Old Dominion Freight Line, Inc. (Nasdaq: ODFL)
today announced financial results for the three-month and
nine-month periods ended September 30, 2019, which include the
following:
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In thousands, except per share
amounts)
2019
2018
%
Chg.
2019
2018
%
Chg.
Total revenue
$
1,048,457
$
1,058,233
(0.9
)%
$
3,099,905
$
3,016,751
2.8
%
LTL services revenue
$
1,035,093
$
1,041,854
(0.6
)%
$
3,058,864
$
2,971,399
2.9
%
Other services revenue
$
13,364
$
16,379
(18.4
)%
$
41,041
$
45,352
(9.5
)%
Operating income
$
217,527
$
228,385
(4.8
)%
$
630,442
$
598,206
5.4
%
Operating ratio
79.3
%
78.4
%
79.7
%
80.2
%
Net income
$
164,099
$
173,442
(5.4
)%
$
471,494
$
446,209
5.7
%
Diluted earnings per share
$
2.05
$
2.12
(3.3
)%
$
5.85
$
5.43
7.7
%
Diluted weighted average shares
outstanding
79,989
81,976
(2.4
)%
80,589
82,166
(1.9
)%
“Old Dominion’s financial results for the third quarter of 2019
reflect the challenging operating environment,” said Greg C. Gantt,
President and Chief Executive Officer of Old Dominion Freight Line.
“The domestic economy remained sluggish during the quarter, and the
general softness in demand contributed to our first
quarter-over-quarter decline in revenue since the second quarter of
2016. While our tonnage declined as compared to the third quarter
of 2018, we were pleased with the ongoing improvement in our yield.
Importantly, we also maintained our superior service record with
on‑time performance of 99% and a cargo claims ratio of 0.2%.
“Our revenue in the third quarter of 2019 included a 5.2%
reduction in LTL tonnage per day that was partially offset by a
4.4% increase in LTL revenue per hundredweight. Excluding fuel
surcharges, our LTL revenue per hundredweight increased 5.8%, as we
maintained our disciplined approach to yield management despite the
market competitiveness. We intend to continue with our same
long-term approach by focusing on providing shippers with an
unmatched value proposition that combines consistent, cost-based
pricing with a commitment to superior service.
“Our operating ratio for the third quarter of 2019 was 79.3%, as
the decline in revenue had a deleveraging effect on many of our
operating expenses while certain employee benefit costs were higher
due to the increase in the price of our common stock during the
quarter. In addition, our miscellaneous expenses included a net
loss of $4.9 million on the disposal of property and equipment. The
resulting increase in our overhead costs as a percent of revenue
more than offset the improvement in direct operating costs during
the quarter. Our direct operating costs decreased as a percent of
revenue primarily due to our continued focus on cost management and
an increase in the efficiency of our operations.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$285.6 million for the third quarter of 2019 and $747.5 million for
the first nine months of the year. The Company had $322.3 million
in cash and cash equivalents at the end of the third quarter of
2019.
Capital expenditures were $140.4 million for the third quarter
of 2019 and $370.3 million for the first nine months of the year.
The Company expects its capital expenditures for 2019 to total
approximately $480 million, including planned expenditures of $220
million for real estate and service center expansion projects; $165
million for tractors and trailers; and $95 million for information
technology and other assets.
Old Dominion returned $54.2 million of capital to its
shareholders in the third quarter of 2019 and $246.4 million for
the first nine months of the year. For the first nine months, this
total consisted of $205.3 million of share repurchases and $41.0
million of cash dividends.
Summary
Mr. Gantt concluded, “We are pleased with the consistent
execution of our strategy this year. We will continue to focus on
managing the fundamental aspects of our business that we can
control and adhere to a proven business model that has served us
well throughout many economic cycles. Our consistent ability to
deliver superior service at a fair price has been a critical
competitive differentiator in the LTL industry. In addition, the
ongoing investment in our service center network provides us with
the necessary capacity to win additional market share, especially
in favorable economic conditions. We remain confident that through
continued successful execution of this strategy, we will create
further growth in long-term 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 ir.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 and will be
available for 30 days. A telephonic replay will also be available
through November 1, 2019, at (719) 457-0820, Confirmation Number
3218857.
