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ODFL Old Dominion Freight Line

Participants
Drew Anderson Investor Relations
Greg Gantt President, Chief Executive Officer
Adam Satterfield Senior Vice President of Finance, Chief Financial Officer, Assistant Secretary
Chris Wetherbee Citigroup
Jordan Alliger Goldman Sachs
Ravi Shanker Morgan Stanley
Jon Chappell Evercore ISI
Tom Wadewitz UBS
Scott Group Wolfe Research
Amit Mehrotra Deutsche Bank
Todd Fowler KeyBanc Capital Markets
Ken Hoexter Bank of America
Bascome Majors Susquehanna
Bruce Chan Stifel
Call transcript
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Operator

Good morning and welcome to the Old Dominion Freight Line, Inc. third quarter 2021 earnings conference call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Instructions]. [Operator event this being is note, recorded. Please now Drew Anderson. would like to to over conference the turn I Please go ahead.

Drew Anderson

XX Dominion call Gary. statements replay XXXXXXXX. to days be NovemberX, call webcast XXXX Old XXXX, the the at Dominion's you available of company's others, third Line. performance. Thank Good today XXX-XXX-XXXX, quarter conference morning the accessed for operating replay may Private conference forward-looking be regarding and website. by call Act including the and may and of for contain Reform dialing being of within The recorded is also and meaning beginning welcome Freight This Old will Today's through Litigation for statements, financial code the Securities access expected XXXX, among

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

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

company's for sir. this like Please and to all before to opening ahead, time questions ask but that your Gantt. go note, before President of advance queue. returning limit we today, yourselves I the at we a couple Chief a conference your the fairness time, we welcome in begin, would just a final for to questions the over Officer, Executive Greg At to you you in As Mr. Thank to turn remarks, cooperation.

Greg Gantt

welcome After to is conference take call. and CFO. me call will morning Good on brief questions. your our be to quarter some we With you. Thank our today the remarks, Satterfield, third Adam glad

produced profitability. During he new and the third profitable revenue company Dominion growth included for records strong quarterly Old that quarter, team

of our the third straight double with digit quarter double growth The in diluted was straight revenue third XXXX digit share. quarter fifth growth quarter earnings per and of

our consistently While in our to our ability for revenue capacity. impressive grow long commitment demand is reflect at our to best-in-class results the invest result unprecedented the rates of these service, term

the qualities and service, to within have We which continue distinct our are continue win Dominion. best-in-class capacity, year will differentiate for and demand competitive into have limited market and as XXXX. Old of also as believe supported term. These With to environment continuing that growth fourth our long of us we qualities produce share ability available macroeconomic industry the well both network the through and industry capacity profitable provide in a services transportation for quarter strength over advantage this

advantage the chain to superior needs. began continue the our of it for for delivering quarter under believe continue. the of we to long growth many execute creates we XXXX a important these capital of result, customer strategic also we generally business to take level term on customers, a and supply plan proposition to expect value us at profitable strategy will capacity into technology in To be that As further service to that our have operated support further on for us invest price opportunities produce momentum will This third focused a our which and years. fair that

family to continue the in will of be OD however, investment, employees. important most Our

between We added June critical each third and to to in full-time employees of day tirelessly success provide XX.X% average additions a this to our X,XXX quarter are service as increase full-time Our value headcount of to resulted our they compared work September the year. customers. These people new our in as over XXXX.

people While to this growth. grown continues be support to our we the the year, future our have capacity biggest need of OD family

new that As the expect use next a transportation. reduce team growth we and be will year. believe result, continue we to to to employees the prepare full-time for additions will purchase third-party anticipated of We and add further quarter fourth to also our during necessary

the to use to expect the at fourth levels purchase third-party transportation quarter We third during similar quarter.

support performance. like to to third the our revenue that of the level this of to best-in-class remains our team to standards the must our parties we fully customers. capacity reduce supplement service committed to we our of in utilization, would we same providing We excellence continue topline hold While our with and fleet and of people work

our for many how given to deliver. with industry to superior Dominion our standard and customers' expectations the support them to not growth. center change, excellence Old and to supply regardless challenges have that in of move complete ability service we confidence Our currently chain freight do set in of ability the facing, we them capacity service customers' their want provide are our our

term. results we are us and other morning detail. now our discuss position than you better result, a we carrier believe to in Adam further for share shareholder win financial joining over quarter the market greater any value will a in increase Thank and this third long additional As

Adam Satterfield

operating good quarter to XX.X% quarter. Old increase led to and to of XX.X%. third Dominion's combination changes $X.X earnings our Thank and The in to Greg (revenue for grew share per XX.X% a the these you ratio the billion improved diluted morning. $X.XX in

yield, between balanced within the the Our domestic issues by were capacity and and industry. volumes which revenue was economy strong growth both supported LTL of

the in LTL per also on XX.X%, from revenue hundredweight increased which the Our XX.X% impact funds fuel LTL program reflects diesel our surcharge prices. increased and fuel increase

a result quarter On XXXX sequential LTL sequential XX-year over compared of freight. more increase as our remaining XX- hundredweight quarter improvement per XXXX only comparison. October, as basis, with average compared the in changes continued mix revenue in the tons third with XX-year of as days trends shipments per the increased second to to XX% to month approximately day increase Excluding X.X%. initiatives a sequential October XX.X% per normalized a day increased These as yield a XX% day point a fuel our success increase the X.X% average increased for work our LTL few of At exclude surcharges, as LTL of to metrics our revenue this by well X.X% the in X.X%. compared has average XXXX. when per

quarter as in quarter revenue will the a We provide actual basis to well primarily third categories our Form rising The cost operating quarter, ratio XX.X% as of of our XXX operation efficiency. the leverage diesel details continued points, to growth as created during petroleum-based for although focus points the cost by October third operating fuel result supplies and operating basis XX-Q. products. related the improved a of revenue of Many and the XXX percent revenue other for as our on due expenses our our improved increased

a of the periods wages benefits improved basis salaries, As revenue, and compared. XXX percent points between

