Net income increased 6 to $23.9 million, and earnings per diluted share for the second quarter of 2008 were $0.64, an increase of 6.7%.
The results for the second quarter of 2007 included the final resolution of a customer pricing issue from periods prior to 2007, which resulted in the recognition of $2 million in revenue, or $0.03 per diluted share after tax. Old Dominion's operating ratio for the second quarter of 2008 was 89.7% compared with 88.7% for the second quarter of 2007.
Revenue for the first six months of 2008 increased 15.7% to $786.0 million from $679.6 million for the comparable period in 2007. Net income declined to $34.3 million, or $0.92 per diluted share, for the first half of 2008 from $36.1 million, or $0.97 per diluted share, for the first six months of 2007. The company's operating ratio was 91.9% for the latest six-month period compared with 90.3% for the first six months last year.
"Old Dominion continued to perform well in the second quarter of 2008 relative to a period in which rising fuel prices and an uncertain economic environment created challenging industry conditions," said Earl Congdon, Executive Chairman. "Our revenue growth for the quarter primarily resulted from a 10.2% increase in tonnage, which slightly exceeded our expectations at the beginning of the quarter. The tonnage growth was a result of a 7.1% increase in weight per shipment and a 2.8% increase in the number of shipments. Revenue per hundredweight increased 5.4% as compared to the second quarter of 2007 due mostly to the impact of higher fuel prices on our fuel surcharges. Our revenue per hundredweight, however, was negatively affected by both the increase in weight per shipment and a 3.1% decline in length of haul. The impact of these two changes makes the comparison of our pricing metrics difficult; however, we believe that the overall pricing environment has somewhat stabilized but remains challenging.
"We also benefited from operational efficiencies in the second quarter, as productivity improvements were realized in our linehaul, pickup and delivery, and dock operations. In addition, insurance and claims decreased as a percentage of revenue for the fifth consecutive comparable-quarter period, with our cargo claims ratio again falling to the best level in our Company's history. Similar to our first-quarter experience, however, these and other margin improvements resulting from improved freight density were not sufficient to overcome the impact of a difficult pricing environment that did not allow us to fully recover the significant rise in operating expenses.
ODFL produced over 95% of its tonnage growth for the second quarter through service centers in operation for more than one year. The company opened one service center during the second quarter in Pocatello, Idaho, and combined the operations of two service centers, for a total of 204 service centers in operation at the quarter's end, compared with 188 at the end of the second quarter of 2007.
"Despite our achievements for the first half of 2008, we continue to be cautious with our guidance for the remainder of 2008 because of the challenging industry conditions that persist," Congdon said. "As a result, we today affirm our recently updated earnings guidance for 2008 earnings per diluted share of $1.90 to $1.95."