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Operator
Hello, and welcome to the Old Dominion Freightline, Inc. First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note, today's event is being recorded. And now I'd like to turn the conference over to Drew Anderson. Ms. Anderson, please go ahead.
Drew Anderson
Thank you. Good morning and welcome to the first quarter 2022 conference call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through May 4th, 2022 by dialing 1-877-344-7529, access code 8164823. 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. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Old Dominion's filings with the Security and Exchange Commission and in this morning's news release. And consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. As a final note, before we begin, we welcome your questions today, but we do ask in fairness to all that you limit yourselves to just a few questions at a time before returning to the queue. Thank you for your cooperation. At this time, for opening remarks, I would like to turn the conference over to the company's President and Chief Executive Officer, Mr. Greg Gant. Please go ahead, sir.
Greg Gant
Good morning and welcome to our first quarter conference call. With me on the call today is Adam Satterfield, our CFO. After some brief remarks, we will be glad to take your questions. The OD team successfully launched another year by delivering first quarter results that included new company records for both revenue and earnings per diluted share. We began the year with significant momentum in our business and expected that we would continue to win market share in 2022. This expectation has already become reality as the 32.9% increase in revenue was the fifth straight quarter where we recorded double-digit revenue growth. We also improved our operating ratio to a first quarter company record of 72.9%, which drove our seventh straight quarter of double-digit growth in earnings per diluted share. Our revenue growth for the quarter included a 17.4% increase in LTL revenue per hundredweight, and a 12% increase in LTL tons per day. The improvements in both freight density and yield created operating leverage that allowed us to improve our cost categories as a percent of revenue, which also drove the improvement in our operating ratio. Density and yield are the key ingredients to long-term improvement in our operating ratio. and both generally require the support of a favorable domestic economy. We expect to further improve each of these two elements as we work through 2022. Demand for our superior service has remained consistently strong, and we do not see that changing in the foreseeable future based on recent conversations with both our customers and our sales team. we continue to receive feedback regarding the general lack of capacity within the LTL industry. This feedback is not unexpected, given that the LTL industry has seen a net decrease in the number of service centers over the past 10 years, at least for the public group, excluding OD. Customers also appear to be dealing with lower inventory balances than they would prefer. which can result in missed revenue opportunities for them. We have unfortunately heard similar stories from our suppliers and have seen little improvement with their inventories this year. We believe these issues are driving many new customers and increased shipments from existing customers to OD. Despite all of the general industry and supply chain challenges, Old Dominion has continued to maintain our service center capacity to support our customers' growth. This has been and remains an integral piece of our value proposition, and we are well positioned to benefit from the continued strength in demand for both our superior service performance and network capacity. We have opened three new service centers this year and currently have approximately 15 to 20% excess capacity. These additions were part of our 2022 expansion plan that targets an additional five to seven new facilities this year. While our service center network is in good shape, we are continuing to work on the other two pieces of the overall capacity equation. We increased our average number of full-time employees by 18.5% during the first quarter, and we expect to continue hiring additional employees during the second quarter to support our anticipated growth. As the capacity of the OD team increases, we would like to reduce our reliance on purchase transportation. To accomplish this, however, we will need to increase the capacity of our fleet. While our 2022 capital expenditure plan includes approximately $485 million for equipment, we are experiencing delays with the delivery of new equipment. These delays were anticipated and limit our ability to effectively match the receipt of new equipment with the expected seasonal increase in our volumes. As a result, and similar to 2021, we will operate existing equipment that would have otherwise been replaced and use purchased transportation as needed to support our growth. As part of our effort to deliver best-in-class service for our customers, we remain committed to ensuring that each element of capacity is in place to support our ability to win long-term market share. As we continue to manage through the short-term challenges within the current freight market, We will also maintain our focus on long-term opportunities for our business by continuing to execute on our long-term strategic plan. This plan has helped us achieve a 10-year compound average growth rate in revenue and earnings per diluted share of approximately 11% and 24% respectively. As part of this plan, we have consistently invested significant resources to support the doubling of our market share over the past 10 years. This has included a significant investment in our OD family of employees to help ensure that each employee is motivated and rewarded for providing superior service to our customers. We believe that consistently providing customers with superior service at a fair price, and regularly investing in our people, equipment, and network capacity to stay ahead of anticipated volume growth will support our long-term growth initiatives. As a result, we are confident in our ability to continue to produce further profitable growth and increase shareholder value. Thanks for joining us this morning, and now Adam will discuss our first quarter financial results in greater detail.
