管理層發言
Good morning, and welcome to the Old Dominion Freight Line Second Quarter 2026 Earnings Conference Call. All participants will be in listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Jack Atkins, Director, Investor Relations. Please go ahead.
Thank you, operator, and good morning, everyone. Welcome to the second quarter 2026 conference call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today through August 5, 2026. By dialing +1 (855) 669-9660, access code 852-1190. The replay of the webcast may also be accessed for 30 days on our website. This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Old Dominion's filings with the Securities and Exchange Commission and in this morning's news release. Consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Finally, before we begin, we welcome your questions today, but ask that you limit yourselves to just one question at a time before returning to the queue. Thank you for your cooperation. At this time, for opening remarks, I would like to turn the conference over to our President and Chief Executive Officer, Marty Freeman.
Marty, please go ahead.
Good morning, and welcome to our second quarter conference call. With me today on the call is Adam N. Satterfield, our Chief Financial Officer. After some brief remarks, we would be glad to take your questions. Old Dominion produced strong results in the second quarter, which include a 10.4% increase in revenue and a 450-basis point improvement in our operating ratio. In addition, our second quarter earnings per diluted share increased 32.3% to $1.68, which matched our previous company record that we set in the third quarter of 2022. These results reflect both continued improvement in demand trends as well as our ongoing focus on yield management and operational execution. While the difficult operating environment over the past few years presented us with a number of challenges, including lower network density and inflationary cost pressures, we continued to diligently execute on the fundamental aspects of our long-term strategic plan and invest for the future. The strength of our second quarter results demonstrates the benefits of this strategy. While I am proud of these results, I am even more proud of our OD family of employees and their unwavering commitment to provide our customers with superior service at a fair price. That was the case again in the second quarter when we provided our customers with 99% on-time service and a claims ratio of 0.1%. In addition, we have made approximately 1,000 lane adjustments this year that improved our service standard transit times. Our team continues to leverage their experience and new technologies to further improve our service standards and overall value proposition for our customers. Our customers rely on us to keep their promises to them by picking up and delivering their freight on time and without damages so that they can keep their commitments to their own customers. Our proven ability to execute on behalf of our customers at all points of the macroeconomic cycle has created an unmatched value proposition in our industry. That is why it is critical, despite a prolonged period of softness in the domestic economy, to continue to make the key long-term investments in our network, our technology, and our people so that we can continue to deliver best-in-class service as the operating environment changes. Consistently providing our customers with superior customer service is the cornerstone of our strategic plan and doing so supports our yield management initiatives. Our disciplined approach to pricing, which focuses on individual account-level profitability, is designed to offset our cost inflation over the long term and support reinvestment back into our business. Our ability to take a long-term approach to our investments in our network and our OD family of employees helps ensure that we are always in an unparalleled position to respond to both current market conditions and future growth opportunities. Our strategic plan has worked through many economic cycles. That said, our greatest opportunities to win market share often come when industry capacity is generally limited and the domestic economy is strong. The domestic economic environment remains relatively stable and we are encouraged by the continued improvement in demand that began late last year. In addition, based on feedback we have received from our customers, we believe that our superior service is increasingly differentiating Old Dominion within our industry and providing opportunities for incremental growth. We reported strong second quarter results that demonstrate the power of our disciplined execution and the strength of our long-term strategic plan. We returned to revenue growth in the quarter and produced strong operating leverage on our incremental revenue. In addition, because of our consistent investments in our network and our people, we have all the necessary elements of capacity that we need to support our customers and take on additional volume opportunities as the operating environment changes. As a result, we are confident in our ability to win market share and produce profitable revenue growth which we believe will generate increased value for our shareholders over the long term. Again, thank you for joining us this morning. And now Adam will discuss our second quarter in greater detail. Adam?
