Earl Congdon - Executive Chairman David Congdon - Vice Chairman and CEO Wes Frye - CFO.

Rob Salmon - Deutsche Bank Alex Vecchio - Morgan Stanley Allison Landry - Credit Suisse Jason Seidl - Cowen Chris Wetherbee - Citi Tom Kim - Goldman Sachs David Ross - Stifel John Barnes - RBC Capital Markets Todd Fowler - KeyBanc Capital Brad Delco - Stephens Scott Group - Wolfe Research David Campbell - Thompson, Davis & Co..

[Call starts abruptly] …Third Quarter 2015 Conference Call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through November 12th by dialing 719-457-0820. The replay passcode is 256290. A replay may also be accessed through November 12th 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 some similar expressions are intended to identify forward-looking statements.

You're hereby cautioned these statements may be affected by the important factors, among others, set forth in Old Dominion's filings with the Securities and Exchange Commission and in this morning's news release. And consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements.

The company undertakes no obligation to update publically 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 ask in fairness to all that you limit yourself to just a couple of 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 Executive Chairman, Mr. Earl Congdon. Please go ahead, sir..

Good morning and thanks for joining us today for our third quarter conference call. With me this morning are David Congdon, Old Dominion's Vice Chairman and CEO, Wes Frye, our CFO and Adam Satterfield, our Vice President and Treasurer. After some brief remarks, we'll be glad to take your questions.

I am pleased to report that Old Dominion produced very solid financial performance for the third quarter of 2015, including a 90 basis points improvement in our operating ratio to a third quarter company record of 82.1%, that contributed to a 10% increase in our earnings per diluted share.

[Over our tonnage] slow this quarter from it double digit phase for the first half of the year reflecting an uncertain economic environment that has affected the entire industry. This quarter is being compared against the third quarter of last year when tons increased 18.7%, a 12 year-over-year comparison.

Despite these headwinds Old Dominion continued to win market share for the quarter and we experienced double digit growth in shipments for the seventh consecutive quarter.

The released result is further evidence that our progress of on time [claims] free deliveries only differentiates Old Dominion from our competitors and continues to resonate favorably in the market. Even with our strong 11.7% growth in shipments during the third quarter our on time service was 99% and our cargo claims ratio was 0.35%.

That customer's value underpinned only superior service, we continue to achieve our yield objectives with revenues per hundredweight excluding fuel surcharge for the third quarter increasing 5.2%. As always our successful long term execution of our value proposition depends on the tremendous commitment and hard work of our dedicated employees.

We will continue to invest in the equipment, infrastructure and technology as well as the training and continuing education that supports our industry leading team and their efforts to consistently produce superior performance. Thanks for your support of Old Dominion and now here is David Congdon..

Good morning, let me begin by saying that I too am pleased about the company's performance for the third quarter. Our business model which we have been refining for nearly two decades now is built around an innovative and flexible team of people, providing superior service at a fair price.

We continue to invest significantly in the company to execute with discipline and to strengthen our customer focused culture. We are fully committed to certain strengthen our market differentiation through consistent and sizeable investments in the resources, training and education that our employees need to exceed our customer's expectation.

By doing this we can also continue to focus on yield management to ensure every account has an persuade return on that investment.

While we are actively returning capital to our shareholders through stock repurchases, we are also committed to maintaining the balance sheet strength required to support the investments in the equipment, real estate and technology that is necessary to provide our customers with the superior service they expect and depend on.

With ongoing execution we expect this commitment to enable us to continue to deliver on our unique value proposition and continue to outperform the industry. We remain confident in our ability to produce further long term gains in market share, earnings and shareholder value.

Thanks for joining us today and now let's move to view our financial results for the third quarter in greater detail..

Thank you David good morning. For the third quarter of 2015 Old Dominion's revenue was 779.5 million, that's an increase of 4.8% from 743.6 million from the third quarter of 2014.

Our operating ratio improved to an 82.1 for the third quarter from an 83.0 last year and earnings per diluted share increased 10% to $0.99 from $0.90 in the third quarter of last year.

Revenues for the third quarter reflect a 6.6% increase in LTL tonnage which was comprised primarily of 11.7% increase in LTL shipments a 4.6% decrease in LTL weight per shipment. LTL revenue per hundredweight decreased 1.6% for the quarter primarily due to reduction in the fuel surcharge.

Revenue per hundredweight excluding fuel surcharge increased 5.2%, declining weight per shipment for the quarter had a positive impact on the revenue per hundredweight somewhat offset by a small decline in [indiscernible].

On a monthly basis LTL tons per day decreased sequentially by 1.2% for July from June increase slightly by one tenth or 1% for August and increased 3.4% for September.

This performance compares to our ten year average sequential month trends that show a decrease of 2.4% for July, an increase of 0.6% for August that's six tenths of 1% and an increase of 3.2% for September. So on average sequential trends was slightly higher during the quarter when compare to our 10 year average.