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 revision at any time at our discretion; (6) various
economic factors such as recessions, downturns in the economy,
global uncertainty and instability, changes in international trade
policies, changes in U.S. social, political, and regulatory
conditions or a disruption of financial markets, which may decrease
demand for our services or increase our costs; (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 or deductible 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 collective and/or 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 FMCSA’s electronic logging device
(“ELD”) regulations and guidance, including the transition of our
fleet and safety management systems from our legacy electronic
automatic on-board recording devices to a new ELD hardware and
software platform; (21) seasonal trends in the less-than-truckload
industry, including harsh weather conditions and disasters; (22)
our ability to retain our key employees and continue to effectively
execute our succession plan; (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 and liabilities
associated with cyber incidents and other risks with respect to our
systems and networks or those of our third-party service providers,
including system failure, security breach, disruption by malware or
ransomware or other damage; (26) failure to comply with data
privacy, security or other laws and regulations; (27) 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; (28) the costs and potential
adverse impact associated with transitional challenges in upgrading
or enhancing our technology systems; (29) damage to our reputation
through unfavorable perceptions or publicity, including those
related to environmental, social and governance issues,
cybersecurity and data privacy concerns; (30) the costs and
potential adverse impact of compliance with anti-terrorism measures
on our business; (31) dilution to existing shareholders caused by
any issuance of additional equity; (32) the impact of a quarterly
cash dividend or the failure to declare future cash dividends; (33)
recent and future volatility in the market value of our common
stock; (34) 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 (35) 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 through a single
integrated organization. Our service offerings, which include
expedited transportation, are provided through an expansive network
of service centers located throughout the continental United
States. Through strategic alliances, the Company also provides LTL
services throughout North America. In addition to its core LTL
services, the Company offers a range of value-added services
including container drayage, truckload brokerage and supply chain
consulting.
OLD DOMINION FREIGHT LINE,
INC.
Statements of
Operations
Third Quarter
Year to Date
(In thousands, except per share
amounts)
2019
2018
2019
2018
Revenue
$
1,048,457
100.0
%
$
1,058,233
100.0
%
$
3,099,905
100.0
%
$
3,016,751
100.0
%
Operating expenses:
Salaries, wages & benefits
533,451
50.9
%
536,513
50.7
%
1,588,378
51.2
%
1,560,073
51.7
%
Operating supplies & expenses
(1)
117,343
11.2
%
127,557
12.0
%
361,110
11.7
%
370,059
12.3
%
General supplies & expenses
33,633
3.2
%
31,209
3.0
%
97,584
3.2
%
91,076
3.0
%
Operating taxes & licenses
29,117
2.8
%
27,952
2.6
%
87,572
2.8
%
82,905
2.8
%
Insurance & claims
11,280
1.1
%
12,069
1.1
%
34,039
1.1
%
34,510
1.1
%
Communications & utilities
8,098
0.8
%
8,215
0.8
%
22,071
0.7
%
22,700
0.8
%
Depreciation & amortization
63,493
6.0
%
58,086
5.5
%
189,137
6.1
%
167,802
5.6
%
Purchased transportation
23,063
2.2
%
25,373
2.4
%
68,218
2.2
%
73,157
2.4
%
Miscellaneous expenses, net
11,452
1.1
%
2,874
0.3
%
21,354
0.7
%
16,263
0.5
%
Total operating expenses
830,930
79.3
%
829,848
78.4
%
2,469,463
79.7
%
2,418,545
80.2
%
Operating income
217,527
20.7
%
228,385
21.6
%
630,442
20.3
%
598,206
19.8
%
Non-operating (income) expense:
Interest expense
3
0.0
%
29
0.0
%
285
0.0
%
51
0.0
%
Interest income
(1,714
)
(0.2
)%
(778
)
(0.1
)%
(4,966
)
(0.2
)%
(1,902
)
(0.1
)%
Other expense (income), net
844
0.1
%
(70
)
(0.0
)%
768
0.0
%
1,895
0.1
%
Income before income taxes
218,394
20.8
%
229,204
21.7
%
634,355
20.5
%
598,162
19.8
%
Provision for income taxes
54,295
5.1
%
55,762
5.3
%
162,861
5.3
%
151,953
5.0
%
Net income
$
164,099
15.7
%
$
173,442
16.4
%
$
471,494
15.2
%
$
446,209
14.8
%
Earnings per share:
Basic
$
2.05
$
2.12
$
5.86
$
5.44
Diluted
2.05
2.12
5.85
5.43
Weighted average outstanding
shares:
Basic
79,880
81,885
80,474
82,068
Diluted
79,989
81,976
80,589
82,166
(1)
Operating supplies and expenses includes
building and office equipment rents that were separately disclosed
on our Statements of Operations in prior periods.
