Hello, and welcome to the Old Dominion Freight Line, 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. Now I'd like to turn the conference over to Drew Andersen. Ms. Andersen, 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 Securities and Exchange Commission and in this morning's news release. 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 Gantt. 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 and demand for both our superior service performance and network capacity. We have opened three new service centers this year and currently have approximately 15%-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 purchased 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. Now Adam will discuss our first quarter financial results in greater detail. Thank you, Greg, and good morning. Old Dominion's revenue for the first quarter of 2022 increased 32.9% to a company record of $1.5 billion, while our operating ratio improved 320 basis points to 72.9%. The combination of these factors resulted in a 52.9% 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 work days 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 the 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%-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 2022. This concludes our prepared remarks this morning. Operator, we'll be happy to open the floor for questions at this time. Yes. Thank you. As mentioned, we now will begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble the roster. The first question today comes from Jon Chappell with Evercore. Thank you. Good morning, everyone. Good morning. Adam, if I could start with you. I mean, the last few 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 some of these, you know, vast market share gains that you're making, going to continue to make those trend in a more favorable momentum? Well, I think that, you know, 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. You know, I think we've certainly performed very well, the last couple of years and produced a lot of operating ratio improvement. I think, you know, 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, 100-150 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 100-150 basis points above our cost per shipment inflation. 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. 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. Over time, that's certainly part of the focus is to continue with that same type of mentality, with our yield management philosophy. Got it. Thanks, Adam. Follow-up for Greg. Last quarter, you specifically called out, you know, 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? Yeah, I'm not sure it's gonna get a whole lot better. I mean, the equipment that we had planned to receive this year was planned to be delivered later in the year than that we would normally take it. Typically, we would start taking trucks, especially late in the first quarter on through the early fall, and then deliveries would pretty much be over. We would have what we had purchased for that calendar, particular calendar year. This year, it's just it's a later build from the get-go. That's what we were told. 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. Got it. Thank you, Greg. Thanks, Adam. Thank you. The next question comes from Jack Atkins with Stephens. Okay, great. Good morning, Greg. Good morning, Adam. Thanks for taking my questions. Hey, Jack. Good morning, Jack. 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 kinda comment on April relative to March so far and how it's trending, you know, versus either your expectations for April as you were kinda going into the month or just relative to normal seasonality. Just sort of curious if you could maybe kinda give us an update there, how the month has trended versus plan. It's, I mean, a continuation of strong revenue growth. 28% is about where we are. Continuing to see strong yield performance, which you know that has certainly continued throughout the first quarter and same types of trends into April, for sure. You know, 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. Many of these conversations center on the lack of general capacity within LTL. You know, 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 a 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. You know, 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. That'll be our focus, is to continue delivering best-in-class service and making sure we've got the capacity to support our customers' growth. Okay. No, that makes sense. That's great to hear on April. I guess maybe for my follow-up question, just kinda going back to Jon point on operating ratio and sort of thinking about seasonality into the second quarter. You know, typically, or the last couple of years, you guys have seen between 350-400 basis points of sequential improvement, 1Q to 2Q. You know, Adam, is there anything to kinda 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 kinda think about it? I mean, that would imply an operating ratio, you know, in the upper 60s. Just sort of curious if you could maybe give us some thoughts on that. Sure. Certainly in the first quarter, when you look at some of the sequential changes that we had from 4Q, you know, we outperformed what the normal seasonality was and what we had talked about. Our target was gonna be coming into the first quarter rather from the fourth. You know, some of the benefits that we saw really a variance from the 10-year trend were in our miscellaneous expenses. Those costs were lower. Those normally are about 0.5%. They were lower, and we got some benefit. You normally see an 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. Then some other things were just, you know, there are 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 0.5%, plus or minus. You know, we'd expect some of these items that potentially could increase. You know, I would just say if you kinda 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 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 6. Anything that starts with a 6 is gonna be good by us. No, I think that makes a lot of sense. Okay, thanks so much for the time, guys. Really appreciate it. Thanks. Thank you. The next question comes from Allison Poliniak with Wells Fargo. Hi, guys. James on for Allison. Actually, just to clarify on that, the previous question, you expect both those to normalize moving forward, and they're not necessarily was a reset in this quarter in terms of those expense levels? Are you talking about the general supplies and expenses and the miscellaneous expenses? Correct. Well, like I said, the miscellaneous generally is around 0.5%, and it was at 0.2% of revenue in the first quarter. We would expect you know that to move back to where it's historically trended. Now again, it's not to say that you know some of the favorable trends that we saw in the first quarter couldn't repeat. You know, there's a lot of elements that go into that miscellaneous expense, but it's more normalized around that 0.5%. You know, certainly in some of the things in the general supplies and expenses, we could continue to see some increases there as well. You know, no specific guidance, if you will, to say what that's gonna be, but wouldn't be unexpected to see that increase, if you will. Got it. Just wanted to clarify. You'd called out that you had 15%-20% capacity in terms of service centers, and you also had some issues with the equipment deliveries. Overall, how much capacity do you think you do have in your network, at the moment across sort of the three metrics you've encouraged us to track around employees, trucks, and service centers? Like, do you actually have capacity to take on incremental volume from here? Well, certainly that's our expectation is to continue to produce growth. 