Old Dominion Freight Line Inc. (ODFL, Financial) filed Quarterly Report for the period ended 2010-09-30.
Old Dominion Freight Line Inc. has a market cap of $1.6 billion; its shares were traded at around $28.53 with a P/E ratio of 25.03 and P/S ratio of 1.28. Old Dominion Freight Line Inc. had an annual average earning growth of 15.1% over the past 10 years.ODFL is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management, Steven Cohen of SAC Capital Advisors.
The 22.7% and 15.8% increases in revenue for the third quarter and the first nine months of 2010, respectively, resulted from both increases in tonnage and revenue per hundredweight. Tonnage increased 21.5% and 13.7% for the three- and nine-month periods ended September 30, 2010, respectively, when compared to the same periods of 2009. The increase in tonnage for both periods was due to a combination of increased shipments and increased weight per shipment. The growth in tonnage per day and shipments per day accelerated during the third quarter, which we believe reflects our gain in market share as well as general economic improvement. Weight per shipment increased 6.9% and 6.3% for the third quarter and first nine months of 2010, respectively, as compared to the same periods of 2009. We believe the increase in our weight per shipment metrics indicates an improving economy,
Revenue per hundredweight increased 1.1% to $13.04 from $12.90 in the third quarter of 2009 and increased 2.1% to $12.94 from $12.67 for the first nine months of 2009. The increase in revenue per hundredweight for both of these periods primarily reflects increases in fuel surcharges, which are designed to offset fluctuations in the cost of petroleum-based products and are one of many components included in the overall price for our services. Fuel surcharge revenue increased to 12.0% of revenue in the third quarter and first nine months of 2010 from 10.3% in the prior-year quarter and 9.1% in the first nine months of 2009. Excluding fuel surcharges, revenue per hundredweight declined 0.8% and 1.1% for the three and nine months ended September 30, 2010, respectively, primarily due to the negative effect on this metric from the increases in weight per shipment. We believe our ability to initiate necessary price increases is strengthening, as evidenced by an improvement in the year-over-year change in revenue per hundredweight, excluding fuel surcharges, for each month during the third quarter of 2010. In addition, revenue per hundredweight, excluding fuel surcharges, for the third quarter of 2010 improved 1.6% sequentially from the second quarter of 2010.
Salaries, wages and benefits decreased to 53.9% and 54.6% of revenue for the third quarter and first nine months of 2010, respectively, from 56.9% and 58.0% in the comparable periods of the prior year. Despite a 2% across-the-board salary and wage increase on September 3, 2010 and no major changes to our benefit plans, both cash compensation and benefit costs proportionally improved as a percent of revenue. The improvement in our salary and wage costs is due to the increased density within our network that allowed us to leverage the additional volumes at lower unit costs and our increased use of purchased transportation to help manage the significant increase in our tonnage. As a result, driver wages decreased as a percent of revenue to 21.6% and 21.7% for the third quarter and first nine months of 2010, respectively, from 22.9% and 23.3% in the comparable periods of 2009. In our linehaul operations, our laden load average increased 2.5% and 2.0% for the third quarter and first nine months of 2010, respectively. Our P&D shipments per hour decreased 0.5% for the third quarter of 2010 but increased 0.5% for the first nine months of 2010. P&D stops per hour decreased 1.3% for the third quarter and were flat for the year-to-date period. Although some of our productivity measures did not improve, several of these metrics reflect the cost to employ and train new employees to support our growth while allowing us to maintain our high quality service.
Operating supplies and expenses increased to 15.8% of revenue from 14.9% for the third quarter of 2009 and increased to 16.2% of revenue from 14.2% for the first nine months of 2009. The increase for both periods is primarily due to the increase in diesel fuel costs, excluding fuel taxes, which is the largest component of operating supplies and expenses. In the third quarter of 2010, diesel fuel costs, excluding fuel taxes, increased 37.2% from the comparable prior-year period due to a 17.8% increase in gallons consumed and a 13.1% increase in our average price per gallon. Diesel fuel costs, excluding fuel taxes, increased 44.6% from the first nine months of 2009 due primarily to a 25.0% increase in our average price per gallon, as well as a 9.2% increase in gallons consumed. We do not use diesel fuel hedging instruments and are therefore subject to market price fluctuations.