Adam Satterfield
Thank you, Greg, and good morning. Old Dominion's revenue for the first quarter of 2022 increased 32.9 percent to a company record of 1.5 billion, while our operating ratio improved 320 basis points to 72.9 percent. The combination of these factors resulted in a 52.9 percent increase in earnings per diluted share to $2.60 for the quarter. Our revenue per day increased 30.8% as the first quarter of this year included one extra workday. This growth was balanced between increases in our volumes and yields, both of which continued to be supported by a favorable domestic economy. We continued to win a significant amount of market share as demand for our superior service and available network capacity remained consistently strong during the quarter. As a result, the year-over-year growth in our revenue and volumes continued to trend above our longer-term averages. LTL tons per day increased 12%, and our LTL revenue per hundredweight increased 17.4%. While changes in our freight mix contributed to the increases in this yield metric, the 10% increase in our LTL revenue per hundredweight, excluding fuel surcharges, reflects the success of our long-term pricing strategy. Our consistent strategy is designed to offset cost inflation while also supporting further investments in capacity by focusing on the individual profitability of each customer account. On a sequential basis, revenue per day for the first quarter increased 1.2% as compared to the fourth quarter of 2021, with LTL tons per day decreasing 1.4% and LTL shipments per day decreasing 2.2%. Our revenue per day performance during the first quarter, both with and without fuel surcharges, exceeded our 10-year average sequential trends, although our volumes were below our 10-year trends. It is important to remember, however, that our 10-year average trends include the doubling of our market share. As a result, there may be quarterly periods where sequential performance may be below our 10-year trends, despite solid year-over-year performance. The first quarter is a good example, as we believe we won a significant amount of market share and produced solid profitable growth as a result. The monthly sequential changes in LTL tons per day during the first quarter were as follows. January decreased 5.8% as compared with December, February increased 5.1% versus January, and March increased 3.6% as compared to February. The 10-year average change for the respective months are an increase of 1.6% in January, an increase of 1.7% in February, and an increase of 5.6% in March. While there are still a few workdays that remain in April, our revenue growth continues to be very strong and reflects the favorable demand environment described earlier by Greg. Our month-to-date revenue per day has increased by approximately 28% when compared to April of 2021. We will provide the actual revenue-related details for April in our first quarter Form 10-Q. Our first quarter operating ratio improved to 72.9% with improvements in both our direct operating costs and overhead costs as a percent of revenue. Within our direct operating costs, improvement in our salaries, wages, and benefit costs as a percent of revenue. effectively offset the increase in expenses for both our operating supplies and purchased transportation. The increase in operating supplies and expenses as a percent of revenue was primarily due to the increase in the cost of diesel fuel and other petroleum-based products. We improved overhead cost as a percent of revenue during the first quarter, primarily by leveraging our revenue growth and controlling discretionary spending. As mentioned on our fourth quarter call, we expect our core inflation, excluding fuel, to be between 4.5% to 5% for the year, with higher inflation in the first half of the year that is expected to moderate in the back half. We believe our fuel surcharge program is effectively offsetting the increased cost of our fuel, and our yield management strategy is effectively offsetting cost increases in other areas. As we continue to experience cost increases related to our real estate network, As well as with our equipment, parts, and repairs, it will be critical to maintain our focus on productivity while continuing to control discretionary spending to minimize the overall effect on our cost per shipment. Old Dominion's cash flow from operations totaled $388.7 million for the first quarter and capital expenditures were $93.7 million. We currently anticipate our capital expenditures to be approximately $825 million this year which includes $300 million to expand the capacity of our service center network. We utilized $438.4 million of cash for our share repurchase program and paid $34.2 million in dividends during the first quarter. The total amount for share repurchases includes a $400 million accelerated share repurchase agreement that was executed during the first quarter. Our effective tax rate was 26.0% for the first quarter of 2022 and 2021. We currently expect our annual effective tax rate to be 26.0% for the second quarter of 2022. This concludes our prepared remarks this morning. Operator, we'll be happy to open the floor for questions at this time.
Operator
Yes, thank you. And as mentioned, we now will begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble the roster. And the first question today comes from John Chappell with Evercore.
John Chappell
Thank you. Good morning, everyone. Good morning. Adam, if I could start with you. I mean, the last few days, quarters, you can kind of throw all of your historical seasonal OR trends out the window. Just very robust pricing environment. You're doing much better than 10-year trends. As you start to anniversary some of these big pricing and tonnage moves over the last several quarters, do you envision a return to kind of the long-term trend margin seasonality? Or are some of these vast market share gains that you're making going to continue to make those trend in a more favorable momentum?
Adam Satterfield
I think that certainly some of the quarters, those trends are very consistent. We've talked before about the first quarter and the fourth quarters can be a little bit more movement versus the average, just given the variability at times with revenue trends in those periods and certain costs that trend in various ways in those periods as well. I think we've certainly performed very well the last couple of years and produced a lot of operating ratio improvement. I think regardless of the seasonal sequential changes from quarter to quarter, we always talk about over the long term that we generally expect, we've seen and would expect to continue to see 100 to 150 basis points of operating ratio improvement. A lot of that gets back to our focus with our pricing philosophy. We try to achieve revenue per shipment growth of 100 to 150 basis points above our cost per shipment inflation. And when you look over the last 10, 15 years, including fuel in both of those metrics, that's what we've been able to achieve. So certainly some years when we've got significant revenue growth like we saw last year and certainly in the environment that we're in right now where we're growing revenue at about 30%, in the first quarter, a little over that. Certainly, it's a good environment to keep driving improvement in the operating ratio, maybe above those longer-term averages. But over time, that's certainly part of the focus, is to continue with that same type of mentality with our yield management philosophy.
John Chappell
Got it. Thanks, Adam. Follow-up for Greg. Last quarter, you specifically called out some of the issues you've had with some of your suppliers. being unable to get the equipment that you would have liked to have to grow and maybe some of the elevated maintenance expense associated with that. But given how light your CapEx was in 1Q vis-a-vis your full year number, are you expecting some of these supplier constraints to kind of lift so you'd have a very back-end loaded spend and get the equipment that you're looking for by the end of the year?
Greg Gant
Yeah, I'm not sure it's going to get a whole lot better. I mean, the equipment that we – had planned to receive this year. It was planned to be delivered later in the year than we would normally take it. Typically, we would start taking trucks especially late in the first quarter on through the early fall. And then the deliveries would pretty much be over. We would have what we had purchased for that particular calendar year. And this year, it's a later build. From the get-go, that's what we were told. So that's the difference. It's just coming a little bit later. We're getting a little bit less than we had hoped to get, and we're getting it later.
John Chappell
Got it. Thank you, Greg. Thanks, Adam.
Operator
Thank you. And the next question comes from Jack Atkins with Stevens.
Jack Atkins
Okay, great. Good morning, Greg. Good morning, Adam. Thanks for taking my questions.
Greg Gant
Hey, Jack. Good morning, Jack.
Jack Atkins
So I guess maybe to start, Adam, if we could go back to your April commentary for a moment. You know, obviously there are a lot of changes taking place in the freight markets kind of broadly. I was just maybe curious if you could kind of comment on April relative to March so far and how it's trending, you know, versus either your expectations for April because you were kind of going into the month or just relative to normal seasonality. Just sort of curious if you could maybe kind of give us an update there how the month has trended versus planned.
Adam Satterfield
It's a continuation of strong revenue growth. 28% is about where we are, continuing to see strong yield performance, which that has certainly continued throughout the first quarter and same types of trends into April for sure. It's a reflection of our ability to continue to win market share. We talked about it earlier. that as we continue to have conversations with our customers and with our sales team, we continue to get positive feedback as it relates to demand for our service. And many of these conversations center on the lack of general capacity within LTL. And LTL is different from truckload. And I think a lot of shippers have seen the value of LTL and certainly the e-commerce effect on supply chains There's been movement of freight within LTL that we believe will stay, and we believe we'll continue to see tailwinds over time for the industry. We think we can be the biggest participant in winning share as that industry continues to grow, much like we've been the biggest share winner over the last 10 years. Certainly, that's our plan, is to keep investing ahead of growth and keep delivering service value that's better than anyone else in our industry. We've got an unmatched value proposition, and our customers continue to respond to that. And so that will be our focus is to continue delivering best-in-class service and making sure we've got the capacity to support our customers' growth.
