Old Dominion Freight Line Reports Record Revenue for Q2
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Old Dominion Freight Line saw net income increase year-over-year by 82.4% during the second quarter of 2021, the company reported July 28.
The Thomasville, N.C.-based less-than-truckload carrier posted net income of $269.6 million, or $2.31 a diluted share, for the three months ending June 30. That compared with $147.8 million, or $1.25, during the prior-year quarter. Total revenue rose 47.2% to a record $1.32 billion from $896.2 million.
“The Old Dominion team produced another record-breaking quarter and established new company records for quarterly revenues, operating ratio and earnings per diluted share,” ODFL President Greg Gantt said during a conference call with investors. “While the comparison of our numbers with the second quarter of 2020 is somewhat skewed due to the impact of the pandemic-related shutdowns last year, our second-quarter business momentum this year helped to drive the improvement in our revenue and profitability.”
Gantt
ODFL has worked to bolster its shipping network and improve profitability as part of a long-term strategic plan. A major component of that plan has involved investing in new and existing service centers; the company in February added nine service locations in new and existing markets, and Gantt credited the plan for helping lift quarterly results.
“This plan has guided us through many economic cycles and it is currently driving impressive growth in this strong market,” Gantt said. “Two key elements of this plan are delivering superior service at a fair price and consistently investing in capacity to help ensure that our network is never a limiting factor to our growth.
The results surpassed expectations by investment analysts on Wall Street, which had been looking for $2.17 per share and quarterly revenue of $1.23 billion, according to Zacks Consensus Estimate.
LTL shipments increased 33.5% during the quarter to 3.3 million from 2.5 million during the same time last year. This was partially affected by a 4% decrease in LTL weight per shipment. Revenue per shipment increased 10.3% to $394.49 from $357.65 last year. The average length per haul increased 1.2% to 930 miles from 919 miles.
ODFL Second-Quarter 2021 by Transport Topics on Scribd
The report noted the decrease in LTL weight per shipment was due primarily to changes in the mix of freight from the prior-year quarter. That includes the impact of operational changes made earlier in the year that reduced the number of heavy-weighted shipments in the company’s network. Yield metrics benefited from the decrease in weight per shipment as well as the 1.2% increase in average length of haul.
“There are three major elements of capacity within LTL — doors at our service center, our equipment and our people,” Gantt said. “Doors can be the most limiting form of capacity in the short term, which is why we try to stay several years ahead of our anticipated growth curve. We have invested $1.7 billion in our service center network over the past 10 years, which has allowed us to expand our door count by over 50%.”
Operating expenses in Q2 were mostly driven by salaries, wages and benefits which — at $611.5 million — accounted for 46.4% of the total. That was followed by operating supplies and expenses at $137.6 million, or 10.4%, and general supplies and expenses at $34.4 million, or 2.6%.
While Cowen and Co. analyst Jason Seidl credited the company for topping the estimate, he noted that some of ODFL’s rising costs — such as purchased transportation and the nine new service terminals — will remain elevated.
“Wages and benefits improved primarily due to improved efficiencies in operations, which was more than offset by increased costs due to fuel and purchased transportation which ODFL had to lean into in order to support customer relationships,” Seidl wrote in a report. “While the company continues to work through capacity and improve efficiency, we expect purchased transportation to remain at elevated levels through the back half of the year.”
Old Dominion Freight Line ranks No. 10 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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