$XXX.X third were within increase and for than XXX Dominion's $XXX.XX which first flow Our that our estimated this Old projects more expenditures periods. timing million release this year. $XXX.X XXXX, nine year. our same purchase large quarter and category point We now in points real this months will are million XXX our capital operations prior improved the pushed basis expense cash million into be for transportation. million offset $XXX totaled basis from the on in expenditures morning of productive noted labor $XXX.X respectively, and cost the estate The due that decrease capital estimate the is to $XX next mainly from for million to be while

earnings further time we our expenditures but at fourth the age to expect capital XXXX provide market reduce our initiatives plan about will with and to increase details this fleet. average our of support We ongoing expenditure to share release, quarter our

shareholders during no through We continued return dividend than repurchase share XXXX. accelerated later March our million third and will share the that agreement capital to expire programs, quarter including repurchase $XXX the to

share return currently of XX.X% and For for tax rate dividends. time. $XXX of the be utilized the remarks repurchases happy morning. the first questions This in million shareholder $XX.X compared year, months rate fourth for included was at cash to XXXX quarter nine XXXX. the will million quarter. we floor open XX.X% for this programs third concludes for as cash for this prepared third tax the this XX.X% We effective our be quarter Operator, for to our anticipate Effective the

Operator

[Operator Instructions].

Our with from first Chris ahead. Please today go question Wetherbee Citigroup. comes

Chris Wetherbee

picked September mention, off, little tonnage up. a deceleration morning the to you quarter. Adam, the bit tonnage below before trends, seems you normal. it Hi. in saw And a are I Thanks clearly, trends August is the sequentially we what mean little of start like bit guys. a of good Maybe back

maybe So how the here talk conditions October. could what intra-quarter we into of moves that's and saw as little a sort and you business in played early about bit out quarter

Adam Satterfield

Sure.

of driving One harder in out quarters LTL of for continue wait larger, as we shipments system. recent fact to focus the rather. transactional as we handle of versus that's the well continue point in in try the are is generally change more traditional to these nature and type the to bit to out lower we for a things that shipment that tonnage little have change And talked our that about some shipments shipments work within to more on

between impact trend of sequential an the line at that big right question, June then sequential a the discrepancy, shipments and but in a July as work in just been the we had but But through at what August. shipments. above you and back little with a your point that in back X.XX%, the the quarter, there. overall when basis look look were general had pretty tons were we X.X% the versus to would tonnage little So step have volumes shipments, the normal at we if trends in will, versus discrepancy we of When really and on a they bit XX-year

labor in in just big customers day average ongoing August, the rise effect and certainly Our an is warehouses that July. directly changes affecting and country reason a the and had from the are And throughout on COVID started many that That was across there. issues the indirectly, decreased country. cases fact increase tons that really. business the per for The X.X% seeing we X.X% XX-year

XX-year pickup results to throughout freight be to be economy But ripple we our some that business the was to us, effect, reflected it when a couldn't think, to as an was there started in able certainly labor improve, such So that up average deliver our that change well. pickup And rates, I tons not and issue accelerated some as saw the so in towards back caused recovery. able Really, cases, through cases were September but in the of day August it X.X%. per end we of September, over began of really participation of the month that significant August the X.X% versus in

certainly So we it of so made the up quarter. accelerated and through that as for the end

Chris Wetherbee

it would Okay. like That's day seems per maybe that very suggest that continued. revenue in day. October trend And has helpful

So hiring the some context about think of kind are the as curious of cadence that. that inflation obviously imagine, at sense a but tonnage ratios we operating wanted pricing on very there's and would side. rapid clip. the to we fourth get of But with strong of a normal environment, look follow-up, I about quarter? through I sequential as How you do with of, a kind obviously

Adam Satterfield

And we mentioned Greg year. quarter. frankly new it's employees we go continue to we remarks, Sure. prepared bringing on the focus doing Well, something all that been through on have as will in fourth our

change have straight I quarters. If normal exceeded people, sequential change you think, what trends the and our in at our been, for volumes in have look five we

of something certainly that we the think that will that that's the into confident demand we that feel continue XXXX. strength extend will So given the very environment

that much lot us good So right our be it's line capacity the point said, cost But line be the our growth to we We of XQ right in the accommodate performance customers' in side in for ratio increase some to it change for And service normal be service onboard. that that's of sequential line would expect quarter. trends. still to fleet And that of basis about to really center that in to still up I in are face to expectations with With and feel those and to quarter. were to sequential from operating continue we coming is best-in-class able third build the and them. the that to people, in to important pretty to a challenges. performance, elements with the calls deliver able need all XXX We was in continue third XQ. business typically to our XXX what normal from right factored

employees. should come as, range in both some we to continuing able to to new in that the that be calls we while relation be have investment think will I at in

We are delivery equipment. on some taking still

there. continued to in October, as So would well to you still we incredible the performance and what be have with and offset have got certainly change and some topline those is But performance otherwise inside trends overall above cost on volumes has for our revenue pressures sequential that's we got be normal performing to, are well. we the certainly alluded continuing yield as But strong. revenue the pricing strength helping volume

Chris Wetherbee

Great. for it. That's appreciate Thanks helpful. the very I time.

