Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today announced
financial results for the three-month period ended March 31,
2023.
Three Months Ended
March 31,
(In thousands,
except per share amounts)
2023
2022
% Chg.
Total revenue
$
1,442,136
$
1,497,280
(3.7
)%
LTL services revenue
$
1,424,372
$
1,475,781
(3.5
)%
Other services revenue
$
17,764
$
21,499
(17.4
)%
Operating income
$
383,049
$
405,618
(5.6
)%
Operating ratio
73.4
%
72.9
%
Net income
$
285,038
$
299,751
(4.9
)%
Diluted earnings per share
$
2.58
$
2.60
(0.8
)%
Diluted weighted average shares
outstanding
110,679
115,173
(3.9
)%
Greg C. Gantt, President and Chief Executive Officer of Old
Dominion, commented, “Old Dominion’s first quarter financial
results reflect continued softness in the domestic economy and a
challenging operating environment. The resulting decrease in our
volumes contributed to our first decline in quarterly revenue and
earnings per diluted share in over two and a half years. The
decrease in LTL revenue included an 11.9% decrease in LTL tonnage
per day that was partially offset by a 9.2% increase in LTL revenue
per hundredweight. The combination of this decrease in revenue and
slight deterioration in our operating ratio contributed to the 0.8%
decrease in earnings per diluted share to $2.58 for the
quarter.
“Our daily tonnage decreased during the first quarter due to
decreases in LTL shipments per day and LTL weight per shipment of
9.6% and 2.5%, respectively. While our volumes decreased on a
year-over-year basis, our overall market share remained relatively
consistent and our yield continued to improve. LTL revenue per
hundredweight, excluding fuel surcharges, increased 8.6% due
primarily to the ongoing execution of our yield-management
strategy. We remained disciplined throughout the first quarter and
continued to focus on our consistent, cost-based approach to
managing yields and individual account profitability. In support of
this strategy, we also continued to provide superior service to our
customers that included 99% on-time service and a cargo claims
ratio of 0.1%.
“The operating ratio for the first quarter increased 50 basis
points to 73.4% as compared to the first quarter of 2022. While we
improved our direct costs as a percent of revenue, the decrease in
these costs was more than offset by an increase in our overhead
costs that are more fixed in nature. Many of these fixed cost
categories increased as a percent of revenue due to the
deleveraging effect associated with the decrease in revenue. In
addition, depreciation and certain operating supplies and expenses
increased as a result of our long-term investments in service
center and equipment capacity.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$415.4 million for the first quarter of 2023. The Company had
$207.6 million in cash and cash equivalents at March 31, 2023.
Capital expenditures were $234.7 million for the first quarter
of 2023. The Company expects its aggregate capital expenditures for
2023 to total approximately $700 million, including planned
expenditures of $260 million for real estate and service center
expansion projects; $365 million for tractors and trailers; and $75
million for information technology and other assets.
Old Dominion continued to return capital to shareholders during
the first quarter of 2023 through its share repurchase and dividend
programs. For the quarter, the cash utilized for shareholder return
programs included $141.7 million of share repurchases and $44.1
million of cash dividends.
Summary
Mr. Gantt concluded, “Old Dominion continues to execute our
proven long-term strategy that is centered on our ability to
deliver superior service at a fair price to our customers. This
value proposition has differentiated OD from other carriers in the
LTL industry and has served us well for many years throughout the
economic cycle. While the economic and operating environment has
become more challenging than we anticipated this year, we are
confident that our focus on managing the fundamental aspects of our
business will support our ability to continue to win market share
over the long term. As a result, we remain focused on making the
best decisions to help us navigate through the short term while
also positioning us to produce long-term 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 3, 2023, at (877) 344-7529, Access Code 6525435.
