Old Dominion Freight Line (ODFL)
Q4 2012 Earnings Call
February 07, 2013 10:00 am ET
Executives
Earl E. Congdon - Executive Chairman and Chairman of Executive Committee
David S. Congdon - Chief Executive Officer, President, Director and Member of Executive Committee
J. Wes Frye - Chief Financial Officer, Senior Vice President of Finance, Treasurer and Assistant Secretary
Analysts
Scott H. Group - Wolfe Trahan & Co.
Christopher J. Ceraso - Crédit Suisse AG, Research Division
Justin B. Yagerman - Deutsche Bank AG, Research Division
William J. Greene - Morgan Stanley, Research Division
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Christian Wetherbee - Citigroup Inc, Research Division
Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division
A. Brad Delco - Stephens Inc., Research Division
Matthew S. Brooklier - Longbow Research LLC
David G. Ross - Stifel, Nicolaus & Co., Inc., Research Division
Kenton Moorhead - Robert W. Baird & Co. Incorporated, Research Division
Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division
David P. Campbell - Thompson, Davis & Company
Presentation
Operator
Good morning, and welcome to the Fourth Quarter 2012 Conference Call for Old Dominion Freight Line. Today's call is being recorded and will be available for replay beginning today and through February 24 by dialing (719) 457-0820. The replay pass code is 2443579. The replay may also be accessed through February 24 at the company's website.
This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Old Dominion's expected financial and operating performance. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in Old Dominion's filings with the Securities and Exchange Commission and in this morning's news release. And consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.
[Operator Instructions] Thank you for your cooperation.
At this time, for opening remarks, I'd like to turn the conference over to the company's Executive Chairman, Mr. Earl Congdon. Please go ahead, sir.
Earl E. Congdon
Good morning, and thanks for joining us today for our fourth quarter conference call. With me is David Congdon, Old Dominion's President and CEO; and Wes Frye, the company's CFO. After some brief remarks, we'll be glad to take your questions.
As you've seen in our news release, revenue increased 8.7% to $527.3 million for the fourth quarter from $485.1 million for the fourth quarter of 2011. Net income, though flat at $39.5 million compared to the fourth quarter of 2011, was strong given the harsh weather events, political uncertainty and economic environment experienced during the quarter. The 5.3% tonnage growth for the fourth quarter was below our expectations despite having an additional workday in the quarter versus the fourth quarter of 2011. Overall demand during the quarter was affected by Hurricane Sandy beginning in late October and by a series of winter storms in the Midwest and Northeast in December had the greatest impact on our results with nearly a 50% greater decline in sequential month tonnage per day as compared to our 10-year average. Despite the impact of these events, we still expect that Old Dominion's tonnage growth will exceed the average industry performance for the fourth quarter, indicating continuing increases in market share. Although the economy contracted and demand suffered during the fourth quarter, we are encouraged by our January increases in revenue per day and weight per day. While economic uncertainty continues to cloud our visibility into 2013, we will continue to execute performance consistent with the discipline and the business model that have made Old Dominion the leader in the LTL sector throughout the economic cycle. We have created clear market differentiation through our value proposition of on-time, claims-free service at a fair and equitable price. And as our outperformance of the LTL industry has demonstrated for years, we believe demand for this value proposition will only increase over the long term, driving growth in our financial results and shareholder value.
Thank you again for being with us this morning. Now, here's David Congdon to discuss our fourth quarter operations in more detail.
David S. Congdon
Thank you, Earl, and good morning. I'll begin this morning by pointing out that the softer industry environment we experienced in the fourth quarter was more a factor of sluggish demand than intensified competition. Our pricing during the quarter remained reasonably firm. And with an increase of 3.7% in revenue per hundredweight, excluding fuel surcharge for the quarter, our pricing met our expectations.
This performance demonstrates the continuing demand for our high-quality services, which are exemplified by our industry-leading service standards. This demand explains why we will continue to invest in sustaining and improving our service standards even in less-than-robust market conditions.
For the fourth quarter, our cargo claim ratio improved 14 basis points from the fourth quarter of 2011 to a 0.40% of revenue, and our on-time percentage was above 99%. Our commitment to these standards in a period of somewhat softer tonnage growth can result in some loss of efficiency as we consistently meet or exceed our high service standards.
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