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. That is the more determinant figure in terms of how much from the levels where we currently are that we can continue to grow. We generally like to have somewhere 20%-25% excess capacity. 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. Now, 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 purchased 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. 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 continuing to be successful there in attracting new people to our business and retaining those that we already have. 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 purchased transportation as needed to supplement there. I think we've got those pieces covered, and we're continuing to give 99% on-time service performance with the claims ratio between 0.1% and 0.2%. 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. Got it. Thank you. Thank you. The next question comes from Chris Wetherbee with Citigroup. Hey. Thanks. Good morning. 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 hundredweight ex-fuel starting in the second quarter. I guess maybe two questions here. First is the step up of the comps kinda happened immediately in April, so is that sort of the trigger as you move from 1Q to 2Q? We're already beginning to lap those sort of more challenging comps. 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 4.5%-5%, so presumably you're sort of targeting somewhere in that, you know, call it 6%-6.5%, maybe 7% range. Can you just talk a little bit about how you're thinking about it? Yeah. You know, certainly the increases that we need in the first half of this year are gonna 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. As contracts were maturing then, we were having to start asking for more. You know, 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 gonna be, as well as our cost and what our customer needs are. 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. We are starting to get some normalization on some of the weight per shipment trends. At this point, our weight per shipment is flat with where we were last year. We've seen a decreased weight per shipment over the last year or so, as well as increase in the length of haul. Both of those changes in mix have been supporting that overall reported yield number, and making it look, you know, stronger than just the core increases that we're getting. 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, and we'll continue to execute on that same type of philosophy as we progress through the year. With some of those mix metrics normalizing, when you just look at kinda normalized trends, it would if you look at kind of 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, the kinda mid-single digits and eventually normalizing, if you will. 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. Okay. That's very helpful. I appreciate that. You mentioned that the weight per shipment's been ticking up sequentially year after, I think, bottoming kind of in the third quarter. Should we, you know, likely to be sort of up on a year-over-year basis as we move forward? Well, right now, like I said, we're flat. As we progress through the second quarter, then we could, if things just sort of hold steady, if you will, from a mix standpoint, then certainly we would start seeing some increase. 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 lbs on average in the third quarter of last year. You know, right now we're trending somewhere in the 1,575 lbs, so between 1,550 lbs and 1,600 lbs, but it's been a little bit heavier on that scale over the last few months. Okay. That's very helpful. Thanks for the time. I appreciate it. Thank you. The next question comes from Scott Group with Wolfe Research. Hey, thanks. Good morning. Adam, I just wanna clarify 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? 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. All right. I'll try to clarify that. First, I'll just talk about our revenue growth and you know, we don't wanna necessarily give the details. We'll wait and let the month settle out. But you know, like I kinda referenced earlier, in March, we saw revenue per hundredweight excluding the fuel that was up about 9%. And that's about the same year-over-year change that we're seeing. You know, from a fuel you know, we never really get into breaking down fuel contributions, but the average price per gallon in March is about the same in April. And so it's averaging about a little over $5, 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. You know, we'll have similar contributions, if you will, there. The overall yield continues to show considerable strength and, you know, the comparisons start looking a little bit different, if you will, on the volume side. You know, when you look at last year and what the revenue growth was, you know, 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 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, you know, the strong revenue growth at 28% in April. You know, 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 ratio, you know, don't wanna 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. 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's fringe cost as a percent of our salaries and wages. I would expect that to kinda normalize back to where I thought it would be for the year. There may be a little bit of pressure on a couple of those items. You know, time will tell, and we'll see. My point was, if you just took normal seasonality from the fourth quarter, certainly we had big outperformance in 1Q. 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%. You know, we'll see. That would imply less, you know, seasonal improvement than what we normally expect. You know, 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. You know, 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. Certainly, you know, if it comes out that it's a 70.1% or a 70.2%, that's produced some very strong, profitable growth as well. 