Old Dominion Freight Line, Inc.

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.

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.

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.