Operating Ratio Improves to a Company Record
of 72.3%
Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today announced
financial results for the three-month and six-month periods ended
June 30, 2021.
Three Months Ended
Six Months Ended
June 30,
June 30,
(In thousands, except per share
amounts)
2021
2020
% Chg.
2021
2020
% Chg.
Total revenue
$
1,319,409
$
896,210
47.2
%
$
2,445,924
$
1,883,574
29.9
%
LTL services revenue
$
1,299,760
$
884,069
47.0
%
$
2,409,382
$
1,858,500
29.6
%
Other services revenue
$
19,649
$
12,141
61.8
%
$
36,542
$
25,074
45.7
%
Operating income
$
366,044
$
199,166
83.8
%
$
635,701
$
382,336
66.3
%
Operating ratio
72.3
%
77.8
%
74.0
%
79.7
%
Net income
$
269,576
$
147,805
82.4
%
$
468,935
$
280,982
66.9
%
Diluted earnings per share
$
2.31
$
1.25
84.8
%
$
4.01
$
2.36
69.9
%
Diluted weighted average shares
outstanding
116,561
118,360
(1.5
)%
116,907
119,083
(1.8
)%
Greg C. Gantt, President and Chief Executive Officer of Old
Dominion, commented, “Old Dominion’s second quarter financial
results include new Company records for quarterly revenue,
operating ratio and earnings per diluted share. We achieved these
record results by continuing to execute on the fundamental aspects
of our long-term strategic plan, which is centered on our ability
to provide superior service at a fair price. In addition, our
strategy of continuously investing in our service center network
has provided us with capacity to support additional revenue growth.
These factors, combined with a domestic economy that continues to
improve, have driven a significant increase in the demand for our
superior service. As a result, the sequential acceleration in our
revenue during the second quarter was once again well above our
normal sequential trends.
“The Company’s revenue growth as compared to the second quarter
of 2020 included a 28.1% increase in LTL tons and a 14.9% increase
in LTL revenue per hundredweight. The increase in LTL tons resulted
from a 33.5% increase in LTL shipments that was partially offset by
a 4.0% decrease in LTL weight per shipment. The decrease in our LTL
weight per shipment was due primarily to changes in the mix of
freight between the periods compared, which includes the impact of
operational changes we made earlier this year that reduced the
number of heavy-weighted shipments in our network. Our yield
metrics benefited from the decrease in weight per shipment as well
as the 1.2% increase in our average length of haul. The increase in
our revenue per hundredweight also reflects the success of our
yield-improvement initiatives that are designed to improve
individual account profitability. Our consistent, long-term pricing
strategy generally focuses on offsetting our cost inflation while
also supporting further investments in capacity and technology.
“Our operating ratio improved 550 basis points to 72.3% for the
second quarter of 2021. The improvements in freight density and
yield created operating leverage that allowed us to improve most of
our cost categories as a percent of revenue. The improvement in our
direct operating costs as a percent of revenue also benefited from
increased operating efficiencies during the quarter. Our salaries,
wages and benefits costs as a percent of revenue improved to 46.4%
from 51.4% in the second quarter of 2020, although as volumes
increased during the quarter, we increased our use of purchased
transportation to supplement our workforce. The average number of
full-time employees increased 20.7% as compared to the second
quarter of 2020, and we intend to hire additional employees
throughout the third quarter to support anticipated growth.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$198.0 million for the second quarter of 2021 and $508.3 million
for the first half of the year. The Company had $484.2 million in
cash and cash equivalents at June 30, 2021.
Capital expenditures were $155.1 million for the second quarter
of 2021 and $206.1 million for the first half of the year. 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 returned $63.2 million of capital to its
shareholders during the second quarter of 2021 and utilized $395.4
million of cash through the first half of the year for both its
share repurchase and dividend programs. For the first half of the
year, this amount consisted of $349.0 million of share repurchases
and $46.4 million of cash dividends.
Share Repurchase Authorization
The Company’s Board of Directors approved a new share repurchase
program that authorizes Old Dominion to repurchase up to $2.0
billion of its outstanding stock. This new repurchase program will
begin after the completion of the Company’s existing $700 million
repurchase program, which had $206.3 million remaining available
and uncommitted at June 30, 2021. Share repurchases may be effected
in the open market or through privately negotiated transactions,
including through repurchase plans designed to comply with Rule
10b5-1 and accelerated share repurchase transactions. The new share
repurchase program does not have an expiration date. While the
Company intends to return excess capital to its shareholders
through its share repurchase and dividend programs, the priority
for capital spending will continue to be strategic investments in
capital expenditures to support the long-term profitable growth of
its business.
Summary
Mr. Gantt concluded, “The Old Dominion team delivered Company
records for both revenue and profitability during the second
quarter, and we are pleased with the ongoing momentum in our
business. The consistent execution of our strategic plan has
allowed us to increase our market share over the long term, and we
believe our service and capacity advantages will allow us to
continue to win market share. Our ability to grow will require
further investment in our OD Family of employees, our fleet, and
our service center network, and we have the financial strength to
support these initiatives. The combination of these factors gives
us confidence that we can produce additional profitable growth and
increased 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 August 4, 2021, at (877) 344-7529, Access Code
10158075.
