ODFL Reports Slight Revenue Bump to $1.5 Billion for Q4
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Old Dominion Freight Line experienced nearly flat earnings and a slight revenue bump to $1.5 billion during the fourth quarter of 2023, the company reported Jan. 31.
The Thomasville, N.C.-based less-than-truckload carrier posted net income of $322.8 million, or $2.94 a diluted share, for the three months ending Dec. 31. That compared with $323.9 million, or $2.92 a share, during the same time the previous year.
Total revenue increased by 0.3% to $1.5 billion from $1.49 billion.
The results topped expectations by investment analysts on Wall Street, who had been looking for $2.86 per share, according to Zacks Consensus Estimate.
For the full year, ODFL reported net income of $1.24 billion, or $11.26 a share, on revenue of $5.87 billion, compared with net income of $1.38 million, or $12.18 a share, on revenue of $6.26 billion in 2022.
“Old Dominion’s fourth-quarter financial results reflect continued softness in the domestic economy, which is similar to how the economic environment felt throughout much of 2023,” ODFL President Marty Freeman said during a call with investors Jan. 31. “As a result, the rebound in volumes that we had anticipated back in the spring never fully materialized.”
Freeman added that despite the softness in the economy and weaker-than-expected volumes, his workforce faithfully executed the long-term strategic plan that has guided the company through the ups and downs of the economic cycle before.
“Although our LTL shipments per day and overall market share improved,” Freeman said, “we also improved the quality of our revenue during the quarter as well, which contributed to an increase in both our quarterly revenue and earnings per diluted share for the first time in 2023. We believe that underlying demand for our LTL service remained consistent in the quarter, which corresponds to the consistency in our volume trends.”
OD announced its financial results for the fiscal year and Q4 2023. Read Now: https://t.co/pIilJGQ1Oj. pic.twitter.com/FJcWUhiFbR — ODFL, Inc. (@ODFL_Inc) January 31, 2024
ODFL attributed the slight revenue increase in Q4 primarily to a 3% increase in less-than-truckload revenue per hundredweight. This more than offset the 2% decrease in LTL tons per day. The company noted that LTL tons per day decreased during the quarter, but LTL shipments per day and its overall market share improved.
“We were pleased to provide an on-time service performance of 99% and a cargo claims ratio of 0.1% during the quarter, which also supported the ongoing execution of our yield management initiatives,” Freeman said. “We have said many times before that long-term improvement in our operating ratio is dependent upon a consistent improvement in density and yield. Both of which generally require the support of a positive macro environment.”
Freeman added the company improved its yield by maintaining a consistent cost-based approach to pricing despite network density being challenged. The long-term pricing goal is focused on improving the profitability of each customer account through yield improvements. These are designed to offset cost inflation and support further investments in capacity and technology.
“Our team knows firsthand how quickly the demand environment can change in the LTL industry, and we are very experienced at growing our company without sacrificing the quality of our service,” Freeman said. “To do so, however, requires us to maintain a certain amount of excess capacity in our service center network. We are pleased to currently have approximately 30% excess capacity in our network, and we have the ability to expand it further as needed.”
Old Dominion Freight Line ranks No. 10 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, and is ranked No. 2 on the LTL list.
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