Yahoo Finance Old Dominion Freight Line Inc (ODFL) (Q1 2024) Earnings Call Transcript Highlights: Record EPS ...
Revenue: $1.5 billion, a 1.2% increase year-over-year.
Earnings Per Diluted Share (EPS): Increased by 3.9% to $1.34, setting a new record for Q1.
Operating Ratio: Increased slightly by 10 basis points to 73.5%.
Capital Expenditures: $119.5 million for Q1 2024; $757.3 million total in 2023.
Cash Flow from Operations: $423.9 million for the quarter.
Share Repurchase: $85.3 million used for share repurchases in Q1.
Dividends: Paid out $56.6 million in cash dividends.
Effective Tax Rate: 25.6% for Q1 2024, with an anticipated rate of 25.4% for Q2.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Is 2Q the quarter where we see the best of what this industry looks like in a post-yellow environment, and if tonnage picks up and you have 2024 pricing that comes in, how do we expect 2Q to trend versus seasonality? A: (Adam N. Satterfield - CFO, Old Dominion Freight Line) The second quarter typically sees a big acceleration in revenue, with a 10-year average increase of 8.7% from the first to the second quarter. However, the actual growth starting in April is not at those levels yet. The company is encouraged by the year-over-year revenue growth and sequential improvements in volumes into April, but it's not at normal seasonal levels. The second quarter operating ratio will depend heavily on top-line performance.
Q: There was a comment in the release about some recent developments suggesting overall demand for your services may be improving. Could you provide more context around what that comment was referring to? A: (Adam N. Satterfield - CFO, Old Dominion Freight Line) The underlying demand has felt relatively consistent but seems to be improving slightly. The company has seen sequential acceleration in volumes from January through April. Factors such as the ISM index moving back above 50% and improvements in weight per shipment suggest that the industrial activity might start improving, which could increase the demand for LTL services.
Q: Can you provide more color around the yield side of the equation, particularly around mix and core pricing as contracts come up? A: (Adam N. Satterfield - CFO, Old Dominion Freight Line) The company continues to target yield improvements that exceed cost inflation and support the capital expenditure program. There has been no change in the pricing philosophy or the overall pricing environment. The slowdown in revenue per hundredweight in April is attributed to certain mix changes and does not reflect a change in the pricing environment.
Q: As you look forward and wait for that inflection, are there things you are looking for that the market may have changed and the strategy does require a tweak here or there? A: (Adam N. Satterfield - CFO, Old Dominion Freight Line) The company continues to monitor business levels and market share trends. The strategic advantages that have allowed Old Dominion to outgrow competitors in strong growth periods are still in place. The company is prepared to respond to customers' needs when they see their businesses improving.
Q: Regarding the excess capacity noted about 30%, could you remind us of the current capacity expansion plan maybe in the near term or over the next couple of years? A: (Adam N. Satterfield - CFO, Old Dominion Freight Line) Old Dominion tries to maintain at least 25% excess capacity to be prepared for potential increases in demand. The current 30% capacity includes some expansions from 2022. The company aims to keep this level of excess capacity to handle any influx of business as the economy improves.
Q: How do you view the truckload market here, and do you think some freight that moved over to truckload with the disruption with Yellow will come back to LTL? A: (Kevin M. Freeman - CEO, Old Dominion Freight Line) Some of the Yellow freight likely moved to full truckload carriers due to the slowness in the truckload market. It is believed that this freight will return to the LTL market once the truckload market picks back up, which is expected to coincide with the overall improvement in the LTL market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
