Old Dominion Freight Line Announces Earnings Per Diluted Share of $1.03 for 2016 Third Quarter

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THOMASVILLE, N.C.--(BUSINESS WIRE)-- Old Dominion Freight Line, Inc. (NASDAQ: ODFL) today announced financial results for the three-month and nine-month periods ended September 30, 2016, which include the following:

      Three Months Ended         Nine Months Ended    
September 30, September 30,

(In thousands, except per share amounts)

2016     2015

%

Chg.

2016     2015

%

Chg.

Revenue $ 782,611 $ 779,474 0.4 % $ 2,245,779 $ 2,237,870 0.4 %
Operating income $ 137,404 $ 139,854 (1.8 )% $ 370,388 $ 384,318 (3.6 )%
Operating ratio 82.4 % 82.1 % 83.5 % 82.8 %
Net income $ 85,581 $ 84,368 1.4 % $ 227,254 $ 232,466 (2.2 )%
Basic earnings per share $ 1.03 $ 0.99 4.0 % $ 2.73 $ 2.71 0.7 %
Diluted earnings per share $ 1.03 $ 0.99 4.0 % $ 2.73 $ 2.71 0.7 %
Basic weighted average shares outstanding 82,742 85,247 (2.9 )% 83,357 85,646 (2.7 )%
Diluted weighted average shares outstanding 82,811 85,247 (2.9 )% 83,390 85,646 (2.6 )%
 

“We are pleased that Old Dominion’s revenue and earnings improved for the third quarter and are encouraged by a number of factors that contributed to this improvement,” said David S. Congdon, Vice Chairman and Chief Executive Officer of Old Dominion. “Although the economic environment continued to be weak during the quarter, the pricing environment remained stable, our LTL weight per shipment increased and we exercised good control over our variable operating costs. Revenue increased slightly as compared to the third quarter of last year, as the 2.5% increase in LTL revenue per hundredweight offset the 1.3% decrease in LTL tons per day and the $6.4 million decrease in non-LTL revenue. This expected decrease in non-LTL revenue was less than what we experienced in each of the three prior quarters and should become more comparable on a quarter-over-quarter basis in the fourth quarter.

“Our quarterly LTL weight per shipment increased on a year-over-year basis for the first time since the fourth quarter of 2014. This increase contributed to the growth in our LTL revenue per shipment and also improved certain productivity metrics. Overall, we operated with a high degree of efficiency during the quarter, which led to a reduction in our variable operating costs as a percent of revenue. These improvements, however, were not significant enough to offset the increase in depreciation associated with our investments in capacity. As a result, our operating ratio increased slightly to 82.4% from the Company’s record third-quarter operating ratio of 82.1% last year.”

Old Dominion ended the third quarter of 2016 with 17,587 full-time employees who delivered superior customer service, with on-time delivery above 99% and a cargo claims ratio of only 0.28%.

Cash Flow and Use of Capital

Old Dominion’s net cash provided by operating activities was $117.9 million for the third quarter and $410.1 million for the first nine months of 2016, compared with $118.0 million and $372.3 million for the comparable periods in 2015. The Company had $15.0 million in cash and cash equivalents at September 30, 2016, and its debt-to-total capitalization was 9.7% compared with 10.1% at the end of the third quarter of 2015.

Capital expenditures were $55.6 million for the third quarter of 2016 and $351.1 million for the first nine months of the year. The Company currently expects capital expenditures for 2016 to total approximately $405 million, including planned expenditures of $170 million for real estate and service center expansion projects, $205 million for tractors and trailers and $30 million for technology and other assets.

Old Dominion repurchased $34.3 million of its common stock during the third quarter and $119.0 million for the first nine months of 2016. At the end of the third quarter, $211.3 million remained available under its $250 million stock repurchase program, which was authorized during the second quarter of 2016.

Summary

Mr. Congdon concluded, “As our third quarter service metrics and financial results indicate, Old Dominion performed very well during the third quarter despite a challenging economy. We attribute our financial performance to the consistent execution of our business fundamentals, which have driven long-term growth in our market share, revenue and earnings through many economic cycles. We remain fully committed to the ongoing execution of these fundamentals that we believe will create additional long-term 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 27, 2016. A telephonic replay will also be available through November 7, 2016 at (719) 457-0820, Confirmation Number 2072815.

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, such that our total overall pricing is sufficient 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 the inability 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 customers’ business cycles and shipping requirements, and global uncertainty and instability that may lead to fewer goods being transported, including the United Kingdom’s decision to exit the European Union; (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 compliance obligations associated with the Patient Protection and Affordable Care Act; (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; (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; (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) the impact of potential disruptions to our information technology systems or our service center network; (25) damage to our reputation from the misuse of social media; (26) the costs and potential adverse impact of compliance with anti-terrorism measures on our business; (27) dilution to existing shareholders caused by any issuance of additional equity; and (28) 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 broad 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)

2016 2015 2016 2015
Revenue $ 782,611 100.0 % $ 779,474 100.0 % $ 2,245,779 100.0 % $ 2,237,870 100.0 %
 
