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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

or

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________ .

 

Commission File Number: 0-19582

 

OLD DOMINION FREIGHT LINE, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Virginia

56-0751714

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

 

 

500 Old Dominion Way

Thomasville, North Carolina

27360

(Address of principal executive offices)

(Zip Code)

(336) 889-5000

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock ($0.10 par value)

ODFL

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 3, 2023 there were 109,113,654 shares of the registrant’s Common Stock ($0.10 par value) outstanding.

 

 


 

INDEX

 

Part I – FINANCIAL INFORMATION

1

 

Item 1

Financial Statements

1

Condensed Balance Sheets – September 30, 2023 and December 31, 2022

1

Condensed Statements of Operations – For the three and nine months ended September 30, 2023 and 2022

3

 

Condensed Statements of Changes in Shareholders’ Equity – For the three and nine months ended September 30, 2023 and 2022

4

Condensed Statements of Cash Flows – For the nine months ended September 30, 2023 and 2022

5

Notes to the Condensed Financial Statements

6

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

10

Item 3

Quantitative and Qualitative Disclosures about Market Risk

19

Item 4

Controls and Procedures

19

 

Part II – OTHER INFORMATION

20

 

Item 1

Legal Proceedings

20

Item 1A

Risk Factors

20

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

21

Item 5

Other Information

21

Item 6

Exhibits

21

 

Exhibit Index

22

Signatures

23

 

 


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

OLD DOMINION FREIGHT LINE, INC.

CONDENSED BALANCE SHEETS

 

 

September 30,

 

 

 

 

 

 

2023

 

 

December 31,

 

(In thousands, except share and per share data)

 

(Unaudited)

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

206,601

 

 

$

186,312

 

Short-term investments

 

 

 

 

 

49,355

 

Customer receivables, less allowances of $11,432 and $10,689, respectively

 

 

632,874

 

 

 

578,648

 

Income taxes receivable

 

 

16,007

 

 

 

12,738

 

Other receivables

 

 

14,846

 

 

 

13,743

 

Prepaid expenses and other current assets

 

 

83,888

 

 

 

92,944

 

Total current assets

 

 

954,216

 

 

 

933,740

 

 

 

 

 

 

 

Property and equipment:

 

 

 

 

 

 

Revenue equipment

 

 

2,636,599

 

 

 

2,501,995

 

Land and structures

 

 

2,956,811

 

 

 

2,750,100

 

Other fixed assets

 

 

637,447

 

 

 

550,442

 

Leasehold improvements

 

 

14,497

 

 

 

13,516

 

Total property and equipment

 

 

6,245,354

 

 

 

5,816,053

 

Accumulated depreciation

 

 

(2,159,944

)

 

 

(2,128,985

)

Net property and equipment

 

 

4,085,410

 

 

 

3,687,068

 

 

 

 

 

 

 

Other assets

 

 

259,248

 

 

 

217,802

 

Total assets

 

$

5,298,874

 

 

$

4,838,610

 

 

Note: The Condensed Balance Sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements.

The accompanying notes are an integral part of these condensed financial statements.

1


 

OLD DOMINION FREIGHT LINE, INC.

CONDENSED BALANCE SHEETS

(CONTINUED)

 

 

 

September 30,

 

 

 

 

 

 

2023

 

 

December 31,

 

(In thousands, except share and per share data)

 

(Unaudited)

 

 

2022

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

115,712

 

 

$

106,275

 

Compensation and benefits

 

 

278,064

 

 

 

288,278

 

Claims and insurance accruals

 

 

60,616

 

 

 

63,307

 

Other accrued liabilities

 

 

77,958

 

 

 

51,933

 

Current maturities of long-term debt

 

 

20,000

 

 

 

20,000

 

Total current liabilities

 

 

552,350

 

 

 

529,793

 

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

 

 

Long-term debt

 

 

59,974

 

 

 

79,963

 

Other non-current liabilities

 

 

276,184

 

 

 

265,422

 

Deferred income taxes

 

 

347,243

 

 

 

310,515

 

Total long-term liabilities

 

 

683,401

 

 

 

655,900

 

Total liabilities

 

 

1,235,751

 

 

 

1,185,693

 

 

 

 

 

 

 

Commitments and contingent liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Common stock - $0.10 par value, 280,000,000 shares authorized, 109,178,942 and 110,222,819 shares outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

10,918

 

 

 

11,022

 

Capital in excess of par value

 

 

241,022

 

 

 

244,590

 

Retained earnings

 

 

3,811,183

 

 

 

3,397,305

 

Total shareholders’ equity

 

 

4,063,123

 

 

 

3,652,917

 

Total liabilities and shareholders’ equity

 

$

5,298,874

 

 

$

4,838,610

 

 

Note: The Condensed Balance Sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements.

