Old Dominion Freight Line updates Q4 growth forecast

Less-than-truckload (LTL) carrier Old Dominion Freight Line (ODFL) is feeling optimistic as the calendar officially turned to the final month of the year, announcing various fourth quarter growth and revenue updates today.

ODFL is calling for an annual increase tons per day in the 9.5 percent-to-ten percent range, which is ahead of a previous forecast of 9 percent-to-ten percent growth, adding that tons per day increased at 8.5 percent and 10.3 percent, respectively, on an annual basis on October and November.

And it also said it expects revenue per hundredweight, excluding fuel surcharges, to rise 1.5 percent-to-2 percent annually, ahead of previously forecasted ranges of 1.5 percent-to-2 percent.

“Old Dominion has continued to produce solid revenue growth in the fourth quarter of 2013 through a combination of increased tons and yield,” said David S. Congdon, President and Chief Executive Officer of Old Dominion, in a statement. “We believe our growth in October and November was the result of increased market share while also maintaining our core pricing philosophy. Our updated guidance for revenue per hundredweight, excluding fuel surcharges, reflects changes to the mix of our freight that can lower this metric. We remain committed to providing superior service at a fair and equitable price and believe this value proposition should allow us to continue to win market share.”

In the third quarter of this year, ODFL reported revenue was $616.5 million, which was up 12.0 percent from the $550.5 million for the third quarter of 2012. Net income increased 17.8% to $60.1 million for the third quarter of 2013 from $51.0 million for the third quarter last year, while earnings per diluted share rose 18.6% to $0.70 from $0.59 for the prior-year quarter. Old Dominion’s operating ratio improved to 84.1% for the third quarter of 2013 compared with 85.3% for the third quarter of 2012.

Stifel Nicolaus analyst David Ross wrote in an October research note that ODFL has an efficient network operation, industry-leading service quality, proven price disciplined, expanding service portfolio, and significant profitable market share gains, adding that as the rest of the industry gradually improves, Old Dominion should also get better and at least maintain its margin lead over the rest.”

Ross added that the LTL industry backdrop remains favorable, in Stifel’s view, for continued rate increases and margin expansion, as long as freight volumes remain in positive territory, and he expects pricing to rise faster than volume at about 2 percent-to-3 percent annual yield growth

Freight density, cost control, and pricing discipline continue to be three main themes for the LTL sector since the depths of the recession in 2009. A good number of publicly traded LTLs had strong third quarter performances.