Typically you wouldn't expect double-digit revenue growth in a business like trucking and freight hauling, but Old Dominion Freight Line (ODFL +0.60%) delivered rather eye-popping revenue growth this past quarter. Let's take a deeper look at the company's most recent earnings results and what investors can expect for the rest of 2018.
Old Dominion Freight Line earnings: The raw numbers
| Metric | Q4 2017 | Q3 2017 | Q4 2016 |
|---|---|---|---|
| Revenue | $891.1 million | $873.0 million | $745.7 million |
| Operating income | $143.4 million | $163.9 million | $113.4 million |
| Net income | $197.2 million | $102.3 million | $68.5 million |
| Diluted EPS | $2.39 | $1.24 | $0.83 |
Data source: Old Dominion Freight Line earnings release. EPS = earnings per share.
A little caveat to these results. Thanks to the changes in the U.S. corporate tax rate, Old Dominion recorded a $104.9 million benefit for the quarter to revalue its deferred tax liabilities.
What happened with Old Dominion Freight Line this quarter?
- Old Dominion's revenue for the quarter was up 19% thanks to better metrics across the board. Total LTL (less than truckload) miles driven were up 11.8%, LTL revenue per mile was up 7.4%, and LTL weight per shipment was up 2.7%. The only operating metric that fell was the length of haul, which dropped only 0.2%
- The company also maintained its on-time deliveries to above 99% and a cargo claims ratio of less than 0.3%.
- On the operating cost side, higher labor costs and operating supplies increased as a percentage of revenue compared to the prior quarter but managed to keep full-year operating expenses to 82.9% of revenue, a 90 basis point improvement on 2016.
- Even though management has about $192 million in share repurchase authorization, the company did not use it this past quarter. The board did, however, vote to increase its dividend payment by 30% to $0.13.
- At the end of the quarter, Old Dominion had $127.5 million in cash on the books and $95 million in current and long-term debt.
Image source: Getty Images.
What management had to say
CEO David Cogdon's press release statement was optimistic as he foresees further growth in 2018.
Old Dominion's strong operating and financial performance for the fourth quarter and throughout 2017 highlights our team's outstanding execution of a proven and differentiated business model. As we enter 2018, we are encouraged by our recent trends that demonstrate continued customer demand for our services and a strong domestic economy. We believe that the ongoing execution of our business model, which includes a commitment to continuously invest in our employees and network capacity, will allow us to produce further profitable growth and increased shareholder value in 2018.
Looking forward
Old Dominion beat Wall Street's expectations every quarter in 2017 as revenue grew significantly and management was able to keep costs down. With plenty of cash on the balance sheet to cover all of its short and long-term obligations and continued investment in its fleet, the company looks well positioned to keep growing in 2018. Even if it were to hit a rough patch -- it is a cyclical industry after all -- there aren't too many reasons to think that the company couldn't weather the storm.
