Achieves Company Record First-Quarter
Operating Ratio of 83.9%
Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today announced
financial results for the three-month period ended March 31, 2018,
which include the following:
Three Months Ended March 31,
%
(In thousands,
except per share amounts)
2018 2017 Chg. Total revenue
$
925,020 $ 754,096
22.7 % LTL services revenue
$ 911,054 $ 740,186
23.1 % Other
services revenue
$ 13,966 $ 13,910
0.4
% Operating income
$ 149,340 $ 108,122
38.1 % Operating ratio
83.9 % 85.7 %
Net income
$ 109,333 $ 65,792
66.2 %
Diluted earnings per share
$ 1.33 $ 0.80
66.3
% Diluted weighted average shares outstanding
82,356
82,444
(0.1 )%
“Old Dominion had a great start to 2018, with first-quarter
results that included many new Company records. We had our fourth
consecutive quarter of double-digit revenue growth, and our
quarterly revenue exceeded $900 million for the first time in our
history,” commented Greg C. Gantt, the Company’s President and
Chief Operating Officer, who, as previously announced, will
transition to the combined role of President and Chief Executive
Officer effective May 16, 2018. “The domestic economy continues to
be strong, and we believe our ability to deliver superior service
in this favorable operating environment will position us to win
additional market share. The strength of our revenue growth
contributed to a 180 basis-point improvement in our operating ratio
for the quarter, and these factors, when combined with the
substantial reduction in our income tax rate due to the Tax Cuts
and Jobs Act, drove a 66.3% increase in earnings per diluted
share.”
“Revenue for the quarter increased 22.7%, due primarily to a
15.4% increase in LTL tons and a 5.9% increase in LTL revenue per
hundredweight. The growth in LTL tons reflects a 10.5% increase in
LTL shipments and a 4.5% increase in LTL weight per shipment. Even
with the increase in LTL weight per shipment and 0.7% decline in
length of haul, both of which generally have the effect of reducing
revenue per hundredweight, we generated a 3.7% increase in revenue
per hundredweight, excluding fuel surcharges. Consistent with our
long-term pricing philosophy, we will continue to focus on
individual account profitability to ensure that our yield
improvement offsets cost inflation while also supporting our
continued investment in the Company.
“Our operating ratio improved to 83.9% for the first quarter of
2018, which is a new Company record for the first quarter. With
growth in LTL volumes driving improved freight density and the
improvement in our yield, we gained significant leverage with
respect to many of our cost elements during the quarter. Salaries,
wages and benefits improved 100 basis points to 54.2% of revenue,
even as we experienced an anticipated increase in employee benefit
costs. We continued to add employees during the first quarter to
ensure adequate capacity for expected growth, with an increase of
11.9% in our average number of full-time employees compared with
the first quarter last year. Despite the number of new employees
and a double-digit increase in LTL shipments, we are proud that our
dedicated team was able to provide on-time deliveries of 99% and a
cargo claims ratio of 0.2%.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$211.2 million for the first quarter of 2018, a 90.6% increase
compared to the first quarter of 2017. The Company had $159.9
million in cash and cash equivalents at March 31, 2018, and its
ratio of debt-to-total capitalization was 1.9% compared with 4.0%
at December 31, 2017.
Capital expenditures were $100.6 million for the first quarter
of 2018. Based on first-quarter results and the Company’s outlook
for 2018, the Company has increased its expected capital
expenditures for 2018 to a total of approximately $555 million from
the previous estimate of $510 million. This total includes planned
expenditures of $200 million for real estate and service center
expansion projects; $310 million for tractors and trailers; and $45
million for technology and other assets.
Old Dominion returned $28.0 million of capital to its
shareholders in the first quarter of 2018, consisting of $10.7
million of cash dividends and $17.3 million of share
repurchases.