Operator

with is Goldman Jordan from The Please question Alliger next Sachs. ahead. go

Jordan Alliger

Hi. Yes.

it the should expectations volumes? Thanks. some roughly relative of less once you headcount in to need related I year, you we headcount about things. headcount past whatever get volume track the think When growth? headcount the a need, growth, this are volume do and Or Just on follow-up, guess,

Adam Satterfield

Yes. extent. all got remember, will to you Jordan, ewe most I to year. continue the to think it But tract, for part it really some chasing have have

growth hope. do play At to will that But forward. level to to continue start catch-up least our we degree. pace moderate our type going think out what I has and needs we that's to accelerated, continue back As normal to more and we chase some

Jordan Alliger

you then per look per And had people want seeing as are order Okay. good and it. cost you employee, assume, push the others, up to the success, and wage to however you or to obviously at in the need employee get I have

Adam Satterfield

Yes.

We September wages. thing year starting rate past. that We in in have gave cases done years our some the done this have have we in same annual to we and increase had

we had had of bonuses have some kind where We and things. have referral places those

So past. in we matching have had quarters lock-up

whatever have having success a at takes a the having things and to little little I it and we were expect But do We success. continue harder differently, We to are just folks work to so. do onboard. get will it bit you

Jordan Alliger

Thank you.

Operator

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

Ravi Shanker

Thanks. Morning, all.

along similar that So trend. maybe is first question the

that well You Is to that guys do Or several also the in capacity? excess the the known quarters, time next does build doing? are in everybody hatches capacity get to And are the environment? buffer, you build competitors building right also now of capacity. cost to over your given current keep higher and XX% the they Are industry what How batten your think? trying trend trying to price? the

Adam Satterfield

well. the next quarter as out front over have and at when investments finished continue LTL we which Ravi, And it the with that's last term still to longest about and finish in form about that's we that in we the of transitions same XX% point are place. the but most years our the to we excess that people on XX% been in certainly and at were will as put capacity and in I mean service the the is capacity hardest takes center important we this consistent year we But into businessman. that's trucks network then year.

volume despite able the performance XQ, So that we to spot. been in we at sequential strong had capacity that excess same the about keep level have

And the short really mix. we it need really have believing our work all to continue levels. probably investment But So the And got mentioned, going focused XX-year we our to three that but keep had those are than into that the on we we capacity to and know this to as been certainly, through as continuing to And came people strategies of we competitors' into exactly we keep really in And in this adding capacity add came have forms. balance term made. year, biggest to really after be that's year our goes takes more anyone. that year year. back the it we what we into all don't are Greg

have expanded XX% the over count our door years. by We XX over last

center others, any a nothing here scale. have maybe We of the some little seen investment service there but and from major very at

that best-in-class to got share still for And has environment win than certainly, believe able an we service. to And else. we us created more anyone be market so

a marketplace periods the anyone us into more phenomenal in expect we that we year So got have And the results else. advantage and have in and when usually for that we been gives the we like well. got than the pretty have strong produces as capacity year marketplace service capacity we see to advantage this get next what in demand and

carrier which from confidence best lot to profitable of from it us the produce So levels currently positioned the are continue we growth operating. value, we increase a gives say, and shareholder are to even to

Ravi Shanker

the detail. great follow-up That's it. on Maybe thing. just capacity Got

Just like trucks get XXXX? going like all on Or new in you or in to happens are that maybe something in the XXXX? look need you that that feel trucks, XXXX do you does

Adam Satterfield

going we we think indication there are this time, asked for. point get that have We At what to we will in is not. no

wait see, far standpoint will we for So good. so to obviously, is the outlook truck a have but and

Ravi Shanker

Very good. you. Thank

Operator

Chappell with question Evercore from next The go Jon ISI. Please is ahead.

Jon Chappell

further either ideal what's your And sight year? terminal the and to the Greg, about, an for end of door Thank terminals XXXX? it the you hopes Good by year, early of have this you. think XXXX. in as us morning. or of remainder give for count? take Can new call pushed can you count some definitely into nine on for capacity will additional XX even if kind next line on a maybe this you pace although on holistically, the What update we of the step acknowledging last mentioned months, that relates

Greg Gantt

we open to in we terminal four going to count, numerous we this we about another I calendar exact have year. that. think I Jon, range am you next got The in working but that the And expect others year. Yes. for have that to or are next eight we number like can't are say, give year, something for XX I an on three

we we lot and a we in time, start got have pulling on we that those teeth, we some as will, awful and we could are things, the be what's like take projects of lot lot on middle need then go they an constrained. just we we got So where working if But you think we remember, help where locations forward. the list were in of But have capacity to cases. know

to be hope wherever with continue are. So all whatever, accomplish and that able to our to needs

Jon Chappell

Okay. And be will the along follow-up same my lines.

people their immediate or and some here, thought expansion start-up on terminal when to margin. the aggregate goes weighing capacity expansion, think costs potentially I

Given the scale size impact just new a a of terminal from the that pretty the immediate entire of ratio better on there the firm? your network has today, de minimis impact is operating of tonnage aggregate so onboarding that

Adam Satterfield

out, I are today. covering start certainly We Yes. markets mean all we

it open a is if profitable much with when starts will So new we a good of facility, immediately. book already and business, you pretty

in we of capacity some center out up frees move new freight service existing into also the ZIP and that so the Codes And that location.

