Old Dominion Freight Line Provides Update for First Quarter 2025

Rhea-AI Summary

Old Dominion Freight Line (ODFL) reported a 5.0% decrease in revenue per day for February 2025 compared to February 2024. The decline was primarily due to a 7.1% decrease in LTL tons per day, partially offset by increased LTL revenue per hundredweight. The company experienced a 5.9% decrease in LTL shipments per day and a 1.3% decrease in LTL weight per shipment.

For the quarter-to-date period, LTL revenue per hundredweight increased 2.6%, while excluding fuel surcharges, it rose 4.3% compared to the previous year. CEO Marty Freeman noted that the revenue decline reflects ongoing softness in the domestic economy and lower fuel prices impacting yields. Despite these challenges, the company maintains a cautiously optimistic outlook and continues to focus on delivering superior service while maintaining capacity for growth.

Positive

• Revenue per hundredweight increased 2.6% quarter-to-date
• Revenue per hundredweight ex-fuel up 4.3% quarter-to-date
• Maintained pricing power despite market conditions

Negative

• Revenue per day decreased 5.0% year-over-year
• LTL tons per day declined 7.1%
• LTL shipments per day fell 5.9%
• LTL weight per shipment dropped 1.3%

Insights

Transportation Analyst

Old Dominion's February update reveals notable weaknesses in its operating metrics, with a 5.0% year-over-year decline in daily revenue. This decrease stems primarily from reduced shipping volumes, with LTL tons per day falling 7.1%, shipments down 5.9%, and weight per shipment decreasing 1.3%.

The volume declines paint a concerning picture of freight demand, aligning with broader economic softness that's been challenging the LTL sector. However, ODFL continues to demonstrate pricing power despite these headwinds, with revenue per hundredweight increasing 2.6% overall and 4.3% excluding fuel surcharges.

This pricing resilience amid volume pressure highlights ODFL's service-focused strategy and strong market position. The company maintains its disciplined approach of prioritizing service quality over volume growth - a strategy that has historically enabled above-industry margins and returns.

While management expresses cautious optimism about economic conditions, the significant volume declines suggest continued freight market weakness. Investors should closely monitor whether these volume trends represent market share losses or broader economic deceleration. The company's ability to maintain pricing power during this period of softness will be important for preserving margins despite the revenue headwinds.

Financial Analyst

ODFL's February metrics confirm ongoing softness in the LTL market with daily revenue contracting 5.0% year-over-year. The primary driver is volume deterioration, with tonnage down 7.1%, reflecting both fewer shipments and lighter weight per shipment.

What's noteworthy is ODFL's continued yield management strength amid this challenging environment. The 4.3% increase in revenue per hundredweight (excluding fuel) demonstrates the company's pricing discipline and premium service positioning. This disciplined approach to pricing has historically supported ODFL's industry-leading operating ratio, which stood at approximately 71.9% in Q4 2024.

However, the magnitude of volume declines raises concerns about utilization of ODFL's network and potential margin pressure. The company typically requires 3-5% volume growth to leverage its fixed cost base effectively. With volumes moving in the opposite direction, maintaining their exceptional operating ratio will be challenging without offsetting cost measures.

From a competitive standpoint, these results likely reflect broader market conditions rather than ODFL-specific issues, as the company rarely sacrifices margin for volume. Investors should monitor whether management can successfully balance pricing discipline with the need to stabilize volumes - a delicate balance that will determine ODFL's financial performance for the remainder of 2025.

THOMASVILLE, N.C.--(BUSINESS WIRE)-- Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today reported certain less-than-truckload (“LTL”) operating metrics for February 2025. Revenue per day decreased 5.0% as compared to February 2024 due to a 7.1% decrease in LTL tons per day that was partially offset by an increase in LTL revenue per hundredweight. The decrease in LTL tons per day was attributable to a 5.9% decrease in LTL shipments per day and a 1.3% decrease in LTL weight per shipment. For the quarter-to-date period, LTL revenue per hundredweight and LTL revenue per hundredweight, excluding fuel surcharges, increased 2.6% and 4.3%, respectively, as compared to the same period last year.

Marty Freeman, President and Chief Executive Officer of Old Dominion, commented, “The decrease in our February revenue results reflects continued softness in the domestic economy as well as the impact of lower fuel prices on our yields. While our revenue and volumes were lower on a year-over-year basis, demand for our industry-leading service remains strong, and we continue to be cautiously optimistic about the economy. As a result, we will continue to focus on delivering superior service at a fair price and have the capacity to effectively manage incremental growth in our business. Our continuous execution on these fundamental elements of our long-term strategic plan has contributed to our historical track record for success and supports our confidence in producing further profitable revenue growth over the long-term while also increasing shareholder value.”