On the compatible quarter-over-quarter basis LTL counts per day increased 7.7% for July 5.8% for August as previously announced and 6.4% for September. Impair able quarter growth in shipments for July, August and September were 12.9%, 11.7% and 10.7% and 10.7% respectively.

While our weight per shipment declined 4.6%, 5.3% and 3.9% for the same months.

We've now had three sequential quarters and a decline in weight per shipment which we believe is driven by several factors including the truckload capacity challenge during the third quarter of 2014 as resulted in additional courage migrating to LTL carriers that was not repeated in 2015.

Also customers modifying their LTL shipment patterns to smaller, more frequent shipments and also as well by the softness in the economy. Looking to the fourth quarter we expect LTL accounts per day for October to increase approximately 4.1% versus 2014.

Sequentially this represent a 4.4% decrease in tons per day compared to September versus a 2.8% decrease for the 10 year average. The increased tons include approximately a 10% increase in the number of shipments offset by 5% decrease in the weight per shipment.

Sequential ten year average and accounts per day in November and December is 3% increase and an 8.7% decrease respectively. We also expect revenue per hundredweight excluding fuel surcharge to increase 5.5% for October.

With the fourth quarter we will again face tough comparison versus last year, monthly year-over-year LTL tonnage per day increased during the fourth quarter of 2014 compared to 2013 by 20.8% for October, 20.6% for November and 18.5% in December. Fourth quarter of 2015 has the same number of word days as of fourth quarter of 2014.

As David discussed the 90 basis points improvement in Old Dominion's operating ratio primarily reflected our increased freight density on the yield as well as some improvements in productivity.

While a significant decline in fuel prices affected our revenues to a reduced fuel surcharge it also resulted in a 316 point reduction in operating supplies and expense.

Another expenses expressed as a percent of revenue were higher during the quarter which was partially attributable to a lower denominator due to the decline in fuel surcharge revenue.

Salary, wages and benefit expense also reflected the partial quarter impact of a 3.5% increase in wages beginning in September as well as an increased use of company old equipment and employees in the lieu of rail service. Capital expenditures for the third quarter of 2015 were $130.8 million.

Now estimated CapEx for the entire year of 2015 will total approximately $451 million, including land expenditures of $139 million for real estate, $278 million for tractors, trailers and other equipment and $34 million for technology and other assets.

After anticipated asset sales, we expect total net CapEx of approximately $431 million, a preliminary CapEx investment for 2016 should be in the range of 430 million to 460 million. Our effective tax rate for the third quarter of 2015 was 38.4% compared with 37.1% for the third quarter of 2014.

We expect an effective tax rate of 38.6% for the fourth quarter of 2015. This concludes our prepared remarks this morning. And, operator, we'll be happy to open the floor for any questions at this time..

[Operator Instructions] We'll go first to the line of Rob Salmon with Deutsche Bank. Your line is open..

I guess there's been a lot of talk with investors about the LTL pricing environment, given some concerns from some competitor's statements, looks like the yield net of fuel was pretty solid in the month of October as well.

Can you give us a sense of what your contractual renewals trended last quarter as well as your thoughts about to generate increase, I don't think I have seen one kind of hit the wires yet but just kind of curious how you're thinking about that?.

Rob, it looks like it's about 3.5% to 4% is what we're seeing on the contractual..

And how does that compare to what you saw in Q3?.

Yes, it's very comparable..

If I can shift over to the weight per shipment, it looks like that declined sequentially in the third quarter I'm curious David what you think the drivers were there, because typically the weight per shipment decline I would expect to see an acceleration of the shipment growth because people are moving down to smaller shipments, it doesn’t look like that played out, is this just kind of the business mix shifting more towards retail and a little bit away from some of the traditional manufacturing LTL shipments or any color whether that's just economic related or kind of business mix that you think's driving them?.

Wes made comments -- made some comments about that the comparison to last year, there was some fall off from the truckload [peers] last year that we're not experiencing this year that has affected the weight per shipment and then the general macro trends of the economy being little soft, shippers with -- their holders are smaller and they're shipping smaller orders more frequently that's what we're hearing from our sales force and the third point is we are obviously winning some market share and the new look at our overall length per shipment compared with our industry competitors, ours is heavier.

So, if we are winning market share, we are winning smaller shipments which will also impact our weight per shipment slightly..

And Rob also, it's not unusual that the weight per shipment drops in the third quarter compared to the second, it did the same last year and it did the same year before and I think maybe that's because the seasonal moves start to tick up like as you had already mentioned retail starts to hasten a little bit as well which typically is a lower weight per shipment..

That makes sense, I think we're also seeing some shift to LTL just given the elevated inventories that we saw show up in the Q3 report as well. But I'll leave it there, thanks so much..

And we'll go next to the line of Alex Vecchio with Morgan Stanley. Your line is open..

