Old Dominion Freight Line saw revenues drop and the company workforce decline by more than 1,000 workers following a challenging second quarter for the Thomasville-based company.
Old Dominion reported a 16.6% decline in net income to $268.6 million.
The Thomasville less-than-truckload trucking company’s diluted earnings of $1.27 per share were 2 cents below the average earnings projections of 10 analysts surveyed by Zacks Investment Research.
Old Dominion reported its overall workforce had declined by 1,081, or 4.8%, during the second quarter to 21,621 as of June 30. The count is down 1,175 from June 30, 2024.
At last count, Old Dominion had 1,318 employees at its Thomasville headquarters, 668 at its Greensboro service center and 107 at the Kernersville service center.
As Old Dominion has expanded into a top 10 U.S. trucking company, it has become an insightful economic bellwether of consumer spending.
The sizable profit decline for a third consecutive quarter — down 12.9% in the first quarter and down 18.5% in the fourth quarter — comes after Marty Freeman, Old Dominion’s president and chief executive, has been warning for several months of ongoing softness in the domestic economy.
Revenue fell 6.1% to $1.41 billion.
Old Dominion reported a year-over-year decrease in shipments and weight per shipment during the second quarter, both key revenue drivers.
“Old Dominion’s financial results for the second quarter reflect the ongoing softness in the domestic economy,” Freeman said. “The difficult operating environment has persisted for longer than anticipated.
“While the challenging microeconomic backdrop created demand headwinds for our business during the quarter, our market share remained relatively consistent.”
CFRA Research analyst Emily Nassef Mitsch responded to the second-quarter report by lowering her 12-month share price target by $10 to $107 as well as dropping her 2025 fiscal earnings estimate by 14 cents to $4.98 a share.
“Old Dominion appears overvalued as the stock prices in a perfect recovery scenario that’s increasingly unlikely,” Mitsch said. “The risk/reward profile favors more downside as the market reprices expectations for a slower, less profitable recovery.”
Chief Financial Officer Adam Satterfield told analysts during a conference call that the company will continue with its annual pattern of providing a wage increase in September.
“So, that’s always there, but we typically have the revenue that offsets a little bit,” Satterfield said.
“But I’m also expecting that we’ll see continued pressure with our free benefit costs.”
For example, Satterfield said Old Dominion experienced higher expenses during the second quarter from its group health and dental plans.
Benchmark Research analyst Christopher Kuhn said investors were focused on Old Dominion's volume growth "was lower than peers in second quarter and a third quarter operating revenue outlook that was worse than estimates."
"Old Dominion is operating efficiently in this weaker freight environment, but the lower volume had a deleveraging effect on expenses once again."
"Revenue was down 6.1% year over year due to the challenging operating environment, which increased both overhead and direct variable costs as a percent of revenue in second quarter."
Overall, Kuhn said that "while we would not bet against Old Dominion over the long term, we think XPO and SAIA are in a better position than in the past to compete given improved service and increased density which will provide more operating leverage when demand improves."
Equipment and acquisitions
A major part of Old Dominion’s success has been its focus on reinvesting in equipment, technology and acquisitions.
The company spent $771.3 million on capital investments during fiscal 2024.
Through the first half of fiscal 2025, Old Dominion has spent $275.3 million, consisting of: $210 million for real estate and service-center expansion projects; $190 million for tractors and trailers; and $50 million for information technology.
Satterfield said Old Dominion is responding to potential tariffs expenses by “continuing to take some of our older equipment out that would have had really high repair costs. We’ve continued to pare back some of our fleet in that example.”
The company spent $223.5 million on share repurchases during the second quarter after spending $201.1 million in the first quarter.