Old Dominion Freight Line (ODFL) 27 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Greg Gantt	President, CEO & Director
Adam Satterfield	SVP, Finance, CFO & Assistant Secretary
Allison Landry	Crédit Suisse
Jordan Alliger	Goldman Sachs Group
Jack Atkins	Stephens Inc.
David Ross	Stifel, Nicolaus & Company
Christian Wetherbee	Citigroup
Ravi Shanker	Morgan Stanley
Jason Seidl	Cowen and Company
Amit Mehrotra	Deutsche Bank
Todd Fowler	KeyBanc Capital Markets
Ari Rosa	Bank of America Merrill Lynch
Scott Group	Wolfe Research

Call transcript

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Operator

Good morning, and welcome to the third Quarter 2020 Conference Call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through November 4, 2020, by dialing 719-457-0820. The replay passcode is 8105860. The replay of the webcast may also be accessed for 30 days at the company's website. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion's expected financial and operating performance.

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

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

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

Greg Gantt

creates rose increase history. hard quarter the on-time the was in challenge continued After this of the service deliver matching which record operating of on today strongest described value questions. many The the of cargo third of times our generally team volumes service in third demand second a it further quarter fair OD to our conference which to delivering morning, customers welcome you is for simple continuing the technology claims glad on your superior profitability challenges and the is capacity the of related yield the X.X%. take brief to be our the we initiatives. low critical deliveries. quarter work capital ever during third results for in and ratio XXXX in and third unusual to of the a member for After pandemic. sharpest a understands support Superior claims-free while by own a Good The number of and their to strategy record focused remarks, during proposition the team goes one long-term how is us plan, declines our effects some to initiatives. strong the call. our also the execute invest price, With to XX% CFO. OD of OD operating that service quarter quarter Satterfield, dedication, incredibly experiencing service volumes of year, me to have on-time operating call and Adam family Through our supporting a sequential we We at one produced of financial the despite will before. delivered our and Every during our value to beyond and management

profitability and on long-term. factor managing quality our pricing revenue customers in ability appreciate win consistent Our We also an long-term should our strengthened account-by-account which has of the to to over to share the yields basis our over key a continue long-term. the market be approach believe philosophy,

share at With where next year, the pricing expectations believe market our further we environment point to wins industry an improving, inflection accelerate. in can for are rates and rise we

demand use and will improve. look we'll work XXXX, year also the to may forward and to the out strong, to prepare continue will page tirelessly domestic people for XXXX. most economy to believe period finish While We this on the turning we customer

the have anticipated capacity support growth. ensure that elements to must of we we So necessary our

opening the new service additional opportunities, long-term the share end invest should steadily market center we in and to include year. quarter equipment facilities first of the several next our of capacity before intend Given that

our also will of OD our asset, employees. continue family in most critical to invest We

financial and to hiring greater our the you demand now succeed with market and actively continue additional to trends, and for increasing growing are confident morning, to detail. and position in support us third in will our and our am platform profitably drivers We benefits we team customers. and ability workforce value. the employees to training, to Adam provide With further discuss unique ourselves, invest our ability joining opportunities Thank while shipment grow in and this continue balance to our results I quarter in our will shareholder with

Adam Satterfield

Dominion's a X.X% Old records operated morning. of profitability. and company prior billion, quarter good from year. the quarter XXXX third and the very was for Greg, during $X.X you, new efficiently ratio increase overall operating revenue for our and the was Thank established which We

Our per XXX $X.XX. to share operating ratio points basis improved XX.X% and to XX.X% earnings increased diluted

a LTL for trend. average positive quarter growth was in in been increase fuel affected X.X% reflects third actually X.X% overall of well the as price hundredweight. revenue that partially negatively decrease by metric diesel significant to well the pleased was but LTL as our increase as revenue mix yield Our in The offset may as decrease revenue the the freight. changes This per of we have in the modest, tonnage to by a return were

shipment. XXXX, increased per continued during by strength quarter the Our second trends revenue our the the third sequential of quarter increased relatively for a quarter, LTL XX.X% per day shipments underlying per as compared third LTL consistent the to basis, as On while XX.X%. pricing indicated day in remained revenue

shipment state-at-home sequential resulted our revenue point, in above At our from this to XXXX. drop in remaining the month, normal the is initial approximately X% day higher X.X% orders, that October, a October as increased week trending steep with almost Following in trend. April volumes steadily in to per compared by our levels have generally the

than shipments the is lower seasonality, is third our but in line normal the per range, trended day in X,XXX-pound to quarter. per Our which weight X,XXX- with shipment

well October decrease customer is higher have sequential weight improving larger on a per While system lower shipment due basis shipment compared is to we revenue measures a generally the weight number trends of as to the than shipments in as to our limit accounts with smaller as the per still that took XXXX, LTL national our year-over-year heavier-weighted account. a

revenue details As the will third in for October we quarter provide related actual our usual, Form XX-Q.

our third of We average, cost increases third compared quarter XXXX. revenue. improvement our as points and shipments and Our a in the operating hour with platform operating overhead improved percent our efficiency when per XXX to laden basis direct cost produced per P&D XX.X%, ratio in quarter of both shipments hour of the load operations improved to and

add sequential and employees the fourth by line platform quarter, item effectively in continue expense drivers line believe will focus labor-to-revenue productivity. the we normal can we our during Greg continuing as to with this change in While balance trend mentioned, to we on

the third while to during capital million of inflation We to to $XXX.X million $XXX.X total cash cash and $XXX.X minimize will months expenditures effort We XXXX, cost Old $XX.X approach million first and from million during of were spending third flow Dominion's $XX.X shareholders shareholders periods. million dividends same our in capital X quarter every of for and respectively, year. the discretionary returned quarter, paid control make operations other for the also first to months maintain and our and the X in areas. disciplined million the $XXX.X totaled

million cash repurchases includes the unsettled accelerated in X-month We in remaining the total There recorded quarter, fourth no second effectively the during million we executed $XXX.X of delivery shares made of share in share and year-to-date and delivered quarter the repurchase repurchases period, dividends. For the be shares the agreement due May. were this third $XX.X in the to share initial quarter. will