David, can I ask for you that maybe talk a little bit more about the pricing environment for the industry as a whole, it sounds like you're still getting some solid rate increases here, but naturally we've heard, some other carriers that there's been a little bit of chinks in the armor if you will, some other carriers trying to get a little bit more aggressive on price, can you comment on what you're seeing from a competitive standpoint or do you concur that there are some other carriers out there may be getting a bit more aggressive or is that something you're not seeing at this point?.

Overall, we continue to feel that the pricing environment is stable, this is based on the feedback from our pricing department as well as our sales force, you will always have a pocket here or there of one tier or another may do something irrational or our [opinion perhaps stupid], which is nothing new.

So, the way we see this still -- is still somewhat stable. We specifically tried to ask if what we heard this week from another carrier was truly about case and we just don't see it that way yet..

Okay. That's helpful commentary there.

Switching gears to the operating ratio another good quarter here, typically I think in the fourth quarter, we see the OR road by about 150 basis points if we look historically on average, can we kind of -- how should we think about that this fourth quarter I know you don't give explicit guidance but maybe can you talk to some of the puts and takes that might be a little bit unusual this fourth quarter to the extent there are any and how we should think about that?.

You are right Alex, we don't give any guidance on the fourth quarter, so you will just have to take our story variance and make your own conclusions on that..

Okay.

All right, and then just one last one here if I could, your load factor was down about 5% in the third quarter and I realize that's partially a function of the weight per shipment declines but is this something that kind of we should be concerned about it all with respect to kind of the density in your network and it doesn’t seem to have had a significant impact on your margins, you’ve shown very solid margins but how should we just kind of interpret that data points specifically?.

I just want to reiterate the fact that our tonnage [lumping] which affects our [laid] load average, but keep in mind that we’re still in double-digit growth on shipments, so in an area, in a [indiscernible] you wait for shipments drop, you kind of expect your laid note load average to drop as well simply because you just have lighter shipments.

But on the other hand, if you look at our productivity in terms of shipments per hour shipments, shipments per stop, all those measures on shipments, it's still a part of the factor and resulted in part of our positive results for the quarter. So we still get positive results on shipment, if you look at in units instead of pounds..

And we will go next to site of Allison Landry with Credit Suisse. Your line is open..

So I wanted to ask how does your market share strategy play out when industry does get competitive, I am thinking about your lower cost profile particularly relatively to where you guys were heading into the last downturn, is that for due additional flexibility to balance volumes versus price or should we take your earlier comments about irrational pricing behavior in the industry, as a clear indication that you won't deviate from your strategy of price discipline?.

Well, Allison I can assure you we are not going to deviate from our pricing discipline strategy and the notion of trading of price per volume or volume per price, is not in our vocabulary..

Got it, okay.

And then as a follow-up question on the salaries and wages one, you gave that as a percent of sales sequentially it looks like it increased more than the historical average, I know that there is a wage increase, that was implemented but Q3 is typically when you do that, so just wondering if there is anything unusual there, or maybe if your headcount is a little bit elevated relative to the demand growth that you are expecting for the quarter?.

Yes, Allison I mentioned in my comments that a couple of reasons, one is mathematically, when you have less fuel surcharge, you would expect those cost, outside operating slight expense to increase as a percent of revenue and that's just mathematically one factor, another thing is when we were having in 2014, we were using a lot of rail up around the mid-west Pacific northwest with the service problem from the rail carriers of that time, we converted all that rail to company owned equipment and so part of that is converting and we had tremendous growth in that area also converting that is put to an increase in salary and wages, converting that to rail and you will notice it's all offset of purchase transportation is bound as well which reflects that offset.

Secondly we have [indiscernible] operation that we’re converting from lease operative model to a company owned driver model and so that has an effect as well..

And next we’ll go to the site of Jason Seidl with Cowen. Your line is open..

Hey Earl, David, Wes, Adam how are you guys? Quick question here, Wes, you went over a lot of numbers and when you were talking about the sequential shifts in tonnage you kind of lost me, could you repeat that for us?.

I can’t because I was lost too. Let`s go through that, so July our tonnage per day decreased by 1.2% from June. The 10-year average says that that he increase for July from June was 2.4%, so that was last in the sequential. For August we increased 0.1% that's one-tenth of 1% from July and the 10-year average is 0.6%. So that was a little less.

For September we increased the tonnage from August 3.4% and the 10-year average is 3.2%, so that was above. So if you look at all that averages together on average our sequential trend was even [maybe] own part to slightly higher on what would be the 10-year average..

Okay. That’s good, I just couldn’t keep up with your [indiscernible] those numbers..

I guess still not slow enough..

The weight per shipment not [indiscernible] is going to lap a clean comparison weight per shipment in another when is it not going to be impacted by the truckload business, it can be 1Q?.

Yes, we were face with its truckload still over most of’14. So we won't really lap until we get into 2016 most likely..

2016, okay.

