Old Dominion's 4Q Hit By Tonnage, Fuel Surcharge Drops
Old Dominion Freight Line reported lower revenue and income for the fourth quarter of 2009 compared to the year-ago period, a reflection of a drop in tonnage, lower fuel surcharges and a continued competitive pricing environmen
Old Dominion Freight Line reported lower revenue and income for the fourth quarter of 2009 compared to the year-ago period, a reflection of a drop in tonnage, lower fuel surcharges and a continued competitive pricing environment
, the carrier says.
The North Carolina-based less-than-truckload carrier posted revenue of $310.9 million, down from $335.8 million for the fourth quarter of 2008. Net income was $9.7 million, or 26 cents a share, versus $11 million, or 30 cents a share, for the fourth quarter of 2008.
Earl Congdon, executive chairman of Old Dominion, said the company's fourth quarter revenues was a result of a reduction in fuel surcharges due to the decrease in the price of diesel fuel.
"We saw some signs of market stabilization in the fourth quarter of 2009, although industry demand remains significantly below pre-recession levels and overcapacity in the industry persists," Congdon said. "Since we have limited visibility with regard to the competitive landscape or the prospect of an economic recovery in 2010, we will continue to balance the investment in our expansion plans carefully against our profit objectives."
Congdon believes the company is well positioned to take advantage of the recovery, despite the fourth quarter's performance.
Stifel Nicolaus called the LTL carrier's results "a positive surprise," as the analysts' earnings estimate for the quarter was lower than the company's results. In a letter to investors, Stifel Nicolaus said Old Dominion was one of the only LTLs that didn't cut wages and most likely the only LTL carrier to report positive net income through each quarter of the freight recession.
The analysts raised their 2010 earnings per share estimate for the carrier from $1.37 to $1.40, and will maintain their $1.90 earnings per share estimate for 2011.
"While we would like to recommend the stock (it is the blue chip of the LTL group), we feel the upside surprise should take the price closer to fair value by the time this note is published, limiting upside potential for investors," the analysts concluded.
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