Our XX.X% the quarter effective was XXXX. XXXX of of rate as quarter compared tax third for to third the in XX.X%

XXXX. in remarks from currently quarter morning. be Operator, This be questions effective time. the adjustments, and fourth certain to at for for third the tax rate quarter rate the benefited concludes our prepared Our open floor we'll tax this XX.X% expect this happy our to discrete we of

Operator

[Operator Landry first Allison go Suisse. with to Instructions]. Crédit we'll And

Allison Landry

wondering, And capacity? the to little truckload per there those shipments are I mentioned lower still any are is shipment And the So starting tight spillover weight that a revenue margins? also, weight freight optimize that a see is that some targeting Adam, shipment you and up -- year-over-year. was per of to bit away? from just you you're quality sequentially, you're turning

Adam Satterfield

weight X,XXX too. Yes. there's optimal necessarily to I we've better periods per an that Certainly, be down and shipment. in closer still don't X,XXX-pound the we can mark, think fine, pounds, and average tended that around trend to

it's to to balance see range, around weighted with now, industrial some in the we X,XXX- overrun starting lower the weren't the and market and mean, we in in generally that that's we the we're to some was good. transactional strong hand-in-hand between coast, off to were and -- watermarks business of keep getting large in, that really seen heavier the had But as I year, kind that be may west when last shipments of the particularly hit kind of coming still just with pleased. kind of economy went slowdown wanted we make not of the about like of as sure last pounds, X,XXX-pound We that's right network and X,XXX year. Some try some August well.

around not shipments took all, some exclude system. So those but of measures limit, to to try to necessarily we some there of internal limit kind the

was average closer little pounds, in a it's trending X,XXX of it back why moving trends good that had that's September, couple the so mark. In to bit so And X,XXX-pound been And there's a lower. there.

with national mom-and-pop accounts. the back. customers Our are revenue performance is -- stronger in Initially larger the starting to our coming pandemic, had we smaller

of into election perform And at once some hopefully, see top to But we'll uncertainty smaller of back. I continue Our trend 'XX. some the the to even to that's accounts starting XX those get those and we continue more as think transition we there, accounts well. favorably see out very come

Allison Landry

how active market about I in trends be currently sort being like know it'll to sounded more us on you share sounds could you year-over-year? you maybe and QX? then And materialize It gains, down up sequentially, to But Okay. like still of it a conducive but bit hiring you're do headcount you accelerating expect the front. talked the through environment think walk little

Adam Satterfield

periods when a in -- XXXX, sequentially. higher I that is And some quarter higher average the headcount were X% period example, think volumes like number look And through for starting in similar with about quarter. back third that then sequential we the fourth was accelerate. it on the than will really at X% about going a basis, to change you typically,

number. in service normal could in keep that around balanced. up a And absolutely just element our need we surge truckload business. we magic We didn't purchase only total the trend XX some in employees and So advantage around standpoint. necessary have that X%. proposition and things our being think see to -- use we And continue quarter. that third of But used have, that in-house than people market. because By more from There's the our where extra no historically basically control, all haul out may that network we to a transportation We're now, that's manage people the as go we rather get when system having we when that's the what when the saw little transportation, of like have critical certainly we've to a being That PT get we to bit and value basis trying historically. we with to of noticed we own and claims we a like shipments able are to points. figure equipment we bit we certainly, that's to the little number want the can rates places. would how can go kind continue we like domestic of and to We certainly, certainly right purchase that line our where XXX% or manage XX was they control produced you have that I

in 'XX. to where So but demand we're up with going to necessary growth trends, positive expectations adding current for people for a the also we keep environment make keep sure that

the It process So piece needs of addressing to a solve equipment be in that and you people important. certainly equipment, is given the time effects more that particular. quickly. people with that get we we'll of got the bit critical right pandemic, place. drivers, it's all it's in our service our We've and plan. onboard something And CapEx 'XX the equation not can our and center now takes little But the

we we curve, And we if so get want something to will. that's and sure demand the up try that just ahead make of can that to catch

Operator

with We'll go Jordan Goldman next Alliger to Sachs.

Jordan Alliger

questions. of couple a Just

headcount come driver your the on on world I'm front. just lot LTL up Obviously, about in experience driver following in being by. they to Just sector, a the curious, the drivers talk difficult truckload headcount.

Greg Gantt

than find They a they have are pandemic, Adam success, than question. having But bit the the great hard more come Since as They're by. to Jordan, We're onboard little to. and people back some in timely now as difficult not of we're of it's harder checks little it to thing. used be to past. and been as a to mentioned. we're the government some the because of of kind records, used that offices getting issues

of still think we'd not to some certainly We're so a but find them. Again, I has helped drivers. good, so we're that's at process over find But little that time. to thing competitors. than effort. speed to a do longer driver us things but taking the like to definitely Just an some hire used And that you bit we're just it good far, to, the able takes are that a always able

need do to So go. ready we'll continue to what our center do staffed keep to service to we and

Jordan Alliger

well right. to other have supplies, these of over some et a quick side, these the the other they Can do cetera? just percentage quarter sort expense -- third helpful. curious, then sales, now more OpEx the can as touch back a relative time -- and one muted? supplies, at just other a to bit All expenses, general I'll operating little you I'm supply, labor? on good is continue stay on as as run come quarter general second one. track That's the normal of the very they rate Or to this are of And

