Old Dominion Freight Line Provides Update for Third Quarter 2024

Rhea-AI Summary

Old Dominion Freight Line (Nasdaq: ODFL) reported a 5.2% decrease in revenue per day for August 2024 compared to August 2023. This decline was due to a 6.1% decrease in LTL tons per day, partially offset by an increase in LTL revenue per hundredweight. The company experienced a 5.0% decrease in LTL shipments per day and a 1.1% decrease in LTL weight per shipment. For the quarter-to-date period, LTL revenue per hundredweight increased by 3.0%, while LTL revenue per hundredweight excluding fuel surcharges rose by 4.9% year-over-year. Despite the softness in the domestic economy and lower fuel surcharge revenue, Old Dominion maintains its focus on delivering superior service and executing its long-term strategic plan to win profitable market share and increase shareholder value.

Positive

• Increase in LTL revenue per hundredweight
• 3.0% increase in LTL revenue per hundredweight for the quarter-to-date period
• 4.9% increase in LTL revenue per hundredweight excluding fuel surcharges

Negative

• 5.2% decrease in revenue per day in August 2024
• 6.1% decrease in LTL tons per day
• 5.0% decrease in LTL shipments per day
• 1.1% decrease in LTL weight per shipment
• Continued softness in the domestic economy

Insights

Financial Analyst

Old Dominion's August update reveals concerning trends. The 5.2% decrease in revenue per day and 6.1% drop in LTL tons per day signal a significant slowdown. While the company managed to increase LTL revenue per hundredweight, the volume decline outweighed pricing gains. The 5.0% decrease in LTL shipments per day indicates weakening demand, likely due to economic headwinds.

However, it's not all negative. The company's ability to maintain pricing discipline, as evidenced by the 4.9% increase in LTL revenue per hundredweight excluding fuel surcharges, demonstrates market strength. This pricing power could help buffer profitability despite volume declines. Investors should monitor whether Old Dominion can sustain this pricing advantage in a softening market.

Market Research Analyst

The trucking industry serves as a barometer for overall economic health and Old Dominion's metrics suggest a cooling economy. The consistent shipment levels with July indicate this isn't a company-specific issue but a broader market trend. The mention of "continued softness in the domestic economy" aligns with other economic indicators pointing towards a potential slowdown.

However, Old Dominion's focus on maintaining service quality and disciplined pricing could position them well for market share gains when the economy rebounds. Their strategy of prioritizing profitable growth over volume could lead to stronger margins compared to competitors who might engage in price wars during this downturn. Investors should watch for signs of market share shifts and compare Old Dominion's performance to industry peers.

Logistics Expert

Old Dominion's update highlights the delicate balance between volume and pricing in the LTL sector. The 1.1% decrease in LTL weight per shipment suggests shippers are optimizing their loads, potentially in response to economic pressures. This trend could impact operational efficiency and costs for LTL carriers.

The company's ability to increase revenue per hundredweight despite volume declines is impressive, indicating strong customer relationships and service quality. However, if the volume decline persists, it may pressure Old Dominion to reassess its network capacity and cost structure. The focus on their "long-term strategic plan" suggests they're prepared for cyclical downturns. Investors should monitor how effectively Old Dominion balances maintaining service levels with potential need for cost adjustments in response to volume changes.

THOMASVILLE, N.C.--(BUSINESS WIRE)-- Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today reported certain less-than-truckload (“LTL”) operating metrics for August 2024. Revenue per day decreased 5.2% as compared to August 2023 due to a 6.1% decrease in LTL tons per day that was partially offset by an increase in LTL revenue per hundredweight. The change in LTL tons per day was attributable to a 5.0% decrease in LTL shipments per day and a 1.1% 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 3.0% and 4.9%, respectively, as compared to the same period last year.

Marty Freeman, President and Chief Executive Officer of Old Dominion, commented, “Our revenue results for August reflect continued softness in the domestic economy as well as the impact of lower fuel surcharge revenue on our yields. While our LTL volumes declined on a year-over-year basis, our LTL shipments per day in August were relatively consistent with July and our year-to-date average through the first half of this year. We also maintained our long-term, disciplined approach to pricing, which is reflected in the ongoing improvement in our LTL revenue per hundredweight. The OD Family of employees remains focused on delivering superior service at a fair price to our customers, which has created an unmatched value proposition in our industry. We believe that by continuing to execute our long-term strategic plan, we are positioning Old Dominion to win profitable market share 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/20240904032482/en/

Adam N. Satterfield

Executive Vice President and

Chief Financial Officer

(336) 822-5721

Source: Old Dominion Freight Line, Inc.

FAQ

What was Old Dominion Freight Line's (ODFL) revenue performance in August 2024?

Old Dominion Freight Line reported a 5.2% decrease in revenue per day in August 2024 compared to August 2023.

How did ODFL's LTL shipments per day change in August 2024?

ODFL experienced a 5.0% decrease in LTL shipments per day in August 2024 compared to the previous year.

What was the change in ODFL's LTL revenue per hundredweight for the quarter-to-date period?

ODFL's LTL revenue per hundredweight increased by 3.0% for the quarter-to-date period compared to the same period last year.

How did ODFL's LTL weight per shipment change in August 2024?

ODFL reported a 1.1% decrease in LTL weight per shipment in August 2024 compared to August 2023.