Old Dominion Freight Line, Inc.

Old Dominion Freight Line produced a highly disappointing set of results as a result of the persistent downturn in the local economy and the volume decline. Old Dominion’s revenue fell by 3.7% due to an 11.9% decline in LTL tonnage. The revenue decline and slight deterioration in Old Dominion’s operating ratio caused the earnings per diluted share for the quarter to decline by 0.8% to $2.58. The company’s market share has remained mostly stable. Their daily shipments were relatively steady sequentially and increased marginally each month as the first quarter progressed. Also, many of the fixed cost categories saw an increase as a percentage of revenue due to the deleveraging effect brought on by the drop in sales, the timing of some expenses, and the importance of others. The company’s general supplies and expenses climbed by 30%, but its depreciation and amortization costs increased by 80%. Looking ahead, the company anticipates that the softer demand environment will persist. The company intends to execute its long-term growth strategies and maintain its position in the industry. We give Old Dominion Freight Line an ‘Underperform’ rating with a revised target price.