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 trend it. Okay. Yeah. Most of the others get excited about starting with an 8. You made a comment about LTL is different than truckload, so I'm guessing the LTL is very different than spot truckload. You know, 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? Well, you know, from a tonnage standpoint, you know, that was the point we wanted to make was that, you know, 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. 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 and an 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. 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. You know, certainly something that we'll continue to pay attention to, and we're talking very frequently with customers and our sales team. Again, that's consistent feedback that we're receiving from all parties is that demand continues to be solid. Certainly, you know, numbers are what they are and, you know, 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 and, you know, that doesn't always come in a linear fashion. You know, we might have a month where volumes underperform, for a monthly period, our 10-year average trends, and that's just certainly not something to get overly concerned about. You know, 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. We produced a lot of revenue growth and good profit growth as a result. We continue to be encouraged by the overall environment and the feedback that we're hearing from customers and our sales team and wanna continue to do what it takes to take advantage of the volume flows that may come our way this year. Thank you, guys. Appreciate it. Thank you. The next question comes from Jordan Alliger with Goldman Sachs. Yeah. Hi. I'm curious, realizing that things are very strong today, if we do or were to go into a slower economic situation, you know, later this year into next year, maybe negative growth, you know, 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? Can you with wage increases and headcount? Thanks. 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 wanna 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. 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. You know, then we did it again, you know, in 2016 and through a flat year in 2019. You know, we've geared up, then we gear down and then 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 10 accounts in the building in the last couple weeks, and they're both very positive on, you know, their business and their customers. These were logistics companies, by the way, you know, they're huge, and they manage an awful lot of dollars. You know, their outlook is very strong at this point in time. You know, I think our standing with these particular accounts and with our accounts in general, our standing is better than ever. You know, at this point in time, we're not thinking about a downturn. If we have to, we will. That's not where we are today. Thank you for your perspective. Thank you. The next question comes from Todd Fowler with KeyBanc Capital Markets. 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 a bit 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 headcount's caught up with where your tonnage levels are? How do you think about continued headcount growth into the back half of the year? 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, you know, in over a year. Happy with that, happy with where we are. You know, 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. I think those needs will be fewer certainly than they were, you know, in the last year or so. Yeah, we're in a better spot, and I feel pretty good about, you know, our standing today. That wouldn't be. Got it. That wouldn't be a bad thing to see that continue to level off a little bit. Yeah, I know. Understood. That's a good comment. That's helpful there. Then Greg, just to follow up, you know, on your prepared remarks, you had a lot of comments around, you know, shippers really, you know, realizing the value of the LTL service proposition. You know, I guess I'm curious, you know, are you seeing, you know, any shift in your mix, you know, as far as, you know, kind of your core customer base? I know it would just be around the edges, you know, not a big wholesale shift, but kind of, you know, different shippers using LTL relative to where you've been historically. 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. No, Todd, not that I know of. Not at all. I think it's just continued growth from existing accounts. Certainly we continue to take on new business. We have, you know, a very significant group of sales folks working out there every day. We do continue to gain some new business from the reports that I'm seeing. 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. They, their customers need that. You know, their supply chain, as Adam mentioned, supply chains are challenged and, you know, putting that product on the shelf is more important now than probably ever. Thanks for the time. Sure. Thank you. The next question comes from Ravi Shanker with Morgan Stanley. Thanks. Morning, 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 why there isn't one answer. I think one of the big elements is your continued kind of 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, you know, turning the wick up or down on the incremental growth plans. A, you know, 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? Well, you know, I think you've got to look at past performance to a degree to see how we react. As Greg mentioned earlier, you know, we've taken the opportunity in the past in some of those slower periods, like you mentioned, to in some ways accelerate our investments. You know, I mentioned earlier that we're probably a little bit behind. We're at 15%-20% excess capacity. We like being at sort of 20%-25% on average. You know, we're a little bit behind that target range just given the significant volume growth that we've had. You know, 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 we didn't necessarily see this in the last slow cycle in 2019 like we thought we might have. In prior periods in 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 wanna go then yeah we would take advantage of something like that. It's just always sort of 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 wanna 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. Got it. That's good color. Just a follow-up on the topic of, you know, keeping an eye on the long term and growth investments. There have been a number of important developments in the, you know, path to commercialization of autonomous trucks and obviously the pressure on most companies to kind of strengthen their ESG footprint with electrifications growing as well. I would love to get an update from you guys on kind of 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. Well, we certainly have we've just recently disclosed our first ESG Sustainability Report. We were proud to get that out. 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. You know, one of the key pillars of our foundation for success is continuous improvement, and that means multiple things, continuous improvement in multiple areas. You know, 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. 