Quarterly Cash Dividend to Increase 35.3% to
$0.23 Per Share
Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today announced
financial results for the three-month and twelve-month periods
ended December 31, 2019, which include the following:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
(In thousands,
except per share amounts)
2019
2018
%
Chg.
2019
2018
%
Chg.
Total revenue
$
1,009,206
$
1,026,944
(1.7
)%
$
4,109,111
$
4,043,695
1.6
%
LTL services revenue
$
996,603
$
1,011,259
(1.4
)%
$
4,055,467
$
3,982,658
1.8
%
Other services revenue
$
12,603
$
15,685
(19.6
)%
$
53,644
$
61,037
(12.1
)%
Operating income
$
188,264
$
218,845
(14.0
)%
$
818,706
$
817,051
0.2
%
Operating ratio
81.3
%
78.7
%
80.1
%
79.8
%
Net income
$
144,024
$
159,459
(9.7
)%
$
615,518
$
605,668
1.6
%
Diluted earnings per share
$
1.80
$
1.95
(7.7
)%
$
7.66
$
7.38
3.8
%
Diluted weighted average shares
outstanding
79,866
81,587
(2.1
)%
80,406
82,020
(2.0
)%
“Old Dominion’s financial results for the fourth quarter and
year reflect our continued focus on revenue quality and cost
control during a challenging operating environment,” said Greg C.
Gantt, President and Chief Executive Officer of Old Dominion
Freight Line. “The industrial economy remained sluggish during the
fourth quarter, which contributed to the year-over-year decrease in
revenue for the second straight quarter. Our tonnage also declined
compared to the fourth quarter last year, although we were pleased
to see our yield continue to improve and our volumes begin to
stabilize.
“Our revenue in the fourth quarter included a 4.5% reduction in
LTL tons that was partially offset by a 2.7% increase in LTL
revenue per hundredweight. Excluding fuel surcharges, our LTL
revenue per hundredweight increased 4.0% over the same period last
year. Although our volumes declined during the quarter, our
superior service allowed us to maintain our price discipline and
market share. Our industry-leading service included on‑time
performance of 99% and a cargo claims ratio of 0.2% during the
fourth quarter.
“The operating ratio for the fourth quarter increased 260 basis
points to 81.3%. Despite this increase, we operated with efficiency
during the quarter and also did a good job of managing our
discretionary costs. Our fringe benefit costs, however, were
significantly higher and increased to 39.7% of salaries and wages
as compared to 30.7% for the fourth quarter of 2018. Total fringe
benefit costs for the fourth quarter of 2019 included $17.1 million
of phantom stock expense that resulted from both the increase in
our share price during the quarter as well as the previously
disclosed plan amendments that were implemented in December
2019.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$236.4 million for the fourth quarter of 2019 and $983.9 million
for the year. The Company had $403.6 million in cash and cash
equivalents at December 31, 2019.
Capital expenditures were $109.0 million for the fourth quarter
of 2019 and $479.3 million for the year. The Company expects its
capital expenditures for 2020 to total approximately $315 million,
including planned expenditures of $245 million for real estate and
service center expansion projects; $20 million for tractors and
trailers; and $50 million for information technology and other
assets.
Old Dominion returned $49.2 million of capital to its
shareholders in the fourth quarter of 2019 and $295.5 million for
the year. The 2019 total consisted of $241.0 million of share
repurchases and $54.6 million of cash dividends.
Increase to Quarterly Cash Dividend
The Company’s Board of Directors has declared a first-quarter
dividend of $0.23 per share, which is a 35.3% increase to the
quarterly cash dividend paid in the first quarter of 2019. The
dividend is payable on March 18, 2020, to shareholders of record at
the close of business on March 4, 2020.
Summary
Mr. Gantt concluded, “Our proven ability to navigate through
challenging market conditions with consistent results reflects the
strength of Old Dominion’s team. Our annual results include Company
records for both revenue and diluted earnings per share, despite
the costs associated with an increase in service center capacity
that we believed was necessary to support additional market share
opportunities. Achieving our goal of long-term profitable growth
will require the continued execution of our strategic plan, which
is centered on delivering superior service at a fair price. In
addition, we will continue to invest in our service center network,
our technology and, most importantly, our OD Family of employees.
The combination of these investments and our outstanding service
record has differentiated Old Dominion from our competitors. We
remain focused on the opportunities ahead and believe that the
successful execution of our strategic plan will allow us to deliver
greater value to our shareholders.”
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 February 14, 2020, at (719) 457-0820, Confirmation Number
8210669.