Also in the quarter did your mix shift any more towards third-party logistics guys or has it been pretty stable?.

Yes, I mean our percentage of revenue the third-party has been growing slightly than it did in the third quarter. But not by leaps and downs, but our ratio indicates that we're still getting good results and we have a very big relationship with 3PLs..

Have you seen the 3PLs try to get more [rest] with you guys on bringing on board business?.

Well, of course. But that’s where the price discipline falls in, our added value. It really makes a comment there the 3PLs need to provide their customers with best in class service because they wanted to obviously to prevent turnover of their own customer base.

So they realize that assets were important and the other thing is high level of service are important and they are willing to make sure that we are getting compensated sufficiently for that investment in the service that we provide..

And next we will go to the side of Chris Wetherbee with Citi. Your line is open..

I wanted to just back on pricing for a second and just get a sense. Can you give us any sense of the benefit that weight per shipment adds to sort of corporate fuel surcharge. I don't know if it's any different, but is it a little bit lower with that, I guess I just want to try to make sure I understand some of dynamics going on within that pricing..

Was a question that the 5.2% is influenced by the reduction in weight per shipment but as David already point out, we are getting contractual business 3.5% to 4% of increases. So it’s the net of that..

Okay. So that's a reasonable proxy to use for sort of ex weight per shipment..

Right, it’s reasonable. If you neutralize that difference in weight per shipment, we will still be showing some improvement..

Okay, that’s helpful. I appreciate it.

Typically when you think about sort of economical freight cycles weight per shipment relative to tonnage, I guess how you think about it sort of leading that dynamic, I guess I just want to get a sense if there is anything how the weight per shipment trends might be sort of prevailing tonnage trends going forward.

I guess, I don’t know if you’ve been able to sort of going a real strong relationship in the past?.

Yes. Over the last couple of decades I think whenever we have seen weight per shipment fall off it’s a precursor to a softer economy and when the weight per shipment gets larger orders are getting bigger and the economy is improving that’s a general correlation, I think has existed as long as I can remember. .

One thing that we're kind of conscious of that when we had to slowdown in ’08 and ’'09 we actually did not see a drop in our weight per shipment, we saw an increase in our weight per shipment.

And what was happening because of the sluggishness of the economy, our shippers were instead of shipping weekly were holding the shipments and shipping every two weeks. So we saw a decrease in the number of shipments and an increase in the weight per shipment.

In this environment, we’re seeing the opposite, we’re seeing an increase in the number of shipments, which is a positive sign, but a decrease in the weight per shipment. So what’s going income is more frequent shipments one of the reasons is we’re seeing smaller, but more frequent shipments..

I think back in ’08, ’09, it was just such a drastic change in the economy, that calls that phenomenon that they was just said, but now since we’ve been coming out of a recession, we’ve just been on steadily increasing, slowly increasing economy since it was pronounced I guess in July of ’09, that we came out of the recession, we’ve just never seen any kind of a strong rebound of the economy.

But now it’s just kind of gradually [indiscernible] and a gradual shift of the economy. I think you do see the correlation between weight per shipment and the economy, but that drastic period was [this]..

Right. And just to make sure there is no question that the weight per shipment dropped this year is definitely related to the greatest degree to the spillover of the truckload last year.

The second thing is the macros causing fewer widgets are being demanded so, that's causing it also and then as I mentioned some customers have been shipping more frequently with smaller shipments. But if you look at our weight per shipment, this year it actually compares quite favorably to 2013 and years before.

So, it was just said that the last year was an outlier, now what will happen next year -- I mean right now there's a lot of capacity in the truckload market because call it the economy softness now that heats up a little bit is there won't be enough driver availabilities, there're not going to be enough capacity that that can happen again.

We don't know, we'll just have to wait and see, but our weight per shipment is really quite comparable to 2013..

The final quick one, just one, I think about CapEx for 2015 you gave a range of how you're thinking about it, any detail you can provide behind it particularly how you think you want to address capacity additions in the current environments, how do you think about that within that 2016 CapEx target?.

Chris we are anticipating growth for next year. We're bullish on our sales, more certainly in the economy, we think we continue to have opportunities in this marketplace to continue to win market share without some peers service level so within that CapEx range there's definitely some CapEx growth..

Next we'll go to the Tom Kim with Goldman Sachs. Your line is open..

With regard to your comment on market share gain opportunities are you seeing any rationalization or talks at least amongst your competitors that might be leaning toward that path, we obviously noted, you've been mostly focused on yields over the last couple of years, but I'm curious just given the environment and hear what you're saying about the pricing environment being stable I'm wondering if you're hearing anything that your competitors might be looking to maybe get -- to rationalized existing capacity to keep the pricing environment firm? Thanks..

I'm not sure I quite understood the question. I'm sorry..

Sure, with regard to your share opportunity, obviously we appreciate that your service levels continue to improve as you reinvest in the business.