OLD DOMINION FREIGHT LINE,
INC.
Operating Statistics
Third Quarter
Year to Date
2019
2018
% Chg.
2019
2018
% Chg.
Work days
64
63
1.6
%
191
191
0.0
%
Operating ratio
79.3
%
78.4
%
79.7
%
80.2
%
LTL intercity miles (1) (2)
163,061
170,907
(4.6
)%
486,600
501,841
(3.0
)%
LTL tons (1)
2,279
2,367
(3.7
)%
6,792
7,104
(4.4
)%
LTL tonnage per day
35,609
37,571
(5.2
)%
35,560
37,194
(4.4
)%
LTL shipments (1)
2,951
3,042
(3.0
)%
8,740
8,879
(1.6
)%
LTL shipments per day
46,109
48,286
(4.5
)%
45,759
46,487
(1.6
)%
LTL revenue per intercity mile (2)
$
6.39
$
6.07
5.3
%
$
6.30
$
5.93
6.2
%
LTL revenue per hundredweight
$
22.87
$
21.90
4.4
%
$
22.57
$
20.94
7.8
%
LTL revenue per hundredweight, excluding
fuel surcharges
$
19.95
$
18.86
5.8
%
$
19.65
$
18.13
8.4
%
LTL revenue per shipment
$
353.24
$
340.91
3.6
%
$
350.79
$
335.05
4.7
%
LTL revenue per shipment, excluding fuel
surcharges
$
308.26
$
293.56
5.0
%
$
305.46
$
290.07
5.3
%
LTL weight per shipment (lbs.)
1,545
1,557
(0.8
)%
1,554
1,600
(2.9
)%
Average length of haul (miles)
918
920
(0.2
)%
918
917
0.1
%
Average full-time employees
20,421
21,214
(3.7
)%
20,733
20,434
1.5
%
(1) -
In thousands
(2) -
Prior year intercity mile statistics have
been adjusted to exclude miles related to non-LTL shipments.
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
September 30,
December 31,
(In thousands)
2019
2018
Cash and cash equivalents
$
322,286
$
190,282
Other current assets
484,692
515,947
Total current assets
806,978
706,229
Net property and equipment
2,927,894
2,754,943
Other assets (1)
157,546
84,111
Total assets
$
3,892,418
$
3,545,283
Current liabilities (1)
$
396,862
$
356,732
Long-term debt
45,000
45,000
Other non-current liabilities (1)
541,028
463,068
Total liabilities
982,890
864,800
Equity
2,909,528
2,680,483
Total liabilities & equity
$
3,892,418
$
3,545,283
(1)
On January 1, 2019, the Company
adopted Accounting Standards Update 2016-02, “Leases” (Topic 842),
which resulted in the recognition of right-of-use assets of
approximately $67 million with corresponding lease liabilities on
our Condensed Balance Sheet as of September 30, 2019.
Note: The financial and operating statistics in this press
release are unaudited.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191024005347/en/
Adam N. Satterfield Senior Vice President, Finance and Chief
Financial Officer (336) 822-5721
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