Operating expenses:
Salaries, wages & benefits 425,076 54.3 % 406,592 52.2 % 1,234,369 55.0 % 1,162,457 51.9 %
Operating supplies & expenses 83,197 10.6 % 88,669 11.4 % 238,904 10.6 % 270,108 12.1 %
General supplies & expenses 22,010 2.8 % 24,350 3.1 % 65,930 2.9 % 69,175 3.1 %
Operating taxes & licenses 22,714 2.9 % 23,855 3.1 % 69,368 3.1 % 69,667 3.1 %
Insurance & claims 10,185 1.3 % 10,808 1.4 % 29,792 1.3 % 31,171 1.4 %
Communications & utilities 7,025 0.9 % 6,867 0.9 % 21,357 1.0 % 20,143 0.9 %
Depreciation & amortization 49,041 6.3 % 42,561 5.4 % 140,293 6.2 % 121,120 5.4 %
Purchased transportation 18,907 2.4 % 30,297 3.9 % 55,579 2.5 % 93,147 4.2 %
Building and office equipment rents 2,050 0.3 % 2,395 0.3 % 6,487 0.3 % 7,147 0.3 %
Miscellaneous expenses, net 5,002   0.6 % 3,226   0.4 % 13,312   0.6 % 9,417   0.4 %
 
Total operating expenses 645,207   82.4 % 639,620   82.1 % 1,875,391   83.5 % 1,853,552   82.8 %
 
Operating income 137,404 17.6 % 139,854 17.9 % 370,388 16.5 % 384,318 17.2 %
 
Non-operating expense (income):
Interest expense 1,131 0.2 % 1,163 0.2 % 3,378 0.2 % 3,901 0.2 %
Interest income (10 ) (0.0 )% (33 ) (0.0 )% (38 ) (0.0 )% (187 ) (0.0 )%
Other expense, net 6   0.0 % 1,866   0.2 % 782   0.0 % 2,544   0.1 %
 
Income before income taxes 136,277 17.4 % 136,858 17.5 % 366,266 16.3 % 378,060 16.9 %
 
Provision for income taxes 50,696   6.5 % 52,490   6.7 % 139,012   6.2 % 145,594   6.5 %
 
Net income $ 85,581   10.9 % $ 84,368   10.8 % $ 227,254   10.1 % $ 232,466   10.4 %
 
Earnings per share:
Basic $ 1.03 $ 0.99 $ 2.73 $ 2.71
Diluted 1.03 0.99 2.73 2.71
 
Weighted average outstanding shares:
Basic 82,742 85,247 83,357 85,646
Diluted 82,811 85,247 83,390 85,646
 
 
 
 
 
 
 
OLD DOMINION FREIGHT LINE, INC.
Operating Statistics
           
Third Quarter Year to Date
2016   2015   % Chg. 2016 2015 % Chg.
Work days 64 64

—

%

192 191 0.5 %
Operating ratio 82.4 % 82.1 % 83.5 % 82.8 %
LTL intercity miles (1) 148,993 149,510 (0.3 )% 435,563 422,463 3.1 %
LTL tons (1) 2,049 2,075 (1.3 )% 5,997 5,980 0.3 %
LTL tonnage per day 32,016 32,422 (1.3 )% 31,234 31,309 (0.2 )%

LTL shipments (1)

2,641 2,689 (1.8 )% 7,727 7,615 1.5 %
LTL revenue per intercity mile $ 5.17 $ 5.09 1.6 % $ 5.08 $ 5.16 (1.6 )%
LTL revenue per hundredweight $ 18.79 $ 18.33 2.5 % $ 18.44 $ 18.22 1.2 %
LTL revenue per hundredweight, excluding fuel surcharges $ 16.91 $ 16.46 2.7 % $ 16.69 $ 16.20 3.0 %
LTL revenue per shipment $ 291.51 $ 282.90 3.0 % $ 286.23 $ 286.07 0.1 %
LTL revenue per shipment, excluding fuel surcharges $ 262.35 $ 254.01 3.3 % $ 259.06 $ 254.38 1.8 %
LTL weight per shipment (lbs.) 1,551 1,543 0.5 % 1,552 1,570 (1.1 )%
Average length of haul (miles) 925 927 (0.2 )% 930 928 0.2 %
 

(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)

2016 2015
Cash and cash equivalents $ 15,014 $ 11,472
Other current assets 374,141 370,258
Total current assets 389,155 381,730
Net property and equipment 2,229,673 2,023,448
Other assets 65,520 61,326
Total assets $ 2,684,348 $ 2,466,504
 
Current maturities of long-term debt $ — $ 26,488
Other current liabilities 268,974 258,914
Total current liabilities 268,974 285,402
Long-term debt 193,129 107,317
Other non-current liabilities 428,770 389,148
Total liabilities 890,873 781,867
Equity 1,793,475 1,684,637
Total liabilities & equity $ 2,684,348 $ 2,466,504
 

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

 
 
 

Old Dominion Freight Line, Inc.
Adam Satterfield, 336-822-5721
Senior Vice President, Finance and Chief Financial Officer

Source: Old Dominion Freight Line, Inc.

Released October 27, 2016