I'm wondering to what extent your ability to gain share could also be bolstered by possibly competitors maybe rationalizing in this and more softer environment or do we just need to wait and see demand maybe reach phase more before that might happen?.

Are you saying Tom, that the possibility that some of the LTL competitors will not invest in additional capacity and therefore it has to find a resource and that could be us and our -- is that what you're asking?.

Correct..

Okay, we don't know..

All right, it's fair enough. Obviously it's still a very fluid market, I mean I think a lot of its just concern it, obviously demand trends have been slowing particularly in the industrial space and we all get that and -- you guys are -- clearly the gold standard for the LTL industry, you've made amazing progress in the OR in your cost structure.

To what extent can you comment on the stickiness of that and do you need volumes to increase next year to keep your OR down, keep going down? Thanks..

I've addressed this in the past that as we continue -- if we continue to win market share and put density across in that work with a reasonably decent pricing environment which we believe we still are in and we're continuing to improve efficiencies in little ways across the entire company that our operating margins can't continue to improve.

So, we still see it that way, if those variables change i.e. the pricing and finally got worse because of -- and usually that's because of a worsening economy and by the way we don’t see worsening economy, we don't get anything back from our sales force that, that our customers are worried about a worsening economy.

So, I think we're going to keep seeing a steady economy which should mean these pricing environment -- I think our factors are still good for a continued margin improvement at least as far as we're concerned..

Can I squeeze in this one last one, obviously you've got this strong balance sheet and given that stock has pulled back pretty significantly, would you be inclined if your leverage ratios move up and buyback stock while still sustain your CapEx plans?.

Yes, we've been -- we've continue to buy our stock, this year we've bought throughout the third quarter, we've bought up to $85 million and so forth, in the fourth quarter we bought another $20 million, in total we bought out to [indiscernible] on the currency $100 million filling it out.

So, we think we can continue to invest heavily in the LTL network which we intent to based on our CapEx guidance for next year but we can execute buybacks as well..

Next we'll go to the side of David Ross with Stifel. Your line is open..

These questions have not been quite as tough as the moderators from last evening's debate, but if I can just ask on the cost pressures you guys are seeing in the business, heading into 2016, you just put in a weight increase and soon will be another weight increase next year because that's how it goes especially in a driver market, it's difficult, besides that what are you worried about or what are you kind of telling customers about to justify the rate increase, is the equipment cost going up, maintenance cost going up, trailer cost going up etcetera..

All of the above, we are generally facing increases in all cost capital, equipment, if real estate continues to rise the price of property continue to rise, for real estate for example we are able to take advantage of some real good real estate deals years ago but as we are looking at real estate today and the size of facilities that we need, there is no deal in real estate now, everything is expensive from the land to the construction cost and even if occasionally we will run across a large service center that suites our need and they are not cheap like they had been in the past.

We just generally have cost increase pressure across the board including your wage increases that justify the need for pricing in -- modest price increases each year..

Next we will go to the side of John Barnes with RBC Capital Markets. Your line is open..

Here in terms of all the conversation around maybe about a weaker micro environment kind of playing out and recognizing, you are doing incredible well on the margin performance, can you talk a little bit about when and if you start putting contingency plans in place from a cost reduction perspective, was it -- if actually feel like you need to make constantly available weaker macro or is it just that maybe you slow down the pace of hiring or something like that in the event that you are still taking some market share even in that kind of environment? Thanks..

John, we keep an eye on our largest cost there obviously is labor cost to move shipments pickup and delivery and dock and so forward and we were watching that on a daily basis, hourly basis down at the supervisory level actually and historically when you look at any giving year, September's usually your peak and shipments and tonnage per day and then as West pointed on the back on the sequential trends, what you got and what you say in September usually kind of carries out to the end of the year and we built up to handle that peak volume and we are not hiring through for the rest of the year, it is pretty much except for replacements of people that we might lose or just anywhere that we might see that we need to add someone, but we keep our finger on the pulse and if were to see a slowdown we can take action if we need to reduce headcount but we don't see a need for that at this point in time.

.

Next we will go to the line of Todd Fowler with KeyBanc Capital. Your line is open..

Alright thanks good morning everyone.

I guess just to start, David what percent of your freight you think at this point is retail versus industrial manufacturing and markets?.

Retails in 10% to 15% range and industrial manufacturing some around the 45%..

And then what would be the other I guess 40% or so?.

Well a good measure of that would be the 3PLs and we don’t have a transparency underneath that to see what the mix is..

Okay that’s help to us.

And then just to make sure and understand kind of how you are thinking about the third quarter obviously you gave us the sequential trends but, it's sound like that there was normal seasonality during the third quarter but then the October decline versus September is a little bit greater so, are you seeing more softness now as you move into the fourth quarter versus what you saw in the third quarter?.

The tonnage comparisons are even tougher year-over-year in the fourth quarter than they were in the third quarter approaching 20% for the fourth quarter last year, so it's a very tough comparison..

