Old Dominion Freight Line Earns $0.48 Per Diluted Share for Fourth Quarter 2006
Operating Ratio Improves 70 Basis Points Establishes Guidance for 2007 Earnings per Diluted Share to Range of $2.00 to $2.05
THOMASVILLE, N.C.--(BUSINESS WIRE)--
Old Dominion Freight Line, Inc. (NASDAQ: ODFL) today announced financial results for the fourth quarter and twelve months ended December 31, 2006. For the quarter, revenue was $319.4 million, an increase of 12.0% from $285.2 million for the fourth quarter of 2005. Net income for the fourth quarter of 2006 rose 21.5% to $17.8 million from $14.7 million for the fourth quarter of 2005, and earnings per diluted share increased 23.1% to $0.48 from $0.39. Old Dominion's operating ratio improved to 90.1% for the fourth quarter of 2006 from 90.8% for the fourth quarter of the prior year.
Revenues increased 20.5% for 2006 to $1.28 billion from $1.06 billion for 2005. Net income rose 35.7% to $72.6 million from $53.5 million. Earnings per diluted share for 2006 were $1.95, up 36.4% from $1.43 for 2005. Old Dominion's operating ratio for 2006 improved to 89.8% from 90.8% for 2005.
Earl E. Congdon, Chairman and Chief Executive Officer of Old Dominion, remarked, "We are pleased with Old Dominion's operating performance in the fourth quarter and resulting earnings per diluted share that exceeded our established guidance of $0.40 to $0.43. While our financial results reflect tonnage growth during the quarter that was slightly higher than anticipated, we attribute most of the earnings in excess of our guidance to a reduction in our effective tax rate and favorable experience in our reserves for insurance claims.
"Our total tons shipped increased 10.6% for the fourth quarter of 2006 as a result of a 12.7% increase in total shipments with a 1.8% decrease in weight per shipment. We view this decline in weight per shipment to be consistent with the economic environment during the fourth quarter that proved to be challenging. We experienced a sudden decline in daily tonnage in October; however, that trend stabilized in December.
"Old Dominion continues to produce the great majority of its revenues - 98% for 2006 - within its network of service centers that have been open for more than one year. As a result, we were able to increase freight density and capacity utilization within our network that led to a 70 basis-point improvement in our operating ratio for the quarter. This continued improvement allowed the Company to finish 2006 with its annual operating ratio below 90.0% for the first time since becoming a public company in 1991.
"We added 28 new service centers to our network during 2006, including four in the fourth quarter, and completed 2006 with 182 service centers in operation. The four service centers added in the fourth quarter were Rockford, Illinois; Saginaw, Michigan; Bismarck, North Dakota; and Fort Worth, Texas. We now operate service centers in 47 states, up from 44 at the end of 2005, and provide full-state coverage in 37 of those states compared with 33 at the end of 2005. We intend to continue expanding our service center network, subject to real estate availability and market potential, to achieve our strategic goal of providing full-state coverage throughout the continental U.S. and to provide a platform for future growth.
"We were encouraged by our operating trends in the latter part of the fourth quarter, but we remain cautious in establishing our earnings guidance for 2007 due to the current economic environment and the severity of a number of winter storms that have already occurred. As a result, we are today establishing our guidance for earnings per diluted share for 2007 in a range of $2.00 to $2.05. In addition, the Company today established its earnings guidance for the first quarter of 2007 in a range of $0.32 to $0.35, compared with $0.35 for the first quarter of 2006. Through the consistent implementation of our long-term growth strategies throughout the economic cycle, we expect to continue producing profitable growth at a rate in excess of industry averages in 2007 and progressing toward our longer-term goal of $2 billion in revenue for 2010."
Mr. Congdon concluded, "Old Dominion's performance for the fourth quarter and for full-year 2006 again demonstrates the strength of our differentiated market position. In addition to our extensive service center network, which enables us to provide comprehensive, single-source products and services regionally and inter-regionally, our technology infrastructure and our flexible, non-union workforce all combine to drive a customer service culture and capability that is the basis for our success. We are confident in our ability to capitalize on market opportunities and to continue our long-term record of profitable growth in the years ahead."
