Operating Ratio Improves 140 Basis Points to
Quarterly Company Record of 80.9%
Old Dominion Freight Line, Inc. (NASDAQ: ODFL) today announced
financial results for the three-month and six-month periods ended
June 30, 2017, which include the following:
Three Months Ended Six Months Ended June 30,
June 30,
(In thousands,
except per share amounts)
2017 2016
%Chg.
2017 2016
%Chg.
Revenue
$ 839,912 $ 755,435
11.2 %
$ 1,594,008 $ 1,463,168
8.9 % Operating
income
$ 160,432 $ 133,436
20.2 %
$ 268,554 $ 232,984
15.3 % Operating
ratio
80.9 % 82.3 %
83.2 % 84.1 % Net
income
$ 98,418 $ 81,388
20.9 %
$ 164,210 $ 141,673
15.9 % Basic
earnings per share
$ 1.20 $ 0.98
22.4 %
$ 1.99 $ 1.69
17.8 % Diluted earnings
per share
$ 1.19 $ 0.98
21.4 % $
1.99 $ 1.69
17.8 %
Basic weighted average shares
outstanding
82,319 83,354
(1.2 )% 82,334 83,669
(1.6 )% Diluted weighted average shares outstanding
82,428 83,381
(1.1 )% 82,436 83,682
(1.5 )%
“Old Dominion produced strong financial results for the second
quarter of 2017, which included a double-digit increase in revenue
and an increase of more than 20% in earnings per diluted share,”
said David S. Congdon, Vice Chairman and Chief Executive Officer of
Old Dominion. “These were the best growth rates in revenue and
earnings per share since our first quarter of 2015. The 11.2%
increase in revenue for the second quarter was driven by a 6.1%
increase in LTL tonnage per day and a 5.1% increase in LTL revenue
per hundredweight. Excluding fuel surcharges, our LTL revenue per
hundredweight increased 3.8%. We believe that the growth in LTL
tonnage was attributable to the continued improvement in the
domestic economy and the consistent execution of our long-term
strategic plan of delivering superior service at a fair price.
“The Company’s operating ratio in the second quarter of 2017
improved 140 basis points to a new Company record of 80.9%. This
improvement was generally due to the leverage created by our
accelerated revenue growth, which benefited from increases in both
freight density and yield. As a result, most of our operating costs
improved as a percent of revenue when compared to the second
quarter of 2016.
“We continued to deliver best-in-class service to our customers
in the second quarter of 2017, with on-time deliveries in excess of
99% and a cargo claims ratio that improved to a new Company record
of less than 0.2%. With revenue growth continuing into the third
quarter, we intend to hire additional employees so that we can
continue to deliver superior service and position ourselves to win
additional market share.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$127.7 million for the second quarter of 2017 and $238.5 million
for the first half of the year. The Company had $33.8 million in
cash and cash equivalents at the end of the second quarter and a
ratio of debt-to-total capitalization of 4.5% compared with 11.1%
at June 30, 2016.
Capital expenditures were $131.3 million for the second quarter
of 2017 and $188.3 million for the first half of the year. The
Company expects its capital expenditures for 2017 to total
approximately $400 million, including planned expenditures of $185
million for real estate and service center expansion projects, $170
million for tractors and trailers, and $45 million for technology
and other assets. The Company recently increased its estimated
annual expenditures for tractors and trailers by $15 million due to
its growth expectations. This increase is consistent with the
Company’s historical practice of reinvesting in its business to
support long-term market share gains by ensuring it has the
capacity to meet the service expectations of its customers.
Old Dominion returned $15.3 million of capital to its
shareholders in the second quarter of 2017 and $23.6 million for
the first half of the year. This year-to-date total includes $16.5
million in cash dividends and $7.1 million of share repurchases,
leaving $192.8 million available for share repurchases under the
Company’s current $250.0 million stock repurchase program.
Summary
Mr. Congdon concluded, “Old Dominion’s robust second-quarter
operating and financial performance highlighted many of the core
strengths of our business model. We are encouraged by these results
as well as our revenue growth trends and the momentum of the
domestic economy. As a result, we will continue to make the
investments necessary to support the future growth of our business.
We thank our employees for their continued execution of our
business model, which we believe supports long-term growth in
shareholder value.”
Old Dominion will hold a conference call to discuss this release
today at 10:00 a.m. Eastern Time. Investors will have the
opportunity to listen to the conference call live over the Internet
by going to www.odfl.com. Please log
on at least 15 minutes early to register, download and install any
necessary audio software. For those who cannot listen to the live
broadcast, a replay will be available at this website shortly after
the call through August 27, 2017. A telephonic replay will also be
available through August 4, 2017, at (719) 457-0820, Confirmation
Number 9007431.
