Adds share movement in paragraph 5, analyst comment in paragraph 6
By Aishwarya Jain
Oct 29 - Old Dominion Freight Line ODFL.O beat third-quarter profit estimates on Wednesday, helped by tight expense control, as the company operated through a prolonged freight recession.
The recessionary phase that began after the 2022 post-pandemic e-commerce boom has now stretched more than three years, with the U.S. trucking industry grappling with persistent low volumes and overcapacity that is driving the rates downward.
Experts expect the downturn to persist through early next year, even as extra capacity gradually exits the market as the sector faces the challenges of a shifting global macroeconomic environment.
Old Dominion's operating expenses came in at $1.05 billion during the third quarter, down 2.1% from $1.07 billion a year ago.
The company's operating ratio, a key metric that indicates operating expenses as a percentage of revenue, fell 30 basis points to 74.3% on a sequential basis during the quarter.
A lower operating ratio indicates that a company is spending less to generate each unit of its revenue.
"Without a doubt, the sequential improvement in operating ratio despite the expected softness in tonnage and revenue per day came as a surprise," said Stephanie Moore, analyst at Jefferies.
Shares of the company rose about nearly 5% in early morning trading.
Less-than-truckload $(LTL)$ companies function by carrying multiple shipments from different customers on a single truck, which are then routed through a network of service centers where they get transferred to other trucks with similar destinations.
The Thomasville, North Carolina-based company's revenue fell 4.3% to $1.41 billion during the third quarter, compared with analysts' average expectation of $1.40 billion, according to data compiled by LSEG.
Its profit per share dropped 10.5% to $1.28, but came in higher than Wall Street estimates of $1.22.
(Reporting by Aishwarya Jain and Abhinav Parmar in Bengaluru; Editing by Shreya Biswas)
((Abhinav.Parmar@thomsonreuters.com;))