Old Dominion Freight Line Reports 8.5% Growth In Second Quarter Earnings Per Diluted Share to $2.16

Produces Company Record Operating Ratio of 77.9%

THOMASVILLE, N.C.–(BUSINESS WIRE)–$ODFL–Old Dominion Freight Line, Inc. (Nasdaq: ODFL) today announced financial results for the three-month and six-month periods ended June 30, 2019, which include the following:

 

Three Months Ended

 

 

 

 

 

Six Months Ended

 

 

 

 

 

June 30,

 

 

 

 

 

June 30,

 

 

 

 

(In thousands, except per share amounts)

2019

 

2018

 

%

Chg.

 

 

2019

 

2018

 

%

Chg.

 

Total revenue

$

1,060,666

 

 

$

1,033,498

 

 

 

2.6

%

 

 

$

2,051,448

 

 

$

1,958,518

 

 

 

4.7

%

 

LTL services revenue

$

1,047,208

 

 

$

1,018,491

 

 

 

2.8

%

 

 

$

2,023,771

 

 

$

1,929,545

 

 

 

4.9

%

 

Other services revenue

$

13,458

 

 

$

15,007

 

 

 

(10.3

)%

 

 

$

27,677

 

 

$

28,973

 

 

 

(4.5

)%

 

Operating income

$

234,489

 

 

$

220,481

 

 

 

6.4

%

 

 

$

412,915

 

 

$

369,821

 

 

 

11.7

%

 

Operating ratio

 

77.9

%

 

 

78.7

%

 

 

 

 

 

 

 

79.9

%

 

 

81.1

%

 

 

 

 

 

Net income

$

174,072

 

 

$

163,434

 

 

 

6.5

%

 

 

$

307,395

 

 

$

272,767

 

 

 

12.7

%

 

Diluted earnings per share

$

2.16

 

 

$

1.99

 

 

 

8.5

%

 

 

$

3.80

 

 

$

3.32

 

 

 

14.5

%

 

Diluted weighted average shares outstanding

 

80,645

 

 

 

82,170

 

 

 

(1.9

)%

 

 

 

80,893

 

 

 

82,262

 

 

 

(1.7

)%

 

“Old Dominion’s financial results for the second quarter of 2019 include new Company records for revenue, operating ratio and earnings per diluted share,” said Greg C. Gantt, President and Chief Executive Officer of Old Dominion. “We were especially pleased to produce these quarterly financial records during a period with lower LTL shipments and tonnage, which reflects the ongoing softer demand environment. Maintaining our long-term, consistent approach to pricing may have also contributed to the decrease in our volumes. The strength of our yield, however, allowed us to increase our revenue and also contributed to the improvement in our operating ratio. We intend to maintain our disciplined approach to yield management and believe the pricing environment has remained relatively stable.

“The increase in LTL revenue in the second quarter was driven by a 9.5% increase in LTL revenue per hundredweight that was partially offset by a 6.3% decline in LTL tonnage for the quarter. The decrease in LTL tonnage was primarily attributable to a 3.8% decrease in LTL weight per shipment and a 2.6% decrease in LTL shipments. The decrease in LTL weight per shipment was expected and also contributed to the increase in our LTL revenue per hundredweight. We expect our LTL weight per shipment in the second half of 2019 to be more consistent with the second half of 2018.

“Our operating ratio for the second quarter of 2019 improved to 77.9% from 78.7% for the same period last year. The increased efficiency of our operations and our continued focus on cost management allowed us to improve our direct operating costs as a percent of revenue, which more than offset the increase in overhead costs. The combination of our revenue growth and improved operating ratio allowed us to increase earnings per diluted share by 8.5% to $2.16 for the second quarter.”

Cash Flow and Use of Capital

Old Dominion’s net cash provided by operating activities was $255.7 million for the second quarter of 2019 and $461.9 million for the first half of the year. The Company had $229.0 million in cash and cash equivalents at the end of the second quarter of 2019.