Forward-looking statements in this news release are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. We caution the reader that such
forward-looking statements involve risks and uncertainties that
could cause actual events and results to be materially different
from those expressed or implied herein, including, but not limited
to, the following: (1) the competitive environment with respect to
industry capacity and pricing, including the use of fuel
surcharges, which could negatively impact our total overall pricing
strategy and our ability to cover our operating expenses; (2) our
ability to collect fuel surcharges and the effectiveness of those
fuel surcharges in mitigating the impact of fluctuating prices for
diesel fuel and other petroleum-based products; (3) the negative
impact of any unionization, or the passage of legislation or
regulations that could facilitate unionization, of our employees;
(4) the challenges associated with executing our growth strategy,
including our ability to successfully consummate and integrate any
acquisitions; (5) changes in our goals and strategies, which are
subject to change at any time at our discretion; (6) various
economic factors such as recessions, downturns in the economy,
global uncertainty and instability, changes in U.S. social,
political, and regulatory conditions or a disruption of financial
markets, which may decrease demand for our services; (7) increases
in driver compensation or difficulties attracting and retaining
qualified drivers to meet freight demand; (8) our exposure to
claims related to cargo loss and damage, property damage, personal
injury, workers' compensation, group health and group dental,
including increased premiums, adverse loss development, increased
self-insured retention levels and claims in excess of insured
coverage levels; (9) cost increases associated with employee
benefits, including costs associated with employee healthcare
plans; (10) the availability and cost of capital for our
significant ongoing cash requirements; (11) the availability and
cost of new equipment and replacement parts, including regulatory
changes and supply constraints that could impact the cost of these
assets; (12) decreases in demand for, and the value of, used
equipment; (13) the availability and cost of diesel fuel; (14) the
costs and potential liabilities related to compliance with, or
violations of, existing or future governmental laws and
regulations, including environmental laws, engine emissions
standards, hours-of-service for our drivers, driver fitness
requirements and new safety standards for drivers and equipment;
(15) the costs and potential liabilities related to various legal
proceedings and claims that have arisen in the ordinary course of
our business, some of which include class-action allegations; (16)
the costs and potential liabilities related to governmental
proceedings, inquiries, notices or investigations; (17) the costs
and potential liabilities related to our international business
operations and relationships; (18) the costs and potential adverse
impact of compliance with, or violations of, current and future
rules issued by the Department of Transportation, the Federal Motor
Carrier Safety Administration, including its Compliance, Safety,
Accountability initiative, and other regulatory agencies; (19)
seasonal trends in the less-than-truckload industry, including
harsh weather conditions and disasters; (20) our dependence on key
employees; (21) the concentration of our stock ownership with the
Congdon family; (22) the costs and potential adverse impact
associated with future changes in accounting standards or
practices; (23) potential costs associated with cyber incidents and
other risks, including system failure, security breach, disruption
by malware or other damage; (24) failure to keep pace with
developments in technology, any disruption to our technology
infrastructure, or failures of essential services upon which our
technology platforms rely, which could cause us to incur costs or
result in a loss of business; (25) the costs and potential adverse
impact associated with transitional challenges in upgrading or
enhancing our technology systems; (26) damage to our reputation
through unfavorable publicity; (27) the costs and potential adverse
impact of compliance with anti-terrorism measures on our business;
(28) dilution to existing shareholders caused by any issuance of
additional equity; (29) the impact of a quarterly cash dividend or
the failure to declare future cash dividends; (30) fluctuations in
the market value of our common stock; (31) the impact of certain
provisions in our articles of incorporation, bylaws, and Virginia
law that could discourage, delay or prevent a change in control of
us or a change in our management; and (32) other risks and
uncertainties described in our most recent Annual Report on Form
10-K and other filings with the Securities and Exchange Commission.
Our forward-looking statements are based upon our beliefs and
assumptions using information available at the time the statements
are made. We caution the reader not to place undue reliance on our
forward-looking statements (i) as these statements are neither a
prediction nor a guarantee of future events or circumstances, and
(ii) the assumptions, beliefs, expectations and projections about
future events may differ materially from actual results. We
undertake no obligation to publicly update any forward-looking
statement to reflect developments occurring after the statement is
made, except as otherwise required by law.
Old Dominion Freight Line, Inc. is a leading,
less-than-truckload (“LTL”), union-free motor carrier providing
regional, inter-regional and national LTL services, which include
ground and air expedited transportation and consumer household
pickup and delivery through a single integrated organization. In
addition to its core LTL services, the Company offers a range of
value-added services including container drayage, truckload
brokerage, supply chain consulting and warehousing.
