Good morning, welcome to the Old Dominion Freight Line first quarter 2023 earnings conference c all. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Drew Anderson. Please go ahead. Thank you. Good morning and welcome to the first 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 May 3rd, 2023 by dialing 18773447529, access code 6525435. 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 are not statements of historical fact, may be deemed 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 yourself to 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. Greg Gantt. Please go ahead, sir. Good morning and welcome to our first quarter conference call. With me on the call today is Marty Freeman, our COO, and Adam Satterfield, our CFO. After some brief remarks, we'll be glad to take your questions. The OD team started this year with first quarter financial results that included revenue of $1.4 billion, an operating ratio of 73.4%, and earnings per diluted share of $2.58. These numbers were slightly below our first quarter results from 2022 and reflect the ongoing softness in the domestic economy and the challenging operating environment. We are also coming off a record year in 2022, where revenue and profits were at an all-time high. As we started this year, we were cautiously optimistic that our business levels would start to improve late in the first quarter and accelerate further in the second quarter. While our volume stabilized during January and February as expected, we have not seen the acceleration in volumes that was originally anticipated. Our shipments per day have remained consistent on a daily basis so far this year, but on a year-over-year basis, shipments in April are trending down double digits. Fortunately, our market share has remained relatively consistent and our yield continues to improve. We believe the stability with our market share during the first quarter reflects the value of our service offering and the success of our long-term strategic plan. The guiding principles of this plan have been in place for many years and have helped us produce a strong track record for long-term profitable growth throughout th e economic cycle. This plan is centered on our ability to deliver superior service at a fair price to our customers. We remain committed to providing on-time service and claims-free service as well. We will continue to focus on delivering a value proposition to our customers while also maintaining a disciplined approach to managing the fundamental aspects of our business. This will include making the best decisions to help us navigate through a challenging environment in the short term, while also positioning us for future opportunities to produce long-term profitable growth. While we like to measure our success over years, we believe it takes winning on a daily, weekly, and monthly basis to add up to long-term success. Our consistent focus and successful balance of long-term opportunities against short-term trends has helped us achieve a 10-year compound average growth rate in revenue and earnings per diluted share of 11.4% and 25% respectively. I want to close my last earnings call as CEO by saying how incredibly proud I am of the entire OD family of employees. All 23,000 of us and the track record of success that we have produced together. I am encouraged by the prospects that our team has for future growth. Without any doubt, I stand firm in my belief that OD has the strongest team in the industry, the best service in the industry, and is better positioned than any LTL carrier to continue to win market share while also increasing shareholder value. Thank you for joining us this morning, and now we'll turn things over to Marty for further discussion of the first quarter. Thank you, Greg, and good morning. I wanna first of all start by thanking Greg for his leadership and significant contributions to OD over his career, while also recognizing each OD employee for their critical role in our success. Together, we have produced remarkable improvement in our financial and operating results over the long term, and I can assure you that OD's team remains focused on continuing our record of strong, profitable growth. With respect to our first quarter, we delivered solid financial results, especially when considering the ongoing softness in the domestic economy and decrease in volumes. Although these factors contributed to the first decrease in quarterly revenue and earnings per diluted share since the second quarter of 2020, our market share has remained relatively consistent. As a result, we believe our decrease in volumes was largely due to some shippers simply having fewer shipments than normal due to the economy. All though there have been others that are beginning to emphasize price versus service and choosing lower price carriers. The operating environment has become more challenging than we anticipated, and the expected acceleration in volumes has obviously not occurred. Despite these factors, we have maintained a commitment to our long-term strategic plan. We will continue to focus on providing shippers with superior service to support our ability to maintain our price discipline. Our consistent cost-based approach to manage yield and account profitability has been critical to our ability to improve our financial position over time, which has helped us support in continued investments in technology and service center capacity. While capacity is not currently an industry issue due to the weakness in industry volumes, we believe this will once again become a critical differentiator for us when the economy improves. We believe our long-term consistent investment in service center capacity has been and remains a strategic advantage that supports our long-term market share goa ls. During this period of revenue decline, we will also maintain a disciplined approach to managing our variable cost and discretionary spending to protect our profitability. This starts with a commitment to maximizing the operating efficiency of our fleet and network. Some of our productivity measurements in the first quarter were negatively impacted by the general loss of operating density associated with the decrease in our shipments and weight per shipment. This was evidenced by 4.9% decrease in our linehaul weight and load average and a 1.0 decrease in our P&D shipments per hour. We improved our platform productivity, however, and generated a 5.8% increase in our platform shipments per hour. We also reduced our reliance on purchased transportation as compared to the first quarter of 2022, which allowed us to improve the overall efficiency of our operations. This contributed to the improvement in our variable cost as a percent of revenue during the first quarter. We will also continue to work on improving the efficiency of our operations as we make our way through the balance of this year, which provides an opportunity to generate additional cost savings. While productivity is always a focus, we cannot