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Earnings Watch: ODFL Earnings Increase Almost 20%, UPS Profit Remains Strong

The mainly less-than-truckload fleet Old Dominion Freight Line Inc. has reported its profit rose nearly 20% in the third quarter of the year, due in part to a better overall economy and freight rates.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
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October 26, 2017
Earnings Watch: ODFL Earnings Increase Almost 20%, UPS Profit Remains Strong

 

3 min to read


The mainly less-than-truckload fleet Old Dominion Freight Line Inc. reported its profit rose nearly 20% in the third quarter of the year due in part to a better overall economy and freight rates.

Net income was $102.3 million, or $1.24 per share, compared to $85.6 million, or $1.03 per share, a year earlier. Revenue in the most recent quarter increased 11.5% to $873 million.

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Operating income in the third quarter of 2017 improved 19.3% from a year earlier, totaling $163.9 million.

“The strengthening economy supported our third quarter revenue growth, but we also believe that tightening industry capacity and pricing increases accelerated the pace of our revenue growth for September,” said David S. Congdon, vice chairman and CEO.

The company’s revenue grew despite having one less operating day than the third quarter of 2016. The growth was attributable to an 8.6% increase in LTL tonnage per day, as well as a 3.6% increase in LTL revenue per hundredweight. LTL revenue per hundredweight, excluding fuel surcharges, rose 2.4%, despite a 1.8% increase in LTL weight per shipment and a 0.6% decrease in length of haul.

Increases in weight per shipment and decreases in length of haul typically reduce LTL revenue per hundredweight metrics, according to ODFL.

UPS Profit Slips Less Than 1%

At trucking and parcel delivery goliath UPS Inc., third quarter profit dipped just 0.5% to $1.26 billion, or $1.45 per share, compared to $1.46 per share a year earlier.

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This happened as total revenue improved 7% from a year earlier to nearly $16 billion. Operating profit was flat at $2 billion.

"UPS produced another solid quarter of financial performance, despite the impact of several natural disasters that slowed regional economic activity and damaged infrastructure,” said David Abney, chairman and CEO. “Our business segments adapted quickly to changing conditions this quarter, taking advantage of market opportunities while minimizing cost and service disruptions from recent events.”

The company’s supply chain and freight segment, which includes trucking company UPS Freight, produced record third quarter results, with double-digit revenue growth and near double-digit operating profit expansion, according to the company. Performance results were driven by revenue-quality improvements combined with structural cost-reduction programs.

Revenue increased 13% to nearly $3 billion while operating profit increased 9.7% to $226 million.

UPS Freight increased LTL revenue by 9.3% on tonnage growth of 5.5% and LTL revenue per hundredweight gains of 3.6%.

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The company’s domestic parcel segment continues to benefit from online retail customer demand for both UPS Next Day Air and Ground services, according to UPS, which drove a 3.9% increase in revenue over the third quarter 2016, totaling $9.7 billion.

Despite this, operating income fell to $1.18 billion from $1.25 billion, due to one less operating day, about $50 million from natural disasters, and ongoing initiatives including facility construction and deployment of Saturday operations of nearly $40 million.

The international segment produced record third quarter operating profit of $627 million, up 8.9%, while revenue grew 11% to $3.36 billion.

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