Operating Ratio Improves to a First-Quarter
Company Record of 76.1%
Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today announced
financial results for the three-month period ended March 31,
2021.
Three Months Ended
March 31,
(In thousands, except per share
amounts)
2021
2020
% Chg.
Total revenue
$
1,126,515
$
987,364
14.1
%
LTL services revenue
$
1,109,622
$
974,431
13.9
%
Other services revenue
$
16,893
$
12,933
30.6
%
Operating income
$
269,657
$
183,170
47.2
%
Operating ratio
76.1
%
81.4
%
Net income
$
199,359
$
133,177
49.7
%
Diluted earnings per share
$
1.70
$
1.11
53.2
%
Diluted weighted average shares
outstanding
117,256
119,806
(2.1
)%
“Old Dominion produced strong profitable growth in the first
quarter of 2021 that included double-digit increases in both
revenue and operating income,” said Greg C. Gantt, President and
Chief Executive Officer of Old Dominion. “We are winning market
share as demand for our industry-leading service continues to
increase. In addition, we believe the domestic economy is getting
stronger while industry capacity is generally limited. We are
encouraged by these trends and believe the combination of our value
proposition, existing capacity, and ongoing investments to expand
our capacity will support future revenue growth opportunities.
“Our revenue increased 14.1% in the first quarter due primarily
to an 8.3% increase in LTL tons and a 5.6% increase in LTL revenue
per hundredweight. The increase in LTL tons included a 6.9%
increase in LTL shipments and a 1.3% increase in LTL weight per
shipment. The improvement in freight density across our network
created operating leverage that helped improve our aggregate
overhead costs as a percent of revenue. Operating efficiencies and
the increase in yield also contributed to the improvement in our
direct operating costs as a percent of revenue. As a result, our
operating ratio improved 530 basis points to a new first-quarter
Company record of 76.1%. We also added a significant number of new
employees to our team during the quarter and were pleased that our
team operated so efficiently while also maintaining our
best-in-class service metrics. We intend to continue to increase
our workforce in the second quarter to support the ongoing
acceleration in volumes.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$310.3 million for the first quarter of 2021. The Company had
$351.9 million in cash and cash equivalents at March 31, 2021.
Capital expenditures were $51.0 million for the first quarter of
2021. The Company expects its aggregate capital expenditures for
2021 to total approximately $605 million, including planned
expenditures of $275 million for real estate and service center
expansion projects; $290 million for tractors and trailers; and $40
million for information technology and other assets.
Old Dominion continued to return capital to its shareholders
during the first quarter of 2021. The Company utilized $309.0
million for its share repurchase program, including a $275.0
million accelerated share repurchase agreement that will expire no
later than August 2021, and paid $23.2 million in cash dividends
during the quarter.
Summary
Mr. Gantt concluded, “The strength of Old Dominion’s first
quarter financial results reflects the consistent execution of our
long-term strategic plan. While this plan has worked throughout
many economic cycles, the positive inflection in the operating
environment helped us deliver our third straight quarter of
earnings growth above 20%. We remain firmly committed to our
strategy of delivering superior service at a fair price, while also
continuing to invest in long-term capacity to support additional
growth. This includes the continued investment in, and expansion
of, our most important asset – the OD Family. Our team’s efforts
have created a unique position for us within the LTL industry that
provides a strong foundation to win additional market share. As a
result, we are confident that the continued execution of our
strategic plan can produce additional growth in earnings and
increase 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 April 30, 2021, at (719) 457-0820, Confirmation Number
7623805.
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, many of which will continue to be amplified by
the current COVID-19 pandemic: (1) the challenges associated with
executing our growth strategy, and developing, marketing and
consistently delivering high-quality services that meet customer
expectations; (2) various risks related to public health epidemics,
pandemics and similar outbreaks; (3) changes in our relationships
with significant customers; (4) our exposure to claims related to
cargo loss and damage, property damage, personal injury, workers’
compensation and healthcare, increased self-insured retention or
deductible levels or premiums for excess coverage, and claims in
excess of insured coverage levels; (5) the availability and cost of
new equipment, including regulatory changes and supply constraints
that could impact the cost of these assets; (6) the availability
and price of diesel fuel and 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; (7) seasonal trends in the
less-than-truckload (“LTL”) industry, including harsh weather
conditions and disasters; (8) the availability and cost of capital
for our significant ongoing cash requirements; (9) decreases in
demand for, and the value of, used equipment; (10) our ability to
successfully consummate and integrate acquisitions; (11) the costs
and potential liabilities related to our international business
relationships; (12) the costs and potential adverse impact of
compliance with anti-terrorism measures on our business; (13) the
competitive environment with respect to our industry, including