today. customers about in the freight we And our of are our our focus So that as increase we per our continued be, I support over service shipment expansion year philosophy into yield getting But it's center of of to network more in talked their lot XX% leveraging supply we and benefits a our but that's count shipment every in been part of expanding also when and it service invested revenue to the investment will what in door that kind processing have through network to goes and about talk chains sophisticated, exceed on that network why our certainly XXX we become our dollars that cost our management center process years network. are increase all as per about earlier. inflation an

effectively we real that we So that's on to the of our something and want material customers behalf that capacity are estate we be investments of really have. making only it's purchasing type

to great within service becoming are real So and yield continue it's we out years that won't and past. with XX time our centers afford long plan. think important got the support the to to in growth estate have for to are as in the more for what parties good to we competing want have carriers expensive growth are, us great We got lack probably in go position management probably had consolidation due growth we ahead runway to spot we to network But in more keep certainly, given and to of of where us, ahead these We the that we find good stop market the good a it's service industry, to we investment continue that the levels to feel curve us success to and detail like we But industry had curve the so of different can by growth. to further in have a continue past. We general a feel bit in expectations trying got certainly for given got be a the that our win that's team like stay us the we very always XX in the of ahead than there.. have a a we and of to the about list stay be of a little we got add have at we for centers share. context

Jon Chappell

so helpful. Thanks Absolutely. Adam. Thanks Very Yes. much Greg.

Adam Satterfield

sir. Yes,

Operator

ahead. from is Wadewitz Please UBS. with go question Tom next The

Tom Wadewitz

morning. Yes. Good

there some your constrained clear Or pretty maybe maybe So pressure? truck Or is a affect they I lot you and Is cost is chain how some noise there, immune first business But you are some supply that discussion to think of as well. do it? some the it's you pretty And intermodal there load tonnage is obviously, to you? Is very there of get ask But to how labor affect constrained kind on wage or think ports. broader constrained, the that's just chain constraints any of wanted don't? you constraints to you? just spillover just and broader much perhaps they supply freight? around effect

Adam Satterfield

we sitting going the on obviously strength get of to lot But, off mean know is don't West see in warehouses Tom, immune Coast. I that's whatnot, stuff anything continues marketplace. do are seeing a in out and we the water are that whatever those that change from, change will or by suppliers where change any strategy certainly, to comes But the as our we But of markets. necessary. goes was some have immune anything. or things we to of right as do there the customers whatever. we feeling and the And and and to, strength the in not there any I continued it to or our is if possibly into now, adjust freight

far, has but I a the will. would minimal, so to immune if going And say, that's not impact Again, been huge you somewhat anything not on, impact.

Tom Wadewitz

Yes.

Okay. I it. appreciate

October. Another don't broadly mid how pretty And year. about about But digits single high-level single guess think for the more And in tonnage about ballpark Or year? be high what you question. framework tonnage. level comment go want you I per in And back tonnage next do would what fourth in the you of about for could to if talked do high revenue XXXX? to be growth quarter? you or tonnage about like growth I XQ? might day know a it Do digit know then it growth? be I next kind you bit in think how potentially for

Adam Satterfield

third in Those quarter. pretty the October to and numbers want yield balance were don't the two per pretty growth give guidance pretty between split We any But in evenly revenue the of is tonnage close. consistent, like it specific was se.

as about that go quarters revenue that was obviously over a trends we third quarter. see recently normal that certainly comparisons, increase really have comparisons on think per work a about hundredweight which, or the market are years. through so XX% tougher after for increase, like volumes metric to the a to side get was considerable the day, revert bit Certainly, fourth what XX have that per think through When years the we reflect about were five our as of volume each and performance month little are yield versus will whole strong overall It been. they then we last the But month of by period strong continued lot the prices six to year, number. kind Typically, where the as well. fuel quarter gain the normal we trends strength our versus sequential On way, the outperformance such we again, we seeing shipments continue reflect still share accelerating month, ago. our you averaging were XX past side, of

So volume any with year. with there that us don't what gains in a we trends, some But d numbers. is think pretty right the operate sequential normal lot that were share I of we overall, But just market that you those say if to on side forecast strong numbers on now, next demand. respect the to we And want say seen is. that's to haven't letdown are

that year, continue volumes way. be have continue more capacity continuing customer to more like see constrained. carriers we this going next just conversations we could So it's to push seen And we and that and will and are feel our slowdown. especially level into year if of demand this based on we certainly unprecedented everything hard any certainly are call other that to That see read, to

in to put then our mainly out seeing the any grades have be of in are take got to focused just focus and it our brokerage the is that's to what various a LTL position we as to in in so, moves make bring non-LTL And in out division Southeast be there. and focused it using to lot handling sure been term our a with growth, truckload onboard customers care offering which them division ways, strength solutions their and continue truckload has we c shipments, we which on help is of that them continue all as long profitable well is

to to comes continue to trying but to finish transition We So you can. relationship ball going fourth respect with continue serve all a got eye best And strength. off back a of and focus to your we to year are still quarter customer as we out to them with as XXXX, it the into keeping building that with with lot do as our not well. the work this

Tom Wadewitz

headcount, It pretty good as just your your fair? additions, headcount. that sounds like next planning it you seems resource year growth set, line, well, Is you are are for are you doing on what

Adam Satterfield

being sir. to get completely We this focus. we past the standpoint. just back the right that's in got But it certainly done to again exceeding from using like the to now, And we supplement that's count. the managing are try Fair. haul source headcount in We back it able still our to a what will reduce business take and getting transportation. And to Yes, shipment purchase to team our have line customers. our to serve

long term, are we growth, those the and up to back with shipments. two really change in year-and-a-half. the in But headcount, we if past year have shipment aligned, have things and catch the got under been for change Over numbers the you the will,

going to see so be up And the likely but business are that not it's next anticipating only to that with to really year. take we regain period sort overall growth of to a catch our

Tom Wadewitz

the Thanks I appreciate Okay. for time. it.