Jack Atkins
Okay. No, that makes sense, and that's great to hear on April. So I guess maybe for my follow-up question, just kind of going back to John's point on operating ratio and sort of thinking about seasonality into the second quarter and You know, typically, or the last couple of years, you guys have seen between 350 to 400 basis points of sequential improvement, 1Q to 2Q. You know, Adam, is there anything to kind of keep in mind as we sort of think about this year in particular, moving from the first quarter to the second quarter? And, you know, do you think that, you know, that type of normal seasonality is the right way to kind of think about it? I mean, that would imply an operating ratio, you know, in the upper 60s. So just sort of curious if you could maybe give us some thoughts on that.
Adam Satterfield
Sure. Certainly in the first quarter, when you look at some of the sequential changes that we had from 4Q, we outperformed what the normal seasonality was and what we had talked about our target was going to be coming into the first quarter from the fourth. Some of the benefits that we saw really a variance from the 10-year trend were in our miscellaneous expenses. Those costs were were lower. Those normally are about half a percent. They were lower and we got some benefit and normalcy and increase. They are general supplies and expenses also were favorable to our longer term trend. Some of those reflect control over discretionary spending like we talked about and then some other things were just there's times where you get some favorability and especially on those miscellaneous expenses and other times where it could go the other way. It's usually half a percent plus or minus. We'd expect some of these items that potentially could increase. I would just say if you go back to the fourth quarter and look at seasonality from fourth to first and then second, that would have put our operating ratio just above a 70. But I can tell you we'd be pleased with that, but we're really focused on being able to see an OR that starts with a six. So anything that starts with a six is going to be good by us.
Jack Atkins
No, I think that makes a lot of sense. Okay, thanks so much for the time, guys. Really appreciate it. Thanks.
Operator
Thank you. And the next question comes from Allison Polikek with Wells Fargo.
Allison Polikek
Hi, guys. James Dunn for Allison. Actually, just to clarify on the previous question, you expect both those to normalize moving forward, and there not necessarily was a reset in this quarter in terms of those expense levels?
Adam Satterfield
Are you talking about the general supplies and expenses and the miscellaneous expenses?
Allison Polikek
Correct.
Adam Satterfield
Well, like I said, the miscellaneous generally is around half a percent, and it was at 0.2% of revenue in the first quarter. we would expect that to move back to where it's historically trended. Now, again, it's not to say that some of the favorable trends that we saw in the first quarter couldn't repeat. There's a lot of elements that go into that misplaced expense, but it's more normalized around that half a percent. And then certainly in some of the things in the general supplies and expenses, we could continue to see some increases there as well. But no specific guidance, if you will, to say what that's going to be, but it wouldn't be unexpected to see that increase, if you will.
Allison Polikek
Got it. Just wanted to clarify. And you called out that you had 15% to 20% capacity in terms of service centers, and you also had some issues with the equipment deliveries. But overall, how much capacity do you think you do have in your network at the moment across sort of the three metrics you've or you've encouraged us to track around employees' trucks and service centers. Do you actually have capacity to take on incremental volume from here?
Adam Satterfield
Well, certainly that's our expectation is to continue to produce growth. And, you know, the piece of the capacity equation that you always have to look at is on the service center side. It takes doors to process freight within LTL. And so that is the more determinant figure. in terms of how much from the levels where we currently are that we can continue to grow. And we generally like to have somewhere 20 to 25% excess capacity. So our CapEx plan this year includes about $300 million to further expand the capacity of our overall service center network. We've opened the three facilities so far this year, and we've got more that are slated as we proceed through the year to keep expanding The number of service centers and some of those dollars are increasing doors at existing locations as well. When it comes to the people side of the equation and the fleet, much like you've seen in our numbers over the last couple of years, the lever that we pull there is we have to use purchase transportation if we need to supplement one or the other of those pieces of the capacity equation. Certainly, we've stepped up the increased use of purchased transportation. We were actually pleased to see that the outsourced miles that we had in the first quarter have actually trended down versus where we were in just the fourth quarter of last year. So we're continuing to make progress there as we continue to add people to our OD family. We had an 18.5% increase in the number of full-time employees, so we're to be successful there in attracting new people to our business and retaining those that we already have. And then we're continuing to balance the capacity of our fleet, as Greg mentioned in prepared comments. There's multiple ways to do that. We're having to hang on to some of the older equipment. We will get some relief later in the year, we hope, with deliveries of what's been ordered, if you will. But again, we can use purchase transportation as needed to supplement there. So I think we've got those pieces covered, and we're continuing to give 99% on-time service performance with a claims ratio between 0.1% and 0.2%. So it's best-in-class service despite the significant volume of growth and processing significant growth on top of the growth that we had last year.
Allison Polikek
Thank you.
Operator
Thank you. And the next question comes from Chris Weatherby with Citigroup.
Chris Weatherby
Hey, thanks. Good morning. So, Adam, maybe we could talk a little bit about yields and sort of how you maybe see that playing out over the next couple of quarters. I think we're starting to hit some of the tougher comps when we look at revenue per hundred with ex-fuel starting in the second quarter. I guess maybe two questions here. First, does the step up of the comps kind of happen immediately in April? So is that sort of the trigger as you move from one Q to two Q? We're already beginning to lap those sort of more challenging comps. And I guess the second part, bigger picture piece of the question would be just how you think about sort of the pricing environment, your ability to sort of, you know, continue to get price. You talked about inflation being four and a half to five. So presumably you're sort of targeting somewhere in that, you know, called six to six and a half, maybe 7% range. Can you just talk a little bit about how you're thinking about it?
