Old Dominion Freight Line Announces Third-Quarter Earnings of $0.54 Per Diluted Share
Establishes Fourth-Quarter Earnings Guidance and Reduces Range for Full-Year 2007 Earnings per Diluted Share to $1.92 to $1.95 from $2.00 to $2.05
THOMASVILLE, N.C.--(BUSINESS WIRE)--
Old Dominion Freight Line, Inc. (NASDAQ: ODFL) today announced financial results for the third quarter and nine months ended September 30, 2007. For the third quarter, revenue was a record $363.3 million, an increase of 7.6% from $337.6 million for the third quarter of 2006. Net income for the third quarter of 2007 was $20.0 million, or $0.54 per diluted share, compared with $20.1 million, or $0.54 per diluted share, for the third quarter of 2006. Old Dominion's operating ratio was 90.6% for the third quarter of 2007 compared with 89.1% for the third quarter of 2006.
Revenue increased 8.6% to $1.04 billion for the first nine months of 2007 from $960.0 million for the first nine months of 2006. Net income increased to $56.1 million, or $1.51 per diluted share, for the first nine months of 2007 from $54.7 million, or $1.47 per diluted share, for the same period in 2006. The Company's operating ratio was 90.4% for the latest nine-month period compared with 89.7% for the first nine months of 2006.
Earl E. Congdon, Chairman and Chief Executive Officer of Old Dominion, said, "Old Dominion produced solid operating and financial results for the third quarter in an industry environment that continues to be very challenging. We are pleased with the 8.7% growth in our total tons shipped during the quarter, which surpassed our tonnage growth of 7.4% for both the first and second quarters of 2007. In addition, we achieved this growth against a tough comparison in the third quarter of 2006 that produced a 15.3% increase in tons.
"The pricing environment, however, was increasingly competitive during the third quarter, as indicated by the decline in our revenue per hundredweight of 0.7% from the third quarter of 2006 and 0.9% sequential decline from the second quarter of 2007. Although we anticipate the competitive pricing landscape will extend into 2008, we will continue to follow our basic pricing philosophy of evaluating each individual account for profitability in an effort to maintain rational pricing for our services.
"The decline in pricing adversely impacted our operating ratio, which increased 150 basis points over the prior-year quarter, despite our continued success in realizing operating efficiencies through tonnage growth and the efficient application of our technologies. We have focused on maintaining our excellent service standards throughout this competitive period in lieu of short-term cost reductions that might damage our long-term customer relationships and service reputation. The resulting increase in operating costs in the third quarter, however, was partially offset by a decline in our effective tax rate. As a result, our net income was 5.5% of revenue for the quarter compared with 6.0% for the third quarter last year.
"In spite of the sluggish environment, we have continued to expand our network of service centers across the country, which is consistent with our long-term growth strategies. We opened one new service center during the third quarter in Erie, Pennsylvania, and another on the first day of the fourth quarter in Jonesboro, Arkansas. With one additional opening planned in Eugene, Oregon, during the fourth quarter, we expect to add a total of nine service centers for the year, bringing our total number in operation to 191."
Based on the Company's results for the third quarter and first nine months of 2007, and its outlook for the remainder of 2007, Old Dominion today established a new range of $1.92 to $1.95 for its guidance for earnings per diluted share for 2007 compared with the previous range of $2.00 to $2.05. Consistent with this guidance, Old Dominion today established its guidance for earnings per diluted share for the fourth quarter of 2007 in a range of $0.41 to $0.44.
Mr. Congdon concluded, "Similar to our outlook at the start of the third quarter, we are cautious about the LTL industry's growth prospects for the fourth quarter of 2007. We continue to expect that our tonnage for the fourth quarter of 2007 will improve over the same period of the prior year; however, we expect that soft demand within our industry will continue to drive a highly competitive environment, particularly with respect to pricing. Despite these challenges, we remain confident that we have the management experience and resources necessary to continue to execute our proven growth strategies designed to provide long-term profitable growth and increased shareholder value."
Old Dominion will hold a conference call to discuss this release today at 11:00 a.m. Eastern Daylight Time. Investors will have the opportunity to listen to the conference call live over the Internet by going to www.odfl.com or by going to www.InvestorCalendar.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 these websites shortly after the call through November 25, 2007. A telephonic replay will also be available through November 1, 2007, at (719) 457-0820, Confirmation Number 4615805.