Thank you, Marty, and good morning. Old Dominion's revenue increased 10.4% to $1.55 billion for the second quarter of 2026 while our operating ratio improved 450 basis points to 70.1%. The combination of these factors resulted in a 32.3% increase in our earnings per diluted share to $1.68. We were pleased to return to revenue growth in the second quarter which included an increase in our yield and an improving trend with our volumes. Our revenue results include a 15.2% increase in LTL revenue per hundredweight which was partially offset by a 4.1% decrease in our tons per day. Excluding fuel surcharges, our LTL revenue per hundredweight increased 5.5% due to our continued focus on revenue quality during the quarter. On a sequential basis, our revenue per day for the second quarter increased 14.6% when compared to the first quarter of 2026, with LTL tons per day increasing 4.0% and LTL shipments per day increasing 3.2%. For comparison, the 10-year average sequential change for these metrics includes an increase of 7.1% in revenue per day, an increase of 4.4% in LTL tons per day, and an increase of 5.2% in LTL shipments per day. The monthly sequential change in LTL tons per day during the second quarter were as follows: April decreased 2.8% as compared to March; May increased 3.0% as compared with April; and June increased 0.9% as compared with May. The comparative 10-year average change for these respective months is a decrease of 0.9% in April, an increase of 2.2% in May and an increase of 1.7% in June. While there are still a few workdays remaining in July, our month-to-date revenue per day has increased by approximately 7.5% to 8.0% when compared to July 2025. This includes an increase in our LTL revenue per hundredweight that is partially offset by a decrease in our LTL tons per day of approximately 1.0%. Although our tons per day are slightly lower than July of 2025, the sequential change from June of 2026 is significantly better than our normal seasonality. The increase in July's LTL revenue per hundredweight, excluding fuel surcharges, is currently tracking below the second quarter growth rate of 5.5% due primarily to changes in the mix of our freight. As a result, I am currently anticipating an improvement in this metric for the third quarter of 4.0% to 4.5%. To be clear, this is a positive trend for our company as it reflects the continued increase in our weight per shipment. We continue to be focused on our long-term yield management initiatives which have helped us become the most profitable carrier in our industry. As usual, we will provide the actual revenue-related details for July in our second quarter Form 10-Q. Our operating ratio improved 450 basis points to 70.1% for the second quarter of 2026 with improvements in both our direct operating cost and our overhead expenses as a percentage of revenue. Within our direct operating cost, improvements in our salaries, wages and benefits as a percentage of revenue more than offset an increase in our operating supplies and expenses. This increase in operating supplies and expenses was primarily due to the increase in the cost of diesel fuel and other petroleum-based products. The improvement in our overhead cost as a percentage of revenue was partially due to the change in our net miscellaneous income and expense. This line item included $17.2 million of net gains on the disposal of property and equipment during the current quarter. In addition, we also saw improvements in a number of other overhead expenses due to the leverage gain from the increase in revenue as well as a continued focus on controlling our discretionary spending. Old Dominion's cash flow from operations totaled $272.7 million for the second quarter and $646.3 million for the first six months of 2026, respectively, while capital expenditures were $77.0 million and $140.0 million for those same periods. As announced in our release this morning, we increased our 2026 capital expenditure plan and now expect aggregate capital expenditures to total approximately $380 million this year. The $115 million increase from our original plan includes an additional $60 million for tractors and trailers and an additional $55 million for real estate and service center expansion projects. While we continue to have plenty of service center and equipment capacity to accommodate anticipated growth opportunities, these increases reflect strategic purchase opportunities that fit into our long-term capital expenditure plan. We utilized $151.6 million and $240.0 million of cash for our share repurchase program during the second quarter and first six months of 2026, respectively, while our cash dividends totaled $60.2 million and $121.0 million for those same periods. Our effective tax rate for the second quarter of 2026 was 25.0% as compared to 24.8% in the second quarter of 2025. We currently expect our effective tax rate to be 25.0% for the third quarter of 2026. This concludes our prepared remarks this morning. Operator, we will be happy to open the floor for any questions at this time.
分析師問答
We will now begin the question-and-answer session. Our first question today is from Jonathan Chappell with Evercore ISI. Please go ahead.
Thank you. Good morning. Adam, a lot of volatility from month to month as we look at seasonality and your 10-year averages, obviously a lot better in May, maybe a little slower in June. Could you speak to the overall demand environment as we think about July trending from here? Also, to the extent that you can put a pin on it, we have been hearing a lot about freight shifting from a tight truckload market to LTL. Are you seeing that? And where do you think you stand as far as the innings of that transition?
