Old Dominion ‘encouraged’ as declines moderate in February

Declines successful Old Dominion Freight Line’s cardinal metrics moderated successful February. A 3.3% year-over-year diminution successful gross per time during the period was amended than the 6.8% driblet the less-than-truckload bearer recorded successful January.

“We are encouraged by trends that we person seen make successful our concern … we stay cautiously optimistic astir the absorption of the home economy,” said Marty Freeman, Old Dominion president and CEO, successful a quality release.

Old Dominion’s (NASDAQ: ODFL) tonnage declined 6.8% y/y successful February arsenic a 7% diminution successful regular shipments was lone partially offset by a 0.2% summation successful value per shipment. Revenue per hundredweight (yield) was up 3.5% y/y done the archetypal 2 months of the year. The bearer antecedently reported a 3.1% output summation for January, which implies output was astir 4% higher successful February.

(Yield, excluding substance surcharges, was 4.1% higher y/y successful the archetypal 2 months of the period.)

On a two-year-stacked tonnage comparison, Old Dominion’s measurement declines person continued to amended from a nadir of negative-20.8% successful October to negative-13.9% successful February. Winter storms person been a headwind to volumes implicit the past 3 months.

Manufacturing enactment remained successful enlargement territory for a 2nd consecutive period successful February, according to information released connected Monday.

The Purchasing Managers’ Index registered a 52.4 speechmaking during the caller month, which was 20 ground points little than January. (A speechmaking supra 50 signals enlargement portion 1 beneath 50 indicates contraction.) The dataset has mostly been successful antagonistic territory for much than 3 years.

The caller orders subindex—an indicator of aboriginal activity—came successful astatine 55.8. (Inflections successful PMI information usually pb LTL volumes by a fewer months.)

Old Dominion antecedently guided first-quarter gross successful a scope of $1.25 cardinal to $1.3 billion. The 4th appears to beryllium trending adjacent the apical extremity of range, which would correspond a 5% y/y decline. However, March typically accounts for astir fractional of first-quarter gross for astir carriers.

It besides forecast 150 bps of sequential borderline erosion successful the archetypal quarter, implying a 78.2% operating ratio, which would beryllium 280 bps worse y/y. It usually sees 100 to 150 bps of borderline deterioration from the 4th fourth to the archetypal quarter.

Old Dominion has been carrying the costs associated with holding implicit 35% excess terminal capableness successful anticipation of a crook successful the market. Its web is susceptible of handling 55,000 shipments per time versus the 41,000 it was processing successful the 4th quarter.

“Due to our accordant execution of our strategical plan, we person the disposable capableness indispensable to efficaciously negociate incremental measurement opportunities arsenic the request situation improves,” Freeman said. “As a result, we stay assured that we are successful a unsocial presumption to make profitable gross maturation and summation shareholder worth implicit the agelong term.”