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 competitive environment with respect to
industry capacity and pricing, including the use of fuel
surcharges, which could negatively impact our total overall pricing
strategy and our ability to cover our operating expenses; (2) 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; (3) the negative
impact of any unionization, or the passage of legislation or
regulations that could facilitate unionization, of our employees;
(4) the challenges associated with executing our growth strategy,
including our ability to successfully consummate and integrate any
acquisitions; (5) changes in our goals and strategies, which are
subject to revision at any time at our discretion; (6) 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; (7) changes in
relationships with our significant customers; (8) the impact of
changes in tax laws, rates, guidance and interpretations, including
those related to certain provisions of the Tax Cuts and Jobs Act;
(9) increases in driver and maintenance technician compensation or
difficulties attracting and retaining qualified drivers and
maintenance technicians to meet freight demand; (10) our exposure
to claims related to cargo loss and damage, property damage,
personal injury, workers’ compensation, group health and group
dental, including increased premiums, adverse loss development,
increased self-insured retention or deductible levels and claims in
excess of insured coverage levels; (11) cost increases associated
with employee benefits, including costs associated with employee
healthcare plans; (12) the availability and cost of capital for our
significant ongoing cash requirements; (13) the availability and
cost of new equipment and replacement parts, including regulatory
changes and supply constraints that could impact the cost of these
assets; (14) decreases in demand for, and the value of, used
equipment; (15) the availability and cost of diesel fuel; (16) the
costs and potential liabilities related to compliance with, or
violations of, existing or future governmental laws and
regulations, including environmental laws, engine emissions
standards, hours-of-service for our drivers, driver fitness
requirements and new safety standards for drivers and equipment;
(17) the costs and potential liabilities related to various legal
proceedings and claims that have arisen in the ordinary course of
our business, some of which include collective and/or class action
allegations; (18) the costs and potential liabilities related to
governmental proceedings, inquiries, notices or investigations;
(19) the costs and potential liabilities related to our
international business relationships; (20) the costs and potential
adverse impact of compliance with, or violations of, current and
future rules issued by the Department of Transportation, the
Federal Motor Carrier Safety Administration (the “FMCSA”) and other
regulatory agencies; (21) the costs and potential adverse impact of
compliance associated with FMCSA’s electronic logging device
(“ELD”) regulations and guidance, including the operation of our
fleet and safety management systems on the ELD hardware and
software platform; (22) seasonal trends in the less-than-truckload
(“LTL”) industry, including harsh weather conditions and disasters;
(23) our ability to retain our key employees and continue to
effectively execute our succession plan; (24) the concentration of
our stock ownership with the Congdon family; (25) the costs and
potential adverse impact associated with future changes in
accounting standards or practices; (26) potential costs and
liabilities associated with cyber incidents and other risks with
respect to our systems and networks or those of our third-party
service providers, including system failure, security breach,
disruption by malware or ransomware or other damage; (27) failure
to comply with data privacy, security or other laws and
regulations; (28) 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; (29) the costs and potential adverse impact associated
with transitional challenges in upgrading or enhancing our
technology systems; (30) legal, regulatory or market responses to
climate change concerns; (31) damage to our reputation through
unfavorable perceptions or publicity, including those related to
environmental, social and governance issues, cybersecurity and data
privacy concerns; (32) failure to adapt to new technologies
implemented by our competitors in the LTL and transportation
industry; (33) the costs and potential adverse impact of compliance
with anti-terrorism measures on our business; (34) dilution to
existing shareholders caused by any issuance of additional equity;
(35) the impact of a quarterly cash dividend or the failure to
declare future cash dividends; (36) fluctuations in the amount and