and we will not allow it to impact our best-in-class service performance. Our team continued to deliver superior service during the first quarter with an on-time service of 99% and a cargo claims ratio of 0.1%. This service performance remains critical to support our yield management strategies. We have said many times before that to produce long-term improvement in our operating ratio will continue to require a balance between operating density and yield management, both of which generally require a favorable macroeconomic environment. As just mentioned, we lost operating density in the quarter in the current environment due to the decline in volumes and the expansion of our network. Our yield has continued to consistently improve, however, and revenue per hundredweight, excluding fuel surcharges, increased 8.6% during the first quarter. We will continue to demonstrate value to our customers by balancing our superior service offering with a consistent cost-based approach to our pricing. The resulting value proposition is unmatched in the LTL industry and will continue to support our ability to increase market share over the long term. As we look forward to remaining quarters of this year, we currently anticipate the softer demand environment will continue. The second quarter is generally the period when volumes begin to accelerate, but we have yet to see an inflection towards growth. Nevertheless, I want to emphasize that we are well- positioned to respond to any acceleration in volumes that might occur if and when the economy improves. Until that time comes, we will continue to focus on managing our costs and delivering value to our customers through our value proposition of on-time claims-free service at a fair price. Delivering value is a central element of our long-term strategic plan, and we remain committed to execute on this plan, regardless of the economic cycle. As a critical part of this plan, we will also continue to execute our capital expenditure program, and most importantly, invest in the training, education, and development of our OD family of employees. The economy will eventually recover, and we are confident that when it does, our team's execution will allow us to achieve further growth and profitability while also increasing our shareholder value. Thanks for joining us today. Adam will now discuss our first quarter financial results in greater detail. Thank you, Marty, and good morning. Old Dominion's revenue decreased 3.7% in the first quarter of 2023 due to an 11.9% decrease in LTL tonnage that was partially offset by a 9.2% increase in LTL revenue per hundredweight. The combination of this decrease in revenue and slight deterioration in our operating ratio contributed to the 0.8% decrease in earnings per diluted share to $2.58 for the quarter. On a sequential basis, revenue per day for the first quarter decreased 7.9% when compared to the fourth quarter of 2022, with LTL tons per day decreasing 4.3% and LTL shipments per day decreasing 3.4%. For comparison, the 10-year average sequential change for these metrics includes a decrease of 0.6% in revenue per day, a 0.5% decrease in tons per day, and a 0.2% increase in shipments per day. The monthly sequential changes in LTL tons per day during the first quarter were as follows. January decreased 1.0% as compared with December, February decreased 0.2% versus January, and March increased 0.7% as compared to February. The 10-year average change for the respective months was an increase of 1.2% in January, an increase of 1.7% in February, and an increase of 5.2% in March. Our shipments per day over these same periods were relatively consistent on a sequential basis and increased slightly each month as we progressed through the first quarter. While there are still a few workdays remaining in April, our month-to-date revenue per day has decreased by approximately 15% when compared to April of 2022. Our LTL tonnage per day has also decreased by approximately 15%, while revenue per hundredweight has increased approximately 1% when including fuel surcharges and increased approximately 7.5% excluding fuel surcharges. Our revenue and shipment counts on a daily basis have been relatively consistent in April when compared to March of this year, except for the Good Friday and Easter holidays. As previously mentioned, however, we had expected to see acceleration in business levels by this point in the year based on customer feedback and our historical planning process. While we would like to see our market share continue to increase again, we believe that it's more important to maintain our price discipline during this period of economic weakness while positioning ourselves to emerge from this slow period with capacity and a better opportunity to produce strong, profitable growth over the long term. We have operated in scenarios like this before, and we will continue to execute our plan and adjust to this lower than expected volume environment until an inflection point happens and we can shift back into growth mode again. Our first quarter operating ratio increased to 73.4% for the first quarter, as the improvements in our direct operating costs did not sufficiently offset the increase in overhead cost as a percent of revenue. Many of our fixed cost categories increased as a percent of revenue during the quarter due to the deleveraging effect associated with the decrease in revenue, as well as the timing and significance of certain expenditures. In particular, our depreciation and amortization cost increased 80 basis points and general supplies and expenses increased 30 basis points. Within our direct operating cost, our purchased transportation cost as a percent of revenue improved 140 basis points, while our productive labor cost improved 50 basis points. These changes more than offset the 50 basis point increase in operating supplies and expenses that was primarily due to an increase in our maintenance and repair cost. Old Dominion's cash flow from operations totaled $415.4 million for the first quarter, and capital expenditures were $234.7 million. We currently anticipate our capital expenditures will be approximately $700 million this year, which is a $100 million decrease from our initial capital expenditure plan. We plan to continue with real estate expansion projects that are already in process and others that we believe will be critical to our long-term operating plan. We also plan to continue to purchase new equipment, which we believe will help lower the average age of our fleet and help reduce our maintenance cost per mile. We utilized $141.7 million of cash for our share repurchase program and paid $44.1 million in dividends during the first quarter. Our effective tax rate was 25.8% and 26.0% for the first quarter of 2023 and 2022 respectively. We currently expect our annual effective tax rate to be 25.6% for the second quarter of 2023. This concludes our prepared remarks this morning. The operator will be happy to open the floor for questions at