Operating Ratio Improves 120 Basis Points to
Third-Quarter Company Record of 81.2%
Old Dominion Freight Line, Inc. (NASDAQ: ODFL) today announced
financial results for the three-month and nine-month periods ended
September 30, 2017, which include the following:
Three Months Ended Nine Months Ended September
30, September 30,
(In thousands,
except per share amounts)
2017 2016 %
Chg.
2017 2016 %
Chg.
Revenue
$ 872,987 $ 782,611
11.5 %
$ 2,466,995 $ 2,245,779
9.9 % Operating
income
$ 163,875 $ 137,404
19.3 %
$ 432,429 $ 370,388
16.8 % Operating
ratio
81.2 % 82.4 %
82.5 % 83.5 % Net
income
$ 102,314 $ 85,581
19.6 %
$ 266,524 $ 227,254
17.3 % Basic
earnings per share
$ 1.24 $ 1.03
20.4 %
$ 3.24 $ 2.73
18.7 % Diluted earnings
per share
$ 1.24 $ 1.03
20.4 % $
3.23 $ 2.73
18.3 % Basic weighted average
shares outstanding
82,286 82,742
(0.6 )%
82,317 83,357
(1.2 )% Diluted weighted average
shares outstanding
82,381 82,811
(0.5 )%
82,418 83,390
(1.2 )%
“Old Dominion produced strong financial results during the third
quarter of 2017, which included an 11.5% increase in revenue and a
20.4% increase in earnings per share,” said David S. Congdon, Vice
Chairman and Chief Executive Officer of Old Dominion. “The
strengthening economy supported our third quarter revenue growth,
but we also believe that tightening industry capacity and pricing
increases accelerated the pace of our revenue growth for September.
Due to the upward trend in the industry pricing environment, our
ability to deliver superior service at a fair price has become a
critical competitive differentiator in the LTL industry. In
addition, the consistent investments in our service center network
and equipment provide us with the necessary capacity to win
additional market share.
“The Company’s revenue grew 11.5% for the third quarter, despite
having one less operating day than the third quarter of 2016. This
growth was attributable to an 8.6% increase in LTL tonnage per day,
as well as a 3.6% increase in LTL revenue per hundredweight. LTL
revenue per hundredweight, excluding fuel surcharges, rose 2.4%,
despite a 1.8% increase in LTL weight per shipment and a 0.6%
decrease in length of haul. Increases in weight per shipment and
decreases in length of haul typically reduce LTL revenue per
hundredweight metrics.
“Consistent with the long-term performance of our Company, the
improvement in freight density and yield created operating leverage
that resulted in a 120 basis-point improvement in our operating
ratio for the quarter. The increase in expense for salaries, wages
and benefits reflects a 3% average wage increase provided to
employees in early September 2017, as well as a 4.4% increase in
the average number of full-time employees for the quarter. Our team
of dedicated employees continued to provide industry-leading
customer service, which included on-time deliveries of 99% and a
cargo claims ratio of 0.2% for the third quarter of 2017. We intend
to hire additional employees throughout the fourth quarter to
increase the capacity of our workforce to support anticipated
growth.”
Cash Flow and Use of Capital
Old Dominion’s net cash provided by operating activities was
$149.5 million for the third quarter of 2017 and $388.0 million for
the first nine months of the year. The Company had $78.1 million in
cash and cash equivalents at the end of the third quarter and a
ratio of debt-to-total capitalization of 4.4% compared with 9.7% at
September 30, 2016.
Capital expenditures were $100.5 million for the third quarter
of 2017 and $288.8 million for the first nine months of the year.
The Company expects its capital expenditures for 2017 to total
approximately $400 million, including planned expenditures of $185
million for real estate and service center expansion projects, $170
million for tractors and trailers, and $45 million for technology
and other assets.
Old Dominion returned $9.1 million of capital to its
shareholders in the third quarter of 2017 and $32.7 million for the
first nine months of the year. For the first nine months, the total
includes $24.7 million in cash dividends and $8.0 million of share
repurchases, leaving $192.0 million available for share repurchases
under the Company’s current $250.0 million stock repurchase
program.