Forward-looking statements in this news release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned 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 Company's ability to complete and successfully integrate acquired businesses and assets and produce the anticipated benefits from such transactions; (2) the competitive environment with respect to industry capacity and pricing, including with respect to fuel surcharges; (3) the negative impact of any unionization of the Company's employees; (4) the challenges associated with executing the Company's growth strategy; (5) various economic factors such as economic recessions and downturns in customers' business cycles and shipping requirements; (6) the availability and cost of fuel; (7) difficulty in attracting or retaining qualified drivers; (8) the Company's exposure to claims related to cargo loss and damage, property damage, personal injury, workers' compensation, long-term disability and group health and the cost of insurance coverage above retention levels; (9) the Company's significant ongoing cash requirements; (10) the availability and cost of new equipment; (11) the costs of compliance with, or liability for violation of, existing or future governmental regulation; (12) seasonal trends in the industry, including the possibility of harsh weather conditions; (13) the Company's dependence on key employees; (14) changes in the Company's goals and strategies, which are subject to change at any time at the discretion of the Company; and (15) other risks and uncertainties indicated from time to time in the Company's filings with the Securities and Exchange Commission.
Old Dominion Freight Line, Inc. is a less-than-truckload multi-regional motor carrier providing one-to-five day service among six regions in the United States and next-day and second-day service within these regions. Through its four product groups, OD-Domestic, OD-Expedited, OD-Global and OD- Technology, the Company offers an array of innovative products and services that provide direct service to 47 states within the Southeast, Gulf Coast, Northeast, Midwest, Central and West regions of the country, including 38 states within which it provides full-state coverage. In addition, through marketing and carrier relationships, Old Dominion provides service to and from the remaining states as well as international services around the globe.
OLD DOMINION FREIGHT LINE, INC.
Financial Highlights
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- % --------------------- %
2007 2006 Chg. 2007 2006 Chg.
--------- --------- ------ ----------- --------- ----
Revenue from
operations $363,298 $337,569 7.6% $1,042,857 $960,012 8.6%
Operating income $ 34,017 $ 36,676 (7.2)% $ 99,711 $ 98,860 0.9%
Operating ratio 90.6% 89.1% 90.4% 89.7%
Net income $ 20,010 $ 20,103 (0.5)% $ 56,120 $ 54,728 2.5%
Earnings per
share:
Basic and
diluted $ 0.54 $ 0.54 0.0% $ 1.51 $ 1.47 2.7%
Weighted average
shares
outstanding:
Basic and
diluted 37,285 37,285 0.0% 37,285 37,285 0.0%
OLD DOMINION FREIGHT LINE, INC.
Statements of Operations
----------------------------------------------------------------------
(In thousands, except per share amounts)
Third Quarter
-------------------------------------------
2007 2006 % Chg.
----------------- --------------- ---------
Revenue $363,298 100.0% $337,569 100.0% 7.6%
Operating expenses:
Salaries, wages & benefits 196,595 54.1% 179,432 53.1% 9.6%
Operating supplies &
expenses 62,310 17.2% 56,265 16.7% 10.7%
General supplies &
expenses 10,336 2.8% 9,496 2.8% 8.8%
Operating taxes & licenses 12,923 3.6% 12,022 3.6% 7.5%
Insurance & claims 6,462 1.8% 6,969 2.1% (7.3%)
Communications & utilities 4,109 1.1% 3,442 1.0% 19.4%
Depreciation &
amortization 20,556 5.7% 17,476 5.2% 17.6%
Purchased transportation 11,349 3.1% 11,603 3.4% (2.2%)
Building and office
equipment rents 3,032 0.8% 2,813 0.8% 7.8%
Miscellaneous expenses,
net 1,609 0.4% 1,375 0.4% 17.0%
Total operating
expenses 329,281 90.6% 300,893 89.1% 9.4%
Operating income 34,017 9.4% 36,676 10.9% (7.2%)
Other deductions:
Interest expense, net 3,354 0.9% 3,067 0.9% 9.4%
Other (income) expense,
net (626) (0.1%) 408 0.1% (253.4%)
Income before income taxes 31,289 8.6% 33,201 9.9% (5.8%)
Provision for income taxes 11,279 3.1% 13,098 3.9% (13.9%)
Net income $ 20,010 5.5% $ 20,103 6.0% (0.5%)
========= ========
Earnings per share:
Basic and Diluted $ 0.54 $ 0.54 0.0%
Weighted average
outstanding shares:
Basic and Diluted 37,285 37,285 0.0%
Year To Date
-------------------------------------------
2007 2006 % Chg.