Capital expenditures were $159.2 million for the second quarter of 2019 and $230.0 million for the first six months of the year. The Company expects its capital expenditures for 2019 to total approximately $480 million, including planned expenditures of $220 million for real estate and service center expansion projects; $165 million for tractors and trailers; and $95 million for information technology and other assets.

Old Dominion returned $147.8 million of capital to its shareholders in the second quarter of 2019 and $192.2 million for the first half of the year. For the first half, this total consisted of $164.7 million of share repurchases and $27.4 million of cash dividends.

Summary

Mr. Gantt concluded, “Old Dominion produced strong financial results for the first half of 2019 – record-breaking results for our Company – that demonstrate the consistency of our business model. Our ability to improve our operating ratio in each of the first and second quarters of 2019, despite declines in tonnage for both periods, reaffirms our commitment to our long-term business plan that has been so successful for us throughout many economic cycles. This plan is centered on providing our customers with a value proposition of superior service at a fair price and regularly investing in service center capacity to support our long-term market share goals. It is also important for us to continue to invest in the education and training of our employees, who consistently operate with great efficiency and remain focused on providing on-time and claims-free service. We are confident in our team’s ability to execute on the fundamental aspects of our business, which we believe will continue to produce long-term growth in earnings 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 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, 2019, at (719) 457-0820, Confirmation Number 7082211.

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) the impact of changes in tax laws, rates, guidance and interpretations, including those related to certain provisions of the Tax Cuts and Jobs Act; (8) increases in driver and maintenance technician compensation or difficulties attracting and retaining qualified drivers and maintenance technicians to meet freight demand; (9) 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; (10) cost increases associated with employee benefits, including costs associated with employee healthcare plans; (11) the availability and cost of capital for our significant ongoing cash requirements; (12) the availability and cost of new equipment and replacement parts, including regulatory changes and supply constraints that could impact the cost of these assets; (13) decreases in demand for, and the value of, used equipment; (14) the availability and cost of diesel fuel; (15) 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; (16) 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; (17) the costs and potential liabilities related to governmental proceedings, inquiries, notices or investigations; (18) the costs and potential liabilities related to our international business relationships; (19) 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; (20) the costs and potential adverse impact of compliance associated with FMCSA’s electronic logging device (“ELD”) regulations and guidance, including the transition of our fleet and safety management systems from our legacy electronic automatic on-board recording devices to a new ELD hardware and software platform; (21) seasonal trends in the less-than-truckload industry, including harsh weather conditions and disasters; (22) our ability to retain our key employees and continue to effectively execute our succession plan; (23) the concentration of our stock ownership with the Congdon family; (24) the costs and potential adverse impact associated with future changes in accounting standards or practices; (25) 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; (26) failure to comply with data privacy, security or other laws and regulations; (27) 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; (28) the costs and potential adverse impact associated with transitional challenges in upgrading or enhancing our technology systems; (29) damage to our reputation through unfavorable perceptions or publicity, including those related to environmental, social and governance issues, cybersecurity and data privacy concerns; (30) the costs and potential adverse impact of compliance with anti-terrorism measures on our business; (31) dilution to existing shareholders caused by any issuance of additional equity; (32) the impact of a quarterly cash dividend or the failure to declare future cash dividends; (33) recent and future volatility in the market value of our common stock; (34) 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 (35) 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

Year to Date

(In thousands, except per share amounts)

2019

 

2018

 

2019

 

2018

Revenue

$

1,060,666

 

 

100.0

%

 

 

$

1,033,498

 

 

100.0

%

 

 

$

2,051,448

 

 

100.0

%

 

 

$

1,958,518

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages & benefits

 

532,583

 

 

50.2

%

 

 

 

522,249

 

 

50.5

%

 

 

 

1,054,927

 

 

51.4

%

 

 

 

1,023,560

 

 

52.3

%

 

Operating supplies & expenses (1)

 

122,410

 

 

11.5

%

 

 

 

126,566

 

 

12.3

%

 

 

 

243,767

 

 

11.9

%

 

 

 

242,502

 

 

12.4

%

 

General supplies & expenses

 

32,391

 

 

3.1

%

 

 

 

29,891

 

