Old Dominion's operating ratio improved to 90.5% for the fourth quarter of 2010 from 93.9% for the fourth quarter of the prior year.
For the year ended December 31, 2010, revenue grew 19% to $1.48 billion from $1.25 billion for 2009. Net income increased 116.9% to $75.7 million compared with $34.9 million for the prior year.
ODFL's operating ratio improved to 90.7% for 2010 from 94.3% for the prior year. The company's results for the fourth quarter and year ended December 31, 2010 reflect lower depreciation expense resulting from changes to the estimated useful lives and salvage values for its equipment that became effective January 1, 2010.
Some of the fourth quarter growth can be attributed to the continued growth in U.S. industrial production and manufacturing, noted David S. Congdon, president and CEO, "which has not only boosted volumes for transportation providers, but also decreased excess capacity in our industry. As a result, a number of LTL carriers announced general rate increases in the fourth quarter of 2010, which has improved the overall pricing environment for our services."
In November, ODFL implemented a general rate increase of 4.9%, which contributed to a 5.9% increase in revenue per hundredweight for the fourth quarter as compared to the prior-year period. Excluding fuel surcharges, revenue per hundredweight for the fourth quarter increased 3.4% over the comparable quarterly period.
Congdon also notes that the results include the impact of a 2 percent company-wide salary and wage increase that was effective September 3, 2010.
"In 2009, we decided not to cut our employees' salaries, wages or benefits, despite the recessionary environment, and we were pleased to provide this increase in wages to our employees as our performance improved," Congdon said. "We also experienced a reduction in our workforce during the recession, but added employees in 2010 to meet increased tonnage levels and to maintain our commitment to providing the industry's highest service levels for on-time and claims-free deliveries. Primarily as a result of the cost to train these new employees, our operating leverage was negatively affected by slight reductions in some measures of our productivity. Despite these additional costs incurred in 2010, our team produced record revenues for the fourth quarter and second half of 2010 and the best operating ratios for these periods since 2006."
Old Dominion opened one new service center during the fourth quarter in Casper, Wyoming, and three for the year, for a total of 213 service centers in operation at the end of 2010. In addition, capital expenditures for the quarter of $37.2 million included the cost of accelerating approximately $19 million of its 2011 equipment purchases into 2010.
Old Dominion now plans total capital expenditures for 2011 in a range of $265 million to $300 million. These planned expenditures include $120 million to $140 million for real estate, $130 million to $140 million for the purchase of tractors, trailers and other equipment and $15 million to $20 million for investments in technology.