Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today announced
financial results for the three-month and six-month periods ended
June 30, 2023.
Three Months Ended
Six Months Ended
June 30,
June 30,
(In thousands, except per share
amounts)
2023
2022
% Chg.
2023
2022
% Chg.
Total revenue
$
1,413,189
$
1,667,448
(15.2
)%
$
2,855,325
$
3,164,728
(9.8
)%
LTL services revenue
$
1,397,815
$
1,644,659
(15.0
)%
$
2,822,187
$
3,120,440
(9.6
)%
Other services revenue
$
15,374
$
22,789
(32.5
)%
$
33,138
$
44,288
(25.2
)%
Operating income
$
391,594
$
508,705
(23.0
)%
$
774,643
$
914,323
(15.3
)%
Operating ratio
72.3
%
69.5
%
72.9
%
71.1
%
Net income
$
292,362
$
376,078
(22.3
)%
$
577,400
$
675,829
(14.6
)%
Diluted earnings per share
$
2.65
$
3.30
(19.7
)%
$
5.23
$
5.90
(11.4
)%
Diluted weighted average shares
outstanding
110,199
113,805
(3.2
)%
110,438
114,485
(3.5
)%
Marty Freeman, President and Chief Executive Officer of Old
Dominion, commented, “Old Dominion’s second quarter financial
results reflect continued softness in the domestic economy. The
resulting weakness in volumes contributed to the 15.2% decrease in
our total revenue. Our team effectively managed our variable costs
during the quarter while also delivering superior service, which
supported our ongoing yield-management initiatives. The combination
of these efforts allowed us to produce a 72.3% operating ratio and
earnings per diluted share of $2.65.
“The decrease in revenue was primarily due to the 14.1% decrease
in LTL tons per day and 1.1% decrease in LTL revenue per
hundredweight. This yield metric was impacted by the significant
decrease in the price of diesel fuel, as our LTL revenue per
hundredweight, excluding fuel surcharges, increased 7.6% during the
quarter. We remain focused on consistently increasing our yield to
offset cost inflation and support our ongoing investments in
capacity. Our ability to consistently offer network capacity is a
key component of our value proposition. We believe this
differentiates us from others in our industry and will continue to
support our long-term market share initiatives.
“Our operating ratio increased 280 basis points to 72.3% for the
second quarter of 2023. This change was primarily due to the
increase in overhead costs as a percent of revenue, as our direct
operating costs remained consistent as a percent of revenue between
the periods compared. The increase in our overhead cost categories
was primarily due to the deleveraging effect associated with the
decrease in our revenue. In addition, our aggregate depreciation
expenses increased due to the ongoing execution of our capital
expenditure plan.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$287.8 million for the second quarter of 2023 and $703.2 million
for the first half of the year. The Company had $55.1 million in
cash and cash equivalents at June 30, 2023.
Capital expenditures were $244.7 million for the second quarter
of 2023 and $479.4 million for the first half of the year. 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 second quarter of 2023 through its share repurchase and
dividend programs. For the first six months of this year, the cash
utilized for shareholder return programs included $302.2 million of
share repurchases and $87.8 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 $3.0
billion of its outstanding stock. This new repurchase program will
begin after the completion of the Company’s existing $2.0 billion
repurchase program, which had $376.9 million remaining available
and uncommitted at June 30, 2023. 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 and
existing share repurchase programs do 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. Freeman concluded, “The OD Family of employees continued to
execute our long-term strategic plan during the second quarter, and
we believe our financial results prove the power of our business
model. Our team continued to deliver superior service at a fair
price and, as a result, our market share has remained relatively
consistent in an environment where overall freight demand was
subdued. We will continue to execute on the same business
strategies that have guided us for many years, and throughout many
economic cycles, to be prepared for the eventual inflection in the
demand environment. We are confident in our long-term market share
opportunities and believe that our service and capacity advantages
in the marketplace will allow us to capitalize on future revenue
growth opportunities.”
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 2, 2023, at (877) 344-7529, Access Code 7609314.