 

2.9

%

 

 

 

63,951

 

 

3.1

%

 

 

 

59,867

 

 

3.1

%

 

Operating taxes & licenses

 

29,384

 

 

2.8

%

 

 

 

28,165

 

 

2.7

%

 

 

 

58,455

 

 

2.9

%

 

 

 

54,953

 

 

2.8

%

 

Insurance & claims

 

11,587

 

 

1.1

%

 

 

 

11,342

 

 

1.1

%

 

 

 

22,759

 

 

1.1

%

 

 

 

22,441

 

 

1.1

%

 

Communications & utilities

 

6,134

 

 

0.6

%

 

 

 

7,439

 

 

0.7

%

 

 

 

13,973

 

 

0.7

%

 

 

 

14,485

 

 

0.7

%

 

Depreciation & amortization

 

62,571

 

 

5.9

%

 

 

 

56,235

 

 

5.5

%

 

 

 

125,644

 

 

6.1

%

 

 

 

109,716

 

 

5.6

%

 

Purchased transportation

 

24,468

 

 

2.3

%

 

 

 

26,044

 

 

2.5

%

 

 

 

45,155

 

 

2.2

%

 

 

 

47,784

 

 

2.4

%

 

Miscellaneous expenses, net

 

4,649

 

 

0.4

%

 

 

 

5,086

 

 

0.5

%

 

 

 

9,902

 

 

0.5

%

 

 

 

13,389

 

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

826,177

 

 

77.9

%

 

 

 

813,017

 

 

78.7

%

 

 

 

1,638,533

 

 

79.9

%

 

 

 

1,588,697

 

 

81.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

234,489

 

 

22.1

%

 

 

 

220,481

 

 

21.3

%

 

 

 

412,915

 

 

20.1

%

 

 

 

369,821

 

 

18.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

160

 

 

0.0

%

 

 

 

11

 

 

0.0

%

 

 

 

282

 

 

0.0

%

 

 

 

22

 

 

0.0

%

 

Interest income

 

(1,769

)

 

(0.2

)%

 

 

 

(668

)

 

(0.1

)%

 

 

 

(3,252

)

 

(0.2

)%

 

 

 

(1,124

)

 

(0.0

)%

 

Other expense (income), net

 

524

 

 

0.1

%

 

 

 

(334

)

 

(0.0

)%

 

 

 

(76

)

 

(0.0

)%

 

 

 

1,965

 

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

235,574

 

 

22.2

%

 

 

 

221,472

 

 

21.4

%

 

 

 

415,961

 

 

20.3

%

 

 

 

368,958

 

 

18.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

61,502

 

 

5.8

%

 

 

 

58,038

 

 

5.6

%

 

 

 

108,566

 

 

5.3

%

 

 

 

96,191

 

 

4.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

174,072

 

 

16.4

%

 

 

$

163,434

 

 

15.8

%

 

 

$

307,395

 

 

15.0

%

 

 

$

272,767

 

 

13.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

2.16

 

 

 

 

 

 

$

1.99

 

 

 

 

 

 

$

3.81

 

 

 

 

 

 

$

3.32

 

 

 

 

 

Diluted

 

2.16

 

 

 

 

 

 

 

1.99

 

 

 

 

 

 

 

3.80

 

 

 

 

 

 

 

3.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average outstanding shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

80,522

 

 

 

 

 

 

 

82,068

 

 

 

 

 

 

 

80,776

 

 

 

 

 

 

 

82,160

 

 

 

 

 

Diluted

 

80,645

 

 

 

 

 

 

 

82,170

 

 

 

 

 

 

 

80,893

 

 

 

 

 

 

 

82,262

 

 

 

 

 

(1)

Operating supplies and expenses includes building and office equipment rents that were separately disclosed on our Statements of Operations in prior periods.

OLD DOMINION FREIGHT LINE, INC.

Operating Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter

 

Year to Date

 

 

2019

 

2018

 

% Chg.

 

2019

 

2018

 

% Chg.