Well I guess what I am referencing was as you gave that October was down I think 4.4% versus September versus a normal decline of 2.8, so I was just trying to get sense of was September stronger and that’s why October is taking a step down or is it just that it's kind of within the range of what you would normally see maybe a little weaker but nothing too concerning?.

We think that macros definitely have some softness in October, I can put a little color on this October, I was doing a little study this morning, we have a report by our non-operating regions and kind of look at that which regions are stronger than others and it's interesting that our strongest regions happened and be up again easy comparisons last year and our weakest regions for October are up against harder comparisons for last year.

And so overall to me it looks like our growth is pretty well balance, that if there is some weakness it will be in what we might call the oil and gas related states and regions of the Pacific Northwest to gulf post region in our central base regions. And that would be, it’s not terribly weak at all for us in those regions.

They’re still relatively good, but if there is any weakness that’s where it is. .

Okay, that helps and David you just made me feel bad for looking at espn.com this morning to rest of my time. So just one last one Wes, it sounds like that you’re saying that fuel didn’t have a significant impact on the OR in the third quarter.

Did I catch that right or you care to quantify maybe the impact of fuel on the OR just as we think sequentially going into the fourth quarter? Thanks..

The impact it was relatively neutral, very little headwind on the reduction fuel surcharge relative to -- I would say if at most it maybe did 10 basis points..

Next we’ll go to the line of [indiscernible] with Bank of America..

Hi, good morning guys, nice quarter. Just wanted to ask first.

So in terms of the market share gains, I wanted to get a better understanding of the first way that’s coming from and second as you look forward over the next few quarters where you are kind of targeting your efforts for additional market share gains?.

Our market share gains are really kind of across the board, there is no particular company or region of the country where they are stronger than another. We have a very balanced service product with multiple regional operations, multiple inter-regional connecting regions with adjacent regions and national service.

So we’re competing with the small regional players, the multi-regional companies and the national players. And we just get a little bit here and there. So it’s just a matter of working with the customer and [indiscernible] and improving yourself and then building your business and it’s happening all over the company..

Okay, great. And recently I guess we’re seeing some challenges from some of your peers.

I’m wondering any opportunity to gain share? How quickly could you guys ramp up scale if that were necessary and what would that entail?.

The unique thing that we have going for us is that we have continually invested in our company. We’ve invested in real estate significantly and have continued to build service centers with excess capacity to handle future growth. So if something drastic were to happen in the marketplace with a competitor failing for example.

The hardest thing to ramp up is labor and that will be the hardest thing. But we have excess capacity in our real estate and excess capacity in trailers to handle a surge and obviously you can rent tractors and trailers, the hardest thing to ramp up in short order would be drivers and [guard] people.

We certainly been anticipate anything drastic in the competitive marketplace happening in the near-term..

Okay, that’s helpful.

And then just the final question I had was, it seems like the CapEx plans to confirm, Wes mentioned it was 430 to 460 anticipated for 2016 is that right?.

Correct..

And it seems like that’s a little bit elevated relative to what it’s been in the past.

Is that a new shift for you guys or is there something structurally different that you’re saying that is allowing you to put more money in to work?.

It's pretty much on plain for the most part for what our CapEx was this year or will be this year. But in terms of look at as we get larger, as percent of revenue, the CapEx that we’re looking at next year is actually smaller as percent of revenue. And much of that CapEx is still going into expanding network and expanding real estate..

Yes.

I guess that's kind of what I’m asking is that, is there kind of a ramp up period that we see and then it comes down as a percent of revenue as you kind of get to a point where you feel comfortable with where your service center network is and maybe kind of the number of tractors you have et cetera?.

Yes.

We expect to maintain or obviously maintain our fleet on a replacement cycle and then as David mentioned we expect growth and so it's all including that, but on the real estate we will spend what we need to spend to take opportunities but certainly as a percent of revenue going forward we do expect our CapEx as a percent of revenue to stop to drop..

Next we'll go to the line of Brad Delco with Stephens. Your line is open..

Hi thanks good morning.

I guess Wes I don’t know if this is accurate or not, is this your last earnings call?.

It is..

Well, I do want to take the opportunity just to thank you and congratulate you on a long carrier, and then I guess my follow up question for you would be, how much are you guys accrued at this point for your retirement bonus?.

It is $3.99..

Per share?.

In total..

To get to the real question, I wanted to ask about your exposure to specifically [XBO] and what the acquisition might mean to you from an 3PL perspective. Are you at risk at loosing that business now that they have sort of internal source to move at LTL freight or is that somehow offset with other opportunities that may come about.

Just can you give some perspective on that will be great?.

Directly we do very little business, in fact [indiscernible] so we don’t see very much risk there. However we do a lot of business with other 3PLs and so we think that we will probably gain market share on that front..

Got you. We kind of heard that yesterday, that potentially some 3PLs may just sort of be challenged to provide some of the information to a carrier now that is effectively owned by a non-asset based logistics provider.