Operator

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

Scott Group

guys. morning Good Thanks. Hi.

Adam Satterfield

Good morning Scott.

Scott Group

line years? it. about to the imagine will on you put over year? calendar guys OR sight for several sub-XX% be like do a can't I next on clearly got But you you to to you for ratio the feel have timeline So want or operating sub-XX% getting XX% of

Adam Satterfield

you When has the the operating continue we ratio, work past of the I got out think that the in XXXX, the depths performance just look at. to of XXXX, two-year have had recession. two-year only over something the back years, really two we improvement that by been exceeded the performance coming that's in to

we know over the room got what improvement. we are and confident of last really for few we achieved feel to we we that say have proud have further years So

operating term, each per I quarter long we over target basis cost kind of delta have to start be. look will think averaged to what fourth XXX ratio in the about wait we get the if will sort back gets shipment. again, between until point and But we talking year revenue improvement to really our our XXX that's you of that the to and next

years, our go those cost we of and managing XX to all over XX change XX% increase but XX us of look performance have each well. year as in we that revenue do done into an considerable some next we at to for over the term long want that look XX% that's as creates EPs, and XX% what into each headwinds that along value that continue on and continuing and period to cost cost producing numbers, out in the the share past go with driven you about the lot offsetting And average to two focus horizon average productivity year year when our a model. term So short expanding annual our

work focus certainly a of hard happen. execution on lot make on of a lot it of opportunity, and part So but our to

Scott Group

and know on ask mandate want any there? then Do that? then for labor just guess, the you thoughts expectations or Okay. what And your carve-outs, feel like I it's to think it? How things. happen, And normal more planning vaccine comp are need side. given for on we you per you the to wages going headcount. on I things than increase to I inflation? touched are have Do employee two

Greg Gantt

bonuses have years, said get we can the I focus. are still Yes. to challenged increase different every it can continue past as And annual the have will bit improvements. where a I past. have again mentioned we do do. done at standpoint. to little this years just I it. before, things But to over done We we We I I what time. referral people. But benefit work we to of make really that don't certain said and pay where to to and pay we find got harder some pay think before and those locations we September I doing with think Like have a different have and have will over we do don't we Scott, in from an think folks. different did do had forward mainly. anything hiring look at have that And significantly again, we in standpoint, We course drastically we had year a from have bonuses And as see benefits going give be

different ways accomplish whatever looking We we have needs the avenues to are. for hiring are always and that

that. do continue vaccines? last to was you will So What question we that asked about

Scott Group

mandate are asking what plan and you to your on it. I vaccine thoughts doing was for Yes. just

Greg Gantt

right Well, some exactly sight yes, what's not the coming where now. sure exactly coming. that down and heard is supposedly of I line. line the clear love But we just would mandate a am have heard have to have to as know you I thing same there's we

had success you I incentive back we And know that think we employees our months four that. an get to vaccinated. have we offered some actually, with ago, about also

as mandate get It's difficult, my be goes, extremely the in would the testing. vaccinated far As that or opinion. do either

the can working accomplish, of And that I I figure very still there Extremely, on are out it challenges that going be to to industry, would we if that trying testing extremely difficult But comes we We to test think does. on numbers a are want to and impossible. to God difficult don't weekly if to have some are accomplish basis. folks that. say it there help our how

think chain we But at really see heads tailspin. the throw supply into you will it that some have got country, clear issues crazy where hopefully, kind a of some But will goes. across point. now prevail could If it we

Scott Group

that? have be the government says confidence the Are that? you everyone confident hearing would that? Do X Are it thing, disaster. you in same gets that you mean a

Greg Gantt

sure sense some there all. No, in common Confident that know I to hope in that? prevail. think some not at I are time, has I government the at point gets forces Washington.

place we whatnot. lot I of it to there place whole and time, whatever common we prevail. will in at some used exempting There's different truckers, think vaccines have a the hopefully, things. strategy not a But a with working that. certainly, that success have might be. this some And couple think to relates that, mandates I has I for am sense sure for But point point. and is the of on ATA as is a to it

is, I thing fortunately, moving the other direction. think are in the right numbers we the seeing are

was news far am did of a state But the really I positivity As lot sure. to just I down are ago. for this do are saw they we that the on months look not dropping. a COVID Carolina, numbers goes, several they North Maybe morning something back where rate. better X%-something as than the

where some kind I and if think at into again, as with you common that are we So will those point, numbers things, of sense prevail. of take account far cases as the surely,

Scott Group

I you Thank appreciate it. guys.

Operator

from question Bank. next is go with Deutsche ahead. Mehrotra Please The Amit

Amit Mehrotra

question. incrementals follow-up wanted you while, to have Adam, that a those up XX% maybe imply them obviously really term a that's kind much just incrementals been you to the talk about XX% moved And framework of are the long you that, that But given That's would a I shipment the bit growth kind Is years it's low in that of down the company pegged about disagree of for ago? plateau much on Just versus kind kind have little of saw framework has outpaced and of of than evolving. kind of seem settling OR. in now. Adam, be anything, incrementals much. sort very you how of low-XXs coming reversing level. very for XX%. you doing there expense margin to at Thanks growth. incrementals Obviously, better think relative how see where structural Do kind you obviously, with? types few the