this time.. We will now begin the question- and- answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Again, please limit yourself to one question before returning to the queue. At this time, we will pause momentarily to assemble our roster. The first question comes from Ravi Shanker with Morgan Stanley. Please go ahead. Great morning, gentlemen. Maybe it's a little two-parter here. One is the uptick in April that didn't materialize. In your conversations with your customers, do you get a sense that this is just a pause while they figure out what's going on with the banking crisis and other things before they resume and their inventory is in a better situation o r do you think the rebound is gonna completely pushed out maybe to 2024? Also maybe as a follow-up, can you help us think about kind of fuel surcharge and how we think about that math through the rest of the year? Thank you. Yes, you know, certainly it's been difficult to read the tea leaves this year. You know, we felt like, we've had a lot of good conversations with customers and continue to have them. Certainly, it seemed like the whole banking issue was a bit of cold water, on the economy overall. You know, I think that it just continues to be a challenging overall, and people question, you know, in some cases the direction of the economy and continue to be, somewhat conservative, as a result. You know, I think our business, we obviously, had been talking about probably since the third quarter, of last year, an expectation that we would start seeing an uptick and, you know, it didn't happen. Things have stabilized. We continue to be consistent. We continue to have good conversations, though. You know, I would say within our direct business, you know, having conversations with customers, we're seeing an increase in some of these accounts. When I look through our top 50 accounts, business that's not with a 3PL, we're seeing a good increase. We actually saw an increase in revenue with those accounts during the first quarter. Some of our business with 3PLs is suffering a little more. Like we said in our prepared comments, you know, we're seeing some shippers that are prioritizing price over service right now. You've got a lot of others and, I think that's why we're seeing the increase in our direct business that, you know, continue to think strategically about their supply chain, understand the value that we're delivering, and know that this environment will turn again. We helped many of these customers through challenging times and the pandemic and then the supply chain crisis that followed. You know, I think it's a mixed bag across the board, but we continue to stay engaged. We're continuing to have favorable conversations and, you know, it's just a matter of when the economy eventually recovers and, we're certainly prepared for when that happens. It's just day in and day out. Our shipments per day, have just been pretty consistent, you know, pretty much all through the first quarter and that's continuing into April. Great. The fuel surcharge, if there's any color, that would be great. Yeah. you know, certainly the fuel surcharge, this is the quarter we've talked about. It actually happened in March. In March, the average price per gallon was down about 18%. You know, right now with fuel being $4.10 somewhere in that range, it's fuel prices are down about 25%. You know, certainly we'll see a bigger decrease on a year-over-year basis of fuel surcharges. You know, that's in the April number that we put out. Already fuel in April is down about 20%. You know, that's driving some of that 15% decrease that we're seeing in our April revenues on a year-over-year basis. You know, I think in the impact is evident in our yield metrics. We're continuing to see, you know, good yield increases. As we're going through, you know, bids and whatnot, we're continuing to talk about our cost plus increases that are necessary. When you look at April and kind of where things are, the revenue per hundredweight continues to be solid. W e'd expect to see sequential increase in the second quarter over the first quarter. That number should naturally start to trend back closer to what our longer term averages have been, from just a core yield increase standpoint. The revenue per hundredweight with the fuel is reflecting that change now, you know, in fuel prices and the fuel surcharge. That is starting to flatten out, if you will, just like the numbers that we talked about for what we've seen month- to- date for April. Very helpful. Thank you. The next question comes from Jack Atkins with Stephens. Please go ahead. Okay, great. Thank you for taking my question this morning. I guess I'd love to, you know, Adam, get your thoughts on operating ratio progression sequentially. You know, obviously this is not a normal second quarter, at least it's not starting off as a normal second quarter in terms of how April's trending. You know, any way to kind of help us think about the puts and takes in terms of the OR progression first quarter to second quarter relative to normal seasonality? Yeah. You know, this is certainly, it's definitely not a usual type of quarter, as you said. I mean, with tonnage being down, you know, about 15%, you know, it's been since 2009 since we've seen that type of change, or maybe back to the second quarter of 2020 when, you know, the pandemic happened and the world shut down. You know, it's something that we've been consistently adjusting to. Frankly, we knew the second quarter comparisons were gonna be more challenging this year, you know, when we looked through the balance of how the quarters would fall. You know, the buildup in March that we anticipated obviously didn't happen. That's where you start really getting a lot of that growth. Really it happens throughout the first quarter, but, you know, March is typically a pretty good increase when you look at things on a shipments per day standpoint. It should be up 5% or so. You know, right now, like I mentioned before, we're seeing shipments per day that's just pretty steady on a day in and day out basis, coming in at, you know, somewhere around 47,000 shipments per day. Granted, the April will have the impact. We don't do half-day conventions, but we pretty much have about a half a day loss with the Good Friday and the Easter holidays. You know, if we don't come off of that number and I'll tell you, it's not like we're picking up the same 47,000 shipments day in and day out. We're getting increases with some accounts, you know, while others we're seeing decreases with. It's, you know, it's not as easy as maybe as what that sounds, as it's consistent day in and day out. You know, if we don't see any further growth from there, we should see it in May, just the natural effect of just like the impact of the holidays, recovering from that, a little bit of growth and if we can move forward from there. You know, overall for the quarter, for... if we're still in this environment where there's no sequential increase, then, you