The accompanying notes are an integral part of these condensed financial statements.

2


 

OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands, except per share data)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue from operations

 

$

1,515,277

 

 

$

1,603,690

 

 

$

4,370,602

 

 

$

4,768,418

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and benefits

 

 

663,810

 

 

 

675,084

 

 

 

1,958,726

 

 

 

2,060,983

 

Operating supplies and expenses

 

 

180,653

 

 

 

217,260

 

 

 

538,410

 

 

 

645,329

 

General supplies and expenses

 

 

41,745

 

 

 

45,951

 

 

 

119,896

 

 

 

120,580

 

Operating taxes and licenses

 

 

36,527

 

 

 

35,753

 

 

 

110,118

 

 

 

105,781

 

Insurance and claims

 

 

16,004

 

 

 

17,491

 

 

 

47,413

 

 

 

50,562

 

Communications and utilities

 

 

10,724

 

 

 

10,288

 

 

 

33,256

 

 

 

30,062

 

Depreciation and amortization

 

 

84,055

 

 

 

68,347

 

 

 

239,786

 

 

 

203,997

 

Purchased transportation

 

 

30,835

 

 

 

34,453

 

 

 

90,046

 

 

 

129,634

 

Miscellaneous expenses, net

 

 

5,905

 

 

 

2,983

 

 

 

13,289

 

 

 

11,087

 

Total operating expenses

 

 

1,070,258

 

 

 

1,107,610

 

 

 

3,150,940

 

 

 

3,358,015

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

445,019

 

 

 

496,080

 

 

 

1,219,662

 

 

 

1,410,403

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating (income) expense:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

90

 

 

 

997

 

 

 

379

 

 

 

1,283

 

Interest income

 

 

(2,308

)

 

 

(1,333

)

 

 

(7,487

)

 

 

(1,933

)

Other expense, net

 

 

861

 

 

 

351

 

 

 

4,319

 

 

 

1,706

 

Total non-operating (income) expense

 

 

(1,357

)

 

 

15

 

 

 

(2,789

)

 

 

1,056

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

446,376

 

 

 

496,065

 

 

 

1,222,451

 

 

 

1,409,347

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

107,089

 

 

 

118,664

 

 

 

305,764

 

 

 

356,117

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

339,287

 

 

$

377,401

 

 

$

916,687

 

 

$

1,053,230

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

3.11

 

 

$

3.38

 

 

$

8.37

 

 

$

9.32

 

Diluted

 

$

3.09

 

 

$

3.36

 

 

$

8.32

 

 

$

9.26

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

109,193

 

 

 

111,569

 

 

 

109,554

 

 

 

113,012

 

Diluted

 

 

109,835

 

 

 

112,295

 

 

 

110,234

 

 

 

113,747

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.40

 

 

$

0.30

 

 

$

1.20

 

 

$

0.90

 

 

The accompanying notes are an integral part of these condensed financial statements.

3


 

OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2023 and 2022

 

 

 

 

 

 

 

 

Capital in

 

 

 

 

 

 

 

 

Common Stock

 

 

Excess of

 

 

Retained

 

 

 

 

(In thousands)

Shares

 

 

Amount

 

 

Par Value

 

 

Earnings

 

 

Total

 

Balance as of June 30, 2023

 

109,337

 

 

$

10,934

 

 

$

239,039

 

 

$

3,582,062

 

 

$

3,832,035

 

Net income

 

 

 

 

 

 

 

 

 

 

339,287

 

 

 

339,287

 

Share repurchases, including net excise tax

 

(165

)

 

 

(17

)

 

 

 

 

 

(66,477

)

 

 

(66,494

)

Cash dividends declared ($0.40 per share)

 

 

 

 

 

 

 

 

 

 

(43,689

)

 

 

(43,689

)

Share-based compensation and share issuances, net of
      forfeitures

 

8

 

 

 

1

 

 

 

2,737

 

 

 

 

 

 

2,738

 

Taxes paid in exchange for shares withheld

 

(1

)

 

 

 

 

 

(754

)

 

 

 

 

 

(754

)

Balance as of September 30, 2023

 