OLD DOMINION FREIGHT LINE, INC. Statements of
Operations Second
Quarter Year to Date
(In thousands,
except per share amounts)
2017 2016 2017
2016 Revenue $ 839,912
100.0 % $ 755,435
100.0 % $ 1,594,008
100.0 % $ 1,463,168
100.0 % Operating expenses: Salaries,
wages & benefits 441,904 52.6 % 408,424 54.1 % 858,408 53.9 %
809,293 55.3 % Operating supplies & expenses 88,580 10.6 %
80,335 10.6 % 179,567 11.3 % 155,707 10.7 % General supplies &
expenses 28,283 3.4 % 22,778 3.0 % 51,155 3.2 % 43,920 3.0 %
Operating taxes & licenses 24,961 3.0 % 23,466 3.1 % 48,983 3.1
% 46,654 3.2 % Insurance & claims 9,314 1.1 % 9,363 1.2 %
18,104 1.1 % 19,607 1.3 % Communications & utilities 7,022 0.8
% 7,327 1.0 % 14,455 0.9 % 14,332 1.0 % Depreciation &
amortization 50,449 6.0 % 46,480 6.1 % 100,736 6.3 % 91,252 6.2 %
Purchased transportation 20,860 2.5 % 18,176 2.4 % 38,857 2.4 %
36,672 2.5 % Building and office equipment rents 1,982 0.2 % 2,164
0.3 % 4,096 0.3 % 4,437 0.3 % Miscellaneous expenses, net
6,125 0.7 % 3,486
0.5 % 11,093 0.7 % 8,310
0.6 % Total operating expenses 679,480
80.9 % 621,999
82.3 % 1,325,454 83.2 %
1,230,184 84.1 % Operating income
160,432 19.1 % 133,436 17.7 % 268,554 16.8 % 232,984 15.9 %
Non-operating expense (income): Interest expense 642 0.1 % 1,064
0.2 % 1,237 0.1 % 2,247 0.1 % Interest income (69 ) (0.0 )% (12 )
(0.0 )% (104 ) (0.0 )% (28 ) (0.0 )% Other (income) expense, net
(431 ) (0.1 )% 260
0.0 % (22 ) (0.0 )% 776
0.1 % Income before income taxes 160,290 19.1 %
132,124 17.5 % 267,443 16.7 % 229,989 15.7 % Provision for
income taxes 61,872 7.4 % 50,736
6.7 % 103,233 6.4
% 88,316 6.0 %
Net income
$ 98,418 11.7 %
$ 81,388 10.8 %
$ 164,210 10.3 %
$ 141,673 9.7 %
Earnings per share: Basic $ 1.20 $ 0.98 $ 1.99 $ 1.69
Diluted 1.19 0.98 1.99 1.69
Weighted average outstanding
shares: Basic 82,319 83,354 82,334 83,669 Diluted 82,428 83,381
82,436 83,682
OLD DOMINION FREIGHT LINE, INC.
Operating Statistics Second
Quarter Year to Date 2017
2016 % Chg. 2017
2016 % Chg. Work days 64 64 — %
128 128 — % Operating ratio 80.9 % 82.3 % 83.2 % 84.1 % LTL
intercity miles (1) 150,991 145,754 3.6 % 290,743 286,570 1.5 % LTL
tons (1) 2,148 2,025 6.1 % 4,118 3,948 4.3 % LTL tonnage per day
33,563 31,641 6.1 % 32,172 30,844 4.3 % LTL shipments (1) 2,742
2,597 5.6 % 5,265 5,086 3.5 % LTL revenue per intercity mile $ 5.49
$ 5.10 7.6 % $ 5.43 $ 5.03 8.0 % LTL revenue per hundredweight $
19.31 $ 18.37 5.1 % $ 19.18 $ 18.26 5.0 %
LTL revenue per hundredweight, excluding
fuel surcharges
$ 17.23 $ 16.60 3.8 % $ 17.09 $ 16.57 3.1 %
LTL revenue per shipment
$ 302.51 $ 286.51 5.6 % $ 299.93 $ 283.49 5.8 %
LTL revenue per shipment, excluding fuel
surcharges
$ 269.92 $ 258.90 4.3 % $ 267.30 $ 257.34 3.9 % LTL weight per
shipment (lbs.) 1,567 1,559 0.5 % 1,564 1,553 0.7 % Average length
of haul (miles) 917 929 (1.3 )% 918 932 (1.5 )% Average full-time
employees 17,644 17,501 0.8 % 17,578 17,627 (0.3 )%
(1) - In thousands
Note: Our LTL operating statistics exclude certain
transportation and logistics services where pricing is generally
not determined by weight. These statistics also exclude adjustments
to revenue for undelivered freight required for financial statement
purposes in accordance with our revenue recognition policy.
OLD DOMINION FREIGHT LINE, INC. Balance Sheets
June 30,
December 31,
(In
thousands)
2017 2016 Cash and cash equivalents $ 33,833 $ 10,171
Other current assets 410,779 372,451 Total current
assets 444,612 382,622 Net property and equipment 2,321,243
2,241,402 Other assets 74,343 72,223 Total assets $
2,840,198 $ 2,696,247 Current maturities of long-term debt $
50,000 $ — Other current liabilities 294,410 288,636
Total current liabilities 344,410 288,636 Long-term debt 45,000
104,975 Other non-current liabilities 457,797 451,478
Total liabilities 847,207 845,089 Equity 1,992,991
1,851,158 Total liabilities & equity $ 2,840,198 $ 2,696,247
Note: The financial and operating statistics in this press
release are unaudited.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727005302/en/
Old Dominion Freight Line, Inc.Adam Satterfield,
336-822-5721Senior Vice President, Finance and Chief Financial
Officer
Old Dominion Freight Line (NASDAQ:ODFL)
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