Depreciation and amortization expense decreased to 4.9% and 5.6% of revenue for the third quarter and first nine months of 2010, respectively, from 7.5% and 7.6% of revenue for the same periods of 2009. Our capital expenditure requirements have been reduced for 2010 due to the available capacity throughout the year in our fleet and service center network. As a result of our reduced capital expenditures, the improvement as a percent of revenue is primarily attributable to the operating leverage associated with the increase in tonnage. In addition, the quarter and year-to-date periods reflect a reduction in depreciation expense resulting from changes in the estimated useful lives and salvage values
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Old Dominion Freight Line Inc. has a market cap of $1.6 billion; its shares were traded at around $28.53 with a P/E ratio of 25.03 and P/S ratio of 1.28. Old Dominion Freight Line Inc. had an annual average earning growth of 15.1% over the past 10 years.ODFL is in the portfolios of Columbia Wanger of Columbia Wanger Asset Management, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
The significant growth in our tonnage has resulted in improved operating density, which is reflected in our results for the third quarter and first nine months of 2010. In addition, the pricing environment improved during the third quarter due to the pricing initiatives by many of our competitors and the announcement of general rate increases that will take effect in the fourth quarter. As a result of these factors and a highly productive workforce, we were able to generate greater operating leverage and improve our financial results over the comparable prior-year periods. For the third quarter of 2010, our net income increased 132.3% to $24.4 million as compared to the third quarter of 2009 and our operating ratio decreased to 89.0% from 93.8% in the comparable period of the prior-year. Net income increased 112.8% to $53.6 million for the first nine months of 2010 and our operating ratio decreased to 90.8% from 94.5% in the first nine months of 2009. Our third quarter and year-to-date 2010 results also reflect reductions in our depreciation and amortization expenses of approximately $3.4 million and $9.4 million, respectively, due to changes in the estimated useful lives and salvage values of certain equipment, which are described further under Critical Accounting Policies below.The 22.7% and 15.8% increases in revenue for the third quarter and the first nine months of 2010, respectively, resulted from both increases in tonnage and revenue per hundredweight. Tonnage increased 21.5% and 13.7% for the three- and nine-month periods ended September 30, 2010, respectively, when compared to the same periods of 2009. The increase in tonnage for both periods was due to a combination of increased shipments and increased weight per shipment. The growth in tonnage per day and shipments per day accelerated during the third quarter, which we believe reflects our gain in market share as well as general economic improvement. Weight per shipment increased 6.9% and 6.3% for the third quarter and first nine months of 2010, respectively, as compared to the same periods of 2009. We believe the increase in our weight per shipment metrics indicates an improving economy,
Revenue per hundredweight increased 1.1% to $13.04 from $12.90 in the third quarter of 2009 and increased 2.1% to $12.94 from $12.67 for the first nine months of 2009. The increase in revenue per hundredweight for both of these periods primarily reflects increases in fuel surcharges, which are designed to offset fluctuations in the cost of petroleum-based products and are one of many components included in the overall price for our services. Fuel surcharge revenue increased to 12.0% of revenue in the third quarter and first nine months of 2010 from 10.3% in the prior-year quarter and 9.1% in the first nine months of 2009. Excluding fuel surcharges, revenue per hundredweight declined 0.8% and 1.1% for the three and nine months ended September 30, 2010, respectively, primarily due to the negative effect on this metric from the increases in weight per shipment. We believe our ability to initiate necessary price increases is strengthening, as evidenced by an improvement in the year-over-year change in revenue per hundredweight, excluding fuel surcharges, for each month during the third quarter of 2010. In addition, revenue per hundredweight, excluding fuel surcharges, for the third quarter of 2010 improved 1.6% sequentially from the second quarter of 2010.
Salaries, wages and benefits decreased to 53.9% and 54.6% of revenue for the third quarter and first nine months of 2010, respectively, from 56.9% and 58.0% in the comparable periods of the prior year. Despite a 2% across-the-board salary and wage increase on September 3, 2010 and no major changes to our benefit plans, both cash compensation and benefit costs proportionally improved as a percent of revenue. The improvement in our salary and wage costs is due to the increased density within our network that allowed us to leverage the additional volumes at lower unit costs and our increased use of purchased transportation to help manage the significant increase in our tonnage. As a result, driver wages decreased as a percent of revenue to 21.6% and 21.7% for the third quarter and first nine months of 2010, respectively, from 22.9% and 23.3% in the comparable periods of 2009. In our linehaul operations, our laden load average increased 2.5% and 2.0% for the third quarter and first nine months of 2010, respectively. Our P&D shipments per hour decreased 0.5% for the third quarter of 2010 but increased 0.5% for the first nine months of 2010. P&D stops per hour decreased 1.3% for the third quarter and were flat for the year-to-date period. Although some of our productivity measures did not improve, several of these metrics reflect the cost to employ and train new employees to support our growth while allowing us to maintain our high quality service.
Operating supplies and expenses increased to 15.8% of revenue from 14.9% for the third quarter of 2009 and increased to 16.2% of revenue from 14.2% for the first nine months of 2009. The increase for both periods is primarily due to the increase in diesel fuel costs, excluding fuel taxes, which is the largest component of operating supplies and expenses. In the third quarter of 2010, diesel fuel costs, excluding fuel taxes, increased 37.2% from the comparable prior-year period due to a 17.8% increase in gallons consumed and a 13.1% increase in our average price per gallon. Diesel fuel costs, excluding fuel taxes, increased 44.6% from the first nine months of 2009 due primarily to a 25.0% increase in our average price per gallon, as well as a 9.2% increase in gallons consumed. We do not use diesel fuel hedging instruments and are therefore subject to market price fluctuations.
Depreciation and amortization expense decreased to 4.9% and 5.6% of revenue for the third quarter and first nine months of 2010, respectively, from 7.5% and 7.6% of revenue for the same periods of 2009. Our capital expenditure requirements have been reduced for 2010 due to the available capacity throughout the year in our fleet and service center network. As a result of our reduced capital expenditures, the improvement as a percent of revenue is primarily attributable to the operating leverage associated with the increase in tonnage. In addition, the quarter and year-to-date periods reflect a reduction in depreciation expense resulting from changes in the estimated useful lives and salvage values
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