So you do think that’s an area of opportunity for further market share gains?.

Yes..

Okay, Wes, thank you very much. If you wanted to go out with the fourth quarter of 2016 EPS guidance range I'd welcome that as well..

But then they may take away my $3.99..

Well congratulations and best of luck to you..

Thank you Brad..

And Brad thank you for bringing this up. We're going to miss Wes, he has been with Old Dominion for 30 years and has meant just the world to our company in adding value to what we do internally, with his expertise and financial management, analytical skills and the whole thing. We're going to miss it. .

Well, I'm sure. Fortunate for Adam, he's got really big shoes to full or unfortunately I should say. .

Hey if you’ve ever seen Adam speak, his feet are bigger than mine so he is very capable of doing that. .

Next we'll go to the line of Scott Group with Wolfe Research. Your line is open..

Hey thanks, morning guys. So I know there's been a lot of questions on pricing, I don't know if anyone asked about your pricing expectations for next year.

Do you think that 3% to 4% range that you're seeing on contractual renewals, is that a good place holder for pricing next year?.

We don’t give guidance on that Scott. We think -- as David already mentioned there's no reason why if the macro is halfway decent, we still think that the LTL competitors have got to maintain price in order to improve their [internal] debt to capital and even to provide funds to invest in capital.

We'd be surprised but we expect pricing to be stable for most of next year..

When you look at the sequential tonnage drop in October, can you see what was the 3PL business any better or worse within that trend?.

I had to tell the truth, well I haven’t done any detail [indiscernible] where that is Scott..

Okay when do you think do you start to see some of that market share come over from Conway?.

That is hard to say well, well I think it's still uncertain exactly what they will do to Conway and how they will execute on that, so it's hard to say. [Indiscernible] together if they don’t do it properly then it's going to be very difficult, it could cause business to come over..

Okay and then just last question.

Have you -- is there in your mind a difference in the margins that you get on organic tonnage growth versus market share tonnage growth?.

By definition there should not be -- I mean we price whether it's organic or whether it's additional, we still price it to earn the margins that we need drop it to investments..

So I guess the point of the question I guess is, if in a slower economy if more of the growth just is going to come from market share and less from organic growth.

In your mind that doesn't have any implications for the margins or margin [above]?.

Are you defining organic growth as just general growth in the economy?.

Yes..

Okay, because, yes it's okay. Alright, it's hard -- it's hard to say. If market share from deeper penetration of existing customers taken away then we do get some leverage because now we're getting multiple pickups that we're going to competitors that are coming on our trucks, so there is some leverage there..

Yes, but we could be getting market share and just starting fresh with a brand new customer who is only giving us single shipments to begin with and the margin on that's worse than one where you give additional shipments in existing setup..

It's hard to answer your question Scott..

Next we'll go to the line of Tom [indiscernible] with [BVNT]. Your line is open..

Most of my questions have been answered but a couple of things.

Let's say the economy stays in this soft patch for a while, does it -- what's your preferred course of action to continue to grow, will it be to expand your sales force and bring in more brand new shippers or to rely maybe disproportionately on the relationships 3PLs can bring you?.

Well, we've been in the soft patch since recession ended almost and then --.

It's a fresh soft patch more recently..

We had not added that many sales deep into our ranks for our sales force over the last couple of years, we've been pretty stable with the size and we're just successful winning market share that way even in a soft patch. So, if it got worse would we increase the number of sales people? I don't most really think so.

Would we try to increase our focus on 3PL? I don't really think so. We'll discover steady as it goes with our strategies and that seems to be working regardless of the economic cycle we're in. So, I just think we'll stay focused on doing what's working for us now..

And then lastly, maybe just a little clarification, David at the analyst day you've described the economy as somewhat soft, at the same time earlier in the call you said that the feedback you're getting from the sales force is not necessarily indicating a decelerating economy and yet some of the October data suggests maybe it has, I mean how do I package all that together?.

Keep in mind Tom, that the comparison in October is against the 20 -- almost 21% increase in tonnage last year..

Sure..

Yes, it feels a little bit soft, but soft doesn't mean down and that's what the indications are, soft is for 2% to 3%, it's still on the GDP it's still soft and that's how we're defining that..

So unless you're looking at shipments and shipments is sequentially in the fourth quarter is right on target with 10 year sequential trends. And so, we're not seeing a softness on our shipments -- on a number of shipments per day. They're just smaller because of the softness in the economy primarily..

And Wes, did you give the November, December, 10 year average for shipments, I know you gave it for tonnage?.

10 year average for shipments?.

Yes, but just for November and December?.

I'll provide it, when you average are you talking about the 10 year average sequentially?.

Yes, on shipments, not tonnes?.

For October the sequential in shipments is down 3.3%, that's what it is, that's what it was in October this year from September. The 10 year average is 3.5%, that you can see was actually better sequentially..

