Operating Ratio Improves 190 Basis Points to 82.0%
Old Dominion Freight Line, Inc. today announced financial results for the three-month period ended March 31, 2019.
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“Old Dominion began 2019 with strong financial results for the first quarter, which included growth in our pre-tax income that exceeded 20.0% for the eighth straight quarter,” said Greg C. Gantt, President and Chief Executive Officer of Old Dominion. “Total revenue growth of 7.1% was slightly lower than we originally anticipated, but the quality of our revenue growth and our focus on managing costs drove the 190 basis point improvement in our operating ratio. The combination of these factors also contributed to the 22.3% increase in our pre-tax income and 23.3% increase in earnings per diluted share.
“LTL revenue increased in the first quarter due to a 9.6% increase in LTL revenue per hundredweight that was partially offset by a 3.0% decline in LTL tonnage for the quarter. The decrease in LTL tonnage primarily reflects a 4.0% decrease in LTL weight per shipment that was partially offset by a 1.1% increase in LTL shipments. The decrease in LTL weight per shipment was expected and also contributed to the improvement in our LTL revenue per hundredweight. We have been encouraged by the continued strength in our yield trends, and we intend to maintain our disciplined approach to pricing to support our long-term strategic plan and improve profitability.
“Our operating ratio improved 190 basis points to 82.0% from 83.9% for the first quarter of 2018. We gained operating efficiencies during the first quarter and, as a result, were able to improve our direct operating costs as a percent of revenue. Our overhead costs also improved as a percent of revenue despite the 60 basis point increase in our depreciation costs. These depreciation costs increased as a percent of revenue due to the deleveraging effect of slower revenue growth as well as the significant amount of capital invested in our operations in recent years. We continue to believe that our investments in capacity and technology are necessary to support both our customers’ needs and our long-term growth initiatives, and we remain committed to doing so as part of our long-term strategic plan.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was $206.2 million for the first quarter of 2019. The Company had $280.6 million in cash and cash equivalents at March 31, 2019.
Capital expenditures were $70.7 million for the first quarter of 2019. The Company expects its capital expenditures for 2019 to total approximately $480 million, including planned expenditures of $220 million for real estate and service center expansion projects; $165 million for tractors and trailers; and $95 million for information technology and other assets. The Company reduced its planned expenditures for tractors during the first quarter by approximately $10 million to balance its fleet with current shipment trends.
Old Dominion returned $44.4 million of capital to its shareholders in the first quarter of 2019, consisting of $13.8 million of cash dividends and $30.6 million of share repurchases.