Adam Satterfield

component salaried so and if And those all collectively, of big the and -- I piece our that's supplies you wages of other will. of inflation and those improvement the with second saved But talked able expenses an some percent expenses some we and think bucket, quarter about aggregate had, first generate to area there. But to the those, quarter, we've you employees revenue, from the on quarter. second when aggregate salary, improvement as dollars, active just overhead that about talk kind clerical in We depreciation, that we the from to But actually been revenue. general were and measures fall the include in due a that a took. to the all those would of benefits, and sequentially, the the some first the dollars we in forth. is of general certainly

about second a the were year, in of this of the were So in XX% quarter those costs quarter. over They aggregate in third little revenue. XX% here

to kind return be programs, able when our as of will to sales those in that restart 'XX, same of that's a helped. So we've ongoing personnel. start of we And in into marketing We were certainly about transitioning those some as of Certainly, matter some we got customer costs the The travel measures by the our just something total spent. entertainment, revenue improvement want such place. it's that measures. cost control dollars

a Our dealt continuing phenomenal meeting. the as and when done out and it's Staying personal face-to-face hand right as communicate, about they're play sales well. talk effective not certainly, they're having our team calls sales to front customer But having job challenges in to customer has customers, now. opportunities making of that

happily to but able idea simply and pay fully we be it one programs. would that those that's things when safe of that restored So like to restore to be no see really we'd be that those will cost, have

costs expect due of some of to the our come can time. kind as our a XX.X% between back will those quarter. continuing we that revenue those certainly, are XX% back focus forward. to a be closer revenue percent and as historically control, being a to coming XX%, when revenue third to XX% of revenue And restored function it's just disciplined going low be seen like recovery, here XX%. costs as overhead Certainly, in higher we'd there as have of will to base overhead but cost always trying we've And to measures keep well. average much But in So --

Operator

go to Stephens. We'll Jack Atkins next with

Jack Atkins

here. Congratulations on great a quarter

So it's kind quarter sequential seasonality third of think Adam, here. could or deterioration. of about I about Typically, so just maybe if quarter basis XXX the fourth points to

of up this the given in year? needing in all can about through think has Just maybe or moment? year unusual bit we here, being think it talked an side. way think such with than bit maybe You that one seasonality something terms it's to how on headcount little normal factors or for different little see kind staff you we'll better? seasonality this year should a Do these normal you help a the about line worse other, Obviously, that more a Or of us progressed.

Adam Satterfield

it And Yes. kind of looking we'll there. compare at the look way Certainly, then think normal be sort that of we'll at I trend. is sequential and contrast just

and time. us. the an can XX- But fourth at like on include that with with saw the a the look can trends we But I couple third think the in you of several and average a recovery strength if things of increase. certainly at you positive or The that revenue the can a And one way quarter that liabilities, the us we outliers average simple it's got usually we've we X-year helping just that gives -- or hand, insurance-type continuing, certainly the when not continue, XXX-basis-point rebase surge and annual trends over about actuarial go we a think revenue will. assessment, have quarter. other

But of sort better. And can those a to so think will of on hand. we're to try outperform basis always in bit little outliers, XXX against. some of a change throw then you know, that that certainly what revenue kind when to do we basis, I if we be out win as And looking you measure will point help

bit higher fringe that the normal, were the in bit away and than dental than go has revenue. that result, normal. was health -- of temporarily as quarter second. frankly, in that a been. Those to that of kind The a costs. rate dental think benefit And third normal and A saw when I of were bit little rate group the a costs group costs we what restored like little look a will cost at a higher our was little fringe our as and rate health element higher percent things some we big we're

So catch-up cost I think there's some that some on items.

So and our And think quarter puts there's I proud in and going and third our those. prepared I'm deliver try look ways, really cargo historic what think to the balance some we're we that the ratio XXX on comments, continuing did is XXX service deliver to very both continue that can takes we'll focus, of change going the certainly, claims typical point we said X.X% the keep at to best basis it XX%. in just the industry. But cost points, I to we that to salaries, that with that we is of salaries, benefits. one, matching to about providing achieved, say want and the But kind that our And I basis benefit. element change in wages and biggest continue -- wages keep low, in have that to

elements kind can. and the more if certainly, we quarter. manage I normal of a the from other those in to seasonality, trends, line will fourth can will, that of think with third Then you be cost function So revenue we if of some

Jack Atkins

Okay.

sense. makes lot That it. Got of Okay. a

your some getting you think question you of been spot, on morning to my don't for put kind And want follow-up so I question here, guess investors. But the this this when from guys long-term I've but when I XX% about for this we particular, of always XX.X% business, operating the margin sort had, quarter. has incremental been a think obviously, about guys a the quarter, for in goal margin you

use? is change frontier. margin potential of like Has forward? still XX% kind how a incremental business pushing Or of as it there to number maybe about you the been look So right we the of to any feels into guys thinking new are the we're sort

Adam Satterfield

achieve to goal we And annual even we'll then We opportunity on lot improve we've operating what you been And what's ratio start got from operated on to to continuing a we you what of ago to sort But ability imply the think better long-term the was we'd basic just that and our produce working we've challenge really think there. the and certainly, ratio. of And very And that costs, of ratio, think thinking operating our piece first years long-term number, do and I proven of strong leverage around our maybe produce able the second doesn't I in that when being goal, in But achieve variable of next. when And we'll know been of on said But XX% and I or execute to couple our has can't we've a mean further. think third, until out then manage then metrics, operating a numbers. And a and will. keep period. of to XX% than to with XX% it sort can, variable. we challenges, fixed kind met of then if control the and year. plan. feel about When And we've you focus that that it would certainly goal. achieve internal we that that If towards those about quarterly update was is changes and update we those continue kind density ratio the continue costs. past. confidence a operating a cost to a of costs look our the can we some costs this it's second on can X/X significant some of certainly density structure, efficiently operating improvement, we those yield. despite there at

long-term. approach as us our to and important led improve all on a that over the done we've helped the cost But So things inflation is just outperforming that's is the operating well. there. -- having piece ratio consistent focused And long-term yield critically that

it. So continue we be of certainly, to direct there's some where a has saying that those cost done the percent as past. up revenue. beat confident certainly you And even about we cost the XX% some when -- quarters structure of numbers or improved feel We've have to We'll our can XX%. think might in we

creates that stronger us is opportunity be producing move internally. going But an So don't even necessarily focused margins on either. forward. we're for that we limiting focus a on let to factor incremental What We not as we're long-term profitable growth.

achieve we And that some opportunities front market the out requires there it so doing to and share us, that of cost. think in create are investments things

long-term And increased so growth to need continue and we're going shareholder value. all been necessary that we to make try string the make leads continue because able deliver the to we've to ultimately to the of investments to profitable