I think to start with that first point, I still think we are in the early innings. We are hearing some of that from customers, but I have not really seen the big weight per shipment change within certain categories, particularly with 3PL-managed business, that you would see when there is a major inflection going on with the truckload spillover one way or the other. So I still think that there is probably a lot left to go with that renormalization. I expect that will continue as the truckload rate environment remains really strong. Overall for us, demand continues to improve. I am happy with a lot of the trends that we are seeing. And you are right, it is choppy month to month when you look at our sequential growth versus our 10-year average trends, but that is not uncommon. When you get in periods like this, there have been certain months where we have significantly outperformed the 10-year average, and then the next month might be a little softer and so forth. That is kind of the way the second quarter shaped up. We had a really strong February and March and then April was softer than the 10-year average. Then we climbed out of that and essentially brought the full quarter sequential trend back to where a normal quarter would be. If you go back to the beginning of this year and apply normal seasonality month by month, in July we are handling probably about 3 million pounds more per day than we would if normal seasonality had played out. To me, that indicates we are outperforming normal seasonality. I think we are in the early stages of the economy getting going again. With ISM in the low 50s, it has not had a big breakout yet. I still think there is a lot of room to run when you look at things like inventory-to-sales ratios being low, and that reconciles with feedback we have heard from customers about the need for restocking. I am excited about where we are and more excited about the opportunities that lie ahead if we can carry some momentum through the balance of this year into 2027 as well. Thanks.
The next question is from Christian Wetherbee with Wells Fargo. Please go ahead.
Yes, thank you. Good morning. Adam, you've given us sort of revenue ranges and OR dynamics for the forward quarter in the past. Wondering if you could help us a little bit with that. Obviously, the second quarter includes the gain in it. Could you share some thoughts on how you think about revenue opportunity in the third quarter and also the operating ratio?
I'll start with the top line. The July revenue growth rate of 7.5% to 8% includes sequential change in tonnage that is significantly better than the 10-year average, as I mentioned. Tons per day is currently sequentially down about 0.5%, while the 10-year average is down 3%, so we are seeing strong performance there. If we can carry momentum through the rest of the quarter, we may see some of the choppiness I described show up in either August or September. If we can carry this momentum forward, we could see a 10% increase in revenue for the full quarter, which would put the absolute number at about $1.54 billion to $1.55 billion for the full quarter. Conservatively, if we carry the same 7.5% to 8% growth rate, that would be about $1.52 billion for the full quarter. As a baseline, I'm assuming fuel stability. Fuel had stabilized for a bit during the second quarter, then reinflected higher. My baseline is $4.95 as an average per gallon for the full quarter, but I would like to see fuel trend down as that would be a net positive for the overall economy.
The next question is from Jordan Alliger with Goldman Sachs. Please go ahead.
Yes, hi, good morning. I'll follow up on the revenue to sequential OR thoughts. Could you clarify whether the sequential OR would be off the reported OR, or if there are adjustments related to that net property gain?
Good question, Jordan. The 10-year average change for us indicates that the third quarter operating ratio is typically flat to up 50 basis points from the second quarter. You can essentially hit normal seasonality, but you should normalize some items to get a comparable third quarter operating ratio, the biggest being the gain on property sales during the second quarter. With that in mind, I would say the normalized overall increase off the 70.1% would be an increase of about 150 to 200 basis points from the second to the third quarter.
The next question is from Thomas Wadewitz with UBS. Please go ahead.
Yes, good morning. Adam or Marty, wanted your thoughts on what is happening with service and capacity in the market. There have been some data points and feedback that a couple of carriers have hit embargoes in the Midwest and capacity constraints. I've also heard the LTL driver market is getting a bit tighter or a little harder to hire drivers. Are you observing that? Is that starting to affect your business in terms of shipments coming to you or pricing?
Good question. First, we are not having any capacity issues—whether it be equipment, drivers, or real estate. But we are hearing talk about competitors having problems picking up at the end of the month, and we have seen some of that freight move over temporarily. If we get a major inflection in the economy, we would see it daily. Some of that may be coming from the truckload industry, with freight spilling back over in a small way to the LTL environment, which is a double benefit for us.
So you think that is maybe boosting July, or was that happening earlier in the quarter?