Adam Satterfield

the to this sort the of just of the don't we to had take were we revenue a that ratio. do manage long company calculation the can towards building what all term balancing have where margin talk of opportunities. improvement XX% company ratio an working that's target said we incremental Sure. for growth think we before, operating more we of operating the inverse goal. used the work we and margin. really out in we say XX% the as And That's really but about One, that the We within

little operating So earlier on quarter get I around fourth based about that that when fourth will of somewhere bit us quarter, I annual give what we for ratio we to kind think puts on the target Obviously, at a call. the color an more mentioned XX%. our

as target incremental But required how time. it like that incremental opportunity incremental we a within We long looks to can of margins particular don't in balanced fixated certainly business. margin It's investments that are to want period as And we down of get margin those on have be really And to to left of we structure again, be repeat laid there's don't our think how structure of are costs I short you the XX% a with we and growth year some on we based think referenced variable an strong lot our a And want in as I quarter a cost about growth. XX% because, longer of our go the between term to down this year. talked have it on success at drive overly that measure before, biggest numbers business history. we earlier. our to be. can operate because will OR XX% our term we able when the incremental comes able So out cost we margins, incremental kind in beat will fixed the that and to this focusing

that But headwinds. some ton create to you focus. and it the so term on miss that opportunity a at to be can you value. going And the investment only if of shareholder things that's out drive lens And look that's requires through, short

a focus, will that to in whatever cost necessary And continue get saying so breakdown, at the make keep pleased lower. and the think confident producing the to we whenever sneeze might business And whatever for be opportunity and say will that down that that that with point going stopping the next how we to the certainly the can works. we final managing it's We of ratio lot drive here. the to strong left point. we look bit, not a anything meaningfully next term long one, ratio. And operating there's stopping we quarter pretty be, threshold algorithm XX.X% on the feel very that if operating investments. a to that to And are am at I XX%. I structure drives that's don't al based little But incremental think continue

keep algorithm continue certainly into The we the we for and us worked work can to for So marching us future. the will in forward. past think has

Amit Mehrotra

makes quick a you. as that And Yes, Sure. sense. just Thank follow-up.

of at a October cycles drag providing or were deconstruct of has tonnage, You that decent to when think through kind level. a in When high been obviously weight neutral do for weight that’s at least the do helpful it's you But a obviously, tonnage. because tonnage a you happens per But you relative headcount little cycling when growth? bit to of number? shipment to implications more the think for drag through shipment like tonnage and the

Adam Satterfield

Yes.

a back we you this year, quarter. second the the of average. in X,XXX If of at sort to That dropped still to range were X,XXX-pound quarter go first

probably And likely to feel in kind settle or so minus of range, are like so. I or we this X,XXX-pound XX plus pounds

tonnage normalize still that, bit And by see and have that so of more want to comparison. with a one the little of the drag, comparable you first see quarter shipment But it should will more call and to a next we year another. with XQ, if start you performance

Amit Mehrotra

you Thank Okay. appreciate very I it. much.

Operator

The Jack next go with Atkins question Stephens. ahead. Please from is

Jack Atkins

my for good thank taking Ho you morning and question. Greg,

Greg Gantt

Jack. Hi

Jack Atkins

out to versus yield digit continue moment, further talking price pricing the OD momentum the about rate to XXXX, of year? the business for you that LTL And just carriers to the for commentary increases in XXXX. in a based potentially the into you about maybe speak have be of second maybe of from half expectation the around acceleration momentum as to double guys pricing speaking look yield momentum and seeing the thinking on year in here a I just thinking first contractual guess but the half in we are kind the sort kind broadly? that about you the with potential How Not that more the just increases. should of XXXX. core maybe the specifically, truckload perspective you demand of into Can market think for and about

Adam Satterfield

the carriers take that Well, many use demand try and meaningfully to push of of capacity we the and and the to industry, past, out for environment the advantage imbalance, this margin. supply in continue prices I think are if to certainly see the higher improve

type of our supportive environment that of certainly, pricing is initiatives. So

that approach think customers down talk and and is one about For us, with our equitable. it's term but a one we of that sit can more consistent long fair It's we what of needs are either that reinvesting to service is terms reduce cost ways or ultimately to going are our what business the improve in in inflation and in our cost. customer investing

and win-win our both it's customers. us situation a for So

so and to that. our And and try inflation cost target pretty we then with been successful some have we

with But that continue will be said, focus. profitability. focusing that so And individual the are the to we on always account

are ways And when types their last yield. so through some as are are It's others. issues there's as environments, there types always couple price. those address to some in to of we these not not that accounts and years you the improve operating really had over And that of the good accounts ratios are different have of that

that and the you sit yield together on that's down And there. you where work improvement build your create of same results ultimately so initiatives different through can and relationship

we believe for be certainly, getting in able that will remain the will there that's are customers, we to strong we strong in be that industry given certainly benefit. grounded the the and expectation capacity we given So for mainly the trends environment demand which of the and very lack the is from expect feedback industry next year, a that pricing to

Jack Atkins

Is maybe if you? some a own function of changes And curious would bit change on mix? that's that Is comment? a comps? maybe your more business little structural you be if expand maybe of Just for on function to kind driving Greg, of guess a extending great. around And about a press haul little Could that following of That's up. out release I you in year-over-year Okay. just had a the what's basis. comment that? back length you maybe maybe bit talk a of that a to that could going

Greg Gantt

are there's contribute in that I of Jack, we And lot freight point. to West as length sitting I an obviously, small some off got at know those that. would of the in, mentioned Coast. And why that seeing out the has before, I all don't move awful are I think there, haul. containers our that seeing right that's of to increase think strength now anything we else

Jack Atkins

That again time. the right. Thanks Okay. sense. All for makes

Operator

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

Todd Fowler

to to little Thanks is the that historical on quarter, the expectation like and the good guess maybe fourth is in because typically Great. to a have than be and going it's seen be encouraging you purchase in Adam, pretty what morning. bit seems comments progression that range higher headcount OR I be elevated. transportation it the would the growth

the typically adding you few So a the maybe what bit little helping in you normal running PT? would than within things XQ a despite stay and heads are more that range more are

Adam Satterfield

typically, we we of day Well, performance a the helps bit topline shapes from certainly I the will, to drop see you think rest just one, in performance offset quarter how And if you of XQ the see that, X% will. softness, per But of a if about lot to will little our X.X% up, cost. revenue XQ.