frequency of our stock repurchases; (37) recent and future
volatility in the market value of our common stock; (38) 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 (39) 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 a leading,
less-than-truckload (“LTL”), union-free motor carrier providing
regional, inter-regional and national LTL services through a single
integrated organization. Our service offerings, which include
expedited transportation, are provided through an expansive network
of service centers located throughout the continental United
States. Through strategic alliances, the Company also provides 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
Fourth Quarter
Year to Date
(In thousands,
except per share amounts)
2019
2018
2019
2018
Revenue
$
1,009,206
100.0
%
$
1,026,944
100.0
%
$
4,109,111
100.0
%
$
4,043,695
100.0
%
Operating expenses:
Salaries, wages & benefits
534,086
52.9
%
515,529
50.2
%
2,122,464
51.7
%
2,075,602
51.3
%
Operating supplies & expenses (1)
112,004
11.1
%
127,417
12.4
%
473,114
11.5
%
497,476
12.3
%
General supplies & expenses
26,391
2.6
%
28,104
2.7
%
123,975
3.0
%
119,180
2.9
%
Operating taxes & licenses
29,267
2.9
%
29,305
2.9
%
116,839
2.8
%
112,210
2.8
%
Insurance & claims
18,510
1.8
%
9,608
1.0
%
52,549
1.3
%
44,118
1.1
%
Communications & utilities
7,530
0.8
%
8,370
0.8
%
29,601
0.7
%
31,070
0.8
%
Depreciation & amortization
64,544
6.4
%
62,555
6.1
%
253,681
6.2
%
230,357
5.7
%
Purchased transportation
21,418
2.1
%
22,860
2.2
%
89,636
2.2
%
96,017
2.4
%
Miscellaneous expenses, net
7,192
0.7
%
4,351
0.4
%
28,546
0.7
%
20,614
0.5
%
Total operating expenses
820,942
81.3
%
808,099
78.7
%
3,290,405
80.1
%
3,226,644
79.8
%
Operating income
188,264
18.7
%
218,845
21.3
%
818,706
19.9
%
817,051
20.2
%
Non-operating (income) expense:
Interest expense
92
0.0
%
138
0.0
%
377
0.0
%
189
0.0
%
Interest income
(1,797
)
(0.2
)%
(1,211
)
(0.1
)%
(6,763
)
(0.2
)%
(3,113
)
(0.1
)%
Other expense, net
375
0.1
%
2,567
0.2
%
1,143
0.0
%
4,462
0.1
%
Income before income taxes
189,594
18.8
%
217,351
21.2
%
823,949
20.1
%
815,513
20.2
%
Provision for income taxes
45,570
4.5
%
57,892
5.7
%
208,431
5.1
%
209,845
5.2
%
Net income
$
144,024
14.3
%
$
159,459
15.5
%
$
615,518
15.0
%
$
605,668
15.0
%
Earnings per share:
Basic
$
1.81
$
1.96
$
7.67
$
7.39
Diluted
1.80
1.95
7.66
7.38
Weighted average outstanding
shares:
Basic
79,688
81,496
80,276
81,924
Diluted
79,866
81,587
80,406
82,020
(1)
Operating supplies and expenses include building and office
equipment rents that were separately disclosed on our Statements of
Operations in prior periods.
OLD DOMINION FREIGHT LINE,
INC.
Operating Statistics
Fourth Quarter
Year to Date
2019
2018
% Chg.
2019
2018
% Chg.
Work days
62
62
—
253
253
—
Operating ratio
81.3
%
78.7
%
80.1
%
79.8
%
LTL intercity miles (1) (2)
157,687
163,857
(3.8
)%
644,287
665,697
(3.2
)%
LTL tons (1)
2,173
2,275
(4.5
)%
8,964
9,379
(4.4
)%
LTL shipments (1)
2,751
2,870
(4.1
)%
11,491
11,748
(2.2
)%
LTL revenue per intercity mile (2)
$
6.29
$
6.18
1.8
%
$
6.30
$
5.99
5.2
%
LTL revenue per hundredweight
$
22.84
$
22.24
2.7
%
$
22.64
$
21.25
6.5
%
LTL revenue per hundredweight, excluding
fuel surcharges
$
19.92
$
19.16
4.0
%
$
19.72
$
18.38
7.3
%
LTL revenue per shipment
$
360.80
$
352.65
2.3
%
$
353.18
$
339.35
4.1
%
LTL revenue per shipment, excluding fuel
surcharges
$
314.70
$
303.80
3.6
%
$
307.67
$
293.42
4.9
%
LTL weight per shipment (lbs.)
1,580
1,586
(0.4
)%
1,560
1,597
(2.3
)%
Average length of haul (miles)
915
923
(0.9
)%
917
918
(0.1
)%
Average full-time employees
20,175
21,381
(5.6
)%
20,594
20,671
(0.4
)%
(1)
In thousands
(2)
Prior year intercity mile statistics have
been adjusted to exclude miles related to non-LTL shipments.
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
December 31,
December 31,
(In
thousands)
2019
2018
Cash and cash equivalents
$
403,571
$
190,282
Other current assets
463,263
515,947
Total current assets
866,834
706,229
Net property and equipment
2,968,835
2,754,943
Other assets (1)
159,899
84,111
Total assets
$
3,995,568
$
3,545,283
Current liabilities (1)
$
366,085
$
356,732
Long-term debt
45,000
45,000
Other non-current liabilities (1)
503,766
463,068
Total liabilities
914,851
864,800
Equity
3,080,717
2,680,483
Total liabilities & equity
$
3,995,568
$
3,545,283
(1)
On January 1, 2019, the Company adopted Accounting Standards
Update 2016-02, “Leases” (Topic 842), which resulted in the
recognition of right-of-use assets of approximately $65 million
with corresponding lease liabilities on our Balance Sheet as of
December 31, 2019.
Note: The financial and operating statistics in this press
release are unaudited.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200206005239/en/
Adam N. Satterfield Senior Vice President, Finance and Chief
Financial Officer (336) 822-5721
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