109,179

 

 

$

10,918

 

 

$

241,022

 

 

$

3,811,183

 

 

$

4,063,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2022

 

112,236

 

 

$

11,224

 

 

$

236,991

 

 

$

3,307,614

 

 

$

3,555,829

 

Net income

 

 

 

 

 

 

 

 

 

 

377,401

 

 

 

377,401

 

Share repurchases

 

(1,282

)

 

 

(129

)

 

 

 

 

 

(345,302

)

 

 

(345,431

)

Cash dividends declared ($0.30 per share)

 

 

 

 

 

 

 

 

 

 

(33,428

)

 

 

(33,428

)

Share-based compensation and share issuances, net of
      forfeitures

 

 

 

 

 

 

 

3,860

 

 

 

 

 

 

3,860

 

Taxes paid in exchange for shares withheld

 

 

 

 

 

 

 

(61

)

 

 

 

 

 

(61

)

Balance as of September 30, 2022

 

110,954

 

 

$

11,095

 

 

$

240,790

 

 

$

3,306,285

 

 

$

3,558,170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2023 and 2022

 

 

 

 

 

 

 

 

Capital in

 

 

 

 

 

 

 

 

Common Stock

 

 

Excess of

 

 

Retained

 

 

 

 

(In thousands)

Shares

 

 

Amount

 

 

Par Value

 

 

Earnings

 

 

Total

 

Balance as of December 31, 2022

 

110,223

 

 

$

11,022

 

 

$

244,590

 

 

$

3,397,305

 

 

$

3,652,917

 

Net income

 

 

 

 

 

 

 

 

 

 

916,687

 

 

 

916,687

 

Share repurchases, including net excise tax

 

(1,097

)

 

 

(110

)

 

 

 

 

 

(371,346

)

 

 

(371,456

)

Cash dividends declared ($1.20 per share)

 

 

 

 

 

 

 

 

 

 

(131,463

)

 

 

(131,463

)

Share-based compensation and share issuances, net of
      forfeitures

 

87

 

 

 

9

 

 

 

8,396

 

 

 

 

 

 

8,405

 

Taxes paid in exchange for shares withheld

 

(34

)

 

 

(3

)

 

 

(11,964

)

 

 

 

 

 

(11,967

)

Balance as of September 30, 2023

 

109,179

 

 

$

10,918

 

 

$

241,022

 

 

$

3,811,183

 

 

$

4,063,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2021

 

115,011

 

 

$

11,501

 

 

$

174,445

 

 

$

3,493,861

 

 

$

3,679,807

 

Net income

 

 

 

 

 

 

 

 

 

 

1,053,230

 

 

 

1,053,230

 

Share repurchases, including settlements under accelerated
      share repurchase programs

 

(4,085

)

 

 

(409

)

 

 

62,500

 

 

 

(1,139,392

)

 

 

(1,077,301

)

Cash dividends declared ($0.90 per share)

 

 

 

 

 

 

 

 

 

 

(101,414

)

 

 

(101,414

)

Share-based compensation and share issuances, net of
      forfeitures

 

55

 

 

 

6

 

 

 

12,027

 

 

 

 

 

 

12,033

 

Taxes paid in exchange for shares withheld

 

(27

)

 

 

(3

)

 

 

(8,182

)

 

 

 

 

 

(8,185

)

Balance as of September 30, 2022

 

110,954

 

 

$

11,095

 

 

$

240,790

 

 

$

3,306,285

 

 

$

3,558,170

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

4


 

OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

(In thousands)

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

916,687

 

 

$

1,053,230

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

239,797

 

 

 

204,009

 

Gain on disposal of property and equipment

 

 

(7,446

)

 

 

(2,584

)

Deferred income taxes

 

 

37,404

 

 

 

20,705

 

Other, net

 

 

22,401

 

 

 

24,772

 

Changes in operating assets and liabilities, net

 

 

(76,401

)

 

 

30,102

 

Net cash provided by operating activities

 

 

1,132,442

 

 

 

1,330,234

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(651,363

)

 

 

(504,782

)

Proceeds from sale of property and equipment

 

 

22,226

 

 

 

20,044

 

Purchase of short-term investments

 

 

 

 

 

(163,720

)

Proceeds from maturities of short-term investments

 

 

48,852

 

 

 

259,623

 

Net cash used in investing activities

 

 

(580,285

)

 

 

(388,835

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Payments for share repurchases

 

 

(368,095

)

 

 

(1,077,301

)

Principal payments under debt agreements

 

 

(20,000

)

 

 

 

Dividends paid

 

 

(131,492

)

 

 

(101,440

)

Other financing activities, net

 

 

(12,281

)

 

 

(8,495

)

Net cash used in financing activities

 

 

(531,868

)

 

 

(1,187,236

)

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

 

20,289

 

 

 

(245,837

)

Cash and cash equivalents at beginning of period

 

 

186,312

 

 

 

462,564

 

Cash and cash equivalents at end of period

 

$

206,601

 

 

$

216,727

 

 

The accompanying notes are an integral part of these condensed financial statements.