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. 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. 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. Understood. Thank you for the color. Thank you. The next question comes from Amit Mehrotra with Deutsche Bank. Oh, great. Thanks. Appreciate it. I just had a couple questions. Adam, just clarification, did you give April tonnage sequentially from March versus seasonality and year-over-year in April? Could you give that if you hadn't already? No, we haven't provided the detail. Consistent with what we've done in the past, we'll give it with our 10-Q, but just gave where we're trending from an overall revenue standpoint, and then gave a little extra color on kinda what our yield trends are doing. Okay, fine. 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 wanna make too big of a deal of, you know, near term or midterm 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. I think part of that reflects the trough to peak has been so robust for OD and many other companies as well. 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, pricing rationally relative to that, those investments they've made in understanding their cost structure. 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? Do you think the pricing, 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. Well, certainly think it's been more disciplined. 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. No one knew how long of a drop we were gonna be in but you know, I think that there was a lot of discipline that was shown. 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 and you know, we certainly have seen that over the years. We talk a lot about the cost of expanding our real estate network, the land costs, facilities where we have to lease, some of the rent rates have almost become prohibitively expensive. Something I thought that way about a couple of years ago may now look like a bargain. It's one of those things where we've got to continue to build that type of cost escalation into our pricing plan. 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. I think that it's likely that we'll continue to. We've seen discipline from the other carriers and wouldn't expect you know any change in that regard. You know, the industry now, you know, 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. You know, 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 you know, sensationalized maybe a little bit more. I don't think you can all necessarily extrapolate what you're seeing in some of those reports to the LTL world. Right. Okay. Very good. Thank you very much. Thank you. The next question comes from Ken Hoexter with Bank of America. Hey, Greg. Good morning. Greg or Adam, maybe thoughts on the impact of purchased transportation on quality control and expense and what is now outsourced as you talked about maybe growing it 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. Yeah. Yeah, certainly, we were able to use the purchased transportation, you know, in an increasing manner as we went through mainly 2021. Started stepping it up a little bit in response to the acceleration in 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. You know, we've got good carriers that we've used to supplement mainly within our line haul operation. You know, it's overall still pretty minimal in terms of the outsourced miles. You know, certainly we saw the cost increasing, if you will, as that rate environment was increasing. You know, 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. You know, 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-ft pup operation and all the claims prevention tools that we have. When I say it upticked, it upticked from, you know, 0.1% something to 0.16% that, you know, just rounded to 0.2%. We're talking very minimal increase there. That's part of the overall value that we provide to our customers. 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. You know, 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. Certainly pleased that we're able to deliver that for our customers. Great. Thanks. 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 kinda maybe shrinking their business, and that's kinda changed, right? Most of your peers are now adding service centers and doors. Everybody's kinda 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 LTL market. Well, you know, we've talked about this before, but our, you know, our business, the way we try to manage and project out, we always have a baseline forecast for the year, and then we have, you know, 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 gonna execute in either side of that scenario. All we can do is continuously look at our numbers and have continuous conversations with customers. 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. You know, part of that is the way we structure our network. We give 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. But it just takes constant communication between us and our customer base. You know, 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. We still get favorable feedback from them with respect to the expectations for volumes this year. You know, that kinda 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. Great. Your thoughts just to wrap that up, the thought within the LTL market, do you still see it structurally taking share within the trucking side? We do. Just understanding, like, yeah. Yeah, we do. I feel like it will continue to grow. You know, right now we've got, 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 was pretty balanced between both our industrial and our retail-related business. You know, 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. They're now leveraging our network as we distribute those goods throughout our system and to that ultimate fulfillment center. We think that type of change will continue to drive volumes into the LTL industry. 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 in-full or must-arrive-by-date type of programs. Certainly, it's a focus on the on-time deliveries and no damages. 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. That's been a piece of the market share that we've won over the last 10 years, and we think that trend will continue going forward. Appreciate the time and insight. Thanks a lot. Thank you. The next question comes from Tom Wadewitz with UBS. Please go ahead, Mr. Wadewitz. Your line is live. 