Quarterly Cash Dividend to Increase 30% to
$0.13 Per Share
Old Dominion Freight Line, Inc. (NASDAQ: ODFL) today announced
financial results for the three-month and twelve-month periods
ended December 31, 2017. The financial results for the fourth
quarter of 2017 include $9.8 million of expense related to a
special bonus paid in December to non-executive employees following
the passage of the Tax Cuts and Jobs Act. This Act also required
the Company to revalue its net deferred tax liability, which
resulted in a net tax benefit of $104.9 million that is included in
the 2017 results presented below:
Three Months Ended
Twelve Months Ended December 31,
December 31,
(In thousands,
except per share amounts)
2017 2016 %
Chg.
2017 2016 %
Chg.
Revenue
$ 891,117 $ 745,738
19.5% $
3,358,112 $ 2,991,517
12.3% Operating income
$
143,457 $ 113,447
26.5% $ 575,886 $
483,835
19.0% Operating ratio
83.9% 84.8%
82.9% 83.8% Net income
$ 197,250 $ 68,511
187.9% $ 463,774 $ 295,765
56.8% Basic
earnings per share
$ 2.40 $ 0.83
189.2%
$ 5.63 $ 3.56
58.1% Diluted earnings per share
$ 2.39 $ 0.83
188.0% $ 5.63 $
3.56
58.1% Basic weighted average shares outstanding
82,282 82,381
(0.1)% 82,308 83,112
(1.0)% Diluted weighted average shares outstanding
82,376 82,450
(0.1)% 82,407 83,154
(0.9)%
“Old Dominion produced Company-record results for both revenue
and operating income in the fourth quarter,” said David S. Congdon,
Vice Chairman and Chief Executive Officer of Old Dominion. “We were
pleased to see an acceleration in our revenue growth, which
continued the momentum that began earlier in 2017. We believe that
this growth was the result of continued strength in the domestic
economy as well as our ability to win market share by providing
shippers with network capacity and a value proposition that
includes superior service at a fair price. Our superior service
offering during the fourth quarter included on-time deliveries of
99% and a cargo claims ratio of less than 0.3%.
“Revenue for the fourth quarter increased 19.5%, which consisted
of a 14.4% increase in LTL tonnage and a 5.1% increase in LTL
revenue per hundredweight. The increase in our LTL tonnage included
an 11.4% increase in LTL shipments and a 2.7% increase in LTL
weight per shipment. We believe the industry pricing environment
strengthened in the fourth quarter, which drove the 3.1% increase
in our LTL revenue per hundredweight, excluding fuel surcharges.
Consistent with our long-term pricing philosophy, we will continue
to target rate increases necessary to offset cost inflation in our
business and address individual account profitability. In the
current pricing environment, we believe that this approach will
enhance our ability to win market share and produce profitable
growth.
“The Company’s operating ratio improved 90 basis points to 83.9%
for the fourth quarter of 2017. The quality of our revenue growth
generated operating leverage that reduced our depreciation expense
and direct operating costs as a percent of revenue, despite the
impact of the employee special bonus. We expect our operating ratio
to improve again in 2018, although our employee benefit costs are
expected to increase this year due to enhancements to our
paid-time-off policy and larger 401(k) matching contributions. We
have historically made a discretionary matching contribution to our
401(k) plan to increase our aggregate matching contribution to 10%
of our net income, and we believe that this year’s discretionary
contribution will increase more than it would have otherwise due to
a lower 2018 effective tax rate under the Tax Cuts and Jobs
Act.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$148.3 million for the fourth quarter of 2017 and $536.3 million
for the year, which was a 5.2% decrease compared to the
year-to-date period of 2016. The Company had $127.5 million in cash
and cash equivalents at December 31, 2017, and its ratio of
debt-to-total capitalization was 4.0% compared with 5.4% at
December 31, 2016.
Capital expenditures were $93.3 million for the fourth quarter
of 2017 and $382.1 million for the year. The Company expects its
capital expenditures for 2018 to total approximately $510 million,
including planned expenditures of $200 million for real estate and
service center expansion projects; $265 million for tractors and
trailers; and $45 million for technology and other assets.