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 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
equipment and parts, including regulatory changes and supply
constraints that could impact the cost of these assets; (6)
increased costs, beyond what we may be able to recover through
price increases, including as a result of inflation; (7) the
availability and cost of suitable real estate; (8) the availability
and cost of third-party transportation used to supplement our
workforce and equipment needs; (9) 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; (10) seasonal trends in the less-than-truckload (“LTL”)
industry, including harsh weather conditions and disasters; (11)
the availability and cost of capital for our significant ongoing
cash requirements; (12) decreases in demand for, and the value of,
used equipment; (13) our ability to successfully consummate and
integrate acquisitions; (14) the costs and potential liabilities
related to our international business relationships; (15) the costs
and potential adverse impact of compliance with anti-terrorism
measures on our business; (16) the competitive environment with
respect to our industry, including pricing pressures; (17) various
economic factors such as recessions, inflation, 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;
(18) the negative impact of any unionization, or the passage of
legislation or regulations that could facilitate unionization, of
our employees; (19) 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; (20) our ability to retain our
key employees and continue to effectively execute our succession
plan; (21) 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; (22) 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; (23) 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; (24) disruption in the operational and technical services
(including software as a service) provided to us by third parties,
which could result in operational delays and/or increased costs;
(25) the Compliance, Safety, Accountability initiative of the
Federal Motor Carrier Safety Administration (“FMCSA”), which could
adversely impact our ability to hire qualified drivers, meet our
growth projections and maintain our customer relationships; (26)
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; (27) the
costs and potential liabilities related to compliance with, or
violations of, existing or future governmental laws and
regulations, including environmental laws; (28) the effects of
legal, regulatory or market responses to climate change concerns;
(29) the increase in costs associated with healthcare legislation
and other mandated benefits; (30) the costs and potential
liabilities related to legal proceedings and claims, governmental
inquiries, notices and investigations; (31) the impact of changes
in tax laws, rates, guidance and interpretations; (32) the
concentration of our stock ownership with the Congdon family; (33)
the ability or the failure to declare future cash dividends; (34)
fluctuations in the amount and frequency of our stock repurchases;
(35) volatility in the market value of our common stock; (36) 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 (37)
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)
2023
2022
Revenue
$
1,442,136
100.0
%
$
1,497,280
100.0
%
Operating expenses:
Salaries, wages & benefits
652,075
45.2
%
680,189
45.4
%
Operating supplies & expenses
192,384
13.3
%
191,357
12.8
%
General supplies & expenses
39,545
2.7
%
35,513
2.4
%
Operating taxes & licenses
36,701
2.6
%
35,076
2.3
%
Insurance & claims
16,028
1.1
%
16,107
1.1
%
Communications & utilities
11,017
0.8
%
9,876
0.7
%
Depreciation & amortization
75,947
5.3
%
67,340
4.5
%
Purchased transportation
30,615
2.1
%
52,500
3.5
%
Miscellaneous expenses, net
4,775
0.3
%
3,704
0.2
%
Total operating expenses
1,059,087
73.4
%
1,091,662
72.9
%
Operating income
383,049
26.6
%
405,618
27.1
%
Non-operating (income) expense:
Interest expense
200
0.0
%
73
0.0
%
Interest income
(2,811
)
(0.2
)%
(129
)
(0.0
)%
Other expense, net
1,511
0.2
%
605
0.1
%
Income before income taxes
384,149
26.6
%
405,069
27.0
%
Provision for income taxes
99,111
6.8
%
105,318
7.0
%
Net income
$
285,038
19.8
%
$
299,751
20.0
%
Earnings per share:
Basic
$
2.59
$
2.62
Diluted
$
2.58
$
2.60
Weighted average outstanding
shares:
Basic
109,956
114,419
Diluted
110,679
115,173
OLD DOMINION FREIGHT LINE,
INC.
Operating Statistics
First Quarter
2023
2022
% Chg.
Work days
64
64
0.0
%
Operating ratio
73.4
%
72.9
%
LTL intercity miles (1)
173,637
183,607
(5.4
)%
LTL tons (1)
2,339
2,653
(11.9
)%
LTL tonnage per day
36,540
41,454
(11.9
)%
LTL shipments (1)
3,018
3,340
(9.6
)%
LTL shipments per day
47,155
52,190
(9.6
)%
LTL revenue per intercity mile
$
8.27
$
8.13
1.7
%
LTL revenue per hundredweight
$
30.71
$
28.13
9.2
%
LTL revenue per hundredweight, excluding
fuel surcharges
$
25.09
$
23.11
8.6
%
LTL revenue per shipment
$
475.88
$
446.86
6.5
%
LTL revenue per shipment, excluding fuel
surcharges
$
388.82
$
367.07
5.9
%
LTL weight per shipment (lbs.)
1,550
1,589
(2.5
)%
Average length of haul (miles)
925
939
(1.5
)%
Average active full-time employees
22,971
24,277
(5.4
)%
(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)
2023
2022
Cash and cash equivalents
$
207,624
$
186,312
Short-term investments
24,807
49,355
Other current assets
664,519
698,073
Total current assets
896,950
933,740
Net property and equipment
3,841,464
3,687,068
Other assets
218,674
217,802
Total assets
$
4,957,088
$
4,838,610
Current maturities of long-term debt
$
20,000
$
20,000
Other current liabilities
549,520
509,793
Total current liabilities
569,520
529,793
Long-term debt
79,967
79,963
Other non-current liabilities
561,102
575,937
Total liabilities
1,210,589
1,185,693
Equity
3,746,499
3,652,917
Total liabilities & equity
$
4,957,088
$
4,838,610
Note: The financial and operating
statistics in this press release are unaudited.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230426005295/en/
Adam N. Satterfield Senior Vice President, Finance and Chief
Financial Officer (336) 822-5721
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