Adam Satterfield
Yeah, certainly the increases that we need in the first half of this year are going to be higher, just like we talked about the expectations on our inflation. We started seeing really the inflation pick up in the middle of last year, and so as contracts were maturing then, we were having to start asking for more. We look at the current environment as those mature and what we're seeing and what we expect. And we're always making predictions for multiple things, what our volumes are going to be as well as our costs and what our customer needs are. But certainly started seeing acceleration in some of those renewals in the back half of last year, and those need to continue as we move through the first half. But we are starting to get some normalization on some of the weight for shipment trends At this point, our wait for shipment is flat with where we were last year. We've seen a decreased wait for shipment over the last year or so, as well as an increase in the length of haul. So both of those changes in mix have been supporting that overall reported yield number and making it look stronger than just the core increases that we're getting. But we continue to target cost plus. That's been our long-term pricing philosophy. It's been consistent and one that our customers know and can understand. We'll continue to execute on that same type of philosophy as we progress through the year. With some of those mixed metrics normalizing, when you just look at normalized trends, it would, if you look at normal seasonality, if you will, just sequential increases from this point forward. It starts coming down. The year-over-year starts getting to the higher single digits, you know, to kind of mid-single digits and eventually normalizing, if you will. But certainly right now we're able to get increases that are covering our cost inflation, and I think you can see that in our numbers.
Chris Weatherby
Okay. Okay. That's very helpful. I appreciate that. And you mentioned that the weight per shipment has been ticking up sequentially here after, I think, bottoming kind of in the third quarter. Should we be likely to be sort of up on a year-over-year basis as we move forward?
Adam Satterfield
Well, right now, like I said, we're flat. So as we progress through the second quarter, then we could, if things just sort of hold steady, if you will, from a mixed standpoint, then certainly we would start seeing some increase. And that's kind of the point of you might start seeing the reverse of what we did last year, where the mix change puts a little bit of pressure on that reported revenue per hundredweight. Certainly in the third quarter, that was our low water mark. I think we were at 1,538 pounds on average in the third quarter of last year. You know, right now we're trending somewhere in the 1,575, so between 1,550 and 1,600 pounds, but it's been a little bit heavier on that scale over the last few months.
Chris Weatherby
Okay. That's very helpful. Thanks for the time. I appreciate it.
Operator
Thank you. And the next question comes from Scott Group with Wolf Research.
Burt Reynolds
Hey, thanks. Good morning. Adam, I just want to clarify just a couple things. The 28% increase in revenue in April, is there any way just directionally to break that down between fuel and tonnage and sort of underlying yields? And then I was also just a little confused about your commentary around the second quarter OR about normal seasonality is a 70-something, but you're hoping for a 60-something. I was a little confused, so if you can help there.
Adam Satterfield
I'll try to clarify that first. I'll just talk about our revenue growth. We don't want to necessarily give the details. We'll wait and let the month settle out. Like I referenced earlier, in March, we saw revenue per hundred weight excluding the fuel that was up about 9%. That's about the same year-over-year change that we're seeing from a fuel We never really get into the breaking down fuel contributions, but the average price per gallon in March is about the same in April. It's averaging about $5.11, $5.12. It's about a 62% increase in that DOE price per gallon in March and the same type of increase that we're seeing in April. will have similar contributions, if you will, there. Their overall yield continues to show considerable strength. The comparisons start looking a little bit different, if you will, on the volume side. When you look at last year and what the revenue growth was, we had total revenue growth of about 16% in the first quarter of last year, and it was 47% in the second quarter. Those will will certainly change as we progress through the second quarter. The comparisons get a little bit tougher, which is why we're extremely pleased to see the strong revenue growth at 28% in April. But we'll continue to see contributions like that. The yield is certainly driving a lot of that revenue growth for us right now, but seeing very solid volume performance as well. In terms of the operating ratios, Don't want to give specific guidance per se, but my point was we certainly had some favorability in the first quarter. I mentioned the general supplies and expenses and the miscellaneous expenses and that those could revert back. So there certainly could be some pressure on that normal sequential change that we see from the first to second quarter. One other thing that was beneficial was we had lower fringe cost in the first quarter than what I expected for the year. And that fringe cost is a percent of our salaries and wages. So I would expect that to kind of normalize back to where I thought it would be for the year. So there may be a little bit of pressure on a couple of those items. Time will tell, and we'll see. But my point was, if you just took normal seasonality from the fourth quarter, Certainly, we had big outperformance in one queue, but if you took normal seasonality from the fourth quarter and ran it through to the second, that would have put our operating ratio right in a 70.2. And we'll see that would imply less seasonal improvement than what we normally expect and What the point of the matter was, if we operate anywhere that starts with a 6, if it's a 69.9, we will certainly be very excited to see that kind of number. We're sitting here like Burt Reynolds and Jerry Reed trying to do something that they said couldn't be done, and we think that we can get it done. But certainly, if it comes out that it's a 70.1 or 70.2, that's producing very strong profitable growth as well. But nevertheless, not throwing necessarily a specific target out there, but just saying what could be done with some of the numbers and how they might normally train it.
Burt Reynolds
Okay. Yeah. Most of the others get excited about starting with an eight. You made a comment about LTL is different than truckload. So I'm guessing the LTL is very different than spot truckload, but There's a lot of focus on spot rates right now. How does slowing falling spot rates impact in any way your tonnage outlook, your pricing outlook?
Adam Satterfield
Well, from a tonnage standpoint, that was the point we wanted to make was that what's going on in truckload right now, we already last year had taken a lot of the heavier weighted shipments that might be considered spillover freight in prior periods and had worked those out of our system. So we don't have those same pressures, and I don't think many of the other LTL carriers do either, just looking at some of the statistics. I think freight demand had been so solid in the influx of freight into the LTL world that many carriers, and certainly us, we can speak to specifically, We're just focused on long-term LTL freight, not something that might be more transactional here today, gone tomorrow type of thing if truckload capacity loosened up. So we're not seeing the same type of pressures and not really hearing about it from an overall competitive landscape either, that there's some movement of freight going back into the truckload world. But it's certainly something that we'll continue to pay attention to We're talking very frequently with customers and our sales team, but again, that's consistent feedback that we're receiving from all parties is that demand continues to be solid. Certainly, numbers are what they are. Part of the conversation in our prepared remarks talking about 10-year trends and so forth, we've doubled our market share over the last 10 years. That doesn't always come in a linear fashion. We might have a month where volumes underperform for our monthly period, our 10-year average trends, and that's just certainly not something to get overly concerned about. We saw some of that in the first quarter. We underperformed, if you just look purely from a 10-year average sequential standpoint, on the volume side, but we produced a lot of revenue growth and good profit growth as a result. So we continue to be encouraged by the overall environment and the feedback that we're hearing from customers and our sales team and want to continue to do what it takes to take advantage of the volume flows that may come our way this year.
