Old Dominion Freight Line, Inc. (NASDAQ: ODFL) today said revenue for the first quarter was $295.1 million, compared with $368.2 million for the first quarter of 2008. Net income was $4 million, or $0.11 per diluted share, for the first quarter of 2009 compared with $10.4 million, or $0.28 per diluted share, for the first quarter of 2008. Old Dominion’s operating ratio was 96.6% for the first quarter of 2009 versus 94.3% for the first quarter of 2008.
“Industry conditions during the first quarter of 2009 continued to reflect the effects of the recessionary economic environment on freight demand, and pricing pressure was as severe as we have ever experienced,” said Earl Congdon, Executive Chairman of Old Dominion.
Under these circumstances, however, we maintained our focus on pricing discipline, improved the efficiency of our operations and positioned the company to take advantage of growth opportunities following an economic recovery or meaningful industry consolidation. As a result of our efforts and despite the unprecedented operating environment, Old Dominion was able to minimize the effects of a 12.4% decline in tonnage and operate profitably for the quarter.
“We were able to maintain relatively stable pricing during the first quarter, considering the negative impact of a 6% increase in weight per shipment on our pricing metrics. Revenue per hundredweight, excluding fuel surcharges, declined only 1% to $11.53 from $11.65 in the first quarter of 2008, which demonstrates the success of our value-driven pricing strategy. Although our commitment to pricing discipline contributed to the decline in tonnage during the first quarter, we believe this strategy will contribute to the long-term success of the company and will also be validated by our operating performance relative to the industry.
“Our operating ratio increased in the first quarter primarily because of the deleveraging effect of the decline in tonnage on our fixed costs. While we continued to focus on matching direct labor costs with current freight demand, our commitment to maintaining our service schedules and on-time performance resulted in an increase in direct labor costs as a percent of revenue. We were able to reduce the impact of these costs with efficiency gains throughout our operations, as indicated by improvements in our laden-load average, pickup and delivery shipments per hour and platform productivity.
“Although we remain focused on implementing additional efficiency improvements and aggressively controlling our variable costs, especially in today’s difficult operating environment, we are balancing these efforts with our strategies to achieve our long-term growth objectives. In this regard, we have maintained the appropriate resources to act decisively and to take advantage of industry consolidation that often arises during economic downturns. We have continued to enhance and expand our service center network during the first quarter by opening two new service centers and relocating several others to larger facilities. We also continued to purchase new equipment, which contributed to total capital expenditures of $79 million for the quarter.
“We continue to anticipate that our total capital expenditures will be approximately $190 million for the year. A significant portion of this budget was completed in the first quarter, which resulted in an increase in our debt to total capitalization to 32.6% from 31.1% at the end of 2008. We expect cash provided by operating activities to fund the majority of our capital expenditures in 2009, and we also have approximately $150 million of available borrowing capacity on our unsecured revolving credit facility, which is not scheduled to mature until August 2011.”