know, we're looking at revenues that might be flattish in the second quarter with the first as compared to we're normally up about 10% on a per day basis. You know, if that's the scenario that we're in, then I think that, you know, we're looking at an operating ratio that may be more consistent with the first quarter and could see some slight deterioration from there. You know, I think our challenge will continue to be managing our direct variable costs. That's our productive labor, our operating supplies and expenses and so forth. If we're in the same type of shipments per day environment, managing those costs flat, maybe with some slight improvement, as a percent of revenue. Those were about 54% of revenue in the first quarter. From an overhead standpoint, those costs were about 19.5% in the first quarter. We'll continue to have an increase in the aggregate amount of depreciation expenses, and some other dollars of overhead that might increase. Those costs could increase further as a percent of revenue from that 19.5%. You know, for us, it's, you know, it's certainly challenging, but I can tell you our teams, we're looking at cost, we're looking at productivity, we're looking at the size of the fleet and making adjustments on a day- by- day basis of trying to get in and save costs where we can. Like we mentioned before, doing all the right things that position us to come out of this downturn even stronger. You know, that's when the inflection, when it happens, when we really outperform. For the longest time, when we get into these slower macro periods, you know, our market share is generally flatter as we maintain our price discipline. When we come out, that's when we really see the outperformance in our volumes versus, the industry. We're gonna continue to with the same strategic plan that's got us to where we are today, and I think that we'll emerge from this thing even stronger. Okay. Adam, thanks for that color. Greg, congrats again on your retirement. Thanks, Jack. The next question comes from Scott Group with Wolfe Research. Please go ahead. Hey, thanks. Good morning. One thing I just want to clarify, and then I have my actual question. Adam, your comment about OR may be flattish 1Q - 2Q, is that assuming that there's none of the seasonal May and June uptick? Am I understanding that right? Assuming a little bit, you know, just the natural uptick that would happen in the sense of, your May volumes should be somewhere, I mean, where we are today. If they stay at this 47,000 range, you know, it'd be a slight uptick over April just because of April being impacted by that half day that I mentioned, for the Good Friday and Easter holidays. You're correct. Just assuming that we stay in this sort of malaise where, we don't see any incremental uptick and, you know, frankly, no decline, either, but just staying in this flattish on a sequential basis. You know, we certainly hope that there will be an uptick in volumes. We've seen, you know, some good trends, you know, a good couple of days this week. You know, I think that we certainly need to be mindful of kinda where we are and the fact that, you know, we don't see that positive inflection from an economic standpoint happening. You know, I think we just need to talk about kinda where we are today. Obviously, we give our mid-quarter update, so if the inflection happens and we start seeing some growth. You know, we're certainly ready and can handle it. You know, that's when we can start maybe talking about seeing some incremental improvement, if you will, relative to the first quarter. Right now, it's just things on a day in, day out basis are, have just been very steady, as you go with, from a revenue per day and a shipments per day standpoint. All right. Then when you talk about volume down the most since 2009, I guess I just wanna understand, like, you know, the pricing's holding up for you really, really well. At what point does that get tougher? Are you seeing any signs of competitive pressure just given, you know, the market continuing to get worse right now from a volume standpoint? Yeah. I mean, it's, you know, it certainly, one, I think the comparison's a little bit tougher, and that should get better as we progress through this year. You know, even if our numbers were to stay flatter, the numbers, you know, should start to show a little bit of improvement. It's still, you know, a really soft environment out there. You know, I think that we've demonstrated a lot of value, and that's what we continue to talk about with our customers. You know, our costs continue to go up and we need increases. We've invested a lot in our network over the years, over the last 10 years, about $4.5 billion of capital expenditures to grow our service center network, to be and have capacity where our customers need us and to have the right fleet and you know, and the right team to be able to continue to deliver value to our customers. We've invested a lot, and we intend to continue to invest. You know, I think that doesn't change the conversations that we're having with shippers. You know, in some cases, due to the economy and due to internal pressures, you know, there are some shippers that have got to look for cheaper priced carriers. You know, we're a premium carrier, premium service, and our price is generally a little bit higher than others. You know, oftentimes we'll hear feedback though from shippers that are making that short-term decision, that they're doing it to meet internal thresholds and intend to give the volume back to us. You know, like I mentioned, we're seeing a little bit more transactional volume loss within our 3PL book of business right now. You know, that's about 1/3 of our overall revenue. In the first quarter, you know, 3PLs were down a little worse than the company average revenue change. You know, that's something that we continue to be mindful of. You know, that too, often flips and kinda ebbs and flows with the economy. You know, I think for us, it's just gotta have a plan, and we have one, and stay disciplined to it and just keep our focus on delivering service. You know, that comes at a cost. There becomes a fixed element of running our linehaul network and our P&D system to be able to continue to deliver service. Usually, this is when service breakdown occurs in the industry, when you become very focused on mitigating cost, and I think we're in a much stronger position than every other carrier. When you start focusing on trying to mitigate costs in this type of environment, when the other carriers have seen worse volume, loss than us on average, you know, that's when trailers start getting held longer to try to fill them up, and on-time service starts declining, claims start increasing, other bad things happen. That really, I think, or at least what we've seen in the past, we see a widening of the gap from a service performance in us versus the industry. You know, we expect that'll play out again. You know, when the economy starts recovering, you