Burt Reynolds
Thank you, guys. Appreciate it.
Operator
Thank you. And the next question comes from Jordan Oliver with Goldman Sachs.
Jordan Oliver
Yeah, hi. I'm curious, realizing that things are very strong today. If we were to go into a slower economic situation later this year into next year, maybe negative growth, given the headcount increases you've had and obviously wage increases across the sector, I mean, how flexible or nimble do you think you guys would be sort of in the other direction in terms of pulling things back and can you with wage increases and headcount? Thanks.
Greg Gant
Jordan, we've done this in the past. I mean, I don't think anybody likes to manage through a downturn or a recession or whatever you want to call it, but we've done it in the past. It's surely not a lot of fun and you have to make hard decisions at times, but we've managed through The worst recession ever in 2009, at least in my pretty lengthy career, it's probably the worst ever. We managed through that fairly well. Then we did it again in 16 and through a flat year in 19. We geared up, then we geared down, and you gear back up. This business is up and down. It always has been. You know, if we have to manage in a downturn, I've got all the confidence in the world we can manage through that. You know, as Adam mentioned, though, you know, so far, so good this year. Our trends are good. Our feedback from customers is very strong. We've had two of our top ten accounts in the building in the last couple weeks, and they're both very positive on, you know, their business and their customers. And these were logistics companies, by the way. they're huge and they manage an awful lot of dollars. Their outlook is very strong at this point in time. I think our standing with these particular accounts and with our accounts in general, our standing is better than ever. At this point in time, we're not thinking about a downturn. If we have to, we will, but that's not where we are today. Thank you for your perspective.
Operator
Thank you. And the next question comes from Todd Fowler with KeyBank Capital Markets.
Todd Fowler
Hey, great. Thanks and good morning. So I wanted to ask on where you think you're at from a headcount growth standpoint. I know you've had success in adding headcount, but it's been about above tonnage and shipment growth now for the past couple of quarters. You had some comments in the release about continuing to add headcounts in 2Q. Do you think you're getting to the point where headcounts caught up with where your tonnage levels are? How do you think about continuing to headcount growth into the back half of the year?
Greg Gant
Yeah, Todd, I think we are. I think we have pretty much caught up. We still have some needs in some places, but we're much closer than we've been, probably in the best shape we've been in over a year. So happy with that, happy with where we are. And we'll just have to see how the volume trends continue. If we continue on our current growth trajectory, then we will have to continue to add some as our seasonality dictates. But I think those needs will be fewer, certainly, than they were in the last year or so. But yeah, we're in a better spot and feel pretty good about our standing today. And that wouldn't be a bad thing to see that continue to level off a little bit.
Todd Fowler
Yeah, no, understood. That's a good comment. That's helpful there. And then, Greg, just to follow up on your prepared remarks, you had a lot of comments around shippers really realizing the value of the LTL service proposition. I guess I'm curious, are you seeing any shift in your mix as far as kind of your core customer base? And I know it would just be around the edges. not a big wholesale shift, but kind of different shippers using LTL relative to where you've been historically. And when you think about the tonnage growth that you've been experiencing, do you think that most of that's because of your available capacity or is there something else within the industry that's driving that? Thanks.
Greg Gant
No, Todd, not that I know of, not at all. I think it's continued growth from existing accounts. Certainly we continue to take on new business. We have a very significant group of sales folks working out there every day. So we do continue to gain some new business from the reports that I'm seeing, but no normal growth from existing customers. I think just the continued confidence that they have in us and the service performance that we've given them in the past, and they like it. Their customers need that. Their supply chain, as Adam mentioned, Supply chains are challenged, and putting that product on the shelf is more important now than probably ever.
Todd Fowler
Thanks for the time. Sure.
Operator
Thank you. And the next question comes from Robbie Shanker with Morgan Stanley.
Robbie Shanker
Thanks, Monty, everyone. A couple of follow-ups. One to the kind of downturn planning question. I'm sure you guys are aware that most of your peers and a lot of investors have been trying to figure out what your secret sauce has been for years. And while there isn't one answer, I think one of the big elements is your continued investments, almost irrespective of the cycle. But I just wanted to get a sense of what benchmarks you guys would look at in terms of turning the wick up or down on the incremental growth plans A, if there is a downturn, are you going to put your foot down and actually accelerate investments? Or, again, what are some of the metrics you'd look at to start pulling back?
Adam Satterfield
Well, I think you've got to look at past performance to a degree to see how we react. And as Greg mentioned earlier, we've taken the opportunity in the past in some of those slower periods, like you mentioned, to in some ways accelerate our investments. I mentioned earlier that we're probably a little bit behind. We're at 15% to 20% excess capacity. We like being at sort of 20% to 25% on average, and we're a little bit behind that target range, just given the significant volume growth that we've had. So we look through a longer-term lens, if you will, and try to project out where we think our market share and our volumes might be in the next five to 10 years. It's not just always in the here and now, because certainly you can't execute when it comes to real estate investments in a very short period of time. Oftentimes, and we didn't necessarily see this in the last slow cycle in 19 like we thought we might have, but In prior periods and downturns, we've seen some opportunities come our way that were attractive investments from land opportunities, existing service center opportunities. Certainly, if something becomes available in an area that's on our long-term roadmap for where we want to go, then yeah, we would take advantage of something like that. It's just always looking at what's in front of you if you will, from an opportunity standpoint, and then us thinking about the longer-term opportunity, where we want to be, where we think we need to have capacity to support the continued growth within our network and to be able to keep our service metrics where they are today.
Robbie Shanker
Got it. That's good color. And just a follow-up on the topic of keeping an eye on the long-term and growth investments. There have been a number of important developments in the path to commercialization of autonomous trucks and obviously the pressure on most companies to strengthen their ESG footprint with electrifications growing as well. I would love to get an update from you guys on what you're seeing out there, what your investment plans are in both these technologies. and maybe kind of what the rollout path looks like, especially if you're going to invest in a downturn?
