The leaders of Old Dominion Freight Line say they expect freight volumes to pick up in the coming months and have in place the resources to capitalize–including a number of newly trained drivers not yet behind the wheel full-time.
At the same time, the No. 13 carrier of FleetOwner’s 2022 Top For-Hire Fleets list has been trimming costs and people in recent months to safeguard its margins during this demand downturn: Its average number of full-time employees fell by nearly 800 during the fourth quarter to 23,799, and President and CEO Greg Gantt said only some of that drop was due to attrition.
“We’ll continue to make adjustments as needed,” Gantt told analysts on a conference call discussing the company’s fourth-quarter results. “We’ve been able to make these adjustments in the past […] We’ve done it again and we feel good about where we are. We just need to stay on top of it.”
In other personnel news, Gantt also announced that he plans to retire June 30 from the company he has led since May 2018 and where he has worked since late 1994. The 67-year-old will be succeeded by Marty Freeman, who has been Old Dominion’s COO since Gantt was named CEO and is nearing his 31st anniversary with the carrier.
North Carolina-based Old Dominion posted a fourth-quarter profit of $324 million, an increase of 16% from late 2021, on revenues of nearly $1.5 billion, which was up 6% year over year. The company’s operating ratio for the period was 71.2% and it finished the year with a 70.6% operating ratio, an improvement of nearly three points from 2021. Full-year sales and profits both hit records.
While less-than-truckload shipments per day fell nearly 9% during Q4, Old Dominion was able to push through price increases that grew revenue per hundredweight (excluding fuel surcharges) by that same nearly 9%. And speaking to analysts, Freeman echoed recent comments from other trucking executives about an expected upturn, adding that the current drop in freight volumes isn’t driving large clients to look to switch carriers as they did during the Great Recession nearly 15 years ago.
“We aren't seeing anything like we saw back in '08 or '09,” he said. “We're not seeing anything out of the ordinary for the economic circumstances, no major price cutting or anything like that. So I feel pretty confident that the end is probably near what we're going through.”
Because of that, Gantt and Freeman and their team are staying the course with Old Dominion’s capital expenditures, which totaled $775 million in 2022. This year, they plan to spend about $800 million, half of it on tractors and trailers and $300 million on real estate and service centers.
Shares of Old Dominion (Ticker: ODFL) popped nearly 10% on the report and accompanying news of a 33% hike of the company’s dividend. In midday trading, they were changing hands at about $360. Over the past six months, they have now climbed 20%, growing the company’s market capitalization to more than $40 billion.
