UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(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 |
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.
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).
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.
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☒ |
Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 1, 2024 there were
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
OLD DOMINION FREIGHT LINE, INC.
CONDENSED BALANCE SHEETS
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September 30, |
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2024 |
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December 31, |
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(In thousands, except share and per share data) |
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(Unaudited) |
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2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Customer receivables, less allowances of $ |
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Income taxes receivable |
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Other receivables |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment: |
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Revenue equipment |
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Land and structures |
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Other fixed assets |
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Leasehold improvements |
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Total property and equipment |
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Accumulated depreciation |
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Net property and equipment |
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Other assets |
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Total assets |
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$ |
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$ |
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Note: The Condensed Balance Sheet at December 31, 2023 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)
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September 30, |
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2024 |
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December 31, |
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(In thousands, except share and per share data) |
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(Unaudited) |
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2023 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Compensation and benefits |
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Claims and insurance accruals |
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Other accrued liabilities |
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Income taxes payable |
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— |
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Current maturities of long-term debt |
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Total current liabilities |
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Long-term liabilities: |
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Long-term debt |
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Other non-current liabilities |
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Deferred income taxes |
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Total long-term liabilities |
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Total liabilities |
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Shareholders’ equity: |
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Common stock - $ |
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Capital in excess of par value |
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Retained earnings |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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Note: The Condensed Balance Sheet at December 31, 2023 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)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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(In thousands, except per share data) |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue from operations |
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$ |
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$ |
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$ |
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$ |
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Operating expenses: |
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Salaries, wages and benefits |
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Operating supplies and expenses |
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General supplies and expenses |
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Operating taxes and licenses |
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Insurance and claims |
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Communications and utilities |
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Depreciation and amortization |
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Purchased transportation |
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Miscellaneous expenses, net |
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Total operating expenses |
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Operating income |
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Non-operating (income) expense: |
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Interest expense |
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Interest income |
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Other expense, net |
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Total non-operating income |
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Income before income taxes |
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Provision for income taxes |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Earnings per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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Dividends declared per share |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed financial statements.
3
OLD DOMINION FREIGHT LINE, INC.
(UNAUDITED)
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Three Months Ended September 30, 2024 and 2023 |
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Capital in |
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Common Stock |
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Excess of |
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Retained |
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(In thousands) |
Shares |
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Amount |
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Par Value |
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Earnings |
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Total |
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Balance as of June 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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Share repurchases |
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( |
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( |
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— |
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( |
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Forward contract for accelerated share repurchases |
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— |
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— |
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— |
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— |
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— |
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Cash dividends declared ($ |
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— |
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— |
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— |
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( |
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Share-based compensation and share issuances, net of |
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— |
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Taxes paid in exchange for shares withheld |
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( |
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( |
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( |
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— |
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Balance as of September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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Balance as of June 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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Share repurchases |
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( |
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( |
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— |
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( |
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( |
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Cash dividends declared ($ |
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— |
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— |
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— |
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( |
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( |
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Share-based compensation and share issuances, net of |
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— |
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Taxes paid in exchange for shares withheld |
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— |
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( |
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— |
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( |
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Balance as of September 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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Nine Months Ended September 30, 2024 and 2023 |
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Capital in |
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Common Stock |
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Excess of |
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Retained |
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(In thousands) |
Shares |
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Amount |
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Par Value |
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Earnings |
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Total |
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Balance as of December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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Share repurchases |
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( |
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( |
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— |
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( |
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( |
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Forward contract for accelerated share repurchases |
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— |
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— |
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( |
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— |
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( |
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Cash dividends declared ($ |
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— |
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— |
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— |
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( |
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( |
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Share-based compensation and share issuances, net of |
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— |
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Taxes paid in exchange for shares withheld |
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( |
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( |
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( |
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— |
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( |
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Balance as of September 30, 2024 |
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$ |
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$ |
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$ |
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$ |
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Balance as of December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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Share repurchases |
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( |
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( |
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— |
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( |
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( |
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Cash dividends declared ($ |
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— |
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— |
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— |
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( |
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( |
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Share-based compensation and share issuances, net of |
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— |
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Taxes paid in exchange for shares withheld |
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( |
) |
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( |
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( |
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— |
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( |
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Balance as of September 30, 2023 |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed financial statements.
4
OLD DOMINION FREIGHT LINE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Nine Months Ended |
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September 30, |
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(In thousands) |
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2024 |
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2023 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Gain on disposal of property and equipment |
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( |
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( |
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Deferred income taxes |
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Other, net |
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Changes in operating assets and liabilities, net |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchase of property and equipment |
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( |
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( |
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Proceeds from sale of property and equipment |
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Purchase of short-term investments |
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( |
) |
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— |
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Proceeds from maturities of short-term investments |
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Net cash used in investing activities |
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( |
) |
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( |
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Cash flows from financing activities: |
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Payments for share repurchases |
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( |
) |
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( |
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Forward contract for accelerated share repurchases |
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( |
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— |
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Principal payments under debt agreements |
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( |
) |
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( |
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Dividends paid |
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( |
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( |
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Other financing activities, net |
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( |
) |
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( |
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Net cash used in financing activities |
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( |
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( |
) |
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(Decrease) increase in cash and cash equivalents |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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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.