Adam Satterfield
Well, we certainly have, one, we've just recently disclosed our first ESG sustainability report, so we were proud to get that out, and I think that was a means to show some of the long-term improvements that we've made over time with operating efficiencies and overall improvements in our miles per gallon and so forth. We'll continue to track towards some of the goals that we have internally to continue to improve those metrics. One of the key pillars of our foundation for success is continuous improvement. That means multiple things, continuous improvement in multiple areas. As it relates specifically to electric vehicles and autonomous and so forth, we'll continue to stay engaged with manufacturers to see what's coming down the line. We would like to try to test some of the equipment, and we actually ordered some equipment, but we're still waiting on the delivery of the truck. So I think that goes to some of the pressures that the OEMs have in terms of what actually is being produced and is planned to be produced in the near term. We're still, from all the feedback we get from specs and capabilities, don't believe that electric trucks as they exist today really fit the operating model of an LTL network, at least how we run our business. But we felt like we wanted to have a seat at the table and that was why we put an order in to get something and actually put it in place to operate and to be able to give true feedback in terms of what the limitations may or may not be. But we'll continue to stay engaged with all of our suppliers in that regard to see as things change and where it may make sense to try to integrate some of that technology into our network as it makes sense or not.
Robbie Shanker
Understood. Thank you for the color. Thank you.
Operator
And the next question comes from Amin Rahotra with Deutsche Bank.
Amin Rahotra
Oh, great. Thanks. Appreciate it. So I just had a couple questions. Adam, just clarification. Did you give April tonnage sequentially for March versus seasonality and year over year in April? Could you give that if you hadn't already?
Adam Satterfield
No, we haven't provided the detail. Consistent with what we've done in the past, we'll give it with our 10Q. but just gave where we're trending from an overall revenue standpoint and then gave a little extra color on kind of what our yield trends are doing.
Amin Rahotra
Okay, fine. And then, you know, I guess bigger picture question, you guys are knocking the cover off the ball on many metrics. Your stock is down 25% this year. I don't want to make too big of a deal of, you know, near-term or mid-term stock movements, but Everybody's debating right now, you know, what the peak to trough, you know, earnings decline to look like in a very tough macro scenario. And I think part of that reflects the trough to peak has been so robust for OD and many other companies as well. So I guess the question is, you know, if I look at the industry, the industry has done a tremendous job of, you know, understanding its cost structure a little bit, you know, pricing rationally relative to those investments they've made and understanding their cost structure. So do you think that the industry, from a pricing discipline perspective, is just better than it's ever been because of some of those specific investments? And do you think there's risk in a downturn that the industry pricing discipline breaks down? Just talk about how the pricing discipline for the industry is today versus how it's been kind of at any time in the past.
Adam Satterfield
Well, I certainly think it's been more disciplined, and you can go back to 2019, and in particular, the second quarter of 2020 as well. I mean, that was a pretty steep drop for everyone from a revenue standpoint, and no one knew how long of a drop we were going to be in, but I think that there was a lot of discipline that was shown, and I think it gets back to there's certainly a lot of value that an LTL carrier can offer, and there's a lot of expense to running and to expanding an LTL carrier's network. We certainly have seen that over the years. We talk a lot about the cost of expanding our real estate network, the land cost, facilities where we have to lease, some of the rent rates. have almost become prohibitively expensive. But something I thought that way about a couple of years ago may now look like a bargain. So it's one of those things where we've got to continue to build that type of cost escalation into our pricing plan. And I think we'll continue to certainly see our numbers and our philosophy no change with respect to the cost plus pricing that we've displayed over the years, and I think that it's likely that we'll continue to ... We've seen discipline from the other carriers and wouldn't expect any change in that regard. The industry now, a lot certainly been written lately about what's going on in truckload, but you've got almost 70% of the LTL revenue that's in publicly traded companies now. It doesn't take long to see what everyone is seeing and doing, and certainly probably more important to see what actually is going on for management teams versus just reading reports off the Internet that's sensationalized maybe a little bit more. But I don't think you can necessarily extrapolate what you're seeing in some of those reports to the LTL world.
Amin Rahotra
Okay, very good. Thank you very much.
Operator
Thank you. And the next question comes from Ken Hoxter with Bank of America.
Ken Hoxter
Hey, great. Good morning. Greg or Adam, can you give me thoughts on the impact of purchased transportation on quality control as expense and what is now outsourced as you talked about maybe growing a bit? Although I think, Adam, you mentioned it was down in first quarter versus fourth quarter, but it sounded like you needed to scale that to meet your growth targets going forward.
Adam Satterfield
Certainly, we were able to use the purchase transportation in an increasing manner as we went through mainly 2021. Started stepping it up a little bit in response to the acceleration and volumes that we saw in the back half of 2020. Speaking of sequential accelerations, just to be able to keep pace with the growth and expectations from our customers. We've got good carriers that we've used to supplement mainly within our line haul operation. It's overall still pretty minimal in terms of the outsourced miles. Certainly, we saw the cost increasing, if you will, as that rate environment was increasing, but We were able to work those third parties into our network and keep our service metrics high while responding to significant volume growth from customers last year. We saw maybe a slight uptick in our claims ratio. That was probably more or somewhat reflective of using third-party truckload carriers versus our twin 28-foot PUP operation. and all the claims prevention tools that we have. But when I say it upticked, it upticked from a .1 something to a .16 that just rounded to a .2. So we're talking very minimal increase there. And that's part of the overall value that we provide to our customers. And Greg mentioned it earlier in his prepared comments that part of our value proposition is having capacity. When you look through prior cycles, look through 2017 and 2018, we are able to grow with our customers right now. When you look at the other carriers, at least public carriers in the back half of last year, we're pretty flattish from a volume standpoint. We're able to come in and demonstrate value, not only with the service quality that we offer, but being able to provide capacity when no one else can. That takes investment. It takes investment in the real estate, the fleet, and our people to make sure we've got that flex capacity. Certainly, we always try to stay ahead of the game as best we can in that regard, but I'm certainly pleased that we're able to deliver that for our customers.
