Old Dominion Freight Line (NASDAQ: ODFL) reported Q4 EPS of $1.61, $0.04 better than the analyst estimate of $1.57. Revenue for the quarter came in at $1.07 billion versus the consensus estimate of $1.05 billion.

Greg C. Gantt, President and Chief Executive Officer of Old Dominion, commented, “Old Dominion’s fourth quarter financial results include a 6.4% increase in revenue and 34.2% increase in earnings per diluted share. The acceleration in our revenue growth during the fourth quarter was driven by an improving domestic economy and increased demand for our industry-leading service. In addition, our consistent and long-term investments in service centers and equipment provided us with network capacity at a time when capacity within the transportation industry was generally limited. We were pleased to finish 2020 with strong financial results and believe the combination of our value proposition and available capacity position us to win additional market share in 2021.

“The Company’s revenue increased 6.4% in the fourth quarter primarily due to a 4.9% increase in LTL tons and a 1.1% increase in LTL revenue per hundredweight. Our yield metrics were negatively affected by the decrease in the average price of diesel fuel, as LTL revenue per hundredweight, excluding fuel surcharges, increased 4.2% when compared to the fourth quarter of 2019. The ongoing and consistent improvement in this yield metric is supported by the quality of our service and reflects our long-term pricing philosophy. We believe a consistent improvement in yield is necessary to offset our cost inflation while also supporting further investments in capacity and technologies that are designed to improve operating efficiencies and customer service.

“Our operating ratio improved to 76.3%, which was a new fourth-quarter Company record. This improvement was achieved through quality revenue growth and increased operating efficiencies. The operating leverage created by the increases in both freight density and yield allowed us to improve many of our cost categories as a percent of revenue. We did experience a 90 basis point increase in purchased transportation costs as a percent of revenue, however, as we used these services to supplement our workforce in the fourth quarter to support accelerating volumes. Our team efficiently handled the increase in volumes while also delivering on-time service of 99% and a historically low cargo claims ratio of 0.1% during the quarter.”

Summary

Mr. Gantt concluded, “Old Dominion produced strong financial results for the fourth quarter as the operating environment continued to improve. Despite the challenges associated with the COVID-19 pandemic and slight decrease in our annual revenue, our annual results include a Company-record operating ratio of 77.4% that contributed to the double-digit growth in earnings per diluted share. We believe these financial results reflect the consistent execution of our long-term strategic plan that includes our unwavering commitment to deliver superior service at a fair price. In addition, we will continue to invest in our service center network, our technology and, most importantly, our OD Family of employees to further enhance our value proposition and support opportunities for additional growth. We are encouraged by the improving demand environment and believe continued execution of our strategic plan will produce profitable growth and increased shareholder value in 2021.”

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