Old Dominion Posts Record Annual Result
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Old Dominion Freight Line reported gains in fourth-quarter profit and revenue and record results for the entire year.
The Thomasville, N.C.-based less-than-truckload carrier said fourth-quarter net income jumped 46.9% to $278.8 million, or $2.41 diluted earnings per share, compared with $189.8 million, $1.61, in the same period a year earlier.
Revenue increased 31.4% to $1.4 billion from $1.1 billion.
“We are encouraged by the momentum of our business and believe we are uniquely positioned to win market share in 2022,” CEO Greg Gantt said in a Feb. 2 conference call with industry analysts and investors.
The company logged a 16.1% gain in less-than-truckload revenue per hundredweight and a 14.3% rise in tons per day. Revenue per shipment excluding fuel surcharges rose 6.2%
For the full year, the motor carrier said net income rose 53.8% to a record $1.03 billion, $8.89, from $672.7 million, $5.68, in the prior year. Likewise, revenue grew 30.9% to a record $5.3 billion from $4 billion.
Smart pricing helped Old Dominion achieve its improved results, Gantt said.
“The increase in LTL revenue per hundredweight also reflects the success of our long-term pricing strategy,” he said, “which is to consistently improve the profitability of each customer account by increasing our yields to both offset cost inflation and support further investments in capacity and technology.”
In one measure of the improvement in Old Dominion’s operations, operating ratio — the percentage that expenses represent of revenue — fell to 73.6 in the fourth quarter from 76.3 in the same period a year earlier. The company wants to see further improvement in reducing operating costs to lower the operating ratio into the high-60 range.
The motor carrier continues to add to its headcount to keep up with surging freight demand, growing by 20% to 23,610 employees during the fourth quarter. That included adding 1,700 drivers in what Gantt described as a “challenging labor market.” He said Old Dominion would continue to add employees this year to support anticipated growth.
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Old Dominion plans to spend about $825 million on capital expenses this year, with about $300 million going to expand its service center network.
“We never want our service center network to be a limiting factor to growth,” Gantt said.
Gantt said the company will add eight to 10 new centers this year and sees the expansion as a strategic move to grow capacity when competitors face constraints.
“Our biggest wins have come from our ability to service the customers. A lot of our competitors have not been able to provide the capacity that we have,” he said.
The motor carrier also will spend about $485 million on new tractors and trailers this year.
“We would frankly like to spend more, but we have been limited by several suppliers that are facing manufacturing challenges,” Chief Financial Officer Adam Satterfield, said. “We were fortunate to enter the pandemic with one of the youngest fleets in our industry.”
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That allowed the company to use existing equipment that otherwise would have been replaced this year, he said. But the strategy might result in higher maintenance and repair expenses this year, he said.
“We believe our current fleet and expected additions will be enough to satisfy further growth,” Satterfield said.
The company expects the same favorable trends it saw in 2021 to continue.
“From talking with our customers, we expect continued growth,” Gantt said. “E-Commerce continues to drive the LTL market, and the industrial economy’s been strong.”
Old Dominion Freight Line ranks No. 10 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.