Old Dominion Freight Line's Q3 Mixed Bag: EPS Beat, Marginal Revenue Miss Amid Soft Domestic Economy

Old Dominion Freight Line Inc ODFL reported a Q3 FY23 revenue decline of 5.5% Y/Y to $1.515 billion, marginally missing the consensus of $1.52 billion.

This was due to a 6.9% Y/Y decrease in LTL tons per day, partially offset by a 3.1% Y/Y increase in LTL revenue per hundredweight.

LTL tons per day decline reflects a 2.9% Y/Y decrease in LTL shipments per day and a 4.1% Y/Y decrease in LTL weight per shipment. 

Also, revenue decreased by 32.4% Y/Y in the other services segment in the quarter.

Operating income decreased by 10.3% Y/Y to $445.0 million, with an operating ratio of 70.6%, compared to 69.1% a year ago, due to an increase in overhead costs ratio. 

EPS of $3.09 beat the consensus of $2.92.

Old Dominion's operating cash flow was $429.2 million for Q3 2023. The company had $206.6 million in cash and equivalents as of September 30, 2023. Capital expenditures stood at $172.0 million in Q3 2023.

In 9M 2023, ODFL returned $368.1 million through share repurchases and $131.5 million via cash dividends to the stockholders.

Marty Freeman, President and CEO, said, "Old Dominion's third quarter financial results reflect continued softness in the domestic economy but also a number of encouraging trends. Our LTL shipments per day averaged 49,670 during the third quarter after averaging 47,077 per day through the first six months of the year. Our team responded both efficiently and effectively to this positive inflection in volumes by continuing to offer superior service that included 99% on-time service performance and a 0.1% cargo claims ratio. The consistency of our best-in-class service has continued to differentiate Old Dominion in the marketplace, which we believe supports our ongoing yield-management initiatives and ability to win market share over the long term."

2023 Outlook: The company now expects aggregate capital expenditure of approximately $720 million (vs. $700 million earlier), including planned expenditures of $260 million for real estate and service center expansion projects, $385 million for tractors and trailers, and $75 million for information technology and other assets.

Price Action: ODFL shares are trading lower by 1.15% at $381.48 on the last check Wednesday.

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