Operator

We'll Ross go David to next Stifel. with

David Ross

months you to a ago, the months I leverage. talk bit want XX X very were the you've the more most ago, where I little guess, Adam, about, shown is because guys lean. just efficiencies employee side labor already

cut how what you did -- been you may not now you What amount the you're people? freight where you found -- was guess, I that with apparent? fewer the fact to -- did move able moving was that So have of that how were

Greg Gantt

areas, not and drivers, that felt cuts productive some some dock But what things found Dave, necessary some necessary found folks. those different -- to was that our the we were necessarily when we like of the but were supervision, not labor, able our in tight, productive, clerical the fat just of manage -- we at some and and necessarily in time. without, made we got really things we

added have those We not all folks of means. by back any

spring, that and to not were labor we needed in changed, back able and have May. April in reduce the have we things that Some additional back

we that we -- continuing are a But some back The means now feel do is to to every sure before, as 'XX, have location make bit now to ramp a just we're I for expect year. promising we different little up by staffed. my different. we're Adam as needs bit And So earlier be mentioned had location. prepare pretty little commentary, robust which trying to in to and mentioned and

continue needed. we'll ramp So up that as

David Ross

technology give more you from you demand to support of a has And is? efficiency us you some mentioned that productive investing to Greg, And allowed that examples initiatives. labor customers also Can in be what their standpoint? also that

Greg Gantt

In customers on better shipments. is it they has. the that we that for those get most it, know do are But are from where quicker. the want some do for their is cases, the to things and part, try They continue the our David, better it and quicker to work -- from they they so looking it how biggest communication, better we information how get in plan thing the we And and to feedback shipment get can so that the communication, better feedback information, them get customers, back to order on plan. provide we tracing can that

from and things, they that are focus we're continuing work on standpoint. street to help starting us. those definitely So a to and X-way But it's

Adam Satterfield

That's definitely helping.

much, So thank you David. very

Operator

go Chris next Citi. to Wetherbee We'll with

Christian Wetherbee

I'm what's sense on Maybe per cadence a well? or I revenue little side hundredweight trying sense per per from get on, the impacting of of to you sense there. in to going revenue are guess that fluctuation a and get was you about shipment pricing a the of -- September the get side day core about the curious October. weight kind how I bit talked pricing of to a as mix

Greg Gantt

a bit. the That sizes, certainly Certainly, revenue at revenue decreasing per shipment shipment the mean, to per looking would little with yields I hundredweight you're per as are going hundredweight weight the to if well. cause Yes. continue. increase slightly

at the the from second when think, strong our the number, a in to metrics sequential you been that's So look increase yield I third.

historically that some haul But contributing. purchase of truckload you'll a a the typically little are hundredweight that cost use continue. to when third, Just and some truckload we good seeing for times, the certainly need that cost increasing. of start looking that as impacted inflection in higher basis, things; run of mix higher really their what point a is, length more a at or now. rates like will line a certainly feedback well. that's internal especially bit transportation those as a increase thing competitors bit creates yields as where shipment haul, a little costs And for inflecting That's right And inflation some will the the longer rates services we're as industry start And it to their we offsetting are they weight higher rather of that the need per of competitors I inflation positive in see the some facing well. continuing certainly of are lot as feel our hearing that is our on is an think are

And usually that's supportive our cost certainly it is create when increasing our what inflation of of well that internally cost as competitors ongoing as some than us our as for would freight initiatives piece look will opportunity so like. for much well yield faster

So the that we those out about a positive 'XX. are and start we trends then XXXX of feel turning good finishing to couple about page as thinking

Christian Wetherbee

Okay.

talked in And in helpful. guess That's you about the my also prepared inflection to answer the points I and Okay. remarks question.

after? bigger the LTL job in how that XXXX, into a done of or maybe growing us market you over of you next thoughts what seeing still frame Just guys big give But opportunities in sort about is of you're how opportunity that So to year some and your market. a within and can opportunity, on of of share the of it as want you context sort excess maybe sense maybe cross then the opportunities have good of is? year growth always sort thinking it get sort industry picture

Greg Gantt

a And right that some general When think that overall And pushing continue been seeing will growing second has good freight certainly, more nice freight pretty look tailwinds to Yes. been that trends think there see for still different into e-commerce the of things is just And play than when at for us, now, with it's good trends -- than mix we're in it's growth. we was business, the I legacy GDP. our revenue. that industry retail-related And with system. everything at performed the industrial-related good of have weak. are But faster example, of that which to you it certainly LTL, longer-term are the like, really particularly manage quarter to business retailers. XX% retail-related strong of XX% the some the that else to our type

and the I that's consistently But very shipment the as their of the public a now, some tailwind through is one for there. time. overall And more I think and creating to a back and going cases limiting to for space, factor sizes and in not it continue of some out smaller think there have the building has versus of trend population over real sizes been service the truckload. areas growth, a the centers a growing nevertheless, demand LTL year, when and to and But biggest so of -- ahead been capacity. right whatnot. this or share hasn't in have to network built and could get closer critical stay look we in added invest be as in the at been curve capacity weakness LTL, in continue other that different capacity we least longer gets to period the to and the really I to market LTL why talking that's may freight. be think some of a least number areas because shipment at be change process to continue market you trend that So estate certainly when effect, But door will big Certainly, the centers try winners we've conducive long-term systems fulfillment stay before we've about factor to investing the we've the doors you carriers seen. back of our a to pandemic far been to significant grown that And it's what's capacity, required be

advantage So a by best-in-class service. we have service offering

market recover. have continues We continue some seen to We've certainly our as the to and capacity that play advantage, a we will trends. improving favor think in

of some near as type manufacturers that businesses, positive last certainly retailers. ISM of don't our most of not some we're think have as our But things been think I and improve. like industrial that full -- been anywhere for as I continue they've recovery customers some and manufacturing to the strong months. will couple

So those to will -- will those continue customers recover.

well, I that the we of transition think all business as see 'XX. kind trends for together, retail-related we'll and with can continue as us come favorable hopefully, to into

