Old Dominion issues solid fourth quarter update

Thomasville, N.C.-based national less-than-truckload (LTL) carrier Old Dominion Freight Line (ODFL) provided guidance for key operating metrics for the fourth quarter this week.

ODFL reported that revenue per day increased 7.3% annually, driven by an LTL revenue per hundredweight increase, which it said was offset by an 8.6% decrease in LTL tons per day. And it added that the change in LTL tons per day was due to a 7.3% decrease in LTL shipments per day and a 1.4% decrease in LTL weight per shipment.

On a quarter-to-date basis, ODFL said revenue per hundredweight and LTL revenue per hundredweight, excluding fuel surcharges, saw respective gains, at 17.3% and 8.6%, on an annual basis.

“Old Dominion’s revenue growth for the first two months of the fourth quarter reflects the ongoing improvement in our yield, which more than offset the decrease in volumes,” said Greg C. Gantt, President and Chief Executive Officer of Old Dominion, in a statement. “We believe the year-over-year decrease in volumes is primarily due to continued softness in the domestic economy, as customer demand for our superior service has remained consistently strong. Our ability to provide superior service at a fair price adds value to our customers’ supply chains while also strengthening our customer relationships. We remain focused on this fundamental element of our long-term strategic plan, and we believe the disciplined execution of our plan will continue to support our ability to win market share and increase shareholder value.”

ODFL third quarter revenue increased 14.5% annually, to around $1.6 billion, with LTL services revenue accounting for roughly $1.58 billion of that tally.

Gantt said at the time that the company’s third quarter financial results included double-digit growth in both revenue and profitability.

“We also improved our operating ratio on a year-over-year basis for the eleventh straight quarter,” he said. “These results reflect our continued ability to deliver value to our customers by providing superior service at a fair price. Consistently executing on this key element of our long-term strategic plan, regardless of the economic environment, is critical to our ability to win long-term market share.”

Credit Suisse analyst Ariel Rosa wrote in a research note that while the LTL industry—along with the broader truckload industry—is likely facing several quarters of soft demand, investors anticipating an industry-wide collapse in LTL pricing are fighting against history, in the firm’s view.

“We see little evidence of eroding pricing discipline in these mid-quarter updates,” wrote Rosa. “To this point, ODFL’s pricing strength is particularly noteworthy, as it suggests a solid sequential step-up in yields (both including and ex-fuel).”