October, are And will. you so current if based on the performance, we definitely outperforming

So lot we respect us a a labor about for with of that of things lot the the the talk we are cost puts see will where doing to end We costs. But quarter. within wages in And line our seen pickup this lot line. have XX% that's and productivity year, a of our cost especially of delivery total our and salary, and we operations. probably haul benefits managing

dock. the lost some We productivity have on

will It's Certainly and have manage quarter. that that we about more are little as the the focused first our this people a as the that think to trends been will it. labor on. quarter, of not all to reduce think that's third can our that rates be transportation level using having levels were something haven't the We freight if But and are equipment. And that the given dictated in of to and will I I But we pay. that on we the we help focus point, well, that able at utilization level So opportunity bit. same be that will that be in October topline hope beneficial the that we purchase the year. some on continue fourth front with we reduce quarter we that think

we think wanting expense to four the really for that the we reduce able topline trends that have had have to talked last be call, category. I have quarters, dictated utilization. about continued quarterly But every

business But we that to this topline that performance as So just offset we of bringing and a help of will well are see see some people. the lot are we balances where that out. is on focused on within management will that inflation new continuing as cost strong here there's as that

our We will and in will are the higher costs quarter worked likely were to benefit the number as third employees. see continue to expect our that continuing of hours balance that by we out continue

we going be increase offset factors incremental feel the As inflation. other workforce, help contributing about there's to But costs be more we of that incurred. that good to will benefit some that all cost certainly

Todd Fowler

That sense. Yes. makes all and helps Okay. that

just more depreciation bit you And XXXX, timing and is trends have? how look cost at like pretty that Just there with equipment Do take based know on as can you given side. a But This depreciation would of I much just run of to kind kind will for it that a see my XXXX on come deliveries of little PT I where timing an of have with any expect put equipment the deliveries? can tail about the particularly year. into coming follow-up, that impact catch-up year, looks depreciation down. thoughts in flat be last probably depreciation the being going of

Adam Satterfield

have seen equipment the we year. bit Certainly, this Yes. delayed a little deliveries

will be. the is go base our at of get to will term we to here be that that in will But year to pretty already be percent manage add kind trend until that in delivery be at cycle then But what to that that you taking But fourth CapEx we adds preliminary with to are anticipating. too of well. conversations the deliveries the too equipment kind do many typically, we with that next in has completely are trends, about that CapEx certainly to full as that as And that complete are the some then we growth that are what all mentioned, look finished are need roll able CapEx will next something quarter spending we XXXX. into into want point. of kind only be there's believe next had order resulted But than out depreciation the us about our come have year CapEx carryover haven't in, the plan that this We equipment. consistent expecting year will be some we year, factor ordered this ready on bit delivered And depreciation with will we we will a XX% more of There expect that's details base. up we units and this the September total And and as there from into all get Greg different we of the a that that we really don't CapEx. through OEMs to the and we some periods. be long will depreciation will plan. on quite year's of a I

Todd Fowler

it. Got Thanks morning. Okay. for time the this

Operator

with question Ken next The of ahead. Hoexter go is Please America. Bank from

Ken Hoexter

Good Great. morning.

to join So and Greg call. your happy Adam,

for me. questions cleanup some Just

covered wage I they are the now? lot. stabilizing? idea to get just how changed it's thoughts incentives, on want environment. an through Greg, accelerating just The Maybe have the they You year? a on Or are

Greg Gantt

in and moderated, whatever folks the into to some Yes. We But that bring we to it issues, when some back needed. implemented year we you the if bonus some Ken, of we couple degree. having incentives, were things. took plans earlier go on did different that's

whatever, really or of. of tied incentives, I We bonuses those increased aware late that haven't am

some degree. that's think to So moderated I

Ken Hoexter

out to good get noted you your quarter, worked quarter. look to incentives people a Are typical smooth adjustments a points to to sign Are smooth was The and it seasonal able I XXX to add bit? moderating, are there third Adam, sequential that? you a you surcharges on So are that's guess. maybe commentary. basis there XXX fourth you that OR still if

Adam Satterfield

that benefits an year. in And fourth that can at process fourth no quarter, a annual go that. can by anything No. get line. We a actuary insurance adjustments our other move the be But that of bit surcharges the items within our program or it there's to line. There's couple are quarter some each an accrual-related like through There looked actuarial unusual. insurance

in be the there So some can adjustments past.

look last insurance the our and about We material when as in year, years and move you of are the But we estimates example, with quarter, X.X%. for and X.X% the year claims are through been run fourth perfect at pretty been rate it past. those line had haven't and was they at overly minimal a only

nothing that's of So any favorable a a those But that of other things, comes from there. adjustment, will, else little different you types bit if really in period. absent

Ken Hoexter

centers? that door beyond Okay. to And in doing that service the XX% on need expansion one in lot what highlight additional is just doing or centers on to and adding then room just terms talked the want other XX%, about improvement terms any a for the expanding service you get maybe of my capacity turnover per is of Anything productivity with last you you doors. you Or are network? gains

