Operating Ratio Improves to 72.9%
Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today announced
financial results for the three-month period ended March 31,
2022.
Three Months Ended
March 31,
(In thousands,
except per share amounts)
2022
2021
% Chg.
Total revenue
$
1,497,280
$
1,126,515
32.9
%
LTL services revenue
$
1,475,781
$
1,109,622
33.0
%
Other services revenue
$
21,499
$
16,893
27.3
%
Operating income
$
405,618
$
269,657
50.4
%
Operating ratio
72.9
%
76.1
%
Net income
$
299,751
$
199,359
50.4
%
Diluted earnings per share
$
2.60
$
1.70
52.9
%
Diluted weighted average shares
outstanding
115,173
117,256
(1.8
)%
Greg C. Gantt, President and Chief Executive Officer of Old
Dominion, commented, “Old Dominion is off to a successful start in
2022 with first quarter financial results that include new Company
records for revenue and earnings per diluted share. The increase in
revenue for the quarter reflects the consistent strength in demand
for our superior service that was supported by a favorable domestic
economy. We continue to provide best-in-class service at a fair
price while also offering available network capacity, both of which
differentiate Old Dominion in the marketplace and support our
ongoing ability to win market share.
“Revenue for the first quarter increased 32.9% due primarily to
a 17.4% increase in LTL revenue per hundredweight and a 12.0%
increase in LTL tons per day. The increase in our LTL tons per day
included a 13.2% increase in LTL shipments per day that was
partially offset by a 1.1% decrease in LTL weight per shipment.
This decrease in LTL weight per shipment and the 1.2% increase in
our average length of haul contributed to the increase in our
reported yield. The 10.0% increase in our LTL revenue per
hundredweight, excluding fuel surcharges, also reflects the success
of our long-term pricing strategy, which focuses on consistent
increases in yield to offset cost inflation and support further
investments in capacity.
“Our operating ratio improved 320 basis points to 72.9% for the
first quarter of 2022, which is a new Company record for the first
quarter. The improvements in both freight density and yield created
operating leverage that allowed us to improve most of our cost
categories as a percent of revenue. We also continued to operate
with great efficiency during the quarter and maintained our
disciplined control over discretionary spending. As a result, we
improved both our direct operating costs and total overhead costs
as a percent of revenue during the quarter. Our salaries, wages and
benefit costs as a percent of revenue improved to 45.4% from 48.4%
in the first quarter of 2021, which more than offset the increases
in purchased transportation and operating supplies and expenses.
The increase in operating supplies and expenses reflects the
significant increase in the cost of diesel fuel and other
petroleum-based products during the quarter. Our average number of
full-time employees increased 18.5% during the first quarter, and
we intend to continue hiring additional employees during the second
quarter of 2022 to support our anticipated growth and reduce our
reliance on purchased transportation.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$388.7 million for the first quarter of 2022. The Company had
$262.1 million in cash and cash equivalents at March 31, 2022.
Capital expenditures were $93.7 million for the first quarter of
2022. The Company expects its aggregate capital expenditures for
2022 to total approximately $825 million, including planned
expenditures of $300 million for real estate and service center
expansion projects; $485 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 2022 through its share repurchase and
dividend programs. The Company utilized $438.4 million of cash for
its share repurchase program, including a $400.0 million
accelerated share repurchase agreement that will expire no later
than August 2022, and paid $34.2 million in cash dividends during
the quarter.
Summary
Mr. Gantt concluded, “Old Dominion produced strong financial
results for the first quarter that included several new Company
records. We extended our long track record of profitable growth by
continuing to execute on our long-term strategic plan. This plan,
which has been in place for many years now, is focused on providing
our customers with superior service at a fair price and
continuously investing in equipment and network capacity to stay
ahead of anticipated volume growth. It takes a special team to
consistently deliver on these core principles, which is why the
most important element of our strategic plan is the ongoing
investment in our OD Family of employees. These fundamental
elements of our long-term strategic plan have allowed us to double
our market share over the past ten years, and we believe they will
continue to support our long-term growth initiatives. As a result,
we are confident in our ability to produce further 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 May 4, 2022, at (877) 344-7529, Access Code 8164823.