know, it's obviously tough to manage through it on a da- by- day basis. I think we get right back to our market share gains. I don't think anything has changed in the sense of what we think our long-term, market share potential can be, what our long-term, operating ratio goals are. You know, none of that really changes. It just kinda moves when the start point begins, when we get back into the market share growth mode again. Thank you for the time. I appreciate it. This is the operator. Just a reminder to kindly limit yourself to one question. The next question comes from Jon Chappell with Evercore ISI. Please go ahead. Thank you. Good morning. Marty, you mentioned in your prepared remarks, Adam, you've kind of addressed it in a couple of your answers as well, but customers choosing price over service, have you seen any kinda significant cracks in the pricing dynamic given just the complete weakness in the volume side? How would you compare kind of the pricing environment today versus other periods of recessionary volume backdrop? Yeah. I've been through this a few times in my 40 years in transportation, and I think the worst I've ever seen was 2009, and we're nowhere near that. You know, there is some, you know, challenging pricing out there, as there always is during, you know, low freight levels. Most of it we see is transactional mom-and-pop type shippers and inbound customers. Yeah, it can be challenging out there, it's not anything we hadn't seen before, and it's not anything we can't work through and manage through. Thank you, Marty. The next question comes from Tom Wadewitz with UBS. Please go ahead. Yeah, good morning. I think, you know, I think I said this on the last call maybe, but, you know, if I didn't, you know, congratulations, Greg, on the retirement and the great run you had. I actually wanna ask, along those lines, you know, I guess you've seen, you're retiring, someone on the team's moved to a competitor. You know, there's some degree of change going on, you know, that will take place with the OD team. How do you think that may affect what you're doing at OD? What might be some of the risks around that? Are there risks around that? Are there potential things that you say, "Well, you know, this was my approach, obviously tremendously successful, but the next person might tweak things a bit." I know that's kind of anticipatory, but any just thoughts on some of the management things that are have taken place or will take place as you retire? Thanks. Sure, Tom. I don't mind addressing that at all, and I appreciate the question. You know, fortunately, Tom, we've got a tremendously strong team here at OD. The folks replacing me have nearly as many years, in some cases, in the industry as I do. You know, they're all 20+ year veterans. They've been through everything since we started executing this plan many years ago. They've been through the thick and thin, the good times, the bad times. You know, they know who we are. They know what's made us successful. They understand our plan going forward, and I think we're in a great position to continue to execute on that plan. You know, Tom, there's always risk. You know, anytime you lose good people, certainly there's risk. You know, I feel extremely good about where we are. You know, we'll make the replacement and continue to move forward. Again, thankfully, you know, we had a plan, you know, a plan to execute on my exit, if you will, and promoted the folks that certainly are capable of continuing to drive our results forward. You know, again, I feel good about it. I'm not concerned about that part at all. You know, these guys know what to do, and hey, I feel extremely good about it. We got a great team. You can see that in the results. It's not, you know, it's not me, it's not just the folks here, but I think everybody truly understands, you know, what we're trying to do and how we're supposed to execute and handle customers' business on a daily basis. You know, that's not gonna change just because I'm out the door or any other one person left. You know, those fundamental things that we know how to do much better than our competitors, you know, that's not gonna change anytime soon. You know, I think the basics of blocking and tackling and those kind of things, you know, without any doubt, we're far superior to all of our competitors. You know, that, again, that's not gonna change. I think we're in a good spot. Hey, I look forward to, you know, a whole lot of success down the road for OD. Okay, great. Thank you, Greg. Sure. The next question comes from Allison Poliniak with Wells Fargo. Please go ahead. Hi, good morning. Just wanna go back to the comment on the top of the accounts. You did say there were actually some that were improving here. I guess any color that we can maybe read through on vertical or such that's driving some of that improvement? I guess along with that stabilization, when you kind of think of those larger customers, do you at least... I know we don't have a view on the inflection, but at least if the stabilization may hold, just any color there? Thanks. Yeah. I t was pretty consistent performance between our retail and industrial customer base during the quarter. The revenue levels were generally about the same for both. But like I mentioned earlier, it's really a lot of the business that we're seeing. There's probably a little bit worse decline with business that's managed by 3PLs. you know, that's fairly typical, you know, in a softer environment, if you will. Not wholly or, you know, unexpected completely. But yeah, we've seen, you know, just a consistency day in and day out, you know, with business levels in terms of the number of shipments per day that we've seen. It's been trending around, you know, 47,000 bills a day. We don't necessarily see that, you know, inflection point, if you will, happening. Typically, you would start seeing an increase. You'd see an increase in May of about 2.5%-3%, and then a further increase from May to June of 2%. You know, certainly we'd like to think that might happen. If you go back to when things really started decreasing, it was last year in April. March of last year was the last month where we had a nice sequential increase. Our business in February of last year was up about 5%. It was up another 3% in March. We started dropping off and basically have been flat to down, for every month thereafter. You know, our shipments have been pretty consistent. They've, increased, very, very slightly, less than 1% each month. You know, pretty much, consistent as we made our way through e ach month of the first quarter pretty much had been the same in April. You know, again, other than those two days that we consider full days impacted by the holiday, but that's in our normal number. Typically, April would be up about 0.5% over March. Right now, you know, we're down about 2.5% shipments per day. You know, that's some of that where we've just seen that consistent trend day in and day out. Do we start