Old Dominion beats quarterly profit estimates on higher pricing

By Aishwarya Jain

April 23 - Old Dominion Freight Line ODFL.O beat first-quarter profit estimates as stronger pricing helped offset a steep drop in shipments, sending its shares up 3% on Wednesday.

Less-than-truckload (LTL) revenue per hundredweight, a key performance indicator for freight companies, rose 4.1% for the quarter, excluding fuel surcharges.

"The decrease in our first-quarter revenue was primarily due to a 6.3% decrease in LTL tons per day that was partially offset by an increase in LTL revenue per hundredweight," CEO Marty Freeman said.

A slump in freight volumes has continued into its third year, with no immediate signs of a market turnaround, prompting some industry experts to term it as a "freight recession."

"There continues to be uncertainty with the economy, which can mean that a full recovery in our business trends might take additional time," Marty said on the earnings call.

Old Dominion's LTL business, in which shipments from multiple carriers are carried on the same truck, handled a total of 2.09 million tons in the first quarter, down 7.8% from a year ago.

"Volumes remain the primary risk, with tariffs and broader economic uncertainty threatening or at least delaying consumption and investment, which would ultimately translate into lower freight volumes throughout the network," said Bruce Chan, analyst at Stifel.

The carrier, which caters to sectors such as retail, manufacturing, automotive and healthcare, posted first-quarter revenue of $1.37 billion, roughly in line with Wall Street estimates, but down nearly 6% from a year earlier.

The company's operating ratio, a key metric indicating operating expenses as a percentage of revenue, rose 190 basis points to 75.4% from a year ago.

A higher operating ratio reflects an increase in costs, suggesting lower profitability.

The Thomasville, North Carolina-based company's profit per share fell 11.2% to $1.19 per share, compared with analysts' estimates of $1.14, according to data compiled by LSEG.