Old Dominion posts higher 1Q net income

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Old Dominion Freight Line on Wednesday, April 28, announced financial results for the first quarter ended March 31. Revenue was $317.8 million, an increase of 7.7 percent from $295.1 million for the first quarter of 2009. Net income was $7.7 million, up from $4.0 million. Old Dominion’s operating ratio improved to 94.8 percent from 96.6 percent.

The company said the first-quarter results reflect a reduction in depreciation expense that was a result of changes to the estimated useful lives and salvage values primarily for the company’s tractor and trailer fleet. Effective Jan. 1, 2010, the estimated useful life for most of the company’s tractors was extended to nine years from seven years, and the estimated useful life for most of its trailers was extended to 15 years from 12 years. As a result of the impact on depreciation from these changes, net income increased by about $1.3 million, and the company’s operating ratio was reduced by 66 basis points. The company expects an increase to net income in 2010 of about $7.6 million resulting from these changes.

“We are pleased with Old Dominion’s operating and financial results for the first quarter, which included year-over-year earnings growth for the first time since the third quarter of 2008,” said Earl Congdon, executive chairman of Old Dominion, based in Thomasville, N.C. “Our tonnage increased 5.8 percent, our revenue increased 7.7 percent, and our net income increased 93.8 percent in comparison to the first quarter of 2009. These results demonstrate the continued effectiveness of the strategies that guided us through the recession, and we believe these same strategies will drive our future profitable growth. We also believe these results, as well as our operating ratio, will once again compare very favorably with our industry peer group.”

Congdon said Old Dominion’s revenue increase was due to the increase in tonnage as well as increased fuel surcharges caused by rising fuel prices. “During the first quarter, we continued to enhance our service-center infrastructure by relocating four service centers to larger facilities,” he said. “Our capital expenditures for the quarter totaled $27.5 million, and we continue to anticipate total capital expenditures for the year in a range of $90 million to $100 million. Consistent with the first quarter, we expect to fund these expenditures primarily through cash provided by operating activities. Our ratio of debt to total capital at the end of the first quarter 2010 was 34.0 percent, which was unchanged from year-end 2009.”

Congdon said the company is encouraged by its results for the first quarter and its tonnage and revenue trends in April. “Old Dominion is focused on continuing to execute the business strategies that contributed to our industry-leading results,” he said. “We are confident the continued implementation of our business model, combined with industry trends favoring providers of integrated, comprehensive, low-cost and high-quality services, will support our long-term growth while also increasing shareholder value.”