First look: Old Dominion Q3 earnings

Old Dominion Freight Line reported better-than-expected third-quarter results on Wednesday ahead of the market open. Volume declines were again partially offset by higher yields and cost takeouts.

The less-than-truckload carrier posted earnings per share of $1.28, 6 cents ahead of consensus but 15 cents lower year over year. A Higher tax rate was a 3-cent drag on the quarter.

Analysts lowered forecasts heading into the print as industrial demand weakness continued and expectations for peak season soured. (The carrier’s third-quarter consensus estimate stood at $1.32 three months ago.)Table: Old Dominion’s key performance indicators

Old Dominion (NASDAQ: ODFL) reported revenue of $1.41 billion, which was slightly ahead of the consensus estimate but 4% lower y/y. Tonnage continued to fall even as the y/y comps got easier. Total tonnage declined 9% y/y, partially offset by a 5% increase in yield (revenue per hundredweight).

The tonnage decline was the combination of an 8% decline in shipments and a 1.2% dip in weight per shipment. The yield metric benefitted from the lower shipment weights, but a 1.5% decline in length of haul offset the tailwind.

A 74.3% operating ratio (inverse of operating margin) was 160 basis points worse y/y but 30 bps better than the second quarter. The company normally sees no change to 50 bps of deterioration from the second to the third quarter, and management previously flagged the potential for 80 to 120 bps of sequential deterioration this year.

Cost per shipment was up 6.2% with revenue per shipment up just 3.4%, a 280-bp negative spread. However, that was 110 bps better sequentially.SONAR: Longhaul LTL Monthly Cost per Hundredweight, Class 125+ Index. Less-than-truckload monthly indices are based on the median cost per hundredweight for four National Motor Freight Classification groupings and five different mileage bands. To learn more about SONAR, click here.

“Our proven track record of long-term financial success is grounded in our ability to consistently execute on the core elements of our strategic plan, and we continue to believe that we are the best positioned carrier to respond to a positive inflection in demand when it materializes,” said Old Dominion President and CEO Marty Freeman in a news release. “This long-term plan has guided us through many economic cycles and created an unmatched value proposition in our industry.”

Shares of ODFL were up 4.2% in pre-market trading on Wednesday.

Old Dominion will host a conference call at 10 a.m. EDT on Wednesday to discuss third-quarter results.

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