------------------ --------------- --------
Revenue $1,042,857 100.0% $960,012 100.0% 8.6%
Operating expenses:
Salaries, wages &
benefits 559,855 53.7% 510,252 53.1% 9.7%
Operating supplies &
expenses 170,214 16.3% 154,748 16.1% 10.0%
General supplies &
expenses 30,239 2.9% 28,596 3.0% 5.7%
Operating taxes &
licenses 37,706 3.6% 34,688 3.6% 8.7%
Insurance & claims 26,576 2.5% 24,119 2.5% 10.2%
Communications &
utilities 11,438 1.1% 10,927 1.1% 4.7%
Depreciation &
amortization 59,050 5.7% 49,769 5.2% 18.6%
Purchased transportation 33,230 3.2% 34,214 3.6% (2.9%)
Building and office
equipment rents 8,766 0.8% 8,482 0.9% 3.3%
Miscellaneous expenses,
net 6,072 0.6% 5,357 0.6% 13.3%
Total operating
expenses 943,146 90.4% 861,152 89.7% 9.5%
Operating income 99,711 9.6% 98,860 10.3% 0.9%
Other deductions:
Interest expense, net 9,781 0.9% 7,095 0.7% 37.9%
Other (income) expense,
net (384) 0.0% 855 0.1% (144.9%)
Income before income
taxes 90,314 8.7% 90,910 9.5% (0.7%)
Provision for income
taxes 34,194 3.3% 36,182 3.8% (5.5%)
Net income $ 56,120 5.4% $ 54,728 5.7% 2.5%
=========== ========
Earnings per share:
Basic and Diluted $ 1.51 $ 1.47 2.7%
Weighted average
outstanding shares:
Basic and Diluted 37,285 37,285 0.0%
OLD DOMINION FREIGHT LINE, INC.
Third Quarter Year to Date
------------------------- -------------------------
Operating % %
Statistics 2007 2006 Chg. 2007 2006 Chg.
-------------------------------------------- -------------------------
Operating ratio 90.6% 89.1% 1.7% 90.4% 89.7% 0.8%
Intercity miles
(a) 85,433 78,564 8.7% 241,565 222,260 8.7%
Total tons (a) 1,357 1,248 8.7% 3,941 3,653 7.9%
Total shipments
(a) 1,749 1,646 6.3% 5,092 4,835 5.3%
Revenue per
intercity mile $ 4.25 $ 4.30 (1.2%) $ 4.32 $ 4.32 0.0%
Rev/cwt (b) $ 13.32 $ 13.41 (0.7%) $ 13.24 $ 13.17 0.5%
Rev/cwt less FSC
(b) $ 11.65 $ 11.65 0.0% $ 11.68 $ 11.56 1.0%
Rev/shp (b) $206.71 $203.20 1.7% $ 204.96 $ 198.96 3.0%
Rev/shp less FSC
(b) $180.74 $176.61 2.3% $ 180.71 $ 174.65 3.5%
Weight per
shipment 1,552 1,515 2.4% 1,548 1,511 2.4%
Average length of
haul 928 930 (0.2%) 936 933 0.3%
(a) - In thousands
(b) - For statistical purposes only, revenue does not include
adjustments for undelivered freight required for financial statement
purposes in accordance with the Company's revenue recognition policy.
September 30, December 31,
Balance Sheets 2007 2006
----------------------------------------------------------------------
(In thousands)
Current assets $219,098 $256,367
Net property and equipment 723,568 607,588
Other assets 39,273 28,238
------------- ------------
Total assets $981,939 $892,193
============= ============
Current maturities of long-term debt $ 12,109 $ 12,697
Other current liabilities 134,311 108,849
------------- ------------
Total current liabilities 146,420 121,546
Long-term debt 254,322 261,885
Other non-current liabilities 107,457 91,142
------------- ------------
Total liabilities 508,199 474,573
Shareholders' equity 473,740 417,620
------------- ------------
Total liabilities & shareholders' equity $981,939 $892,193
============= ============
Note: Financial statements and operating statistics are unaudited.
Source: Old Dominion Freight Line, Inc.
Released October 25, 2007