Adam Satterfield

I growth we capacity that to can XX% that to that that of control this anticipating world, like really building not don't the to the year, what In system. still handle in it's be come can are but freight and can only LTL going the of service it, to the target are that doors trying be capacity that have us at the may up, building XX% system. excess maintain ensure think through growth next processed amount we add center network levels within anything up to just our to are to make different the really sure we the we the

to factor centers want And those never and the we easy our service so to And come network a quick are additions don't our be growth. not either. add to limiting

critical really the that you out even important present. might seeing growth market to invest So the have softness. to those see XXXX, in so have to be all where in we are it's to and were that them periods accommodate we XXXX in The investments and for there it's able us why made opportunities you

more out make and to us us that build our to just we continue more there their we want to freight. So of to ready and that want continue just it capacity sure on customers and give and have as call

Ken Hoexter

was No. improve to you I existing capacity. more do wasn't if arguing the just gain need for additional productivity the can I service on anything centers wondering additional centers. there's to

Adam Satterfield

be have and expanded going And performance say center cost Well, then breakdown. I there yield two freight to particular center the mean the that's service generalized comes every is just that average the to one core to center the an as ratio we that service yield that that at drive density got years well. has where ago. XX% average If service XX%, level stick certainly, on through offset may to in it of inflation improvement operating we keep incremental to just

that So out that profit maybe in And improvement we depreciation. a any grouping level. already across each that have it incurred expanding been facilities center may got year have while service scale and you are incremental driving you XXX build facilities now XX at large given expanded, we be so, or

bottomline the the driven line. then to continue drives to of faster that growth So density that's and the is what's yield invest top and contribution model growth really than overall ahead

Ken Hoexter

Adam. appreciate you. Great, that. Thank I

Operator

is next with Bascome The Please go ahead. from Susquehanna. question Majors

Bascome Majors

Yes.

big flat look next in increased measure over last not employees that questions pursuing service is OD, have to five know door the customers, capacity. earlier, and enough tonnage mentioned lot are frame your of you for I we to the while down can and market. the value or of by centers, industry it? count growth-oriented big lot decade. where though approach really a you you for noticeably? you you. all created of years, when starts over them, forward And more your look as of As competitors, a the was though, does decline to shareholders. get XX margin I Thank the investment growth or the feel clearly, mean or it XX%, of terms a as whether we like more your But market most however on want of you to how had to that do share of we point benefit

Greg Gantt

the I take we look not first I enough. at big am that your question, is shot really a big how that, Bascome. it sure of will like part at

to focused I I that what think become? it's don't does do or needs have committed How are think based know. they we us? we to our know that's something on don't take that's our as key. see that customers the have service we And that sure on. looked That's I extremely big make all Where not at them and need we productive. we I to do do. can where and we where

wherever it really But are, to the And say see. it takes looked wouldn't continue guess way. address to will wait road, that will them. and I that we So have our have needs just we we where us? I down at

Bascome Majors

the for you perspective. Thank

Operator

The next question is go ahead. Stifel. Bruce with Please from Chan

Bruce Chan

and morning me for squeezing here. everyone thanks Good Hi. in

far new Just dock want breakdown us for to labor? as how Adam, come you new in go the potential. on it a you give of you process, and hires the just back productivity the maybe the And are that you of long up some those hires potential? follow-up, Can quickly things little increases. does as take through full a as and But to get then to you. those typically color drivers labor to some where touched between side headcount Thank onboarding on of if coming

Greg Gantt

got the move our both Yes. have to It's the Obviously, employees to breakdown. and have we platform freight. drivers

service So the pickup just employees pretty we freight only our productive and balance not customers. for has responsible moving handling as the the have as are growth drivers, that our consistent line with labor then well, centers, the that our delivery had and business employees haul platform drivers, mainly and general added for especially freight the new

of driving that's conversations to labor that is say majority country. given pretty XX% the something So that, And up is especially around the all the essentially meaningful, headcount. in headcount growth shortages your about been the it's

biggest been, the that successful we how will. would learning happens us. of balance we hire you curve proud more, a for we dock The productivity. And said it's to on certainly just we to So are love the have fact the continue on if despite

freight. airbags, that claims too haul, that X.X% place all us most The for to new big get one have number and particular in can't The And priority of use part to to in is proposition. make have trailers, line dock management in are important the that's ratio on that. cargo we the is whether a utilizing everything dunnage, to that load that that another. we claims bars the You to is versus overall metric customers' at one And sure really the our each continue employee drives our tools protect X.X%. overly value understands their up caught the techniques that

more a that's that really is our part of are management piece the of of That's motivated that understand we big a and and make of our we us that, something and So equation. between that our yield many competitors. proud success years sure value employees differentiating the the of part factor over

to preventing may sure is That's ensure maximizing be to that for are effectively place six-month haul. to queue. and entire our the on they utilizing learning is line biggest element the factor claims cost people make it of they there our also a in other piece come curve load are So

opportunity But more on manage But so we you versus focused make if per opportunity to a we as shipments will as think that people the to good us year. certainly, more be factors, why of cost they that's just turn that next would see drive now of number we seeing of that balance improvement on are those want And some to as love will, improvement the you XXXX. hour are page I And are into that seasoned, at might dock. certainly, we finish new that pretty looking for productivity further sure key that the some those opportunity the some we out the gives the year. into

Bruce Chan

for Thanks Great. the color.

Operator

Gantt like question-and-answer for the our turn Greg remarks. closing I conference would session. concludes This to any over back to

Greg Gantt

have you feel anything all appreciate if your thank your us Well, day. you further. to surely have great and a participation. please a questions and free today for hope Thanks call you give We

Operator

The concluded. attending Thank conference now presentation. today's you has for

You may now disconnect.