seeing some increase? Like I mentioned before, May just naturally should show a little bit of growth if we stay at this 47,000 bill level. You know, do we start growing from there? Do we see a, you know, 1% or 2% growth in June? I'd like to think that we would. You know, again, we've had a lot of good conversations. We've had some good hits here lately with, you know, with customers and, you know. Some of those same conversations we were having three months ago, where we were positive as well. I think that, you know, right now we just, you know, wanna be conservative, if you will. We're continuing to try to manage our costs down to this lower level of shipments. You know, I think that will continue to happen as we progress through the years. We focus on productivity. We're a little heavy with our fleet now as well, and we're working through some of those challenges. But just trying to get everything balanced, as best as we can, while we stay in this, you know, sort of stable period, if you will. But it's just not really seeing any kinda growth. But, you know, I'd say typically, you know, April volumes, from a shipments per day standpoint, you know, typically, are fairly consistent with what our year-to-date average is. We've seen that over time other than, you know, the, in 2020. That's something that, you know, we just sorta keep in mind from a planning standpoint. Yo u know, and we always have a plan for... We have a baseline plan, we've talked about this before, that we enter every year with, and then we have a bull scenario and a bear scenario. The 2021 was more at that bull case scenario. This year is more in the bear. You know, we start with a plan if things materialize like this, and that's about at the level where we are. We're executing on that plan. Great. Thank you. The next question comes from Amit Mehrotra with Deutsche Bank. Please go ahead. Thanks, operator. Hi, everyone. Quick question. When was the last time shipments in 2Q were worse than 1Q? I don't know or I don't think there's ever been a time that that's been the case, but if you can just help me with that. You know, when does the drawdown on weight abate? We're at 1,550 now. Are we at the point where we stabilize at these levels? So those two points. Adam, you know, historically, you've lost lanes in past downturns to, you know, high quality regional players or maybe lower cost. I don't think that's happened maybe up until now. I don't know if that's happening now. That maybe explains some of the weakness in April. If you can talk about kind of what the customers are doing from a trade down effect to some of the regional maybe equally or as high quality players. Yeah, it's, you know, from a second quarter to first quarter standpoint, other than the second quarter of 2020, when the world shut down, we've not really seen a decrease in shipments. You know, that too kind of played into our general thinking. You know, even years like 2009, 2016, 2019, you know, weaker years, we still had some marginal improvement in shipments in the second quarter versus the first. So, you know, right now if that's kinda trending flattish, we'll see how things, you know, shake out for the remainder of the period. You know, like I said, maybe we'll get some growth and, you know, certainly it will be out there as we, put our mid-quarter update. We'll put the final April update in our 10Q. You know, if we see some continued acceleration this week, you know, that will be in the number. But, you know, we just don't see, you know, a big inflection point happening like we did in, say, 2017 that spurred that growth of 2017 through 2018 and what we saw in the back part of 2020 that, you know, continued to accelerate through 2021, like it happened. You know, we're still waiting for that point, but, we don't see it kind of on the near term. We just managed to kinda where we are. Yeah, that's kind of the challenge and, you know, what we're seeing is partly why, you know, I mentioned earlier that, you know, our revenues in the second quarter are typically up, you know, 9%-10%. That's why we always get so much margin improvement in the second quarter as well. That becomes the challenge as we manage through, you know, this particular period. You know, with respect to your other question, you know, on the customer base, I don't know that we're seeing, you know, significant loss, you know, other than that's some of what's going on underneath, I think, with some of the 3PL business. You know, that they can leverage their carrier relationships and move some freight and some of this is transactional, as well. They can take advantage of relationships and see who has capacity and, you know, who's got a cheaper price. Move some business away. You know, that's some of the feedback where we've heard, you know, customers coming to us and saying, you know, "Look, I need to do this to meet my own, cost center objectives." If, you know, there's an internal mandate to save X dollars that, you know, they've got to try to meet in some way. Generally speaking, you know, that freight comes back to us. If we ever lose freight, it's on price, but we generally always gain it back for service quality, and capacity down the road. We're confident that that trend will continue to play out again, and that we'll see any of this freight loss, eventually come back to us. It's just a matter of it seems like that's being pushed further down the road than the inflection point that we thought would happen, beginning with this spring. What about weight? Weight? Oh, yeah, the weight per shipment. I guess you embedded three questions in one, but, and my memory was short. Sorry. That's all right. Our weight per shipment, you know, it's down a little bit further. You know, I think we're getting to the stabilization point. Right now in April, it's about 1,525 lbs. You know, historically, we would get down in lower periods to about 1,550 lbs or so, but if you recall, we made some strategic decisions in 2021 and exited from some of the spot quote, heavier type shipments, these 8,000, 10,000 lbs type loads. That had an effect of really lowering our overall weight per shipment. You know, despite the weakness, we're not going back and trying to bring in freight that we didn't think fit our network for the long term. Just going along with the economy, we've seen a little further deceleration in that weight per shipment, being down to 1,525 lbs. That's a little bit worse. April is always usually down 0.5% or 1% off of March. You know, some of that is March builds up at the end of quarter, we're down a little bit more. I feel like that's stabilizing that, you know, probably our low water mark in a softer economy will be 1,525, 1,530 lbs maybe. Yeah, we think that's getting to a stabilization point or so it seems. Thank you. The next question comes from Chris Wetherbee with Citi. Please go ahead. Hey. Thanks. Good morning. Adam, just kinda curious how you think about headcount going forward here. Obviously, a lack of seasonality