Old Dominion will hold a conference call to discuss this release today at 11:00 a.m. Eastern Standard 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 Web sites shortly after the call through March 1, 2007. A telephonic replay will also be available through February 8, 2007, at (719) 457-0820, Confirmation Number 5637459.
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 competitive environment with respect to industry capacity and pricing; (2) the negative impact of any unionization of the Company's employees; (3) the challenges associated with executing the Company's growth strategy; (4) various economic factors such as economic recessions and downturns in customers' business cycles and shipping requirements; (5) the availability and cost of fuel; (6) difficulty in attracting or retaining qualified drivers; (7) 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; (8) the Company's significant ongoing cash requirements; (9) the availability and cost of new equipment; (10) the costs of compliance with, or liability for, violation of existing or future governmental regulation; (11) seasonal trends in the industry, including the possibility of harsh weather conditions; (12) the Company's dependence on key employees; (13) changes in the Company's goals and strategies, which are subject to change at any time at the discretion of the Company; and (14) 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 five 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, South Central, Northeast, Midwest and West regions of the country, including 37 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 Twelve Months Ended
December 31, % December 31, %
------------------- -----------------------
2006 2005 Chg. 2006 2005 Chg.
--------- --------- ----- ----------- ----------- -----
Revenue from
operations $319,419 $285,211 12.0% $1,279,431 $1,061,403 20.5%
Operating
income $31,625 $26,315 20.2% $130,485 $97,585 33.7%
Operating ratio 90.1% 90.8% 89.8% 90.8%
Net income $17,841 $14,689 21.5% $72,569 $53,475 35.7%
Basic and
diluted
earnings per
share $0.48 $0.39 23.1% $1.95 $1.43 36.4%
Weighted
average
shares
outstanding
Basic 37,285 37,285 0.0% 37,285 37,273 0.0%
Diluted 37,285 37,285 0.0% 37,285 37,276 0.0%
OLD DOMINION FREIGHT LINE, INC.
Statements of Operations
----------------------------------------------------------------------
(In thousands, except per share amounts)
Fourth Quarter
--------------------------------------
2006 2005 %Chg.
--------------- --------------- ------
Revenue $319,419 100.0% $285,211 100.0% 12.0%
Operating expenses:
Salaries, wages & benefits 172,634 54.1% 159,363 55.9% 8.3%
Operating supplies & expenses 49,638 15.5% 45,402 15.9% 9.3%
General supplies & expenses 8,911 2.8% 7,755 2.7% 14.9%
Operating taxes & licenses 12,005 3.8% 10,231 3.6% 17.3%
Insurance & claims 8,961 2.8% 5,060 1.8% 77.1%
Communications & utilities 3,351 1.1% 3,177 1.1% 5.5%
Depreciation & amortization 17,865 5.6% 15,183 5.3% 17.7%
Purchased transportation 9,719 3.0% 9,261 3.3% 4.9%
Building and office equipment
rents 2,661 0.8% 2,651 0.9% 0.4%
Miscellaneous expenses, net 2,049 0.6% 813 0.3% 152.0%
Total operating expenses 287,794 90.1% 258,896 90.8% 11.2%
Operating income 31,625 9.9% 26,315 9.2% 20.2%
Other deductions:
Interest expense, net 3,111 1.0% 1,622 0.6% 91.8%
Other expense, net 81 0.0% 73 0.0% 11.0%
Income before income taxes and
cumulative effect of
accounting change 28,433 8.9% 24,620 8.6% 15.5%
Provision for income taxes 10,592 3.3% 9,931 3.4% 6.7%
Income before cumulative
effect of accounting change 17,841 5.6% 14,689 5.2% 21.5%
Cumulative effect of
accounting change (net of
income tax effect of $272) - 0.0% - 0.0% 0.0%
Net income $17,841 5.6% $14,689 5.2% 21.5%
========= =========
Earnings per share:
Basic $0.48 $0.39 23.1%
Diluted $0.48 $0.39 23.1%
Weighted average outstanding
shares:
Basic 37,285 37,285 0.0%
Diluted 37,285 37,285 0.0%
Year To Date
---------------------------------------------
2006 2005 %Chg.