Old Dominion returned $8.2 million of capital to its
shareholders in the fourth quarter of 2017 and $40.9 million for
the year. The year-to-date total includes $32.9 million in cash
dividends and $8.0 million of share repurchases.
Increase to Quarterly Cash Dividend
The Company's Board of Directors has declared a first-quarter
dividend of $0.13 per share, which is a 30% increase to the
quarterly dividend paid in 2017. The dividend is payable on March
20, 2018 to shareholders of record at the close of business on
March 6, 2018.
Summary
Mr. Congdon concluded, “Old Dominion’s strong operating and
financial performance for the fourth quarter and throughout 2017
highlights our team’s outstanding execution of a proven and
differentiated business model. As we enter 2018, we are encouraged
by our recent trends that demonstrate continued customer demand for
our services and a strong domestic economy. We believe that the
ongoing execution of our business model, which includes a
commitment to continuously invest in our employees and network
capacity, will allow us to produce further profitable growth and
increased shareholder value in 2018.”
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 March 8,
2018. A telephonic replay will also be available through February
18, 2018, at (719) 457-0820, Confirmation Number 6862987.
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) the impact
of changes in tax laws, rates, guidance and interpretations,
including those related to certain provisions of the Tax Cuts and
Jobs Act; (8) increases in driver compensation or difficulties
attracting and retaining qualified drivers to meet freight demand;
(9) 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; (10) cost increases associated
with employee benefits, including costs associated with employee
healthcare plans; (11) the availability and cost of capital for our
significant ongoing cash requirements; (12) the availability and
cost of new equipment and replacement parts, including regulatory
changes and supply constraints that could impact the cost of these
assets; (13) decreases in demand for, and the value of, used
equipment; (14) the availability and cost of diesel fuel; (15) 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;
(16) 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; (17)
the costs and potential liabilities related to governmental
proceedings, inquiries, notices or investigations; (18) the costs
and potential liabilities related to our international business
relationships; (19) 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 (the “FMCSA”) and other regulatory agencies;
(20) the costs and potential adverse impact of compliance
associated with addressing interoperability between legacy
electronic automatic on-board recording devices and electronic
logging devices (“ELDs”) that comply with FMCSA’s ELD regulations
and guidance; (21) seasonal trends in the less-than-truckload
industry, including harsh weather conditions and disasters; (22)
our dependence on key employees; (23) the concentration of our
stock ownership with the Congdon family; (24) the costs and
potential adverse impact associated with future changes in
accounting standards or practices; (25) potential costs associated
with cyber incidents and other risks, including system failure,
security breach, disruption by malware or other damage; (26)
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; (27)
the costs and potential adverse impact associated with transitional
challenges in upgrading or enhancing our technology systems; (28)
damage to our reputation through unfavorable publicity; (29) the
costs and potential adverse impact of compliance with
anti-terrorism measures on our business; (30) dilution to existing
shareholders caused by any issuance of additional equity; (31) the
impact of a quarterly cash dividend or the failure to declare
future cash dividends; (32) fluctuations in the market value of our
common stock; (33) 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 (34) other risks and uncertainties described in our