I think it has been happening earlier in the year. Capacity is a big part of our value proposition: not just service center capacity, but the ability to spot trailers at our customers' doors and having driver capacity. We have plenty of capacity across those elements. When other carriers are operating at lower service levels, they have to manage costs differently and may not keep excess capacity to respond to growth opportunities. That has been a small part of the story for us. We've been tracking at seasonality since November of last year, and it feels like we are in the early stages of recovering with a big runway of growth ahead. We've built a tremendous amount of capacity through our investments and are eager to get freight back into the system. Given the control we've shown over cost and improvement in direct costs, if we continue to see the inflection we've seen from the second quarter, even a modest 4% sequential increase in tonnage with the same headcount produces a lot of leverage. There is a lot of opportunity to grow the top line and further improve our operating ratio to produce profitable growth.
The next question is from Eric Morgan with Barclays. Please go ahead.
Hey, good morning. Thanks for taking the question. Wanted to ask on pricing. Could you discuss what drove your yield ahead of your initial guidance in the quarter, especially with weight per shipment improving through the quarter? And relatedly, could you elaborate a bit on what those mix effects were that are driving third-quarter yield growth a little below the second quarter?
The second quarter benefited from mix effects—differences such as national accounts versus smaller customers, some higher priority services, and so forth. We were pleased to see revenue per hundredweight track above our guidance; going into the second quarter we were thinking it would be about 4% to 4.5%, and we exceeded that. Month-to-month revenue per hundredweight can move up or down. The rate of growth coming down for the third quarter is still a sequential increase in revenue per hundredweight, so it's not a negative—it's similar to patterns we saw in 2017 where weight per shipment outperformed seasonality in the early stage of an inflection. I would like to think some of the similarities are indicative of the start of a real inflection again. Seeing revenue growth come in the form of tons and weight per shipment, with yields continuing to improve, is what drives profits to the bottom line. That was a key driver of the 70.1% operating ratio. Even backing out the real estate gain, it's one of the strongest operating quarters we've had. Compared to the second quarter of 2022, our direct operating cost in the second quarter of this year was about 200 to 250 basis points better, which, combined with leverage on overhead, gives us the potential to drive the operating ratio much lower over time.
The next question is from Ravi Shanker with Morgan Stanley. Please go ahead.
Great. Thanks. Good morning, everyone. Adam and Marty, there's been a lot of focus on TL-to-LTL conversion on this call. In the down cycle, brokers have taken share from asset-based LTLs. Given the scrutiny on broker relationships post Montgomery, are you seeing any shift away from brokers back to asset-heavy carriers as we go deeper into the cycle?
It's probably a little early to see a material shift. We saw revenue growth with our 3PL-related customers in the most recent quarter similar to the company's overall growth rate, so it's hanging in there. We'd prefer customers to contract directly with us, but we treat 3PL-managed business the same in terms of account-level profitability. About a third of our revenue is with 3PLs; it's important to understand cost on any customer account and price appropriately so that we have similar account-level profitability across our book. If more shippers choose to use Old Dominion direct, we'll be here to handle it. There is cost inflation to account for—insurance premium increases, for example—and if that flows through to 3PL costs, 3PLs will need to prove their value proposition to shippers. That could drive some reversion of the shift toward more direct relationships over time.
The next question is from Ken Hoexter with Bank of America. Please go ahead.
Hey, great. Good morning. Thanks for the insight before on some of the struggles at other carriers. Another question on the brokerage side: given the heavy use of brokers by some customers and the recent lawsuits and exposure, is that impacting discussions with brokers? Are you seeing any flows change or any impacts on pricing or competitive behavior as the market improves or as insurance costs rise?
Nothing material at this point. Several of our top-10 customers are 3PLs and we haven't seen a material change there. There's been a lot of discussion and it's a potential big change that could come to the industry. We have seen increases in insurance costs historically, and as a well-capitalized LTL carrier we have dealt with double-digit premium inflation for many years. That goes into our cost model and pricing. If a customer uses a 3PL, the 3PL needs margin to manage their operations; if costs increase, 3PLs will need to demonstrate value to shippers or shippers may look to contract directly. That could reverse some of the shift toward increased use of 3PLs over the past 10 to 15 years.
The next question is from Jason Seidl with TD Cowen. Please go ahead.
Thanks, operator. Gentlemen, good morning. One competitor talked about using autonomous trucks for some linehaul operations and suggested it might be viable for an LTL carrier. What are your thoughts and have you looked into it?