Operator

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

Ravi Shanker

long LTL as panicking? maybe timing customers forward? And conversations is negotiations just your the ahead in RFP the Are XXXX? are way see So mean, looking GRI just now? now? give question. your based a thinking market cycle. your you a to follow-up Can kind right customer right coming the like There's you are I you how from they customers that about go Do contract us of super tight. to sense you demand Kind clearly, what a what next on of are the are of into

Greg Gantt

our and bigger spring Typically, that, respond you as increase this I'd our off the increase whatnot. shipments, demand you would I of this how truckload seen think year lot take -- look that it's we things, for on we Ravi, the been which Coast. did. trending, typically and certainly the start at typical annually West mentioned needs we Yes, earlier, Adam I it carrier. early we that to see being And to when those which expect customers' which has closer adjustments, and will pretty some mentioned, a you're like take seasonal you if it we a sometimes not have changes are to expect out, has like when not next do. there particularly, next demand fall, much a that careful, But and We've we would they We're changes make would cost our there been, based time. how to

can I hopefully what some has customers expectations, this 'XX on we'll go we tell, so, and pandemic, with big as impact certainly But they're are positively what certainly at we certainly to think, into Again, recover that. continue think the So year. into and think I positive point. going I next we're towards aiming

Ravi Shanker

is just little for Will of range. just framework mean, of again, digits? in pushing big on the that, you a And mean. if GRI mid-single-digit double expectations give Great. be you your a bit kind what typically, I on us

Adam Satterfield

our got customer inflation we from on basis. need our is cost at sit we've long-term what across profitability Ravi, what approach, manage our think in certainly, looking really then then that a rate. customers an way we costs, And account-by-account terms look the And and the we the about table I of talk how and every at business we year. they're changing

some little may than that be customer into we'll may accounts a accounts have other And long-term to maybe be there that there's that lower bit go average. then with. be aggressive So more customer equation the the

But consistent and So been that X%. And relationship kind each last true few then need, increases on customers to of average. those. pretty on achieving gets that kind we've business. we've in our of look is back rate proxy you a it And the of customer general with kind of to for relationship years have. But and the year. throughout About talk just we'll the that situation, been successful we the customer our depends contractual this heart what at a around of industry the for becomes increase

is increase back next that customers X-way of versus a tight is some the kind shipment, customers of per on we this this established per been a will that into next the cost-based we've to maybe basis critical shipment certainly, year they we're some Xst And and customer at year, we're proud of and and to do with going kind communication we with averaged XX it's loose about long-term increase when things. of ride look X.X% wage that discussion of so more that talk year, that, year. an so the continue. double-digit and makes the looking honest to that when select and rollercoaster September. than go other sense and Old we we XXX give that and that out, willing make have think need went decision relationships you the continue Dominion. certainly, a you our And X%. And above industry really can open industry to But revenue of X% And these X%, you that's our a long-term it effect certainly, X% we've to points that's have, inflation. And already between just kind cost really When we're our and have

year. So inflation that's as cost has a every big been consistent our element And of well. pretty

to the that'll up kind things And it us. know already we frame we'll There's stronger per that into really yield your shipment themselves, factors, some of So will and make for some numbers But going of a some revenue weight look. depend. of we X% be that next transition of as bit look might weird than with number. year hundredweight little type comparisons maybe per those

increase, have been. just those. I what kind underlying to So have with trends see all of But and it we'll balance would contract we'll rate that consistent expect our general long-term of

Ravi Shanker

fuel. Do prices. If environment an in in mentioned fuel Kind I of like follow-up appear And X Obviously, may to be or your and how nice to of formulas think the change that. X you past, That's to calculated the area, not prolonged some have the is which surcharge your can need sneak great to is maybe change color. subdued the go-to-market the you I kind just -- of fuel fuel has a we you yield boost in yield fuel metrics. of strategy been the like there? surcharge feel

Adam Satterfield

what that's most been more. or we we've that's and fuel this down a dealing was down Well, XX.X% with produced recent in XX% quarter, operating been And it ratio.

a drop the years and to It's big where when appropriate, to fuel a look pretty think that continue to end that been we variable back scale pricing. contract overall changes we've turns the when the contribution fuel that over, think of component our first I we it's And of on low something just we that. And that a go really waited we successful at. So with and balance I of last time at ago, that's base. look But the maybe to little years. several strategy make some customers couple took with a fuel been some as yield, have our wasn't of over really fuel our

lower, was a $X.XX down would it's quarter helps to be second quarter of the in go when quarter. if the we're continues this to fuel line doesn't fuel fourth see is, down of certainly as really because little be where long it it stay the -- top in in be first So that's comes range gallon, the But XQ started consistent, to fuel before number. dropping like year. we'd back this year as and par, continues stay it going in really kind -- bit back be a That come that next to to going it much of to that around

the the now. at dealt, without and But be with we number, the in it'd look the was, revenue So if a that you're if the it nice make our certainly we fuel but hand looking we'll higher and bit look was what that's we'll revenue, growth overall was because every When at you when and come the say that previous stronger, the little day what we without It'd from numbers. fuel, much day play optically be can see. continue and do. and at certainly that it we to nice revenue looks

Greg Gantt

that, we prices need obviously, a produce don't Positive Ravi, to record low is of OR. high side fuel

think side I positive that's of that. So the

Operator

next We'll Jason go Seidl Cowen. with to

Jason Seidl

the where it's Quickly the customers what been restocking, and How for there's when underlying saying. some that is just is summer, you but clearly, I in some strong look freight terms this long? came be in on to at of we've are you they're how coming telling from? surge I'm in your mean, that there what going demand. seen curious

