First look: Old Dominion Q1 earnings

Old Dominion Freight Line beat first-quarter expectations Wednesday before the market opened. The Thomasville, North Carolina-based less-than-truckload carrier reported earnings per share of $1.19, 5 cents higher than the consensus estimate but 15 cents lower year over year.  

The y/y decline was attributed to “ongoing softness in the domestic economy.”

“While we were encouraged to see signs of improving demand during the first quarter, there continues to be uncertainty with the economy,” Old Dominion’s (NASDAQ: ODFL) president and CEO, Marty Freeman, said in a Wednesday news release.

Consolidated revenue of $1.37 billion was down 5.8% y/y but in line with management’s guidance of $1.34 billion and $1.38 billion.

Revenue per day fell 4.3% y/y as a 6.3%-per-day tonnage decline was only partially offset by a 2.2% increase in revenue per hundredweight, or yield. (Yield was up 4.1% excluding fuel surcharges.) The tonnage decline was the combination of a 5% decline in shipments and a 1.4% dip in weight per shipment.

The yield metric was positively impacted by lower shipment weights.

The company reported a 75.4% operating ratio, 190 basis points worse y/y but 50 bps better than in the fourth quarter. The result was ahead of management’s guidance range calling for no change sequentially to 50 bps of deterioration. The company historically sees 100 to 150 bps of OR deterioration from the fourth to the first quarter.

Salaries, wages and benefits expenses (as a percentage of revenue) increased 210 bps y/y. Average head count was down 4.7%, but shipments declined by a higher amount, pushing shipments per employee down 0.4%.

Depreciation and amortization expenses were 70 bps y/y given growth-oriented investments in the network.

Cost per shipment was up 3.3% with revenue per shipment up just 0.7%, resulting in a 260-bp negative spread. However, the unfavorable spread was cut by half from last quarter. Old Dominion continues to bear the costs of carrying excess network capacity ahead of a market upturn.

Freeman said the company’s model and strategic approach have “weathered many periods of uncertainty through the years. … We continue to believe that by delivering superior service to our customers, maintaining our disciplined approach to yield management, controlling our expenses and consistently investing in our team and our network, we are uniquely positioned to respond to an improving economy.”

Old Dominion lowered full-year capex guidance to $450 million from $575 million. The company plans to spend $210 million on real estate projects, $190 million for tractors and trailers, and $50 million for IT. The capex budget for real estate was cut by $90 million while plans around rolling stock were trimmed by $35 million.

Old Dominion’s 2024 capex equaled $771 million.

Shares of ODFL were up 3.2% in pre-market trading on Wednesday.

Old Dominion will host a conference call at 10 a.m. EDT on Wednesday to discuss first-quarter results.

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