Ken Hoxter
Great. Thanks for that. I guess for my follow-up, let me just start off with the premise. You talked about doubling your share, but... you know, I guess one or two of your public peers were kind of closing service centers and kind of maybe shrinking their business. And that's kind of changed, right? So most of your peers are now adding service centers and doors. Everybody's kind of set new targets out there. Do you still see the LTL market as structurally growing share within the entire trucking market? And then if so, I think a lot of demand questions coming to you now is where do you see it first, right? Where do you see when you see a role? Is it the consumer? Do you not see it because e-commerce growth has changed that within the dynamic that you're still growing and taking shares so you wouldn't see that impact? Maybe just set the stage for the dynamic of what goes on in a market these days relatively within the LTO market.
Adam Satterfield
Well, you know, we've talked about this before, but in our business, the way we try to manage and project out, we always have a baseline forecast for the year, and then we have scenarios with growth above that baseline and scenarios where the volumes are below that baseline. And we try to have a plan for both. We have that baseline plan and then how we're going to execute in either side of that scenario. And all we can do is continuously look at our numbers and have continuous conversations with customers. And certainly we've had years where We've been above and below our baseline scenarios, and you just make operational decisions from that point forward. Part of that is the way we structure our network. Each of our service center managers has got control in terms of managing their headcount and running their operation as needed in terms of adding to or pulling back on some of the additions that they're making depending on what the environment is like and But it just takes constant communication between us and our customer base. And oftentimes, a lot of that is communication with many of our third-party logistics customers. Six of our top 10 largest customers are 3PLs, and they're a fair amount of our overall business. And they generally have a read on what's going on and if there's mode shifts and other things. And we still get favorable feedback from them with respect to the expectations for volumes this year. And so, you know, that kind of goes into our baseline and maybe why some of our conversation and thinking might seem a little bit different than what others might be talking about with respect to overall transportation this year.
Ken Hoxter
Great. And your thought, just to wrap that up, the thought within the LTL market, do you still see it structurally taking share within the trucking side?
Adam Satterfield
We do.
Ken Hoxter
Just understanding, like, yeah.
Adam Satterfield
Yeah, we do. I feel like it will continue to grow. Right now, when you look at all the industrial numbers, those are all favorable for sure, and we're seeing good growth. Our revenue growth in the first quarter is pretty balanced between both our industrial and our retail-related business. We're continuing to see consumer spending, but irrespective of that, there's freight demand for LTL carriers and shippers that this e-commerce effect on supply chains that are leveraging the network that we've built out in moving freight. If it's a manufacturer that is moving freight in yesteryear, it may have been one full truckload of goods to a regional distribution center. That may be 10 different fulfillment centers in that same region. And we can fill one truckload, basically, one full van of goods at that same manufacturer. But they're now leveraging our network as we distribute those goods throughout our system into that ultimate fulfillment center. And so we think that type of change will continue to drive volumes into the LTL industry. And I think that given the investments that we've made and the requirements, too, from the big box retailers for their vendors shipping product in, most have on-time and full or must arrive by date type of programs. And certainly, it's a focus on the on-time deliveries and no damages. And when you've got the best metrics like we do, that's how we can add further value to our customers by making sure that they show well on their vendor scorecards with their customers. And that's been a piece of the market share that we've won over the last 10 years, and we think that that trend will continue going forward.
Ken Hoxter
Appreciate the time and insight. Thanks a lot.
Operator
Thank you. And the next question comes from Tim Waterwoods with UBS. Please go ahead, Mr. Waterowitz. Your line is live.
Tim Waterwoods
Yeah, it's Tom. Sorry I was on mute there. I guess a little bit of follow-up on that last one. What, you know, the kind of consumer goods spending and potential weakness seems like a, you know, key point of concern. So what does your mix look like, broad brush? I know sometimes it's hard to be overly precise, but if you say, well, you know, the 2016 cycle when we saw weakness, we had, you know, you know, kind of X amount consumer and Y amount industrial, and then maybe in 2019 and today, you know, has it skewed a lot more towards consumer, or how do you think about at a high level that mix of your book that's, you know, if you want to put it in industrial and consumer, or if you wanted to include other buckets?
Adam Satterfield
I mean, it's still more weighted to industrial than retail. About 55 to 60 percent of our revenue is industrial related, and 25 to 30 is retail related, but that's probably moved up the spectrum closer to that 30% threshold. I mentioned that we've seen a lot of good growth with our retail customers, and we have. That's been a big part of the story, but we continue to see good growth and market share with our industrial customers as well. There have been periods where that retail was growing a bit faster, but both are growing for us, and we're still seeing good share there. So that retail component has crept up a little bit, but our good industrial business has grown as well and has continued to somewhat keep pace.
Tim Waterwoods
Are you hearing, you know, I don't know if this is the type of, if you have clear input from customers on this, but Are you hearing a difference in the outlook between those two customer segments? Are the consumer-related customers more cautious and the industrial side's more aggressive? And I guess, I think, Greg, you commented on inventories too, that you thought inventories were still light. I don't know if there's a difference in kind of urgency for industrial versus consumer.
Adam Satterfield
No, it's... We look at the inventory to sales ratio and that continues to be low and really reconciles with feedback that we're getting from customers, be it on the retail or the industrial side, that inventory balances are lower than what they prefer them to be. We have an awful lot of conversation about the number of back orders that many are dealing with and in some cases missed opportunities where They simply haven't had product on the shelf or ready now if it's an online purchase, if you will. I think that's something that Greg mentioned earlier that we're seeing and hearing not only from the customer side, but we're seeing it and feeling it from our supplier side as well. Both kind of go hand in hand and many of our suppliers are also customers. We're seeing that across the board, if you will. That's why we think that even ... Right now, consumer spending continues to be strong. I think household balance sheets are good. Maybe consumer confidence is not as high as it has been, but we still feel like freight demand can continue past any type of consumption slowdown. just given the fact that we feel like inventory balances need to be built back up. And we continue to believe that long-term we'll see a higher inventory to sales ratio than perhaps where we were pre-pandemic.
Tim Waterwoods
Right. Okay. Makes a lot of sense. Thanks for your time.
Operator
Thank you. And the next question comes from Vascom Majors with Susquehanna.