Adam Satterfield

continues overall, it, of spending that's And of you still I And are some levels and but consume. so be think money continue, get the I XX% when economy. look think they to that ways. that down inventory overall people Certainly, at will to to the continue different to consumer you that in XX% low

to them production the be and and to be got things and buy continue people there's positioning for those as things to So ultimate them. to delivery of purchase able

of probably change there's changes years forward the pandemic couple landscape in terms retail to the pulled of related sales. at probably have certainly, of the seen terms retail growth of in obvious and So least total in a some e-commerce been e-commerce

creates it think benefit the to build and continuing centers fulfillment and So talked an we LTL overnight, that's you that's certainly don't be that, been for That's opportunity sure. from. kind the freight something about overnight But equipment we change, phenomenon, certainly different of that's that along we some can we're as industry. operational something we can just And that can going not before, everything but service well. come at managing make earlier, there's more hinted and with balancing, right, to do some challenges to pools certainly and demands you're as

got the as big we side retail-related service for is see the that we've can piece superior other make growth on keep I to So sure more think we flex and of But we is our that greater. business. balanced that continue the advantage growth even because those demand certainly, with that all take retail-related e-commerce of see and trends

the X.X%. of Old of As to. they're have will many certainly an on make going deliver we're their you on cases, inventory place that big-box you many got that into in inventory programs have is then and afford and when revenue as in a time retailers And levels, in choose if vendors that deliver of can't of tight, of selection our the Dominion, Certainly, time delivering damages to when aren't penalties managing for carriers full. XX% you and the percent time

where and meet more line help pay Dominion. So for we down customers of and service certainly is cheaper avoid expectation that might they them, Old upfront little total our even bit the for the for cost a though service can charges them demand

Jason Seidl

foray a been How follow-up technology, something Dominion have technology. look in back guys or I good should in of That's forefront looking in you. my I this at Old at you're going always we fuel-type at? alternative investing trucks? into you covering XX-plus alternative-technology color. on their mean, have the Is potential years

Greg Gantt

try out Jason. equipment always of Certainly, of in forefront that's to new the stay type there. any We

of yet. the we're one and in the right a -- calls, of progress. the kind I technology time, and of there think progress They're I'm and and vehicles about type electric right they've a production, sure not that we're now, Jason, a they're this prior at not that opportunities available. has exploring talked we'll any of for electric we've honestly, just looking But just as but nobody thing. just there production vehicle. out now, come and But

have cost that's we There's right we big forward. had everything balance to there, there our to else. a all sure they're I'm standpoint you not again, system. a So just just there issues, certainly go lots as now, out we'll And in to left be sure vehicles of but I'm get if going But they're But and to that to -- yet. from production lots not will. of poles climb, be run thing

Jason Seidl

away then? feels it So of we're years like a couple

Greg Gantt

think so. I

Operator

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

Amit Mehrotra

XX.X% into been variable your costs in bit comments I'm on fourth there Do has revenue? of XQ and on on the percentage Or the overhead about I you actually that's is I the implies of costs versus terms the wondering the shipments or variable shipments cost evolved guess, there if there's you any anything between that a match mismatch think between structure, direct quarter? quite of we close. to side, that costs cost just that, that XX% guess go guess, perspective how should may as drive, piece variable especially can of Adam, regarding in I revenues. of the hold line you of structure think

Adam Satterfield

wages that of of those benefits to deterioration wages that's And comes of most labor be cost. majority Yes. XXX we and earlier The basis our -- salary, were in ratio about I costs points. benefits going and line. normal line. the where labor the mean, that from typically the about that sequential operating are that's the talking salary, costs productive and It's some

see believe in Typically, and that So keep that you'd with inflate as like to those what balances we how and what kind trend we're line we sequential can can that will do little normal we of I bit, be. we'll a going see that transition. said, certainly costs

to and just just were fourth where compared in of the trends through some that we kind base depend the how quarter what And of third. the it on will revenue

types that more So on really some fixed -- costs. of impact will an of of have those but more

Amit Mehrotra

just the overhead, just continue as around just more shipments per basis. of I weight -- provide obviously tonnage. quarter you line in help And to guys September with between a long-term the X Yes. can And breakdown on mean, and XX% there. in the the related the I we just Obviously, on X, to to comment the guess, years, major there. of XX% opportunities that, be network I side, bit to guess, density and I'd there's ended the leverage assuming and if don't terms haul between then shipment the how that you color September. line Could know is looking on revenue for the how on capacity if you That's in excess haul? overhead a had us you opportunity love trending. X, I one is then could change, growth no at the I little year-over-year important last mix in

Adam Satterfield

Yes.

overhead XX% where between reason growth to just over range. long-term the go, of the in like opportunities of terms that that we've costs for long we've might run, long there, what for we've is costs And XX% runway trend In which -- continued type feel And seen continued the market our for are those will we got a really share the really investment long-term. assets. require

line will, depreciation invest, can versus left, component, stay more growth not And getting as on that and the to continue where so you a create point there's certainly, bigger to will as continue if leverage we you to that.

the will increase XX% into drive at XX% look back every our opportunities are CapEx investing about good So we year programs the of feel share market what our and to that then continuing in to that depreciation. revenues

elements those compensation costs, in that that variable nature. more in There's of bad are There are too, expense. performance-based are other some debt things overhead that's Some more are variable. some There's there.

X% to revenue of more So to within overall that's nature XX%, of is of in variable that that element. XX% maybe that sort X% kind

means But to little line increase. haul referenced those the it haul So our always closer we has over pickup/delivery we operating there. to our that improvement is direct minimize opportunities that pickup/delivery there's running to the expense. we're line line times, run be but the do of to a certainly, centers, going customers looking But of those And that's out our in And our inefficiency new long we sometimes on side, creates ratio minimizing the add couple haul, that will can there's cost. come direct what continue and what you a out the first haul are operating we certainly costs. obviously put to and because line now you operations And if time when our a drives And operations. efficiency stop. fixed within nature will, a to our putting service of workforce,

drive can year XXX, when maybe a the opposite go adding the When that's there's as I opportunities us density XXX efficient of add But we've on down opportunity, centers doing across now. And you're service there be that we few certainly, to operating operating the helps at every have the causing it's efficiencies. some pool in sort depreciation so working direction. you different those grow why increase of to of ratio. And that got the we and we at And available where heart than that think to that particular that program. you the for continue you're When network, spectrum one service center, look even you're lower operating in trade-offs ratio But the our saying you've the to only where drive break that we're the whereas of today. improvement operations, at capacity about service confidence center's that's got continue to footprint. overall and is to type we the to ratio further bigger it that continue they're really there's in