pricing pressures; (14) 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; (15) the negative impact of any unionization,
or the passage of legislation or regulations that could facilitate
unionization, of our employees; (16) increases in driver and
maintenance technician compensation or difficulties attracting and
retaining qualified drivers and maintenance technicians to meet
freight demand and maintain our customer relationships; (17) our
ability to retain our key employees and continue to effectively
execute our succession plan; (18) potential costs and liabilities
associated with cyber incidents and other risks with respect to our
information technology systems or those of our third-party service
providers, including system failure, security breach, disruption by
malware or ransomware or other damage; (19) the failure to adapt to
new technologies implemented by our competitors in the LTL and
transportation industry, which could negatively affect our ability
to compete; (20) 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; (21) the Compliance, Safety, Accountability initiative of
the Federal Motor Carrier Safety Administration (“FMCSA”) could
adversely impact our ability to hire qualified drivers, meet our
growth projections and maintain our customer relationships; (22)
the costs and potential adverse impact of compliance with, or
violations of, current and future rules issued by the Department of
Transportation, the FMCSA and other regulatory agencies; (23) the
costs and potential liabilities related to compliance with, or
violations of, existing or future governmental laws and
regulations, including environmental laws; (24) the effects of
legal, regulatory or market responses to climate change concerns;
(25) the costs associated with healthcare legislation or rising
healthcare costs; (26) the costs and potential liabilities related
to litigation and governmental proceedings, inquiries, notices or
investigations; (27) the impact of changes in tax laws, rates,
guidance and interpretations; (28) the concentration of our stock
ownership with the Congdon family; (29) the ability or the failure
to declare future cash dividends; (30) fluctuations in the amount
and frequency of our stock repurchases; (31) volatility in the
market value of our common stock; (32) 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 (33) 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 one of the largest North
American less-than-truckload (“LTL”) motor carriers and provides
regional, inter-regional and national LTL services through a single
integrated, union-free organization. Our service offerings, which
include expedited transportation, are provided through an expansive
network of service centers located throughout the continental
United States. The Company also maintains strategic alliances with
other carriers to provide 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
First Quarter
(In thousands, except per share
amounts)
2021
2020
Revenue
$
1,126,515
100.0
%
$
987,364
100.0
%
Operating expenses:
Salaries, wages & benefits
545,659
48.4
%
524,483
53.1
%
Operating supplies & expenses
124,156
11.0
%
107,693
10.9
%
General supplies & expenses
31,168
2.8
%
33,608
3.4
%
Operating taxes & licenses
31,266
2.8
%
29,314
3.0
%
Insurance & claims
12,922
1.2
%
9,850
1.0
%
Communications & utilities
8,196
0.7
%
8,191
0.8
%
Depreciation & amortization
63,987
5.7
%
65,435
6.6
%
Purchased transportation
34,714
3.1
%
20,800
2.1
%
Miscellaneous expenses, net
4,790
0.4
%
4,820
0.5
%
Total operating expenses
856,858
76.1
%
804,194
81.4
%
Operating income
269,657
23.9
%
183,170
18.6
%
Non-operating expense (income):
Interest expense
507
0.0
%
100
0.0
%
Interest income
(286
)
(0.0
)%
(1,248
)
(0.1
)%
Other expense, net
128
0.0
%
3,617
0.4
%
Income before income taxes
269,308
23.9
%
180,701
18.3
%
Provision for income taxes
69,949
6.2
%
47,524
4.8
%
Net income
$
199,359
17.7
%
$
133,177
13.5
%
Earnings per share:
Basic
$
1.71
$
1.12
Diluted
1.70
1.11
Weighted average outstanding
shares:
Basic
116,498
119,050
Diluted
117,256
119,806
OLD DOMINION FREIGHT LINE,
INC.
Operating Statistics
First Quarter
2021
2020
% Chg.
Work days
63
64
(1.6
)%
Operating ratio
76.1
%
81.4
%
LTL intercity miles (1)
161,174
155,949
3.4
%
LTL tons (1)
2,332
2,153
8.3
%
LTL tonnage per day
37,010
33,641
10.0
%
LTL shipments (1)
2,904
2,716
6.9
%
LTL shipments per day
46,090
42,438
8.6
%
LTL revenue per intercity mile
$
6.93
$
6.26
10.7
%
LTL revenue per hundredweight
$
23.96
$
22.68
5.6
%
LTL revenue per hundredweight, excluding
fuel surcharges
$
21.01
$
19.89
5.6
%
LTL revenue per shipment
$
384.76
$
359.64
7.0
%
LTL revenue per shipment, excluding fuel
surcharges
$
337.46
$
315.43
7.0
%
LTL weight per shipment (lbs.)
1,606
1,586
1.3
%
Average length of haul (miles)
928
919
1.0
%
Average active full-time employees
20,479
19,948
2.7
%
(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)
2021
2020
Cash and cash equivalents
$
351,900
$
401,430
Short-term investments
310,193
330,274
Other current assets
561,168
511,635
Total current assets
1,223,261
1,243,339
Net property and equipment
2,907,672
2,914,031
Other assets
220,930
212,040
Total assets
$
4,351,863
$
4,369,410
Current liabilities
$
513,862
$
373,130
Long-term debt
99,935
99,931
Other non-current liabilities
546,149
570,061
Total liabilities
1,159,946
1,043,122
Equity
3,191,917
3,326,288
Total liabilities & equity
$
4,351,863
$
4,369,410
Note: The financial and operating statistics in this press
release are unaudited.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210422005200/en/
Adam N. Satterfield Senior Vice President, Finance and Chief
Financial Officer (336) 822-5721
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