5


 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Significant Accounting Policies

Business

We are one of the largest North American less-than-truckload (“LTL”) motor carriers. We provide regional, inter-regional and national LTL services through a single integrated, union-free 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, we also provide LTL services throughout North America. In addition to our core LTL services, we offer a range of value-added services including container drayage, truckload brokerage and supply chain consulting. We have one operating segment and the composition of our revenue is summarized below:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(In thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

LTL services

 

$

1,501,266

 

 

$

1,582,952

 

 

$

4,323,453

 

 

$

4,703,392

 

Other services

 

 

14,011

 

 

 

20,738

 

 

 

47,149

 

 

 

65,026

 

      Total revenue from operations

 

$

1,515,277

 

 

$

1,603,690

 

 

$

4,370,602

 

 

$

4,768,418

 

Basis of Presentation

The accompanying unaudited, interim condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and, in management’s opinion, contain all adjustments (consisting of normal recurring items) necessary for a fair presentation, in all material respects, of the financial position and results of operations for the periods presented. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements.

The preparation of condensed financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions. Such estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Our operating results are subject to seasonal trends; therefore, the results of operations for the interim period ended September 30, 2023 are not necessarily indicative of the results that may be expected for the subsequent quarterly period or the year ending December 31, 2023.

The condensed financial statements should be read in conjunction with the financial statements and related notes, which appear in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no significant changes in the accounting principles and policies, long-term contracts or estimates inherent in the preparation of the condensed financial statements of Old Dominion Freight Line, Inc. as previously described in our Annual Report on Form 10-K for the year ended December 31, 2022, unless otherwise disclosed in this Form 10-Q.

Unless the context requires otherwise, references in these Notes to “Old Dominion,” the “Company,” “we,” “us” and “our” refer to Old Dominion Freight Line, Inc.

Stock Repurchase Program

On July 28, 2021, we announced that our Board of Directors had approved a stock repurchase program authorizing us to repurchase up to an aggregate of $2.0 billion of our outstanding common stock (the “2021 Repurchase Program”). The 2021 Repurchase Program, which does not have an expiration date, began after the completion of our prior repurchase program in January 2022. Under our 2021 Repurchase Program, we may repurchase shares from time to time in open market purchases or through privately negotiated transactions. Shares of our common stock repurchased under our 2021 Repurchase Program are canceled at the time of repurchase and are classified as authorized but unissued shares of our common stock.

We entered into accelerated share repurchase agreements with a third-party financial institution on each of August 26, 2021 and February 24, 2022. The Company’s accelerated share repurchase agreements are each accounted for as a settled treasury stock purchase and a forward stock purchase contract. The par value of the initial shares received is recorded as a reduction to common stock, with the excess purchase price recorded as a reduction to retained earnings. The forward stock purchase contract is accounted for as a contract indexed to our own stock and is classified within capital in excess of par value on our Condensed Balance Sheets. The

6


 

Company's accelerated share repurchase agreements are each settled with the final number of shares received based on the daily volume-weighted average share price of our common stock over the term of the agreement, less a negotiated discount. The table below summarizes our accelerated share repurchase activity for the nine months ended September 30, 2022. There was no accelerated share repurchase activity for the nine months ended September 30, 2023.

 

 

 

 

 

 

Agreement

 

 

 

 

 

 

 

 

 

 

Agreement

 

Settlement

 

Amount

 

 

Initial Shares

 

 

Shares Received

 

 

Total Shares

 

Date

 

Date

 

(In millions)

 

 

Received

 

 

at Settlement

 

 

Received

 

August 2021

 

 

January 2022

 

 

$

250.0

 

 

 

655,365

 

 

 

123,410

 

 

 

778,775

 

February 2022

 

 

April 2022

 

 

$

400.0

 

 

 

1,018,157

 

 

 

372,809