Old Dominion Freight Line handled nearly 2,600 more shipments each day in the third quarter than it did in the first six months of the year. The lift in volumes was tied to Yellow’s exit as broader trends “reflect continued softness in the domestic economy.”
The less-than-truckload carrier reported third-quarter earnings per share of $3.09 Wednesday before the market opened. The result was 18 cents better than the consensus estimate but 27 cents lower year over year (y/y).
“We responded to the increase in market share during the quarter by continuing to provide our customers with superior service at a fair price, which remains the foundation of our business model,” stated Marty Freeman, Old Dominion president and CEO. “We were well-positioned to respond to the inflection in volumes due to our consistent investment in service center capacity, equipment, technology, and most importantly, our people.”
Table: Old Dominion’s key performance indicators
Revenue was down 6% y/y to $1.52 billion as a 7% tonnage decline was partially offset by a 3% increase in revenue per hundredweight, or yield (yield was up 9% excluding fuel surcharges). The yield metric benefited from a 4% decline in weight per shipment.
With daily shipments just under 50,000, the Old Dominion held the 6% lift in volumes it has seen since Yellow’s departure.
Yellow ceased operations at the end of July but many shippers and 3PLs began looking for alternative capacity options weeks before, meaning Yellow’s shutdown positively impacted results for carriers for the bulk of the third quarter.
Compared to the second quarter, Old Dominion’s (NASDAQ: ODFL) tonnage increased 4% as shipments were up 6% and weight per shipment declined 2%. Yield excluding fuel was 3% higher but only slightly positive when accounting for the lower shipment weights.
The company posted a 70.6% operating ratio in the quarter, 150 basis points worse y/y. In addition to the revenue decline, the company called out higher employee benefits and depreciation costs as the detractors.
“Maintaining excess capacity during slower economic environments comes at a cost, but we believe having available capacity for our customers when they need it is a critical element of our value proposition,” Freeman said.
The third-quarter OR improved 170 bps from the second quarter.
The company will host a call at 10 a.m. Wednesday to discuss third-quarter results.
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