Susquehanna
Yeah, thanks for taking my question. You know, not to beat a dead horse with another hypothetical recession scenario, but it's clear that you don't think there is a structural change to the investment you've been able to invest in, or I'm sorry, to the situation you've been able to invest into and make a tremendous amount of return over the last 10 years. But I'm curious, as you think about scenarios, not just the kind of scenario analysis you talk about in a single year, but But in that five to 10 year plan, we are looking where to invest and where to buy land and where to build more capacity. What would it take to maybe change that strategy? Is it seeing less discipline in pricing at your peers? Is it a consistent run of sub-seasonal tonnage versus the share gain you've gotten historically? I'm just curious what you would have to see to actually make a change in the way that you approach the market price long term. Thank you.
Greg Gant
Baskin, if, again, a big if, and I know it's a hypothetical, but if we saw a major downturn of some kind and all of a sudden we had excessive capacity, maybe we would look to do something different. But to tell you the truth, as Adam mentioned earlier, sometimes in a downturn, it provides the best opportunity for you to go out and do some things in certain markets that are extremely difficult to get them done. And that may present an opportunity for us and give us that very, very difficult place that we desperately need. So I hate to talk too much about hypotheticals, but we'll certainly take advantage of the market if it provides some opportunities for us. We've got to be opportunistic. I've talked about it in the past. how difficult it is now to acquire land in certain parts of the country, how difficult it is to get buildings started and whatnot. And I think we'd be terribly remiss if we sat back and said, oh, things have really slowed down and we shouldn't do this. And if you could flip the switch and build a facility in six months or even a year, that's one thing. But when we know in some of these markets It's two, three, and four and five years to get something accomplished. You've got to be opportunistic. When those opportunities are there, you've got to strike and you've got to take advantage of them. I'm not sure that anything would drastically change our outlook and our strategy at this point. I think we've had a fair amount of success. I think you'd agree with that, that what we've done, it's worked, and we've continued to put ourselves in a good position to take share, and honestly, I don't see that changing. If we were at 30% share or something crazy, but we're still at a 12% market share, so we think there's still a lot of upside for growth from our standpoint, and again, I think it's critical that we take advantage when that opportunity provides.
Adam Satterfield
Just to add a little bit more color to that, too, and reinforce the point, If we had not made the decisions to invest in 2016, we wouldn't have been able to take advantage of the revenue opportunities that we had in 17 and 18. And the same is true in 2019. If we had listened to everything that we had read at that point and had pulled back and not continued to execute on our CapEx plan, then we wouldn't have been able to enjoy the growth that we saw last year and what we're seeing today. It takes investment during those slower times to build up that excess capacity to be able to participate in these really strong market environments. I think that's why you've seen us have a little different performance. It's a different strategy, but certainly we've been able to participate on the upside of the market swing more so than anyone. As Greg said, we feel like we've got a really long runway for growth ahead of us, and it's just going to continue to take that continuous investment cycle. Whether we're in the middle of a market upturn or if things are slower, that's just something we've got to maintain our focus on and make sure that we're continuing to expand the network overall.
Susquehanna
Greg, Adam, I really appreciate the awful answer. Thank you.
Operator
Thank you. And the next question comes from Tyler Brown with Raymond James.
Tyler Brown
Hey, good morning, guys. Hey, Tyler. Hey, so we've talked to some developers, and it sounds like labor, materials, a difficult zoning environment is actually capping some square footage growth in the broader industrial real estate market. Obviously, you earmarked $300 million in capex on real estate, but Greg, you kind of talked about it, but how confident are you that you will actually be able to spend that this year?
Greg Gant
Well, you know, I'll be honest with you, Tyler. I'm maybe a little more concerned we're going to have opportunities and exceed that number. But, you know, we'll just have to see. We've got an awful lot of projects in play. So we'll just have to see what opportunities present themselves. And I can tell you at the price of land nowadays, we can reach that budget pretty doggone quick. So... It's a challenge, but I think we'll get there, honestly.
Tyler Brown
I think we'll be all over it. Okay, so it actually kind of plays into my second question. This is a difficult question, but I think it's a really important one. But how much would you say the cost to build a like-for-like door today is versus pre-COVID? I mean, how much does that increase just with all the material costs increased? If anything directionally would be helpful.
Greg Gant
Yeah, it's relatively significant. I'm not talking about properties now. I'm just talking about materials. I did see something from our real estate folks recently. And it's probably in the 20% range, give or take. Some materials are more than that, some less. But the cost of everything, be it concrete, steel, You know, any and all materials has definitely increased relatively significant in the last year or two since the pandemic.
Tyler Brown
Everything is up there. Okay, that's very helpful. And then, Adam, quick question, just clarification. So does the propane that your forklifts consume qualify for CNG tax credits? And if so, Didn't those credits go away year over year, and was that an OR drag in Q1, or was that non-material?
Adam Satterfield
You're very perceptive asking something like that, but that credit did go away, at least for now. That credit has sort of come and gone at different times, but at this point, I think it's gone. We'll see if it comes back or not.
Tyler Brown
Okay. All right. Well, I appreciate the time, guys.
Operator
Thank you. And the next question comes from Bruce Chan with Stiefel.
Bruce Chan
Good morning, guys. This is Matt on for Bruce. Thank you for squeezing us in here. Congrats on the quarter. With respect to China's COVID lockdowns and potential for some increased port congestion later this summer, given some CBA negotiations, we were curious if you guys are seeing any changes customer change in their ordering or perhaps contracting patterns in order to maybe get in front of this? Thank you.
Greg Gant
Yeah, Bruce, I can't comment on that. I have not heard that. I expect that that will be an issue if it continues. But yeah, what we're hearing from over there, it's not good and it's a lock down Beijing as well as the rest of the port cities that they have already, it's definitely going to be an impact. But I have not heard that, not from our sales folks or our customers to this point.
Operator
Thank you. And let's conclude the question and answer session. I would like to return the floor to Greg Gantt for any closing comments.
Greg Gant
Well, thank you all for your participation today. We appreciate your questions, and feel free to give us a call if you have anything further. Thanks, and I hope you have a great day.
Operator
Thank you. The conference has now concluded. Thank you for attending today's presentation. May I disconnect your lines?
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