Amit Mehrotra

address Can weight on between and per well the the September you as question breakdown shipments? shipment shipment,

Adam Satterfield

so forget long-winded you year-over-year with -- you overall that September, for the thought I with one, the do let's but that Yes. about September? might see, response, want

Amit Mehrotra

great. me sequential, going the year-over-year if and give to Yes, be you're would take that I'll both,

Adam Satterfield

Okay.

was tonnage then And over for up So year-over-year X.X%. was weight, tonnage August. X.X% up sequentially, September's

X.X% shipment per side, on basis. the the On were down shipments a day year-over-year

year, last were of on September September basis to sequential versus in compared up shipments a August. X.X% So

Operator

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

Todd Fowler

start, anything rolling Adam, And is side? then in you're can into Or is you 'XX. think the as think there you the just growth about first network? capacity need it on about roughly it on dynamic? you the I the the out depreciation into we think mostly you 'XX a tonnage cost where network better the where the could tonnage bit guess, with stock? fleet and And a available the around coming was would in see network? door that in it on it think Is little be to matched share was side? comments maybe the Or I the to is bit what little targeting, on second, is the a maybe grew growth a the XXXX little advance ahead. thought similar bit you of

Adam Satterfield

that especially we're back gotten in a XX% in probably threshold really And is The service We've now. XX% think weakened. Yes. when range the of of XX% type overall I kind things capacity we as several network and to of facilities above Greg that got of and is between the will But first between which be as year. us, the end opening now, think good we've mentioned that we transition next earlier, now just quarter. for

out there will think into out of that but of be that also we some we'll third, 'XX, expand fourth just where add some openings larger another metro a larger may fifth we facility. investment areas I facility Much of the one. either to add continuing and So our be will see or facilities second, or move a in some in we

which particular, the share there. We've in that market the think largest opportunity play out that tremendous LTL I market. Midwest, in seen there's is

earlier, so at opportunities -- look then we a the market have in there. got that line a there's was to we talking certainly, to about think reducing an freight to make in just well And facility can opportunity that of density getting I that want cost can we'll we've generally support help closer market. just where locations us by end And of the of there for our some add and as sure out density I continue to type operation pickup/delivery in enough customers. and But that like our

equipment got other side we've On pieces, capacity certainly, right the other the and now.

But a year our year, This finalized spent haven't of because this a $XX 'XX we CapEx. that We'll overinvestment the we think had I in holiday give quarter's million that on next of call. in 'XX. bit equipment on and we only equipment.

a customers margin will and able I dependent that as really And to having I and orders of strong the we good conversation goes costs. back expectations can maybe to the next of lot fourth But to just the growth some create, certainly, But into and year. think, said, strong and And those to typically, we've type finalize probably think that we upper quarter that that back there's end still change see there a still and the incremental that to top-down place. of kind can of we'll putting of we be offset were kind the out So CapEx forecast environment, having we're but incrementals, of more if hanging basis. earlier. of that we uncertainty, towards a for leverage with in revenue really for get next overall think on a may kind it expect range, to We obviously, the especially year see through be that. I produce in we'll of normalized some kind back bottoms-up election. it things of as results of next we there and all minds building XX% XX% get week some got with from conversations that see get our the point into range, based still transition a people's the we're some And but number we up create can on

Todd Fowler

seeing tuned Yes. in that Well sure. on for definitely Ohio we're one. That's

you here bigger But So, was a on hit earlier. you picture think it on are at with guess, environment volatile. a in incremental as there picture just operating of this the and pretty sub-XX% OR an I bigger mean follow-up, did question third margin question, the my the of about that business? kind any I Jack quarter, takeaways kind in

purchase mid-XX at transportation not basis, like to you lot need longer-term of feel that had think was full-year on or not up. are what obviously a this sequentially, sustainable that Tonnage things pieces excuse or about You a that OR? longer-term? to on up moved contributed it's there basis that the do operate quarter me, lot can other other really Does be performance to kind Or a representative but in mid-XX -- a that year-over-year. may we it a of

Adam Satterfield

operating was had to ratio, certainly but progress basis because we some on this time about say improve I revenue this cost and needed the able to this of to address take there was in We talked action of April. be lot growth in and of work to annualized Well, Used we've the so able range kind that to some the an unusual. operate back immediate and immediate revenue the out year. of type aggressive made unavailability environment of was think of just a how being in to drop-off for

so probably And And started recovery about and began it's saw things we through of been in back we employees X,XXX to improving. back good sort back of when and as compared May stabilized transitioned April. some the brought

go to like into of evaluation take and and so continue costs. period keep processes, seen move I forth. a these but your what really times, balancing up your have you And is job do in to lot with that our this, forward, a as And the through in of in to people of so future, a we the people when of And we've demand we good -- onboard past a all systems lot trying think done trends. you

we in for years carried improvements back timeframe, 'XX we come. And that that some made of forward the saw productivity to 'XX the and those

want obviously to that And think so and as I be these newer into able start people growth of bringing transition we'll we of back onboard, And a improvement productivity. this we that some in to. productivity expect measurements we maintain environment certainly

to and terms And a been what more into as back of we've so in growth and been for those us controllable transition the that's expectations to That's what past. the have other biggest produce element able the of critical our cost to of structure and in true environment most encouraging. continue costs manage certainly, normalized we piece the

environment of So operating produce yields, positive about if have help when we one, on productivity certainly to we've believe our we the to be disciplined creates it's model can that and continue type And we require we certainly, opportunities. based improve good. But transition more those the on to ratio. talked as a we works. continue to initiatives. it network generally and cost-based improvement. to approach -- environment macro how just positive of fronts, improve a again, And we density continue operating it we before, to the If of that we managing We've the but further can both those wasn't think generally done those to macro they'll ratio support continue can

Operator

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

Ari Rosa

Nice quarter.

at Greg, inflection we're first market an to you my point talk -- just where mentioned I bit. of about think on little wanted could you terms go a on in Maybe elaborate that can OD you question, So share.