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
Second Quarter
Year to Date
(In thousands, except per share
amounts)
2021
2020
2021
2020
Revenue
$
1,319,409
100.0
%
$
896,210
100.0
%
$
2,445,924
100.0
%
$
1,883,574
100.0
%
Operating expenses:
Salaries, wages & benefits
611,518
46.4
%
460,906
51.4
%
1,157,177
47.3
%
985,389
52.3
%
Operating supplies & expenses
137,577
10.4
%
75,412
8.4
%
261,733
10.7
%
183,105
9.7
%
General supplies & expenses
34,427
2.6
%
25,881
2.9
%
65,595
2.7
%
59,489
3.2
%
Operating taxes & licenses
33,256
2.5
%
27,043
3.0
%
64,522
2.6
%
56,357
3.0
%
Insurance & claims
14,983
1.2
%
10,910
1.2
%
27,905
1.2
%
20,760
1.1
%
Communications & utilities
8,390
0.6
%
7,262
0.8
%
16,586
0.7
%
15,453
0.8
%
Depreciation & amortization
63,947
4.9
%
65,735
7.4
%
127,934
5.2
%
131,170
7.0
%
Purchased transportation
43,927
3.3
%
18,983
2.1
%
78,641
3.2
%
39,783
2.1
%
Miscellaneous expenses, net
5,340
0.4
%
4,912
0.6
%
10,130
0.4
%
9,732
0.5
%
Total operating expenses
953,365
72.3
%
697,044
77.8
%
1,810,223
74.0
%
1,501,238
79.7
%
Operating income
366,044
27.7
%
199,166
22.2
%
635,701
26.0
%
382,336
20.3
%
Non-operating expense (income):
Interest expense
465
0.0
%
765
0.1
%
972
0.0
%
865
0.0
%
Interest income
(196
)
(0.0
)%
(231
)
(0.0
)%
(482
)
(0.0
)%
(1,479
)
(0.1
)%
Other expense (income), net
1,387
0.1
%
(373
)
(0.0
)%
1,515
0.1
%
3,244
0.2
%
Income before income taxes
364,388
27.6
%
199,005
22.2
%
633,696
25.9
%
379,706
20.2
%
Provision for income taxes
94,812
7.2
%
51,200
5.7
%
164,761
6.7
%
98,724
5.2
%
Net income
$
269,576
20.4
%
$
147,805
16.5
%
$
468,935
19.2
%
$
280,982
14.9
%
Earnings per share:
Basic
$
2.33
$
1.26
$
4.04
$
2.37
Diluted
2.31
1.25
4.01
2.36
Weighted average outstanding
shares:
Basic
115,821
117,610
116,157
118,330
Diluted
116,561
118,360
116,907
119,083
OLD DOMINION FREIGHT LINE,
INC.
Operating Statistics
Second Quarter
Year to Date
2021
2020
% Chg.
2021
2020
% Chg.
Work days
64
64
0.0
%
127
128
(0.8
)%
Operating ratio
72.3
%
77.8
%
74.0
%
79.7
%
LTL intercity miles (1)
178,938
141,417
26.5
%
340,111
297,366
14.4
%
LTL tons (1)
2,598
2,028
28.1
%
4,930
4,181
17.9
%
LTL tonnage per day
40,600
31,688
28.1
%
38,819
32,664
18.8
%
LTL shipments (1)
3,307
2,478
33.5
%
6,211
5,194
19.6
%
LTL shipments per day
51,672
38,719
33.5
%
48,903
40,578
20.5
%
LTL revenue per intercity mile
$
7.29
$
6.27
16.3
%
$
7.12
$
6.27
13.6
%
LTL revenue per hundredweight
$
25.10
$
21.85
14.9
%
$
24.56
$
22.28
10.2
%
LTL revenue per hundredweight, excluding
fuel surcharges
$
21.67
$
19.64
10.3
%
$
21.36
$
19.77
8.0
%
LTL revenue per shipment
$
394.49
$
357.65
10.3
%
$
389.94
$
358.69
8.7
%
LTL revenue per shipment, excluding fuel
surcharges
$
340.48
$
321.47
5.9
%
$
339.06
$
318.31
6.5
%
LTL weight per shipment (lbs.)
1,571
1,636
(4.0
)%
1,588
1,610
(1.4
)%
Average length of haul (miles)
930
919
1.2
%
929
919
1.1
%
Average active full-time employees
21,621
17,911
20.7
%
21,050
18,930
11.2
%
(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)
2021
2020
Cash and cash equivalents
$
484,204
$
401,430
Short-term investments
165,254
330,274
Other current assets
661,657
511,635
Total current assets
1,311,115
1,243,339
Net property and equipment
2,998,727
2,914,031
Other assets
224,604
212,040
Total assets
$
4,534,446
$
4,369,410
Current liabilities
$
482,018
$
373,130
Long-term debt
99,939
99,931
Other non-current liabilities
550,111
570,061
Total liabilities
1,132,068
1,043,122
Equity
3,402,378
3,326,288
Total liabilities & equity
$
4,534,446
$
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/20210728005261/en/
Adam N. Satterfield Senior Vice President, Finance and Chief
Financial Officer (336) 822-5721
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