Any technology like that needs to be evaluated for cost per mile and overall return. You have to consider the cost of the technology on a per-mile basis. Many of our tractors are dual-use—P&D during the day and linehaul at night—so paying for a technology that you'd only use in one application could drive unit cost up. Autonomous might be more targeted to linehaul-only applications, but that would require dedicated equipment or paying for unused mileage when equipment is in P&D service. We stay aware of the technology but don't plan to be on the bleeding edge of adoption. There are operational concerns—handling one-off scenarios, cargo theft, regulatory issues—before scaling nationwide. It's being utilized in certain lanes, but scaling and nationwide adoption present further challenges.
The next question is from Bascome Majors with Susquehanna. Please go ahead.
Thanks for taking my questions. This appears to be the first time the capital envelope has gone up since the beginning of 2024. I'm curious: is this driven by tightening capacity at some peers bringing freight your way, or are you hearing from customers on macro expectations pushing you into a period of growth investment? Also, can you give a quick update on where you stand on equipment and network capacity today?
The increase to $380 million of CapEx is still well below our normal range of 10% to 15% of revenue. The increases for real estate and equipment are strategic purchase opportunities that fit our long-term plan. On the real estate side, timing of projects and some lease-to-own conversions contributed, and there are a couple of unique opportunities in markets where real estate is hard to find. On the equipment side, some spending that would have been in 2027 is being pulled into the fourth quarter of this year. This is not due to a need for additional service center capacity—we still have north of 35% excess capacity in service centers. We have plenty of power and trailing equipment capacity today. When we get into the fall, we'll forecast next year's volumes to assess replacement and growth needs, but given the fleet's current state, we expect to lean more toward replacement and adding trailing equipment as needed. On the people side, we accommodated a roughly 4% sequential increase in tonnage with essentially the same workforce, so we don't expect material headcount changes through the third and fourth quarters. We'll consider restarting driving schools as we forecast for 2027 to ensure we have drivers ready if growth continues. Overall, these CapEx changes reflect long-term planning rather than an immediate capacity shortage.
The next question is from Rishi Harnane with Deutsche Bank. Please go ahead.
Thanks. Quick housekeeping: Adam, that OR sequential change you cited for the third quarter—flat to up 50 basis points—would that be on GAAP? Bigger picture, tonnage came in line with normal seasonality this quarter and you materially beat your OR outlook even excluding the real estate gain. Looking into the third quarter, you're optimistic about macro demand and OD-specific demand. What is driving that tempered enthusiasm relative to what could be a stronger OR trajectory? Also, the incremental margin in the quarter was strong—around 60%. Does that influence your longer-term OR outlook or should we be cautious because fuel helped operating leverage?
The OR sequential change reference is on GAAP. The second quarter outperformance was driven by stronger volumes than we expected. Volumes came in stronger than the prior call's expectations and we were able to convert a lot of the incremental revenue to the bottom line. Salaries, wages and benefits improved sequentially which helped; we also saw benefits in operating supplies, expenses and G&A. You should normalize for some of those benefits when modeling the third quarter, including the property gains. We expect incremental margins in the 45% to 50% range on additional revenue growth; that is stronger than longer-term trends but reasonable based on our current cost structure. Our direct operating cost was roughly 50% of revenue in the second quarter, improved versus 2022 levels, showing the leverage opportunity if tonnage grows at the right price. There's additional opportunity to improve direct operating cost and overhead leverage, but I wouldn't claim 45% to 50% is the new normal. Our immediate goal is to sustain the sub-70 operating ratio and then define the next goal. When you map out direct and overhead cost leveraging with growth, you can see a clear pathway to further improvements, but we avoid setting specific timelines.
And just to confirm, the OR sequential change for the third quarter is based on GAAP OR, correct?
Yes. We discuss GAAP numbers and we will give adjustments like the real estate gain, but we prefer GAAP for comparisons.
The next question is from Brian Ossenbeck with J.P. Morgan. Please go ahead.
Hey, good morning. Thanks for taking the question. Adam, can you give more context on headcount and labor? The fringe benefit was a pretty big increase—does that continue to increase with annual wage increases? You said labor would be essentially flat; can you provide more on the cadence you have visibility to? Also, some commentary on truck driver schools coming back and capacity into next year would be helpful.