most recent Annual Report on Form 10-K and other filings with the
SEC. 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
Fourth Quarter
Year to Date
(In thousands,
except per share amounts)
2017 2016 2017 2016 Revenue
$ 891,117 100.0 % $
745,738 100.0 % $ 3,358,112
100.0 % $ 2,991,517 100.0
% Operating expenses: Salaries, wages & benefits
482,233 54.1 % 417,686 56.0 % 1,802,440 53.7 % 1,652,055 55.2 %
Operating supplies & expenses 106,688 12.0 % 84,093 11.3 %
381,798 11.4 % 322,997 10.8 % General supplies & expenses
27,793 3.1 % 20,696 2.8 % 107,733 3.2 % 86,626 2.9 % Operating
taxes & licenses 26,248 2.9 % 23,058 3.1 % 99,778 3.0 % 92,426
3.1 % Insurance & claims 12,914 1.4 % 8,069 1.1 % 41,718 1.2 %
37,861 1.3 % Communications & utilities 6,809 0.8 % 6,547 0.9 %
27,754 0.8 % 27,904 0.9 % Depreciation & amortization 53,093
6.0 % 49,574 6.6 % 205,763 6.2 % 189,867 6.3 % Purchased
transportation 23,151 2.6 % 18,472 2.5 % 84,747 2.5 % 74,051 2.5 %
Building and office equipment rents 1,870 0.2 % 1,433 0.2 % 7,984
0.2 % 7,920 0.3 % Miscellaneous expenses, net 6,861
0.8 % 2,663 0.3 % 22,511
0.7 % 15,975 0.5 % Total
operating expenses 747,660 83.9 % 632,291
84.8 % 2,782,226 82.9 %
2,507,682 83.8 % Operating income
143,457 16.1 % 113,447 15.2 % 575,886 17.1 % 483,835 16.2 %
Non-operating expense (income): Interest expense 362 0.0 % 954 0.1
% 2,154 0.1 % 4,332 0.1 % Interest income (408 ) (0.0 )% (20 ) (0.0
)% (740 ) (0.0 )% (58 ) (0.0 )% Other (income) expense, net (361 )
(0.0 )% 1,192 0.2 % (1,360 )
(0.1 )% 1,974 0.1 %
Income before income taxes 143,864 16.1 % 111,321 14.9 % 575,832
17.1 % 477,587 16.0 % Provision for income taxes (53,386 )
(6.0 )% 42,810 5.7 % 112,058
3.3 % 181,822 6.1 %
Net income $ 197,250
22.1 % $ 68,511
9.2 % $ 463,774
13.8 % $ 295,765
9.9 % Earnings per share: Basic
$ 2.40 $ 0.83 $ 5.63 $ 3.56 Diluted 2.39 0.83 5.63 3.56
Weighted average outstanding shares: Basic 82,282 82,381
82,308 83,112 Diluted 82,376 82,450 82,407 83,154
OLD DOMINION FREIGHT LINE, INC.
Operating Statistics
Fourth Quarter Year to
Date 2017 2016
% Chg. 2017 2016 %
Chg. Work days 62 62 — % 253 254 (0.4 )% Operating ratio 83.9 %
84.8 % 82.9 % 83.8 % LTL intercity miles (1) 158,119 141,389 11.8 %
605,204 576,953 4.9 % LTL tons (1) 2,211 1,933 14.4 % 8,519 7,931
7.4 % LTL tonnage per day 35,661 31,177 14.4 % 33,672 31,224 7.8 %
LTL shipments (1) 2,696 2,421 11.4 % 10,736 10,148 5.8 % LTL
revenue per intercity mile $ 5.51 $ 5.13 7.4 % $ 5.46 $ 5.09 7.3 %
LTL revenue per hundredweight $ 19.70 $ 18.74 5.1 % $ 19.39 $ 18.51
4.8 % LTL revenue per hundredweight, excluding fuel surcharges $
17.30 $ 16.78 3.1 % $ 17.20 $ 16.71 2.9 % LTL revenue per shipment
$ 322.97 $ 299.34 7.9 % $ 307.66 $ 289.36 6.3 % LTL revenue per
shipment, excluding fuel surcharges $ 283.60 $ 268.10 5.8 % $
272.97 $ 261.21 4.5 % LTL weight per shipment (lbs.) 1,640 1,597
2.7 % 1,587 1,563 1.5 % Average length of haul (miles) 914 922 (0.9
)% 917 928 (1.2 )% Average full-time employees 19,000 17,585 8.0 %
18,103 17,582 3.0 % (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 December 31,
December 31,
(In
thousands)
2017 2016 Cash and cash equivalents $ 127,462 $
10,171 Other current assets 457,191 372,451 Total current assets
584,653 382,622 Net property and equipment 2,404,459 2,241,402
Other assets 79,312 72,223 Total assets $ 3,068,424 $ 2,696,247
Current maturities of long-term debt $ 50,000 $ — Other
current liabilities 301,049 288,636 Total current liabilities
351,049 288,636 Long-term debt 45,000 104,975 Other non-current
liabilities 395,521 451,478 Total liabilities 791,570 845,089
Equity 2,276,854 1,851,158 Total liabilities & equity $
3,068,424 $ 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/20180208005254/en/
Old Dominion Freight Line, Inc.Adam N. Satterfield,
336-822-5721Senior Vice President - Finance and Chief Financial
Officer
Old Dominion Freight Line (NASDAQ:ODFL)
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