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Old Dominion Freight Line Inc.’s profit and revenue rose in the third quarter as freight demand picked up as the economy started to rebound from the COVID-19 pandemic recession.
The Thomasville, N.C.-based less-than-truckload carrier said net income rose 23% to $201.9 million from $164.1 million in the same quarter a year earlier. Diluted earnings per share climbed to $1.71 from $1.37.
Revenue grew more slowly, rising 0.9% to $1.1 billion from $1 billion in the same period a year earlier.
E-commerce helped fuel the positive results, CEO Greg Gantt said in an Oct. 27 conference call with industry analysts.
But Old Dominion’s legacy industrial business accounts for 55% to 60% of the motor carrier’s revenue and is poised for gains, he said.
“We are not anywhere near full recovery for most manufacturing businesses, but it will recover and we will continue to see positive trends in the retail business,” Gantt said.
The small increase in third-quarter revenue resulted from a 1.3% gain in less-than-truckload tons per day. But that metric was partially offset by a small decrease in revenue per hundredweight, mostly because of the decline in diesel prices.
“While the revenue increase for the quarter might have been modest, we were pleased that it returned to a positive trend,” said Adam Satterfield, Old Dominion’s chief financial officer.
Old Dominion plans to spend about $240 million on capital expenditures this year. That includes $195 million for real estate and service center expansion projects, $20 million to purchase tractors and trailers and $25 million for information technology and other assets.
The motor carrier plans to open several new service facilities before the end of the first quarter next year.
“We expect 2021 to be a robust and pretty promising year,” Gantt said.
Gantt said Old Dominion has resumed hiring drivers and platform employees to anticipate the growth of steady freight demand into next year.
“We are having success hiring drivers, but it is a little harder to onboard people than it used to be because of the pandemic. We are not getting record checks back as quickly as we used to. We are still able to hire from competitors,” Gantt said.
More segments of the economy are rebounding.
Tonnage in September was 3.6% higher than the same month a year earlier and 4.3% higher than August, the company said.
Revenue from “smaller mom and pop customers is starting to come back. Hopefully, we will see that trend even more favorably as we transition into 2021,” Satterfield said.
In October, revenue per day looks to be at least 2% higher than the same month a year ago, he said.
The company also is starting to look down the road at how truck powertrains might change.
“We are looking at and exploring electric vehicles but no one has a production electric vehicle…. Right now, they just are not available, but it will be a big thing as we go forward,” Gantt said.
Gantt said that the company’s liquidity remains strong. It ended the quarter with $420.4 million in cash and cash equivalents.
Old Dominion Freight Line ranks No. 8 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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