And then do you have November, December, could you give that?.

It is expected to be up 1.7 from October and then down 9.6% in the December compared to November..

Those are the 10 year averages..

That's the 10 year average..

And next we'll go to the line of Ben Hartford with Baird. Your line is open..

Quick question on tonnage growth relative to salary and wages and benefit growth, if you look over the past five years' salary wages and benefit growth the growth rate has outpaced tonnage growth rate by about 200 basis points and so I'm interested in whether that relationship should hold or even widen over the next couple of years given the strength that you've talked about with regard to smaller more frequent shipments, any perspective on that as we think about '16 and beyond?.

Part of that increase is -- there're a couple of components there, no one as fringe benefits which is [indiscernible] always being inflationary for the most part, and secondly some of that increase in wages -- in special wages as I mentioned is substitution for lower purchase transportation and that's hardly for our LTL vision, we are not hardly using any purchase transportation whatsoever it's all long in Old Dominion's profit company drivers, So some of that's just an offset to that..

Okay, is it fair to think about that relationship holding, you got some offsets, maybe can help us to understand what the offsets would be or is it just for us to think about that 200 basis point spread as being constant even with the strength toward more frequent shipments?.

I guess as what I also talked about some of that mathematically is due to the fact that the fuel surcharge is so much lower. So whether it goes in the future I'd hate to say it may depend on what the fuel cost is and how that affects the fuel surcharge. So that has a relationship going forward.

So I'm not sure what to expect the relationship will be because of the top line in that and how quickly we continue to substitute purchase transportation with company equipment especially in our drainage division.

So I am not sure to what to accept to relate ship would be because of the top line within that and how quickly we continue to substitute purchase transportation, the company own equipments especially on our container grades division..

Okay.

D&A took a sizable step up sequentially, this $42.5 million level, was that a clean base and we should build from that as we go through 2016?.

Well, we don’t give guidance on that, we'll give you some more details on our CapEx break down, on the January conference call into what is equipment, real estate and then maybe you will have a better basis to make your own calculation of that then. .

Next we will go to line of David Campbell with Thompson, Davis & Co..

How would you describe your expedited business in the third quarter, was it up as much as the overall LTL tonnage and were the shipments same relationship as your general business?.

The expedited revenue was up better than overall revenues for the quarter, yes..

Is that better than?.

Yes, higher than..

Is that anything you would considerate an indicator of future business activity because I would think expedited would be weaker than your general business..

What expect for just growth, whether do you call it from market share or own focus on that which offsets it. And when say expedited, we talked about expedited [indiscernible] domestically not globally..

And we have a follow up from Alex Vecchio with Morgan Stanley. Your line is open..

Thanks for taking the follow up.

Hey Wes can I ask you to just repeat the 10 year historical sequential trends in tonnage for November and December?.

Yes, in tonnage sequentially we will get to it. Well another way. Okay the sequential trends in tonnage for November the 10 year average is 3% up from October and a reduction of 8.7% in tonnage in December..

Got it, okay thanks for that and then I guess just one more.

Wes do you have a rough estimate for how much you would need core pricing to increase in order to sustain margin expansion or say it another way if your pricing -- if the market wasn't able to give you pricing so let's say if pricing was X you would be difficult for Old Dominion to expand the margins..

Well our margin improvement is based upon three things, we need to see a macro that's behaving half way that at least a positive, we have to see discipline from pricing in the LTL sector, and of course the last thing both of which are not necessarily within our control there, but third is our leverage that we all have from density growth and I guess there is really a full thing invest that we remain [indiscernible] this for a long pricing because we are providing best in class service and so how much we think we can still and the last few things which is density, on margin improvement and the fact that we still provided best in class service I think still allows us to be able to increase margins through the combination of those two.

But if those are affected by macro or by a price addressing us out in the market, which is not in our control then we’ll have to see how that goes?.

But as far as a specific number, I think he's asking if view went from 3% positive to zero or what will the number be for us not to be able to improve margins. How much….

And I answer that question..

We don’t know that, we’re not to give you that I think it’s very clear..

Okay. .

We have to really run that calculation to be honest..

Okay.

I think the another way after just how much do you need so just offset basic inflation, are you able to kind of roughly estimate that or also a little bit tough?.

Well I was say obviously we impose our own inflationary factor in wages by yielding a 3.5% increase and of course that doesn’t apply across the board. And we think we are in fact getting some of that back through improved productivity and we’ll give some of that back through this density. So make-up for that, it has to be a pretty positive number.

It wouldn’t be 3.5%, it will be something less than that..

Because wages are what 50%.

40%, 50% of our total costs..

So you need 2%..

Yes to offset that..

And we have no more questions in queue. I’d like to turn the conference back over to Earl Congdon for closing comments..

Well guys as always, we thank you all for your participation today. We appreciate your questions and your support of Old Dominion. Please feel free to call us if you have any further questions. And thank you again and good day..