Operating Ratio Improves to 69.1%
Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today announced
financial results for the three-month and nine-month periods ended
September 30, 2022. The financial results for the third quarter of
2022 include a one-time reduction in salaries, wages and benefit
expense of $15.8 million attributable to the termination of the
employment agreement with the Company's Executive Chairman in
August 2022. While our Executive Chairman remains employed by the
Company, the termination of this agreement eliminated the accrued
obligations for certain post-employment benefits.
Three Months Ended
Nine Months Ended
September 30,
September 30,
(In thousands, except per share
amounts)
2022
2021
% Chg.
2022
2021
% Chg.
Total revenue
$
1,603,690
$
1,400,046
14.5
%
$
4,768,418
$
3,845,970
24.0
%
LTL services revenue
$
1,582,952
$
1,378,339
14.8
%
$
4,703,392
$
3,787,721
24.2
%
Other services revenue
$
20,738
$
21,707
(4.5
)%
$
65,026
$
58,249
11.6
%
Operating income
$
496,080
$
383,410
29.4
%
$
1,410,403
$
1,019,111
38.4
%
Operating ratio
69.1
%
72.6
%
70.4
%
73.5
%
Net income
$
377,401
$
286,634
31.7
%
$
1,053,230
$
755,569
39.4
%
Diluted earnings per share
$
3.36
$
2.47
36.0
%
$
9.26
$
6.48
42.9
%
Diluted weighted average shares
outstanding
112,295
116,162
(3.3
)%
113,747
116,656
(2.5
)%
Greg C. Gantt, President and Chief Executive Officer of Old
Dominion, commented, “Old Dominion’s third quarter financial
results included double-digit growth in both revenue and
profitability. We also improved our operating ratio on a
year-over-year basis for the eleventh straight quarter. These
results reflect our continued ability to deliver value to our
customers by providing superior service at a fair price.
Consistently executing on this key element of our long-term
strategic plan, regardless of the economic environment, is critical
to our ability to win long-term market share.
“Our revenue increased 14.5% during the third quarter of 2022
due primarily to the 17.4% increase in LTL revenue per
hundredweight, which more than offset the 2.6% decrease in LTL
tons. LTL revenue per hundredweight, excluding fuel surcharges,
increased 7.2% despite freight mix changes that generally had the
effect of reducing this metric. The improvement in yield reflects
our long-term strategy of obtaining consistent increases to offset
our cost inflation while also supporting our ongoing investments in
capacity. Delivering superior service is required to support our
yield-management strategy, and we were pleased to provide our
customers with 99% on-time service and a cargo claims ratio of 0.2%
during the third quarter.
“Our operating ratio improved to 69.1% for the third quarter of
2022. The increase in yield and our disciplined control over costs
allowed us to improve both our direct operating costs and overhead
costs as a percent of revenue during the quarter. Our salaries,
wages and benefit costs as a percent of revenue improved to 42.1%
from 46.4% in the third quarter of 2021, and our purchased
transportation costs improved 160 basis points to 2.1% of revenue.
These improvements more than offset the increase in operating
supplies and expenses as a percent of revenue that primarily
resulted from the significant increase in the cost of diesel fuel
and other petroleum-based products during the quarter.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$514.2 million for the third quarter of 2022 and $1.3 billion for
the first nine months of the year. The Company had $216.7 million
in cash and cash equivalents at September 30, 2022.
Capital expenditures were $181.7 million for the third quarter
of 2022 and $504.8 million for the first nine months of the year.
The Company expects its aggregate capital expenditures for 2022 to
total approximately $720 million, including planned expenditures of
$300 million for real estate and service center expansion projects;
$350 million for tractors and trailers; and $70 million for
information technology and other assets.
Old Dominion continued to return capital to shareholders during
the third quarter of 2022 through its share repurchase and dividend
programs. For the first nine months of this year, the cash utilized
for shareholder return programs included $1.1 billion of share
repurchases and $101.4 million of cash dividends.
Summary
Mr. Gantt concluded, “The Old Dominion team delivered revenue
growth and operating ratio improvement during the third quarter
that helped produce the 36.0% increase in our earnings per diluted
share. These financial results reflect the consistent execution of
our long-term strategic plan, which has continued to differentiate
Old Dominion from others in our industry. We are fully committed to
this plan and remain focused on providing our customers with
superior service at a fair price. We must also continue to invest
in our OD Family of employees, our fleet, and our service center
network to support our long-term growth initiatives. We have the
financial strength to support these initiatives and, despite
uncertainty with the domestic economy, we believe these ongoing
investments are necessary to drive the long-term success of our
business 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 November 2, 2022, at (877) 344-7529, Access Code
3324067.
