Old Dominion Freight Line (NASDAQ: ODFL) beat analyst consensus on both earnings per share (EPS) and revenue in the fourth quarter of 2018. The company reported EPS of $1.95, surpassing Seeking Alpha's reported estimate of $1.76.
The less-than-truckload (LTL) giant also beat estimates on revenue, though by a much smaller margin. The company reported $1.03 billion in total revenue, edging Seeking Alpha's reported analyst estimate of $1.02 billion.
Total revenue was up 15.2 percent year-over-year. LTL-specific revenue was up 15.3 percent, coming in at $1.01 billion. Old Dominion President and CEO Greg Gantt attributed the strong revenue growth to a 12.9 percent increase in LTL revenue per hundredweight and a 2.9 increase in LTL tonnage.
"The increase in our LTL tonnage included a 6.5 percent increase in LTL shipments that was partially offset by a 3.3 percent decrease in LTL weight per shipment. This decrease in LTL weight per shipment, which we expected, is consistent with the trend that we identified and explained earlier in 2018," Gantt said. "Our LTL revenue per hundredweight benefitted from the decrease in weight per shipment as well as the 1 percent increase in average length of haul, as the changes to each of these metrics generally result in an increased yield."
Old Dominion's operating ratio (OR) improved 520 basis points in the fourth quarter, moving from 83.9 percent to 78.7 percent year-over-year. This is the third quarter in a row the company has posted an OR under 80 percent.
"This improvement was primarily the result of quality revenue growth, which allowed us to leverage certain costs, as well as a decrease in our direct operating costs as a percent of revenue," Gantt said. "In addition, our fringe benefit costs as a percent of salaries and wages improved to 30.7 percent as compared to 32.6 percent in the fourth quarter of 2017. The combination of revenue growth and the improvement in our operating ratio drove a 51.1 percent increase in income before taxes to $217.4 million."
Old Dominion also broke company records for annual revenue and profitability in 2018, with annual revenue exceeding $4 billion.
"The consistent growth in our revenue throughout the fourth quarter reflected the strength of the domestic economy and our ongoing ability to win market share," Gantt said. "We continue to win market share by providing shippers with superior service at a fair price, which included 99 percent on-time deliveries and a cargo claims ratio of 0.3 percent in the fourth quarter."
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Old Dominion's Board of Directors has declared a first-quarter dividend of $0.17 per share, which is a 30.8 percent increase to the quarterly cash dividend paid in the first quarter of 2018.
Gantt was optimistic about the company's outlook for 2019.
"Our strong operating performance for the fourth quarter and throughout 2018 reflects the consistent execution of our long-term strategy and relentless focus on delivering value to our customers and shareholders," he said. "As we begin 2019, we remain committed to our proven business model that has produced long-term profitable growth throughout many economic cycles. This includes not only providing shippers with superior service at a fair price, but also consistently investing in our OD Family of employees and service center capacity to sustain the momentum in our business. With a favorable economic outlook and ongoing demand for our services, we believe Old Dominion is well-positioned to produce profitable growth and increase shareholder value in 2019."
Old Dominion's stock was up 1.85 percent right after market open Thursday.
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