics a opportunities a do. cost so. lot a whatnot But you lot could about think for the in sure. run the dead think opportunities certainly I this are you there work our think so you improvements what and that of year see drive and hope make and of there, you we know the We've economy

wait we're have we economy within opportunities slower and So to we just a make holds think do going growth see. even to have if some at some and we network our the But think improve, improvements then, certainly can we rate. to

Ravi Shanker

historically about you to just XX% the something And you say number I XX%? or is clarify understood. have you spare Okay, capacity no, earlier, about that believe did said

Greg Gantt

about the Yes, between of right, know that's network. it's on science of sort service we've to excess a XX%, to end the you're capacity historically to about no lower try target we and XX% within range. but and are exact where kind you XX% there's now, probably we right of that And calculate center

Ravi Shanker

from your seeing towards industrial any are in it. your lastly, base, of kind about of consumer? percentage on And growth what us this are shift I there's e-commerce LTLs an And is that? probably got narrative been from you more Can has seeing you you historically give you e-commerce. been know think comes going importantly, to I what then just side, which the on focused update general in e-commerce. benefiting prevailing tonnage Okay, tonnage know mix more

Greg Gantt

say what's from know coming necessarily it's you Ravi, e-commerce. hard to

of need Certainly of push presence. LTL I trends we'll it's think, every needs that that's overnight, do type freight But of for in that see to terms shipment some to but it's retailers to happening. the into smaller e-commerce we sizes generically talk believe continue something retail have not we environment. and should retailer and that happening more

LTL time LTL, got programs grow which share have In able good is good there. for market service in retailers been on it's addition, our full many and carriers, these for to we've but not only high

probably faster most will but our of highly up result a sort if and if little a of than between related LTL are XX% XX% to our this but growing it's think about about industrial range. freight bit in little in you XX% historically is moving the picking certainly couple about As correlated business quarter, in XX% points retail customers XX% probably the and industrial a in that general. growing that's typically retail and are customers oriented drive industrials you oriented and only with will, we not business And retail bit XX% and higher. had I continues staying recent same, to industrial been But a our

Ravi Shanker

Very Thank you. helpful.

Operator

Our from Hartford Ben is with Baird. next question go Please ahead.

Ben Hartford

any Adam been or change center of Hey, minus on good kind XX morning, that count longer the guys. service term you've plus talking about?

Adam Satterfield

continue XX-ish we're be things we be probably may centers it in in we've an consistently we to seeing the type pretty I inter got more grow in want process you you range base now sense the know what one think the seems been good out know takes like lately area more centers but in shortly point if out having more say standpoint. got existing we last developing a a think real plan few type nice and here those growth more good sometimes our that's annual the it to find fourth know I estate a of at company think in and we particularly as But is the will reality service find more you we and service The as it's investment of that from that in metro we're we're land we've over count shape, little But be you start sessions strategic there. the but shape makes a efficiency - years know we've more quarter. know has a in long-term to think be our range bit. next probably the planning service as change. this our I'd got service see we through why longer going building little that bit and our and for good plan I'd bit which center find little like reinforcing we and to we'll could we've slowed plan then I year it's XXish

Ben Hartford

has particularly risen balance recent quarter cash at Your end in quarters.

the of ratios management higher the over with that underlying a the opportunity year past and leverage words in more more a you to flow you've rise you've the and As a bit balance down improve base some cash cash needs, the you line or to levels this minimum the take start that differently? bit pay and do over doubled about sustainable at rise cash presumably in have the seen there little as so? you if free real got In progressively think little past minimum the a you look sight seen think about and sight sheet the as way is other you've cash to you margin estate context levels profile to at down cash of cycle take line do opportunity continue having to OR some to the of some more management of of of

Adam Satterfield

really balance to year, capital to like able and flow then on a capital it's And probably expenditures, - a target into to shares had repurchase spend our increase little took but program. buying we'd that rose Our being shareholders. we we've year-off of operating when this cash cash returning

so faced are lower more at of these and scale particularly looking land the that like to we'll little But the in cash to our in price and we're centers now maybe is the in with go And California expensive reinvesting we'll levels, the areas going more service extra that typically so buying bit first down way component share a we've works allocation than continue sales priority at and program many our use certainly forth for and the where look capital we're in so regard. shares our be at repurchase and than past.

So as that returning that can and continue will when be increase end go well. we spectrum with shareholders, certainly we to evaluate we'll to maybe one capital and the ways in down that and use

Ben Hartford

helpful. That's Thank you. Okay.

Operator

no are additional additional time. at back there to any conference I like turn this would closing And remarks. Congdon questions phone the to or for David

David Congdon

anything to day. you for Thank Thank great a Feel and your free further. you call questions you much, all have have and participation today. very if us