------------------ ----------------- --------
Revenue $1,279,431 100.0% $1,061,403 100.0% 20.5%
Operating expenses:
Salaries, wages &
benefits 682,886 53.4% 585,879 55.2% 16.6%
Operating supplies &
expenses 204,386 16.0% 158,029 14.9% 29.3%
General supplies &
expenses 37,507 2.9% 31,940 3.0% 17.4%
Operating taxes &
licenses 46,693 3.6% 38,961 3.7% 19.8%
Insurance & claims 33,080 2.6% 28,143 2.6% 17.5%
Communications &
utilities 14,278 1.1% 12,573 1.2% 13.6%
Depreciation &
amortization 67,634 5.3% 55,897 5.3% 21.0%
Purchased transportation 43,933 3.4% 35,005 3.3% 25.5%
Building and office
equipment rents 11,143 0.9% 9,490 0.9% 17.4%
Miscellaneous expenses,
net 7,406 0.6% 7,901 0.7% (6.3%)
Total operating
expenses 1,148,946 89.8% 963,818 90.8% 19.2%
Operating income 130,485 10.2% 97,585 9.2% 33.7%
Other deductions:
Interest expense, net 10,206 0.8% 6,527 0.6% 56.4%
Other expense, net 936 0.1% 787 0.1% 18.9%
Income before income
taxes and cumulative
effect of accounting
change 119,343 9.3% 90,271 8.5% 32.2%
Provision for income
taxes 46,774 3.6% 36,388 3.4% 28.5%
Income before cumulative
effect of accounting
change 72,569 5.7% 53,883 5.1% 34.7%
Cumulative effect of
accounting change (net
of income tax effect of
$272) - 0.0% 408 0.1% (100.0%)
Net income $72,569 5.7% $53,475 5.0% 35.7%
============ ===========
Earnings per share:
Basic $1.95 $1.43 36.4%
Diluted $1.95 $1.43 36.4%
Weighted average
outstanding shares:
Basic 37,285 37,273 0.0%
Diluted 37,285 37,276 0.0%
OLD DOMINION FREIGHT LINE, INC.
Fourth Quarter Year to Date
-----------------------------------------------
Operating Statistics 2006 2005 % Chg. 2006 2005 % Chg.
-------------------------------- -------------------------------------
Operating ratio 90.1% 90.8% (0.8%) 89.8% 90.8%(1.1%)
Intercity miles (a) 74,204 66,530 11.5%296,464 257,900 15.0%
Total tons (a) 1,206 1,090 10.6% 4,859 4,203 15.6%
Total shipments (a) 1,593 1,413 12.7% 6,428 5,751 11.8%
Revenue per intercity
mile $4.30 $4.29 0.2% $4.32 $4.12 4.9%
Rev/cwt (b) $13.16 $12.92 1.9% $13.16 $12.63 4.2%
Rev/cwt excluding fuel
surcharges (b) $11.73 $11.30 3.8% $11.60 $11.33 2.4%
Rev/shp (b) $199.27 $199.27 0.0%$199.03 $184.61 7.8%
Rev/shp excluding fuel
surcharges (b) $177.58 $174.33 1.9%$175.38 $165.54 5.9%
Weight per shipment 1,514 1,542 (1.8%) 1,512 1,462 3.4%
Average length of haul 935 926 1.0% 934 926 0.9%
(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.
December 31, December 31,
Balance Sheets 2006 2005
-------------------------------------------------------- ------------
(In thousands)
Current assets $256,367 $150,213
Net property and equipment 607,588 466,071
Other assets 28,238 25,364
----------- -----------
Total assets $892,193 $641,648
=========== ===========
Current maturities of long-term debt $12,697 $17,930
Other current liabilities 108,849 93,098
----------- -----------
Total current liabilities 121,546 111,028
Long-term debt 261,885 111,026
Other non-current liabilities 91,142 74,543
----------- -----------
Total liabilities 474,573 296,597
Shareholders' equity 417,620 345,051
----------- -----------
Total liabilities & shareholders' equity $892,193 $641,648
=========== ===========
Note: Financial statements and operating statistics are unaudited.
Source: Old Dominion Freight Line, Inc.
Released February 1, 2007