Old Dominion Freight Line, Inc.

Hello, and welcome to the Old Dominion Freight Line second quarter 2023 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 touch-tone phone. To answer 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 your host today, Drew Anderson. Please go ahead.

Good morning and welcome to the second quarter 2023 conference call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through August 2nd, 2023 by dialing 1-877-344-7529, access code 7609314. 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 Securities 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 yourself to just one question 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. Marty Freeman. Please go ahead, sir.

Good morning and welcome to our second quarter conference call. With me on the call today is Adam Satterfield, our CFO. And after some brief remarks, we will be glad to take your questions. The OD team delivered solid financial results for the second quarter, considering the operating challenges associated with the continued softness in the domestic economy and a decrease in our volumes. With a 15.2% decrease in revenue during the quarter, our team was focused on improving our yield, managing our variable costs, and controlling our discretionary spending. As a result, We were pleased to produce a 72.3% operating ratio and earnings per diluted share of $2.65. We achieved these results by continuing to execute our long-term strategic plan, which has guided us for many years throughout many economic cycles. The plan is centered on our ability to deliver superior service at a fair price, which included on-time service performance of 99% and a call-or-go claims ratio of 0.1% during that second quarter. Providing this level of superior service strengthens both our value proposition and our relationships with our customers. Delivering superior service also supports our ongoing yield management initiatives. We have improved the quality of our revenue over long term by offering a consistent approach to pricing. which is designed to offset our cost inflation and support our ongoing investments in service center capacity and technology. We believe that our ability to consistently offer network capacity differentiates us from the others in our industry, which is an additional element of our value proposition that we believe will support our long-term market share initiatives. Our market share remained relatively consistent during the second quarter, despite an environment where overall freight demand was subdued. The year-over-year decrease in our volumes, however, resulted in a loss of operating density. We believe that our long-term improvement in our operating ratio requires consistent increases in both density and yield, both of which generally require a favorable macroeconomic environment. With our commitment to providing superior service as our first priority for our customers, it becomes a challenge to maintain, much less improve our productivity during the periods with reduced density. As evidence of this fact, our line haul laden load factor decreased 3.1 percent during the second quarter. We were pleased, however, that our platform shipments per hour increased 6.6 percent and P&D shipments per hour increased 0.5 percent. These improvements, as well as other efforts by our team to manage cost, helped us maintain our direct operating cost as a percent of revenue. Our overhead cost, on the other hand, increased as a percent of revenue during the quarter, as most of these cost categories are fixed. We also believe an increase in aggregate depreciation expense due to the ongoing execution of our capital expenditure plan. We believe it is critically important to continue to execute on this plan regardless of the short-term economic outlook. We currently have approximately 30% excess capacity within our service center network. which is a little higher than our target range of 25%. We are comfortable with the amount of excess capacity as we remain confident in our ability to win market share over the long term. Finding land and building service centers in the right locations can take considerable time. Therefore, we make every effort to stay ahead of our growth curve with these investments. We could not have doubled our market share over the past 10 years without our consistent investment in service center capacity, as well as our regular investments in our fleet, our technology and training, education, and benefits for our OD family of employees. Our proactive approach to managing all elements of capacity has created a strategic advantage for us in the marketplace, which typically becomes most apparent to shippers in tight capacity environments. We do not always know when an inflection point in the demand environment is going to occur, but we believe we are well positioned to respond to any acceleration in volumes when it happens. Through the disciplined execution of our long-term strategic plan, our team has created one of the strongest records for long-term growth and profitability in the LTL industry. We remain committed to providing superior service at a fair price and maintaining the necessary capacity to support growth. And we believe we are better positioned than any other carrier to produce long-term profitable growth while increasing shareholder value. Thank you for joining us this morning, and now Adam will discuss our second quarter financial results in greater detail. Thank you, Marty, and good morning.