might influence this, but you've been bringing it down sequentially the last few quarters. Just wanna get a sense maybe how much more, you know, room you have in terms of rightsizing that labor force and maybe is there a line where you feel like you don't necessarily wanna go beyond? Yeah, it's continued to drift lower, on a sequential basis. The average was down about 3.5% in the first quarter versus the fourth quarter. You know, our peak, if you will, for full-time headcount was in May of last year. You know, through normal attrition and just, you know, some places, making other decisions, if you will, just balancing, you know, our number of employees with the freight volumes that exist, you know, we've had to work through those on a case-by-case basis throughout our 255 locations. Yeah, I expect that that will continue to drift a little bit lower as attrition continues to happen from where we are today through the end of June. You know, we're getting to a point, I think, that, if you kinda compare, where we are, if we continue to drift, you know, maybe, 1% or 2% lower as we progress through the second quarter to where the year-over-year change, you know, by the end of June may be in that 9%-10% type of range. Then, you know, that's coming back into balance. We've always talked about, you know, the change in headcount typically reconciles with, you know, the overall change in shipment count as well. So, you know, if we're looking at that, I think by the end of June, if, that change, in shipments on a month-over-month basis, you know, those two numbers may start coming back into to parity with one another. That is the change in full-time employees and the change in our shipments on a year-over-year basis. Okay. That's helpful. Appreciate it. Thank you. The next question comes from Bascome Majors with Susquehanna. Please go ahead. Thanks for taking my question. You've been pretty open about some of the share and pricing challenges with 3PL business. Can you walk us through a little bit on how that emerges? Are you seeing larger carriers reduce their rates across the board with 3PLs and losing business that way o r is this more targeted dynamic pricing? You know, just if that cyclical dynamic, which I'm sure has been around before, if that is evolving any differently this cycle than last cycle, we'd love to hear more about it. Thank you. Yeah. I think it's hard for us to say. We don't always know the reasons behind. I mean, you know, the feedback we get is that someone's cheaper. We don't know, necessarily, you know, that variance or that reason why. You know, I think that we're obviously one of the first carriers to report and, you know, just continue to watch, you know, what the others are doing, what their numbers are looking like, and hear what the others, you know, have to say. I think others have said that they've got price discipline, but, you know, we've seen one carrier's yields flatten out. You know, I think all we can do is just continue to sort of watch and see what others are doing. That doesn't impact what we do. You know, we've got a plan. We stay committed to it and, you know, we know what value we deliver and we just gotta stay disciplined and that's what we'll do. You know, it's, you know, it's never good to kinda live through it in the moment, and we've done this, time and time again. You know, like I said, it's not totally unexpected, to see some of that business, just given the softness in the economic environment and, cost challenges that, you know, people are facing in general, to be looking at ways they might be able to save on price. In the current term. What we always say is price doesn't equal cost. We deliver a value to our customers, and when you consider total cost of transportation, when you deliver 99% on time and have a claims ratio of 0.1%, you save money by shipping with Old Dominion. That's what our position continues to be. It's just our sales team, they've got to stay engaged with our customers and demonstrate value. We've got to continue to maintain our service metrics, and we will. That is certainly a focus for us, and we'll manage through this. Like we said before, and I think it's played out when you look at our numbers and the long-term improvement that we've made with respect to our margins and the cash from operations that we generate and are able to reinvest back in our business on behalf of our customers, we've got to maintain our disciplined approach. I think that it's proven itself out in the long run and is a key difference why our numbers look a lot different from some of the others. When you look back to a 2019 or a 2016, does the rising competitiveness on price and share of the 3PL channel feel different this time? Just curious if this all rhymes or something feels like it's changed here. Thank you. No, I wouldn't say it. It's maybe a little bit different, Bascome, but not wholly and completely. Just to add a little color to what Adam said, generally speaking, with our 3PLs, we're not losing contractual business. Some of those contractual accounts may be down just because the general economy is slower. They may possibly be down, but that's not where we're losing. The transactional stuff, as Adam talked about before, that's where we're seeing a deterioration in our revenue with those specific 3PLs. They all have a large piece of business that's transactional, that the customers may ship once, twice, whatever a week, smaller type accounts, and that's where we're seeing the losses from our standpoint. It's just business of taking price on the fly, and we're never going to be the low cost guy on the fly, if you will. Anyway, that's more of what we've seen. It's not losing business by any stretch. Thank you. The next question comes from Ken Hoexter with Bank of America. Please go ahead. Great. Good morning. Greg, g ood luck in retirement. Maybe Wes might be giving you a call soon. I'm not sure that would work out with me being on this board and that one. Marty, I just want to clarify. I just want to make sure I heard you right. Did you say this is not abnormal in terms of the part of the cycle on pricing? My question for Adam or Greg, I guess, is just the ability to be fluid on costs, right? You've always talked about more so than peers, given the fixed cost structure of the less than truckload market and OD's focus on keeping people. How do you think about shifting costs or what moves do you make now with volumes down 15%? I know you always want to be prepared and have the 25% capacity available, what do you think about on the costs and impact OR? Thanks. Yeah, this is not abnormal in this type of environment, economic environment. You have some of our competitors, they think offering a more competitive or lower price will keep the customer there. Many times it does not because the customer will always come back to having their cargo delivered on time and claim-free. We've learned that over the years. It's not abnormal. We choose to tighten our belt and manage our