Summary
Mr. Congdon concluded, “The outstanding execution of our
long-term business model during the third quarter once again drove
Old Dominion’s strong, profitable growth. Our team of employees
were able to maintain best-in-class service while shipment volumes
accelerated, which provided a significant competitive advantage in
the LTL industry. We remain committed to investing in our business
to support future growth and are encouraged by recent shipment and
tonnage trends that have continued thus far during the fourth
quarter. We are confident that our proven strategy of delivering
superior service at a fair price will continue to produce long-term
growth in both our market share and 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 www.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 through November
26, 2017. A telephonic replay will also be available through
November 5, 2017, at (719) 457-0820, Confirmation Number
4933246.
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 change at any time at our discretion; (6) various
economic factors such as recessions, downturns in the economy,
global uncertainty and instability, changes in U.S. social,
political, and regulatory conditions or a disruption of financial
markets, which may decrease demand for our services; (7) increases
in driver compensation or difficulties attracting and retaining
qualified drivers to meet freight demand; (8) 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 levels and claims in excess of insured
coverage levels; (9) cost increases associated with employee
benefits, including costs associated with employee healthcare
plans; (10) the availability and cost of capital for our
significant ongoing cash requirements; (11) the availability and
cost of new equipment and replacement parts, including regulatory
changes and supply constraints that could impact the cost of these
assets; (12) decreases in demand for, and the value of, used
equipment; (13) the availability and cost of diesel fuel; (14) 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;
(15) 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 class-action allegations; (16)
the costs and potential liabilities related to governmental
proceedings, inquiries, notices or investigations; (17) the costs
and potential liabilities related to our international business
operations and relationships; (18) 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, including its Compliance, Safety,
Accountability initiative, and other regulatory agencies; (19)
seasonal trends in the less-than-truckload industry, including
harsh weather conditions and disasters; (20) our dependence on key
employees; (21) the concentration of our stock ownership with the
Congdon family; (22) the costs and potential adverse impact
associated with future changes in accounting standards or
practices; (23) potential costs associated with cyber incidents and
other risks, including system failure, security breach, disruption
by malware or other damage; (24) 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; (25) the costs and potential adverse
impact associated with transitional challenges in upgrading or
enhancing our technology systems; (26) damage to our reputation
through unfavorable publicity; (27) the costs and potential adverse
impact of compliance with anti-terrorism measures on our business;
(28) dilution to existing shareholders caused by any issuance of
additional equity; (29) the impact of a quarterly cash dividend or
the failure to declare future cash dividends; (30) fluctuations in
the market value of our common stock; (31) 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 (32) other risks and
uncertainties described in our most recent Annual Report on Form
10-K and other filings with the Securities and Exchange Commission.
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 (i) as 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, which include
ground and air expedited transportation and consumer household
pickup and delivery through a single integrated organization. In