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
Second Quarter
Year to Date
(In thousands, except per share
amounts)
2023
2022
2023
2022
Revenue
$
1,413,189
100.0
%
$
1,667,448
100.0
%
$
2,855,325
100.0
%
$
3,164,728
100.0
%
Operating expenses:
Salaries, wages & benefits
642,841
45.5
%
705,710
42.3
%
1,294,916
45.4
%
1,385,899
43.8
%
Operating supplies & expenses
165,373
11.7
%
236,712
14.2
%
357,757
12.5
%
428,069
13.5
%
General supplies & expenses
38,606
2.8
%
39,116
2.3
%
78,151
2.7
%
74,629
2.4
%
Operating taxes & licenses
36,890
2.6
%
34,952
2.1
%
73,591
2.6
%
70,028
2.2
%
Insurance & claims
15,381
1.1
%
16,964
1.0
%
31,409
1.1
%
33,071
1.0
%
Communications & utilities
11,515
0.8
%
9,898
0.6
%
22,532
0.8
%
19,774
0.6
%
Depreciation & amortization
79,784
5.6
%
68,310
4.1
%
155,731
5.4
%
135,650
4.3
%
Purchased transportation
28,596
2.0
%
42,681
2.6
%
59,211
2.1
%
95,181
3.0
%
Miscellaneous expenses, net
2,609
0.2
%
4,400
0.3
%
7,384
0.3
%
8,104
0.3
%
Total operating expenses
1,021,595
72.3
%
1,158,743
69.5
%
2,080,682
72.9
%
2,250,405
71.1
%
Operating income
391,594
27.7
%
508,705
30.5
%
774,643
27.1
%
914,323
28.9
%
Non-operating (income) expense:
Interest expense
89
0.0
%
213
0.0
%
289
0.0
%
286
0.0
%
Interest income
(2,368
)
(0.1
)%
(471
)
(0.0
)%
(5,179
)
(0.2
)%
(600
)
(0.0
)%
Other expense, net
1,947
0.1
%
750
0.0
%
3,458
0.1
%
1,355
0.0
%
Income before income taxes
391,926
27.7
%
508,213
30.5
%
776,075
27.2
%
913,282
28.9
%
Provision for income taxes
99,564
7.0
%
132,135
7.9
%
198,675
7.0
%
237,453
7.5
%
Net income
$
292,362
20.7
%
$
376,078
22.6
%
$
577,400
20.2
%
$
675,829
21.4
%
Earnings per share:
Basic
$
2.67
$
3.33
$
5.26
$
5.94
Diluted
$
2.65
$
3.30
$
5.23
$
5.90
Weighted average outstanding
shares:
Basic
109,521
113,079
109,737
113,745
Diluted
110,199
113,805
110,438
114,485
OLD DOMINION FREIGHT LINE,
INC.
Operating Statistics
Second Quarter
Year to Date
2023
2022
% Chg.
2023
2022
% Chg.
Work days
64
64
-
%
128
128
-
%
Operating ratio
72.3
%
69.5
%
72.9
%
71.1
%
LTL intercity miles (1)
170,294
194,726
(12.5
)%
343,932
378,333
(9.1
)%
LTL tons (1)
2,296
2,672
(14.1
)%
4,635
5,325
(13.0
)%
LTL tonnage per day
35,878
41,746
(14.1
)%
36,209
41,600
(13.0
)%
LTL shipments (1)
3,008
3,398
(11.5
)%
6,026
6,738
(10.6
)%
LTL shipments per day
46,998
53,096
(11.5
)%
47,077
52,643
(10.6
)%
LTL revenue per intercity mile
$
8.21
$
8.45
(2.8
)%
$
8.24
$
8.29
(0.6
)%
LTL revenue per hundredweight
$
30.44
$
30.78
(1.1
)%
$
30.58
$
29.46
3.8
%
LTL revenue per hundredweight, excluding
fuel surcharges
$
25.50
$
23.69
7.6
%
$
25.29
$
23.40
8.1
%
LTL revenue per shipment
$
464.79
$
484.08
(4.0
)%
$
470.34
$
465.63
1.0
%
LTL revenue per shipment, excluding fuel
surcharges
$
389.39
$
372.56
4.5
%
$
389.10
$
369.84
5.2
%
LTL weight per shipment (lbs.)
1,527
1,572
(2.9
)%
1,538
1,580
(2.7
)%
Average length of haul (miles)
925
934
(1.0
)%
925
937
(1.3
)%
Average active full-time employees
22,438
24,893
(9.9
)%
22,705
24,585
(7.6
)%
(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)
2023
2022
Cash and cash equivalents
$
55,141
$
186,312
Short-term investments
—
49,355
Other current assets
675,468
698,073
Total current assets
730,609
933,740
Net property and equipment
4,001,099
3,687,068
Other assets
247,224
217,802
Total assets
$
4,978,932
$
4,838,610
Current maturities of long-term debt
$
20,000
$
20,000
Other current liabilities
483,018
509,793
Total current liabilities
503,018
529,793
Long-term debt
59,970
79,963
Other non-current liabilities
583,909
575,937
Total liabilities
1,146,897
1,185,693
Equity
3,832,035
3,652,917
Total liabilities & equity
$
4,978,932
$
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/20230726694679/en/
Adam N. Satterfield Executive Vice President and Chief Financial
Officer (336) 822-5721
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