Old Dominion Freight Line benefited from the strong economy with a record-setting quarter. The North-Carolina-based less-than-truckload carrier reported on Oct. 25 that its third-quarter revenue rose 21.2% to $1.06 billion and that its diluted earnings per share grew by 71% to $2.12.
“Old Dominion Freight Line’s third quarter represents another period of substantial growth with results that included many new company records,” ODFL President and CEO Greg Gantt said in a release.
“We continued to benefit from the strong domestic economy and available capacity within our service center network, which supported our ability to win market share during the quarter,” he continued. “Revenue increased at a rate above 20% for the third straight quarter, and the combination of quality revenue growth and ongoing cost control measures allowed us to improve our operating ratio to a new company record of 78.4%.”
Gantt said the 21.2% year-over-year hike in revenue included a 12.5% increase in LTL revenue per hundredweight and an 8.1% increase in LTL tons. The increase in LTL tons resulted from an increase in LTL shipments of 9.7%, which was partially offset by a 1.4% decrease in LTL weight per shipment.
“While a decrease in weight per shipment can be an indicator of a slowing economy, we believe this decrease was primarily due to operational changes we made at the end of the second quarter that were designed to reduce the number of heavy-weighted shipments in our network,” he remarked. “The decrease in LTL weight per shipment, as well as a 0.1% increase in length of haul, contributed to the improvement in our reported yield. LTL revenue per hundredweight, excluding fuel surcharges, grew 9% for the third quarter, as we also continued our focus on yield-improvement initiatives designed to improve individual account profitability.”
According to Gantt, ODFL also benefited from improving most of its cost categories as a percent of revenue during the third quarter. He said salaries, wages, and benefits improved to 50.7% of revenue, compared to 52.9% for the third quarter of last year, despite a 16.2% increase in average full-time employees. In addition, Q3 income tax expense benefited from “certain discrete tax adjustments as well as a slight decrease in our annual effective tax rate.” On the other hand, the company’s operating supplies and expenses increased 90 basis points, which he attributed “primarily to the rising cost of diesel fuel.”
Capital expenditures were $177.6 million for the third quarter of 2018 and $469.9 million for the first nine months of the year. ODFL said it expects its capital expenditures for 2018 to total approximately $555 million, including planned expenditures of $200 million for real estate and service center expansion projects; $300 million for tractors and trailers; and $55 million for technology and other assets.
“Old Dominion achieved company records for revenue and profitability during the third quarter,” Gantt added. “The quarterly results once again reflect the consistent execution of our long-term business strategy of providing on-time, claims-free service at a fair price. While this strategy has allowed us to increase our market share significantly over time-- regardless of the economic environment -- our ability to grow requires consistent investments in capacity, technology, and our employees.”