that? really so, where where the operating having periods talked you maybe environment, kind of OD you've think some strong you're more seeing think seen customer to terms has some of if double you're is digits. we able into end of pressures the function elaborate in a of of conversations. terms Or But customers? about really it conversations And strength you're other grow cost a seeing those if And been seeing could about rising. then on tonnage what function competitors really some in is your earlier a of Adam it and I with markets

that's and XXXX, add? to And of so you about are talk think of kind given which in to terms extent the you're where what resources maybe for you could feasible you looking

Greg Gantt

our Sure. -- both Well, from I of we're a expecting as to standpoint, and next Adam to think, an in equipment mentioned before, obviously, continuing expand people. hiring We're capacity, and the we're growth year. we're had continuing facilities process

the are components as adding of you know, capacity. So those

X imports heard point about But we country. and And we've part So I year. at in exhibited and really, late, next we're in off how fronts the busy certainly of most coming particularly strength hard this Coast. the additional But out that for strength all think we've West on California. time. are the all seen that actually and of ports of the And that we've working seen that seen pretty we've are in expect system-wide, out part, particularly

where extremely a happens before, spending the good Adam part, we're what and week our we're But could year. so positive. where mentioned are Obviously, certainly we year. impact a are most we're next expecting good For an we like Again, on expecting customers have money go. far,

things, to we -- getting, for think the based we're that path sense. it we're that I just So certainly that that on hoping hope makes down feedback big hope we're and continues

Ari Rosa

typically. helpful No, that's a it was And flow just has cash the certainly. But about -- looked no, million like That's bit cash on directionally, the $XXX little below what been a operating it minutiae. at absolutely. free activities bit then number, from

could But what the there cash strong going on maybe about And so the talk you income very with statement on obviously, operating was flow? line.

Adam Satterfield

Well, deferred year-to-date paid. produced on when flow. you've cash get things think from look that a you But overall operating basis, maybe some always got changes standpoint, we in that solid Yes, when are flow an operations. really cash I from

if related of Act from of from effect taxes to year deferred the timing we changes will, pleased that. some you a a taxes just that payroll from probably last helped are. that cash overall, passed was ops of are performance, be a I've with I quarterly but some other It's of this year-to-date of just And could of whatnot. effect million below -- basis But little cash it's CARES in timing the think, somewhat standpoint, so been flow And the of strong, year. $XXX approaching from this year, the some things. But really the earlier terms in that on where and kind

the about be in-hand for know, work first to we've able priority to and of got it to is kind our capital of strong, allocation that we we bit that continue really about in we'll put was as think as CapEx piece this year. a big our talked the was plan a equipment, you But So and -- investing little And sales, our CapEx. as lower earlier.

be this next what we had that, but much evaluating transition year, for will we it certainly CapEx as be than a year. probably we'll larger So number

Operator

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

Scott Group

The per so ones. quick is -- shipment? the Or per that couple there A day that? of piece is any weight October entirely rev of deceleration, other

Adam Satterfield

September before, as driven, and know, per is kind us. mentioned weight strongest of and Scott. shipments usually in month up the the builds our October, in it's No, we typically, the trending are for line year business Like of you shipment

those and strong so, again, And be shipments really that we saw continue to there.

the is normal trend kind over where to In of kind fact, versus when thought back the we We're to we're the back but back line September to route really together in where beginning we'd you level about of be shipment before of by our really September kind would we March. which with of be you where compare September be an put for the there begin took forecast March, in get look of unusual there. to affected year to pandemic. And time, things

to shipment the little day the at trend totally longer-term which this just on -- weight seeing We the that, would is believe with softer per -- right right and we're line be point but heavier that The is October, average a level. trends well perform of national those normalized back what continuing sort to kind couple and their get still little of to a smaller by shipments a our come of would mix to not the sort smaller back per customers back. coming accounts there. good So in the side, But historical accounts than XX-year trends of now But continue sequential are nevertheless, as bit bit our larger continue points to probably. unexpected. slanted

function we freight But of that right it's solid, and So that's continue and business on some the getting of bit be to little shipment taking transactional certainly beneficial. now. really trends of mentioned, dropping us. just that, our us out But a like control weight a of was per yield is some

Scott Group

share just now? would seasonality wouldn't outperforming gains, given have be around thought But that views you your shipments

Adam Satterfield

you freight you to really the October look going September X%. past versus the And how and Well, one down been is a that's only out, years, customer There's past again, normal they're I standpoint XX over think trend September. when think in is from positive sequential a when been years about look about the that and XX getting just build-up. be

where, talking we've this left to. thought managing be, and frankly, finalized, obviously, month, is numbers So would but the just we week about got in a we're about aren't that we we're and

have we a been of with system. the the fact shipments again, that, some not out especially surprise, it's So limited

a So to it versus even so the would trend that look there. a see, just October and you trends spectrum very drop-off across bit shipment way forth. see were really function up of but and And they're been as slightly better, little normal expected things that's of customer their have a in business our we'd their when September accounts, all the of the managing and building

So at it all. see not unexpected to

Scott Group

Okay. lastly, And on then just OR. the

better you than, if if OR at the similar third the most is not years, prior look So year. with, quarter

missing that I should there? is, like So say better. year can year XX% trying Do next not where what you guess to it get OR, if feels I'm we're a be to anything you think

Adam Satterfield

that trend to an the been transitioning that then We been. I bit than we're But ratio, on of affected point better revenue creates year. certainly, of kind it year's ready been XX plays operating we're Well, ratio. or that have hope we like I XXX not call a just kind despite improving from then longer-term generally, we if hadn't next opportunity. obviously basis, mean, will, to the points operating than on out at think basis revenues like have where average, obviously that that are little they And a each taking average year-to-date fact this produced

where any see it in specific ratio color year. give the improve makes year, to we've we're to improving it. easier what with an operating had But deal revenue not we up than and but we'll end on next environment, this ability seen to So certainly, ready certainly

Operator

And like conference to Greg remarks. today's to that question-and-answer over Mr. I'd Gantt closing concludes back for the turn session.

Greg Gantt

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

Operator

conference. concludes your today's for you Thank participation. that And

disconnect. now may You

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