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 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, including the continuing impact of the COVID-19
pandemic; (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 cost of
third-party transportation used to supplement our workforce and
equipment needs; (7) 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; (8)
seasonal trends in the LTL industry, including harsh weather
conditions and disasters; (9) the availability and cost of capital
for our significant ongoing cash requirements; (10) decreases in
demand for, and the value of, used equipment; (11) our ability to
successfully consummate and integrate acquisitions; (12) the costs
and potential liabilities related to our international business
relationships; (13) the costs and potential adverse impact of
compliance with anti-terrorism measures on our business; (14) the
competitive environment with respect to our industry, including
pricing pressures; (15) 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; (16) the negative impact of any unionization,
or the passage of legislation or regulations that could facilitate
unionization, of our employees; (17) increases in the cost of
employee compensation and benefit packages used to address general
labor market challenges and to attract or retain qualified
employees, including drivers and maintenance technicians; (18) our
ability to retain our key employees and continue to effectively
execute our succession plan; (19) 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; (20) 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; (21) 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; (22) 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; (23)
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; (24) the
costs and potential liabilities related to compliance with, or
violations of, existing or future governmental laws and
regulations, including environmental laws; (25) the effects of
legal, regulatory or market responses to climate change concerns;
(26) the increase in costs associated with healthcare legislation
and other mandated benefits; (27) the costs and potential
liabilities related to legal proceedings and claims, governmental
inquiries, notices and investigations; (28) the impact of changes
in tax laws, rates, guidance and interpretations; (29) the
concentration of our stock ownership with the Congdon family; (30)
the ability or the failure to declare future cash dividends; (31)
fluctuations in the amount and frequency of our stock repurchases;
(32) volatility 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 one of the largest North
American 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)
2022
2021
Revenue
$
1,497,280
100.0
%
$
1,126,515
100.0
%
Operating expenses:
Salaries, wages & benefits
680,189
45.4
%
545,659
48.4
%
Operating supplies & expenses
191,357
12.8
%
124,156
11.0
%
General supplies & expenses
35,513
2.4
%
31,168
2.8
%
Operating taxes & licenses
35,076
2.3
%
31,266
2.8
%
Insurance & claims
16,107
1.1
%
12,922
1.2
%
Communications & utilities
9,876
0.7
%
8,196
0.7
%
Depreciation & amortization
67,340
4.5
%
63,987
5.7
%
Purchased transportation
52,500
3.5
%
34,714
3.1
%
Miscellaneous expenses, net
3,704
0.2
%
4,790
0.4
%
Total operating expenses
1,091,662
72.9
%
856,858
76.1
%
Operating income
405,618
27.1
%
269,657
23.9
%
Non-operating expense (income):
Interest expense
73
0.0
%
507
0.0
%
Interest income
(129
)
(0.0
)%
(286
)
(0.0
)%
Other expense, net
605
0.1
%
128
0.0
%
Income before income taxes
405,069
27.0
%
269,308
23.9
%
Provision for income taxes
105,318
7.0
%
69,949
6.2
%
Net income
$
299,751
20.0
%
$
199,359
17.7
%
Earnings per share:
Basic
$
2.62
$
1.71
Diluted
$
2.60
$
1.70
Weighted average outstanding
shares:
Basic
114,419
116,498
Diluted
115,173
117,256
OLD DOMINION FREIGHT LINE,
INC.
Operating Statistics
First Quarter
2022
2021
% Chg.
Work days
64
63
1.6
%
Operating ratio
72.9
%
76.1
%
LTL intercity miles (1)
183,607
161,174
13.9
%
LTL tons (1)
2,653
2,332
13.8
%
LTL tonnage per day
41,454
37,010
12.0
%
LTL shipments (1)
3,340
2,904
15.0
%
LTL shipments per day
52,190
46,090
13.2
%
LTL revenue per intercity mile
$
8.13
$
6.93
17.3
%
LTL revenue per hundredweight
$
28.13
$
23.96
17.4
%
LTL revenue per hundredweight, excluding
fuel surcharges
$
23.11
$
21.01
10.0
%
LTL revenue per shipment
$
446.86
$
384.76
16.1
%
LTL revenue per shipment, excluding fuel
surcharges
$
367.07
$
337.46
8.8
%
LTL weight per shipment (lbs.)
1,589
1,606
(1.1
)%
Average length of haul (miles)
939
928
1.2
%
Average active full-time employees
24,277
20,479
18.5
%
(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)
2022
2021
Cash and cash equivalents
$
262,122
$
462,564
Short-term investments
279,183
254,433
Other current assets
739,652
666,790
Total current assets
1,280,957
1,383,787
Net property and equipment
3,225,308
3,215,686
Other assets
216,385
222,071
Total assets
$
4,722,650
$
4,821,544
Current liabilities
$
578,596
$
464,234
Long-term debt
99,951
99,947
Other non-current liabilities
540,796
577,556
Total liabilities
1,219,343
1,141,737
Equity
3,503,307
3,679,807
Total liabilities & equity
$
4,722,650
$
4,821,544
Note: The financial and operating
statistics in this press release are unaudited.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220427005267/en/
Adam N. Satterfield Senior Vice President, Finance and Chief
Financial Officer (336) 822-5721
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