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 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, kind of X amount consumer and Y amount industrial. Then maybe in 2019 and today, you know, has it skewed a lot more towards consumer? Or how do you think about 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? I mean, it's still more weighted to industrial than retail. About 55%-60% of our revenue is industrial related, and 25%-30% is retail related, but that's probably moved up the spectrum closer to that 30% threshold. You know, I mentioned that you know, we've seen a lot of good growth with our retail customers, and we have. I mean, that's been a big part of the story. We continue to see good growth and market share with our industrial customers as well. You know, 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. It's 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. 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, you know, related customers more cautious and the industrial side's more aggressive? 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, you know, kinda urgency for industrial versus consumer. No, it's, y ou know, 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. You know, I think that's something that Greg mentioned earlier that we're seeing and hearing, you know, not only from the customer side, but we're seeing it and feeling it from our supplier side as well. You know, both kinda go hand in hand and many of our suppliers are also customers. You know, we're seeing that across the board, if you will. You know, that's why we think that even I mean, right now, consumer spending continues to be strong. I think, you know, household balance sheets are good and, you know, maybe consumer confidence is not as high as it has been, but we still feel like freight demand can continue for past any type of consumption slowdown just given the fact that we feel like inventory balances need to be built back up. We continue to believe that long term, we'll see a higher inventory to sales ratio than perhaps where we were pre-pandemic. Right. Okay. Makes a lot of sense. Thanks for the time. Thank you. The next question comes from Bascome Majors with Susquehanna. Yeah, thanks for taking my question. You know, not to beat a dead horse with another hypothetical recession scenario. It's clear that you don't think there is a structural change to the situation you've been able to invest into and make a tremendous amount of return over the last 10 years. You know, I'm curious, you know, what, as you think about scenarios, not just the kind of scenario analysis you talk about in a single year, but in that five to 10 year plan where you're looking where to invest and where to buy land and where to build more capacity, you know, 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. Yeah. Bascome, if again, a big if, and I know it's a hypothetical, but if we saw a major, you know, downturn of some kind, and all of a sudden we had excessive capacity, maybe we would look to do something different. To tell you the truth, as Adam mentioned earlier, you know, 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. You know, that may present an opportunity for us and you know, give us that very difficult place that we desperately need. You know, I hate to talk too much about hypotheticals, but you know, we'll certainly take advantage of the market if it provides some opportunities for us. You know, we've got to be opportunistic. You know, 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. You know, I think we'd be terribly remiss if we sat back and, you know, said, "Oh, things have really slowed down, and, you know, we shouldn't do this." You know, if you could flip the switch and build a facility in six months or even a year, that's one thing. When we know in some of these markets it's two, three, four and five years to get something accomplished, you know, 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, you know, a fair amount of success. I think you'd agree with that what we've done, it's worked. You know, we've continued to put ourselves in a good position to take share. You know, honestly, I don't see that changing. You know, if we were at 30% share or something crazy, but, you know, we're still at a 12% market share, so we think there's still a lot of upside for growth from our standpoint. Again, I think it's critical that we take advantage when that opportunity provides. 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 2017 and 2018. The same is true in 2019. If we had listened and 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 kind of 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. Certainly we've we've been able to participate on the upside of the market swing more so than anyone. You know, as Greg said, we we feel like we've got a really long runway for growth ahead of us, and it's just gonna continue to take that continuous investment cycle. You know, 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. Well, Greg, Adam, I really appreciate the thoughtful answer. Thank you. Thank you. The next question comes from Tyler Brown with Raymond James. Hey, good morning, guys. Hey, Tyler. Hey, 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? 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. I can tell you at the price of land nowadays, that we can reach that budget pretty doggone quick. It’s a challenge, but I think we'll get there, honestly. I think we'll be all over it. Okay. That actually kind of plays into my second question. This is a difficult question, but I think it's a really important one. How much would you say the cost to build a like for like door today is versus pre-COVID? I mean, how much has that increased just with all the material cost increases? Anything directionally would be helpful. 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 you know it's probably in the 20% range, give or take. Some materials are more than that, you know, some less. 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. Right. Everything is up there. Okay. That's very helpful. Adam, quick question, just clarification. Does the propane that your forklifts consume qualify for CNG tax credits? If so, didn't those credits go away year-over-year? Was that a large drag in Q1 or was that non-material? You're very perceptive, asking something like that. That credit did go away. At least for now. Was it a material drag? 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. Okay. All right. Well, I appreciate the time, guys. Thank you. The next question comes from Bruce Chan with Stifel. 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 customer change in their ordering or perhaps contracting patterns in order to maybe get in front of this. Thank you. Yeah. Bruce, I can't comment on that. I have not heard that. I expect that will be an issue if it continues. What we're hearing from over there, it's not good. If they lock down Beijing and as well as the rest of the port cities that they have already, it's definitely gonna be an impact. I have not heard that, not from our sales folks or our customers to this point. Thanks a lot. Thank you. As this does conclude the question and answer session, I would like to return the floor to Greg Gantt for any closing comments. 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. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.