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, as well as 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 less-than-truckload (“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) the 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
Third Quarter
Year to Date
(In thousands, except per share
amounts)
2022
2021
2022
2021
Revenue
$
1,603,690
100.0
%
$
1,400,046
100.0
%
$
4,768,418
100.0
%
$
3,845,970
100.0
%
Operating expenses:
Salaries, wages & benefits
675,084
42.1
%
649,685
46.4
%
2,060,983
43.2
%
1,806,862
47.0
%
Operating supplies & expenses
217,260
13.5
%
146,509
10.5
%
645,329
13.5
%
408,242
10.6
%
General supplies & expenses
45,951
2.9
%
37,312
2.7
%
120,580
2.5
%
102,907
2.7
%
Operating taxes & licenses
35,753
2.2
%
34,028
2.4
%
105,781
2.2
%
98,550
2.6
%
Insurance & claims
17,491
1.1
%
15,674
1.1
%
50,562
1.1
%
43,579
1.1
%
Communications & utilities
10,288
0.6
%
8,738
0.6
%
30,062
0.6
%
25,324
0.7
%
Depreciation & amortization
68,347
4.4
%
65,160
4.7
%
203,997
4.4
%
193,094
5.0
%
Purchased transportation
34,453
2.1
%
52,037
3.7
%
129,634
2.7
%
130,678
3.4
%
Miscellaneous expenses, net
2,983
0.2
%
7,493
0.5
%
11,087
0.2
%
17,623
0.4
%
Total operating expenses
1,107,610
69.1
%
1,016,636
72.6
%
3,358,015
70.4
%
2,826,859
73.5
%
Operating income
496,080
30.9
%
383,410
27.4
%
1,410,403
29.6
%
1,019,111
26.5
%
Non-operating expense (income):
Interest expense
997
0.1
%
371
0.0
%
1,283
0.0
%
1,343
0.0
%
Interest income
(1,333
)
(0.1
)%
(178
)
(0.0
)%
(1,933
)
(0.0
)%
(660
)
(0.0
)%
Other expense, net
351
0.0
%
266
0.0
%
1,706
0.0
%
1,781
0.1
%
Income before income taxes
496,065
30.9
%
382,951
27.4
%
1,409,347
29.6
%
1,016,647
26.4
%
Provision for income taxes
118,664
7.4
%
96,317
6.9
%
356,117
7.5
%
261,078
6.8
%
Net income
$
377,401
23.5
%
$
286,634
20.5
%
$
1,053,230
22.1
%
$
755,569
19.6
%
Earnings per share:
Basic
$
3.38
$
2.48
$
9.32
$
6.52
Diluted
$
3.36
$
2.47
$
9.26
$
6.48
Weighted average outstanding
shares:
Basic
111,569
115,411
113,012
115,906
Diluted
112,295
116,162
113,747
116,656
OLD DOMINION FREIGHT LINE,
INC.
Operating Statistics
Third Quarter
Year to Date
2022
2021
% Chg.
2022
2021
% Chg.
Work days
64
64
0.0
%
192
191
0.5
%
Operating ratio
69.1
%
72.6
%
70.4
%
73.5
%
LTL intercity miles (1)
190,626
184,812
3.1
%
568,960
524,924
8.4
%
LTL tons (1)
2,556
2,625
(2.6
)%
7,881
7,555
4.3
%
LTL tonnage per day
39,941
41,020
(2.6
)%
41,047
39,556
3.8
%
LTL shipments (1)
3,274
3,413
(4.1
)%
10,013
9,624
4.0
%
LTL shipments per day
51,162
53,335
(4.1
)%
52,149
50,388
3.5
%
LTL revenue per intercity mile
$
8.29
$
7.47
11.0
%
$
8.29
$
7.24
14.5
%
LTL revenue per hundredweight
$
30.90
$
26.31
17.4
%
$
29.93
$
25.17
18.9
%
LTL revenue per hundredweight, excluding
fuel surcharges
$
24.15
$
22.52
7.2
%
$
23.65
$
21.76
8.7
%
LTL revenue per shipment
$
482.46
$
404.65
19.2
%
$
471.13
$
395.16
19.2
%
LTL revenue per shipment, excluding fuel
surcharges
$
377.14
$
346.46
8.9
%
$
372.23
$
341.69
8.9
%
LTL weight per shipment (lbs.)
1,561
1,538
1.5
%
1,574
1,570
0.3
%
Average length of haul (miles)
932
940
(0.9
)%
935
933
0.2
%
Average active full-time employees
24,587
22,682
8.4
%
24,586
21,594
13.9
%
(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
September 30,
December 31,
(In thousands)
2022
2021
Cash and cash equivalents
$
216,727
$
462,564
Short-term investments
158,829
254,433
Other current assets
735,641
666,790
Total current assets
1,111,197
1,383,787
Net property and equipment
3,491,511
3,215,686
Other assets
208,685
222,071
Total assets
$
4,811,393
$
4,821,544
Current maturities of long-term debt
$
20,000
$
—
Other current liabilities
619,327
464,234
Total current liabilities
639,327
464,234
Long-term debt
79,959
99,947
Other non-current liabilities
533,937
577,556
Total liabilities
1,253,223
1,141,737
Equity
3,558,170
3,679,807
Total liabilities & equity
$
4,811,393
$
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/20221026005292/en/
Adam N. Satterfield Senior Vice President, Finance and Chief
Financial Officer (336) 822-5721
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