Forward-looking statements in this news release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution the reader that such forward-looking statements involve risks and uncertainties that could cause actual events and results to be materially different from those expressed or implied herein, including, but not limited to, the following: (1) the challenges associated with executing our growth strategy, and developing, marketing and consistently delivering high-quality services that meet customer expectations; (2) changes in our relationships with significant customers; (3) our exposure to claims related to cargo loss and damage, property damage, personal injury, workers’ compensation and healthcare, increased self-insured retention or deductible levels or premiums for excess coverage, and claims in excess of insured coverage levels; (4) reductions in the available supply or increases in the cost of equipment and parts; (5) various economic factors such as inflationary pressures or downturns in the domestic economy, and our inability to sufficiently increase our customer rates to offset the increase in our costs; (6) higher costs for or limited availability of suitable real estate; (7) the availability and cost of third-party transportation used to supplement our workforce and equipment needs; (8) fluctuations in the availability and price of diesel fuel and our ability to collect fuel surcharges, as well as the effectiveness of those fuel surcharges in mitigating the impact of fluctuating prices for diesel fuel and other petroleum-based products; (9) seasonal trends in the less-than-truckload (“LTL”) industry, harsh weather conditions and disasters; (10) the availability and cost of capital for our significant ongoing cash requirements; (11) decreases in demand for, and the value of, used equipment; (12) our ability to successfully consummate and integrate acquisitions; (13) various risks arising from our international business relationships; (14) the costs and potential adverse impact of compliance with anti-terrorism measures on our business; (15) the competitive environment with respect to our industry, including pricing pressures; (16) our customers’ and suppliers’ businesses may be impacted by various economic factors such as recessions, inflation, downturns in the economy, global uncertainty and instability, changes in international trade policies, changes in U.S. social, political, and regulatory conditions or a disruption of financial markets; (17) the negative impact of any unionization, or the passage of legislation or regulations that could facilitate unionization, of our employees; (18) increases in the cost of employee compensation and benefit packages used to address general labor market challenges and to attract or retain qualified employees, including drivers and maintenance technicians; (19) our ability to retain our key employees and continue to effectively execute our succession plan; (20) potential costs and liabilities associated with cyber incidents and other risks with respect to our information technology systems or those of our third-party service providers, including system failure, security breach, disruption by malware or ransomware or other damage; (21) the failure to adapt to new technologies implemented by our competitors in the LTL and transportation industry, which could negatively affect our ability to compete; (22) the failure to keep pace with developments in technology, any disruption to our technology infrastructure, or failures of essential services upon which our technology platforms rely, which could cause us to incur costs or result in a loss of business; (23) disruption in the operational and technical services (including software as a service) provided to us by third parties, which could result in operational delays and/or increased costs; (24) the Compliance, Safety, Accountability initiative of the Federal Motor Carrier Safety Administration (“FMCSA”), which could adversely impact our ability to hire qualified drivers, meet our growth projections and maintain our customer relationships; (25) the costs and potential adverse impact of compliance with, or violations of, current and future rules issued by the Department of Transportation, the FMCSA and other regulatory agencies; (26) the costs and potential liabilities related to compliance with, or violations of, existing or future governmental laws and regulations, including environmental laws; (27) the effects of legal, regulatory or market responses to climate change concerns; (28) emissions-control and fuel efficiency regulations that could substantially increase operating expenses; (29) expectations relating to environmental, social and governance considerations and related reporting obligations; (30) the increase in costs associated with healthcare and other mandated benefits; (31) the costs and potential liabilities related to legal proceedings and claims, governmental inquiries, notices and investigations; (32) the impact of changes in tax laws, rates, guidance and interpretations; (33) the concentration of our stock ownership with the Congdon family; (34) the ability or the failure to declare future cash dividends; (35) fluctuations in the amount and frequency of our stock repurchases; (36) volatility in the market value of our common stock; (37) the impact of certain provisions in our articles of incorporation, bylaws, and Virginia law that could discourage, delay or prevent a change in control of us or a change in our management; and (38) other risks and uncertainties described in our most recent Annual Report on Form 10-K and other filings with the SEC. Our forward-looking statements are based upon our beliefs and assumptions using information available at the time the statements are made. We caution the reader not to place undue reliance on our forward-looking statements as (i) these statements are neither a prediction nor a guarantee of future events or circumstances and (ii) the assumptions, beliefs, expectations and projections about future events may differ materially from actual results. We undertake no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law.

Old Dominion Freight Line, Inc. is one of the largest North American LTL motor carriers and provides regional, inter-regional and national LTL services through a single integrated, union-free organization. Our service offerings, which include expedited transportation, are provided through an expansive network of service centers located throughout the continental United States. The Company also maintains strategic alliances with other carriers to provide LTL services throughout North America. In addition to its core LTL services, the Company offers a range of value-added services including container drayage, truckload brokerage and supply chain consulting.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250304207394/en/

Adam N. Satterfield

Executive Vice President and

Chief Financial Officer

(336) 822-5721

Source: Old Dominion Freight Line, Inc.

FAQ

What caused ODFL's revenue decline in February 2025?

ODFL's revenue declined 5.0% due to a 7.1% decrease in LTL tons per day and lower fuel prices affecting yields, partially offset by increased revenue per hundredweight.

How much did ODFL's LTL shipments decrease in February 2025?

ODFL reported a 5.9% decrease in LTL shipments per day compared to February 2024.

What was ODFL's revenue per hundredweight performance in Q1 2025?

Quarter-to-date LTL revenue per hundredweight increased 2.6%, and excluding fuel surcharges, it rose 4.3% year-over-year.

How is ODFL responding to current market challenges?

ODFL maintains focus on delivering superior service at fair prices while maintaining capacity for growth, despite economic softness.