Work days

 

 

64

 

 

 

64

 

 

 

%

 

 

 

127

 

 

 

128

 

 

 

(0.8

)%

 

Operating ratio

 

 

77.9

%

 

 

78.7

%

 

 

 

 

 

 

 

79.9

%

 

 

81.1

%

 

 

 

 

 

LTL intercity miles (1) (2)

 

 

163,884

 

 

 

171,779

 

 

 

(4.6

)%

 

 

 

323,539

 

 

 

330,934

 

 

 

(2.2

)%

 

LTL tons (1)

 

 

2,306

 

 

 

2,462

 

 

 

(6.3

)%

 

 

 

4,512

 

 

 

4,736

 

 

 

(4.7

)%

 

LTL tonnage per day

 

 

36,031

 

 

 

38,469

 

 

 

(6.3

)%

 

 

 

35,528

 

 

 

37,000

 

 

 

(4.0

)%

 

LTL shipments (1)

 

 

2,970

 

 

 

3,049

 

 

 

(2.6

)%

 

 

 

5,789

 

 

 

5,837

 

 

 

(0.8

)%

 

LTL shipments per day

 

 

46,406

 

 

 

47,641

 

 

 

(2.6

)%

 

 

 

45,583

 

 

 

45,602

 

 

 

(0.0

)%

 

LTL revenue per intercity mile (2)

 

$

6.40

 

 

$

5.94

 

 

 

7.7

%

 

 

$

6.25

 

 

$

5.86

 

 

 

6.7

%

 

LTL revenue per hundredweight

 

$

22.72

 

 

$

20.74

 

 

 

9.5

%

 

 

$

22.42

 

 

$

20.46

 

 

 

9.6

%

 

LTL revenue per hundredweight, excluding fuel surcharges

 

$

19.73

 

 

$

17.94

 

 

 

10.0

%

 

 

$

19.50

 

 

$

17.76

 

 

 

9.8

%

 

LTL revenue per shipment

 

$

352.88

 

 

$

334.95

 

 

 

5.4

%

 

 

$

349.54

 

 

$

332.00

 

 

 

5.3

%

 

LTL revenue per shipment, excluding fuel surcharges

 

$

306.37

 

 

$

289.69

 

 

 

5.8

%

 

 

$

304.03

 

 

$

288.24

 

 

 

5.5

%

 

LTL weight per shipment (lbs.)

 

 

1,553

 

 

 

1,615

 

 

 

(3.8

)%

 

 

 

1,559

 

 

 

1,623

 

 

 

(3.9

)%

 

Average length of haul (miles)

 

 

917

 

 

 

915

 

 

 

0.2

%

 

 

 

918

 

 

 

915

 

 

 

0.3

%

 

Average full-time employees

 

 

20,735

 

 

 

20,501

 

 

 

1.1

%

 

 

 

20,890

 

 

 

20,044

 

 

 

4.2

%

 

(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

 

 

 

 

 

 

 

 

 

June 30,

 

December 31,

(In thousands)

2019

 

2018

Cash and cash equivalents

$

228,960

 

 

$

190,282

 

Other current assets

 

512,460

 

 

 

515,947

 

Total current assets

 

741,420

 

 

 

706,229

 

Net property and equipment

 

2,858,171

 

 

 

2,754,943

 

Other assets (1)

 

159,112

 

 

 

84,111

 

Total assets

$

3,758,703

 

 

$

3,545,283

 

 

 

 

 

 

 

 

 

Current liabilities (1)

 

386,105

 

 

 

356,732

 

Long-term debt

 

45,000

 

 

 

45,000

 

Other non-current liabilities (1)

 

529,113

 

 

 

463,068

 

Total liabilities

 

960,218

 

 

 

864,800

 

Equity

 

2,798,485

 

 

 

2,680,483

 

Total liabilities & equity

$

3,758,703

 

 

$

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 $67 million with corresponding lease liabilities on our Condensed Balance Sheet as of June 30, 2019.

Note: The financial and operating statistics in this press release are unaudited.

Contacts

Adam N. Satterfield

Senior Vice President, Finance and

Chief Financial Officer

(336) 822-5721

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