Summary
Mr. Gantt concluded, “Old Dominion is firmly committed to its
long-term strategy of delivering superior customer service at a
fair price, while continuously investing in capacity to support our
growth initiatives. We believe the time-tested strengths of our
strategic plan are evidenced by our current and historic financial
results, market share gains and shareholder value creation. We also
believe that our ability to consistently deliver this value
proposition has created a unique position for us in the LTL
transportation industry. As a result, we are confident that the
continued execution of our long-term strategy creates a significant
opportunity for us to produce further growth in market share,
earnings and 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 May 26,
2018. A telephonic replay will also be available through May 4,
2018, at (719) 457-0820, Confirmation Number 8205556.
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 and maintenance technician
compensation or difficulties attracting and retaining qualified
drivers and maintenance technicians 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 as (i) 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 First Quarter
(In thousands,
except per share amounts)
2018 2017 Revenue $ 925,020
100.0 % $ 754,096 100.0 %
Operating expenses: Salaries, wages & benefits 501,311
54.2 % 416,504 55.2 % Operating supplies & expenses 114,061
12.3 % 90,987 12.1 % General supplies & expenses 29,976 3.2 %
22,872 3.0 % Operating taxes & licenses 26,788 2.9 % 24,022 3.2
% Insurance & claims 11,099 1.2 % 8,790 1.2 % Communications
& utilities 7,046 0.8 % 7,433 1.0 % Depreciation &
amortization 53,481 5.8 % 50,287 6.7 % Purchased transportation
21,740 2.4 % 17,997 2.4 % Building and office equipment rents 1,875
0.2 % 2,114 0.3 % Miscellaneous expenses, net 8,303 0.9 %
4,968 0.6 % Total operating expenses 775,680
83.9 % 645,974 85.7 % Operating income 149,340 16.1 %
108,122 14.3 % Non-operating expense (income): Interest
expense 11 0.0 % 595 0.1 % Interest income (456 ) (0.0 )% (35 )
(0.0 )% Other expense, net 2,299 0.2 % 409 0.0 %
Income before income taxes 147,486 15.9 % 107,153 14.2 %
Provision for income taxes 38,153 4.1 % 41,361
5.5 %
Net income $ 109,333
11.8 % $ 65,792 8.7
% Earnings per share: Basic $ 1.33 $ 0.80
Diluted 1.33 0.80
Weighted average outstanding
shares: Basic 82,253 82,349 Diluted 82,356 82,444
OLD DOMINION FREIGHT LINE, INC. Operating Statistics
First Quarter 2018 2017
% Chg. Work days 64 64 — % Operating ratio 83.9 % 85.7 % LTL
intercity miles (1) 161,190 139,752 15.3 % LTL tons (1) 2,274 1,970
15.4 % LTL tonnage per day 35,531 30,781 15.4 % LTL shipments (1)
2,788 2,523 10.5 % LTL revenue per intercity mile $ 5.69 $ 5.36 6.2
% LTL revenue per hundredweight $ 20.16 $ 19.03 5.9 % LTL revenue
per hundredweight, excluding fuel surcharges $ 17.57 $ 16.94 3.7 %
LTL revenue per shipment $ 328.78 $ 297.11 10.7 % LTL revenue per
shipment, excluding fuel surcharges $ 286.66 $ 264.47 8.4 % LTL
weight per shipment (lbs.) 1,631 1,561 4.5 % Average length of haul
(miles) 914 920 (0.7 )% Average full-time employees 19,588 17,511
11.9 %
(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 March 31,
December 31,
(In
thousands)
2018 2017 Cash and cash equivalents $ 159,937 $
127,462 Other current assets 455,513 457,191 Total current
assets 615,450 584,653 Net property and equipment 2,450,834
2,404,459 Other assets 77,720 79,312 Total assets $
3,144,004 $ 3,068,424 Current maturities of long-term
debt $ — $ 50,000 Other current liabilities 345,285 301,049
Total current liabilities 345,285 351,049 Long-term debt 45,000
45,000 Other non-current liabilities 394,968 395,521 Total
liabilities 785,253 791,570 Equity 2,358,751 2,276,854 Total
liabilities & equity $ 3,144,004 $ 3,068,424
Note: The financial and operating statistics in this press
release are unaudited.
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version on businesswire.com: https://www.businesswire.com/news/home/20180426005316/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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