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Old Dominion Freight Line saw revenue and net income rise for the first quarter of 2021, the company reported April 22.
The Thomasville, N.C.-based less-than-truckload carrier posted net income of $199.4 million, or $1.70 a diluted share, for the three months ending March 31. That represents a 49.7% increase from $133.2 million, $1.11, during Q1 2020. Total Q1 revenue increased by 14.1% to $1.13 billion from $987.4 million a year ago.
The results surpassed the expectations of Wall Street analysts, who were looking for EPS of $1.58 and Q1 revenue of $1.11 billion, according to Zacks Consensus Estimate.
Old Dominion reported that LTL shipments for Q1 increased 6.9% to 2.9 million from 2.7 million last year. Revenue per shipment increased 7% to $384.76 from $359.64.
“Old Dominion produced strong, profitable growth in the first quarter of 2021 that included double-digit increases in both revenue and operating income,” CEO Greg Gantt said in a statement. “We are encouraged by these trends and believe the combination of our value proposition, existing capacity and ongoing investments to expand our capacity will support future revenue growth opportunities.”
He also credited the company’s long-term strategic plan to improve service and capacity.
“Our team’s efforts have created a unique position for us within the LTL industry that provides a strong foundation to win additional market share,” Gantt said. He noted that capacity constraints in the industry as the domestic economy improved helped Old Dominion pick up some of that market share.
“Our proven strategy of investing in service center capacity ahead of anticipated growth has also provided us with the capacity advantage in the marketplace,” added Old Dominion CFO Adam Satterfield during an April 22 conference call with investors. “The strategy is different from any of our competitors as we believe the average number of service centers operated by the other large LTL carriers has decreased over the past 10 years.” Satterfield said the company has about 25% excess capacity within its service center network, right in line with its long-term targets.
“We plan to further expand our network this year to stay ahead of our growth,” Satterfield said. “Our plan is to ensure that our network is never a limiting factor to growth.”
Gantt also noted improvements in freight density created operating leverage that helped improve aggregate overhead costs. Operating efficiencies and an increase in yield also contributed to improvements in direct operating costs as a percent of revenue, he said. .
“Our first-quarter operating ratio improved to 76.1%, which saw improvements in both our direct operating costs and overhead cost as a percent of revenue,” Satterfield said. “We have said many times before that the long-term improvement for operating ratio requires an improvement in density in yield, both of which are generally supported by a favorable macro-economic environment. Strength of our first-quarter results reflects how important these factors are to our success.”
He added, “We improved our overhead cost as a percent of revenue during the first quarter, primarily by successfully leveraging our revenue growth.”
Gantt noted the company plans to continue adding drivers during the second quarter as volume trends continue to accelerate.
Old Dominion Freight Line ranks No. 8 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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