We'll give a wage increase effective September 1; we haven't announced the exact increase yet, but we believe in sharing success with our employees. We have sufficient people capacity today and employees are able to work more hours on average, which increases take-home pay for drivers and platform employees. That lets us meet customer needs through the third and fourth quarters. We have had truck driving schools running and part of our strategy is to train employees who want to be drivers and give them CDLs, so when demand increases we can put them into trucks quickly. We prefer to promote from within to preserve culture and service quality. The worst thing is having volume opportunities and not being able to take advantage of them. Historically, in high-growth years—2014, 2015, 2017, 2018, 2021, 2022—we have outperformed peers significantly in tons per day, and we expect to be prepared to capture market share when the industry grows again. We will monitor and step up driver training as needed for 2027, but we are in a good position now.
The next question is from Bruce Chan with Stifel. Please go ahead.
Hey team, good morning. This is Matthew on for Bruce. A couple quick ones: with respect to the stronger volume and seasonality, are you seeing this uptick broad-based across the book or concentrated in a few end markets?
It's pretty consistent across our regions, which keeps the network balanced. We're nearly 100% insourced from a linehaul standpoint, so we aren't facing purchased transportation challenges and related cost inflation that some competitors face. Everything is staying in balance—consistent performance across national accounts, smaller customers, and 3PL-managed business.
Great, super helpful. Lastly, you mentioned peers having pickup issues. How would you characterize the financial health of smaller regional providers now? Are you seeing changes in their pricing or competitive behavior as the market improves or with rising insurance costs?
There are many high-quality private regional carriers, but being private we don't have their operating ratios. We hear more feedback from larger national carriers that compete on a national basis. I don't have specifics on smaller carriers' financials or their competitive behavior today.
The next question is from Ariel Rosa with Citigroup. Please go ahead.
Hey, good morning. I wanted to stay on the volume piece and get more color on the macro environment underlying the optimism. Historically, OD can grow tonnage mid- to high-single digits in strong years—can the current macro support that over the next couple of quarters or would we need to see an acceleration in macro to get there? And as a clarification, can you give a little color on the gain on sale and whether there are more such gains to come?
The gain on sale related to service centers that were put in ready reserve after construction. We depreciated those projects while they were available, then moved into different facilities and sold the old ones—three service centers in the quarter produced the $17.2 million net gain. I would not expect more material gains this year; there are a few more dispositions possible, but nothing at the same scale currently expected. On the macro environment, we're seeing positive but not red-hot conditions. ISM is positive but not at breakout levels. Inventory-to-sales ratios are low, which historically precedes restocking and volume increases. We're not in 2018- or 2021-like environments yet, but some metrics suggest the inflection point is coming. That's part of why we've positioned ourselves to be ready; we won't get ahead of the growth curve, but we are prepared to respond as volumes recover and to turn on service centers as needed.
The next question is from Scott Group with Wolfe Research. Please go ahead.
Hey, thanks. Good morning. Adam, on the 10% revenue growth for the third quarter, does that assume normal tonnage seasonality in August and September or anything better or worse? Also, you've been measured in comments but optimistic on margins—what's the timeline or line of sight to get to sub-69 or lower operating ratios?
We don't put exact timelines on goals because you don't want to make operational decisions chasing an arbitrary date. We set the sub-70 operating ratio as our current goal. If we had focused solely on hitting an immediate margin target, we might not have invested nearly $2 billion over the last three years in capital expenditures that position us better than competitors. Looking at the second quarter, our direct operating cost was roughly 50% of revenue versus about 52% in second quarter 2022, despite far fewer shipments then, which shows efficiency gains from technology and process improvements. If tonnage returns and we leverage that direct cost base, there's significant opportunity to drive further improvement. Overhead has variable elements that will grow with revenue, but there is 300 to 400 basis points of overhead opportunity as well. Historically, in big revenue growth years we have produced 300 to 400 basis points of year-over-year operating ratio improvement. We will take a methodical approach: maintain service, manage cost, control discretionary spending, and leverage growth. That is how we expect to move toward our next operating ratio milestones.
This concludes our question-and-answer session. I would like to turn the conference back over to Marty Freeman for any closing remarks.
Thank you all today for your participation. We appreciate all your questions. Please feel free to give us a call if you have anything further. Thanks and I hope you have a great day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.