Analyst Note| Matthew Young, CFA |
In the second quarter, Old Dominion’s top line surged 47% year over year, ahead of our expectations thanks to material market share gains rooted in the firm’s top-shelf network capabilities. Relative to the same period last year, growth stems from robust underlying freight demand and excellent pricing conditions stemming from constrained capacity across the broader trucking landscape. Tonnage growth remains remarkable, jumping 28% (it was up a solid 8% last quarter) due in part to an easy comparison (initial pandemic pressure), but retail end markets are incredibly robust on heavy retailer restocking (ultra-low inventory levels) and industrial end markets are recuperating. OD is also grabbing meaningful market share thanks to its disciplined capacity investment over the years, while most competitors haven’t expanded their service center footprints. In short, OD has sufficient capacity to handle surging shipment opportunities that other carriers must turn down. We believe mid- to high-teens tonnage growth is on tap for this year. Average yield (revenue per hundredweight) excluding fuel surcharges spiked 28% on very healthy core pricing and lower shipment weights.