Old Dominion clocks another strong quarter; YRC posts quarterly income versus 2014 loss

Just when it might have seemed that Old Dominion Freight Line Inc. couldn't push the pedal to the metal any harder, it has added another cylinder.

The Thomasville, N.C.-based less-than-truckload (LTL) carrier, considered the gold standard of LTL if not all of trucking, posted $696.2 million in first-quarter revenue, up 12.2 percent from the year-earlier quarter. Net income rose 36.3 percent, to $62.5 million. Daily tonnage rose 11.4 percent year over year, paced by a 13.5-percent increase in LTL shipments offset by a 1.8-percent drop in weight per shipment, Old Dominion said.

Operating ratio, the ratio of operating revenues to expenses and a key measure of a carrier's efficiency, fell to 85.1 percent from 87.1 percent in the 2014 quarter, meaning Old Dominion spent 85 cents for every $1 in revenue. The 2015 ratio was a first-quarter record for the company, and came despite periods of bad weather and higher costs related to a moderate drop in productivity, it said.

Revenue per hundredweight, excluding the impact of fuel surcharges, rose 6.2 percent year over year, reflecting a firm pricing environment and the impact of reduced shipment weight, Old Dominion said. The increases in yield and tonnage contributed to the record first-quarter operating ratio, the company said.

The lower shipment size and weight in the quarter was due in part to a sluggish U.S. industrial economy. Another contributor was the absence of retailer shipments that would normally ship by truckload but were converted to LTL in the 2014 quarter because of terrible winter weather, the company said.

David S. Congdon, Old Dominion's president and CEO, said the company continued to gain market share in the quarter. Old Dominion's first-quarter shipment and tonnage gains came as other LTL carriers have experienced drops in tonnage and flat shipment counts in the period.

Meanwhile, YRC Worldwide Inc., one of Old Dominion's rivals, today reported first-quarter operating revenue of $1.16 billion, compared to revenue of $1.21 billion in the 2014 quarter. Overland Park, Kan.-based YRC posted first-quarter operating income of $3.7 million, versus an operating loss of $32.4 million. YRC Freight, the company's long-haul unit, reported first-quarter revenue of $737.6 million, a $19.2 million decline from the $756.8 million in revenue reported in the first quarter of 2014. However, the unit posted operating income in the first quarter, though scant at $200,000. This compared with an operating loss of $32.5 million in the 2014 quarter.

YRC Freight's first-quarter yield, excluding fuel surcharges, rose 8.2 percent year over year. Operating ratio increased more than four percentage points over the year-earlier period, the company said.

James Welch, CEO of YRC Worldwide, attributed the improvement to stronger pricing and a more profitable mix of freight. The drop in tonnage was the result of actions taken to put "yield and profitability improvements" ahead of volume growth, Welch said. For several years, YRC Freight has tried to reduce the disproportionate influence that large national accounts—big shippers that use their volumes as leverage to extract price concessions from the carrier—had over its business.

YRC's three-carrier regional unit—composed of Holland, New Penn, and Reddaway—posted first-quarter revenue of $448.8 million, a $5.3 million drop from the same period in 2014. The unit's operating income declined $3.3 million, to $4.6 million—down from $7.9 million—YRC said.

The unit's 2015 results were affected by having 2.5 fewer workdays versus the 2014 quarter, and by a $7.7 million hit related to liability and workers' compensation claims made during 2014, Welch said. The unit was able to generate yield growth of 5.8 percent year over year, excluding the impact of fuel surcharges, Welch said.