addition to its core LTL services, the Company offers a range of
value-added services including container drayage, truckload
brokerage, supply chain consulting and warehousing.
OLD DOMINION FREIGHT LINE, INC. Statements of
Operations Third Quarter
Year to Date
(In thousands,
except per share amounts)
2017 2016 2017
2016 Revenue $ 872,987
100.0 % $ 782,611
100.0 % $ 2,466,995
100.0 % $ 2,245,779
100.0 % Operating expenses: Salaries,
wages & benefits 461,799 52.9 % 425,076 54.3 % 1,320,207 53.5 %
1,234,369 55.0 % Operating supplies & expenses 95,543 11.0 %
83,197 10.6 % 275,110 11.2 % 238,904 10.6 % General supplies &
expenses 28,785 3.3 % 22,010 2.8 % 79,940 3.2 % 65,930 2.9 %
Operating taxes & licenses 24,547 2.8 % 22,714 2.9 % 73,530 3.0
% 69,368 3.1 % Insurance & claims 10,700 1.2 % 10,185 1.3 %
28,804 1.2 % 29,792 1.3 % Communications & utilities 6,490 0.7
% 7,025 0.9 % 20,945 0.9 % 21,357 1.0 % Depreciation &
amortization 51,934 6.0 % 49,041 6.3 % 152,670 6.2 % 140,293 6.2 %
Purchased transportation 22,739 2.6 % 18,907 2.4 % 61,596 2.5 %
55,579 2.5 % Building and office equipment rents 2,018 0.2 % 2,050
0.3 % 6,114 0.2 % 6,487 0.3 % Miscellaneous expenses, net
4,557 0.5 % 5,002
0.6 % 15,650 0.6 % 13,312
0.6 % Total operating expenses 709,112
81.2 % 645,207
82.4 % 2,034,566 82.5 %
1,875,391 83.5 % Operating income
163,875 18.8 % 137,404 17.6 % 432,429 17.5 % 370,388 16.5 %
Non-operating expense (income): Interest expense 555 0.0 % 1,131
0.2 % 1,792 0.1 % 3,378 0.2 % Interest income (228 ) (0.0 )% (10 )
(0.0 )% (332 ) (0.0 )% (38 ) (0.0 )% Other (income) expense, net
(977 ) (0.1 )% 6
0.0 % (999 ) (0.1 )% 782
0.0 % Income before income taxes 164,525 18.9 %
136,277 17.4 % 431,968 17.5 % 366,266 16.3 % Provision for
income taxes 62,211 7.2 % 50,696
6.5 % 165,444 6.7
% 139,012 6.2 %
Net
income $ 102,314 11.7
% $ 85,581 10.9
% $ 266,524 10.8
% $ 227,254 10.1
% Earnings per share: Basic $ 1.24 $ 1.03 $
3.24 $ 2.73 Diluted 1.24 1.03 3.23 2.73
Weighted average
outstanding shares: Basic 82,286 82,742 82,317 83,357 Diluted
82,381 82,811 82,418 83,390
OLD DOMINION FREIGHT
LINE, INC. Operating Statistics
Third Quarter Year to Date
2017 2016 % Chg.
2017 2016 % Chg.
Work days 63 64 (1.6 )% 191 192 (0.5 )% Operating ratio 81.2 % 82.4
% 82.5 % 83.5 % LTL intercity miles (1) 156,343 148,993 4.9 %
447,086 435,563 2.6 % LTL tons (1) 2,190 2,049 6.9 % 6,308 5,997
5.2 % LTL tonnage per day 34,762 32,016 8.6 % 33,026 31,234 5.7 %
LTL shipments (1) 2,774 2,641 5.0 % 8,039 7,727 4.0 % LTL revenue
per intercity mile $ 5.46 $ 5.17 5.6 % $ 5.44 $ 5.08 7.1 % LTL
revenue per hundredweight $ 19.47 $ 18.79 3.6 % $ 19.28 $ 18.44 4.6
% LTL revenue per hundredweight, excluding fuel surcharges $ 17.31
$ 16.91 2.4 % $ 17.17 $ 16.69 2.9 % LTL revenue per shipment $
307.45 $ 291.51 5.5 % $ 302.52 $ 286.23 5.7 % LTL revenue per
shipment, excluding fuel surcharges $ 273.38 $ 262.35 4.2 % $
269.40 $ 259.06 4.0 % LTL weight per shipment (lbs.) 1,579 1,551
1.8 % 1,569 1,552 1.1 % Average length of haul (miles) 919 925 (0.6
)% 918 930 (1.3 )% Average full-time employees 18,257 17,489 4.4 %
17,804 17,581 1.3 %
(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)
2017 2016 Cash and cash equivalents $ 78,091 $ 10,171
Other current assets 435,004 372,451 Total current
assets 513,095 382,622 Net property and equipment 2,367,403
2,241,402 Other assets 75,672 72,223 Total assets $
2,956,170 $ 2,696,247 Current maturities of long-term debt $
50,000 $ — Other current liabilities 305,649 288,636
Total current liabilities 355,649 288,636 Long-term debt 45,000
104,975 Other non-current liabilities 468,505 451,478
Total liabilities 869,154 845,089 Equity 2,087,016
1,851,158 Total liabilities & equity $ 2,956,170 $ 2,696,247
Note: The financial and operating statistics in this press
release are unaudited.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171026005371/en/
Old Dominion Freight Line, Inc.Adam Satterfield,
336-822-5721Senior Vice President, Finance and Chief Financial
Officer
Old Dominion Freight Line (NASDAQ:ODFL)
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