labor. When the slow times pass, we're in a great position to keep our OR going downwards. It's not abnormal to see low prices in any environment with any company. We've seen it before, and it will pass like it always does. Adam, I'll let you handle the... Yeah, I would only say on the call standpoint, I mean, obviously, we've switched to where our variable costs are the majority of our cost base now. Probably 70% or more of our costs now are variable in nature. Obviously, we've got a big fixed cost base, and we're seeing the loss of leverage with the revenue decline there driving some of that. Some of the increase in those overhead costs in the first quarter also come from the fact that we're on a little bit of a different schedule with respect to our equipment plan. We were taking delivery in the fourth quarter of equipment, taking delivery in the first quarter, which is unusual. That was part of why we had anticipated a sequential increase in those depreciation costs as a percent of revenue. You know, given all the challenges from a fleet standpoint, you know, that's driving some of our costs. It's also driving some of the maintenance and repair costs, like I mentioned. We're seeing an increase in cost per mile. Some of that is just due to general inflation, you know, related to parts and repairs. Some of it too just relates to the fact that we're bringing in equipment we've on a different schedule. We've held equipment, you know, through 2021 and 2022, and our average fleet age has increased as a result. We're probably our average fleet age is about 5.5 years now. We like it to be around four years. You know, we'll work on balancing that as we take out some of the older equipment from the fleet and adjusting our fleet, if you will, to these lower shipment levels. That will help from a cost and an efficiency standpoint. 80% of our costs are salaries, wages, and benefits and op supplies and expenses and, you know, linehaul is a big element underneath that. That's why we've got to stay disciplined. We mentioned in our prepared comments about our linehaul load factor being down like it is. I can tell you that's a focus. That's a lot of dollars, not only from a labor standpoint, but that's what creates the miles that we run. If we can drive some improvement there, you know, that'll help us from both labor and fuel in particular, while we're also making some adjustments on the fleet that will help with both depreciation and maintenance costs. Like I think I said earlier, you know, there's an element that becomes fixed. About every variable cost is fixed in the short run. If we want to continue to deliver service, and we are, there becomes a fixed element within that linehaul component. So we've got to be able to do both, frankly. We're not gonna lose our focus on giving service, but we've got some room for improvement. That's what our team talks about every week and, frankly, every day, out in the field is where we can drive some efficiency. That's gonna be the biggest self-help area. It always has been. You know, and that's the work that we've got cut out for us as we go through the last three quarters of this year. I think I've said before that you know, when we look at our direct operating costs, these variable costs, productive labor and op supplies and expenses and so forth, you know, even in slower periods in the past, even in 2009, we were able to generate some improvement in those costs as a percent of revenue on a year-over-year basis. You know, the operating loss in 2009 being with our fixed overhead costs. that's the challenge that continues to be in front of us. you know, in the second quarter, I mentioned if we can keep those costs at 54%, they were about 53% in the second quarter of last year. you know, we're gonna have a little bit of headwind there, but we've got to continue to work those costs down as we progress through the year, and that will be the operating challenge that we face. Great. Marty, Greg, Adam, thank you for the time. Appreciate it. Thank you. The last question today will come from Bruce Chan with Stifel. Please go ahead. Hey, thanks, operator. Good morning, everyone. I just want to come at the volume question from a little bit of a different angle. You've had some competitors that, you know, are going through some labor negotiations this year. One is going through a pretty significant change of ops. Do you see any volume coming into the network because of or maybe in anticipation of those events? Then Adam, maybe just a quick housekeeping question to give us some good color on the fleet age. How long do you think it's gonna be before you're back at that sort of target four years? I would say that we should make a lot of progress this year. W e've got a fair amount of equipment right now that we've got identified that, you know, we want to be able to move out of the system. You know, that takes a fair amount of time to happen. It's not just an overnight thing where you're selling a used car and you post it on, you know, on the website. So it's gonna take us a little bit of time to kinda work through that. You know, we've got a plan. We've met several times recently talking about kind of the needs there and we'll continue to work through it. I think that we'll make considerable progress this year as we're still bringing on. We reduced our CapEx for equipment, but we're still gonna be bringing on a fair number of new units. More of the progress will be hanging on or getting rid of some of these older units that we've been hanging on to. You know, I'll say we're not out of the woods yet when it comes to, you know, parts availability and so forth. We're still finding that, you know, there are continuing to be supply chain issues out there. When we've got equipment that has been down for maintenance, you know, equipment has stayed down for longer periods of time. You know, we're continuing to kind of manage through those challenges while we're also trying to manage costs. I think we'll end up by the end of this year, making pretty steady progress on working that number much lower than where it was at the end of last year, kind of working both ends of the spectrum, if you will. Great. Thanks. Then just on the volume side, any discernible share wins from any of those union competitors? It's kind of hard to say, Bruce. You know, we get reports from our national account folks on a regular basis. You know, we have wins on business from those folks as well as others. I don't know that you can really point to, you know, contract negotiations or whatever the case as any reason that we're getting business. We haven't really seen that. Got it. Fair enough. Thank you. Thanks. This concludes our question- and- answer session. I would like to turn the conference back over to Greg C. Gantt for any closing remarks. Well, thanks everybody for your participation today. We appreciate your questions. Feel free to give us a call if you have anything further. 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.