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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(In thousands) |
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2024 |
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2023 |
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2024 |
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2023 |
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LTL services |
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$ |
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$ |
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$ |
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$ |
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Other services |
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Total revenue from operations |
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$ |
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$ |
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$ |
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$ |
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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, 2024 are not necessarily indicative of the results that may be expected for the subsequent quarterly period or the year ending December 31, 2024.
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, 2023. 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, 2023, unless otherwise disclosed in this Form 10-Q.
Certain amounts in prior years have been reclassified to conform prior years’ financial statements to the current presentation.
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.
Common Stock Split
On February 16, 2024, we announced that our Board of Directors approved a
All references in this report to shares outstanding, weighted average shares outstanding, earnings per share, and dividends per share amounts have been restated retroactively to reflect this stock split.
6
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 $
On July 26, 2023, we announced that our Board of Directors had approved a stock repurchase program authorizing us to repurchase up to an aggregate of $
Under our repurchase programs, 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 repurchase programs are canceled at the time of repurchase and are classified as authorized but unissued shares of our common stock.
On May 28, 2024, we entered into an accelerated share repurchase agreement (the "ASR Agreement") with a third-party financial institution. The ASR Agreement is 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 ASR Agreement is 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.
Under the ASR Agreement, we paid the third-party financial institution $
At September 30, 2024, our 2023 Repurchase Program had $
Note 2. Earnings Per Share
Basic earnings per share is computed by dividing net income by the daily weighted average number of shares of our common stock outstanding for the period, excluding unvested restricted stock. Unvested restricted stock is included in common shares outstanding on our Condensed Balance Sheets.
Diluted earnings per share is computed using the treasury stock method. The denominator used in calculating diluted earnings per share includes the impact of unvested restricted stock and other dilutive, non-participating securities under our equity award agreements. The denominator excludes contingently-issuable shares under performance-based award agreements when the performance target has not yet been deemed achieved.
The following table provides a reconciliation of the number of shares of common stock used in computing basic and diluted earnings per share:
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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(In thousands) |
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2024 |
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2023 |
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2024 |
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2023 |
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Weighted average shares outstanding - basic |
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Dilutive effect of share-based awards |
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Weighted average shares outstanding - diluted |
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7
Note 3. Long-Term Debt
Long-term debt, net of unamortized debt issuance costs, consisted of the following:
(In thousands) |
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September 30, |
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December 31, |
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Notes |
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$ |
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$ |
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Credit agreement |
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Total long-term debt |
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Less: Current maturities |
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( |
) |
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( |
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Total maturities due after one year |
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$ |
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$ |
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Note Agreement
On May 4, 2020, we entered into a Note Purchase and Private Shelf Agreement with PGIM, Inc. (“Prudential”) and certain affiliates and managed accounts of Prudential (as subsequently amended on March 22, 2023 and August 28, 2024, the “Note Agreement”). The Note Agreement, which is uncommitted and subject to Prudential’s sole discretion, provides for the issuance of senior promissory notes with an aggregate principal amount of up to $
Credit Agreement
The Credit Agreement provides for a five-year, $
At our option, borrowings under the Credit Agreement bear interest at either: (i) the Secured Overnight Financing Rate (SOFR) plus the Term SOFR Adjustment, as defined in the Credit Agreement, equal to
For periods covered under the Credit Agreement, the applicable margin on SOFR loans and letter of credit fees were
The Credit Agreement replaced our previous five-year, $
There were $
8
General Debt Provisions
The Credit Agreement and Note Agreement contain customary covenants, including financial covenants that require us to observe a maximum ratio of debt to total capital and a minimum fixed charge coverage ratio. The Credit Agreement and Note Agreement also include a provision limiting our ability to make restricted payments, including dividends and payments for share repurchases, unless, among other conditions, no defaults or events of default are ongoing (or would be caused by such restricted payment).
Note 4. Commitments and Contingencies
We are involved in or addressing various legal proceedings and claims, governmental inquiries, notices and investigations that have arisen in the ordinary course of our business and have not been fully adjudicated, some of which may be covered in whole or in part by insurance. Certain of these matters include collective and/or class-action allegations. We do not believe that the resolution of any of these matters will have a material adverse effect upon our financial position, results of operations or cash flows.
Note 5. Fair Value Measurements
Short-term Investments
We held no short-term investments as of September 30, 2024 or December 31, 2023.
Long-term Debt
The carrying value of our total long-term debt, including current maturities, was $
9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
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. More than 98% of our revenue has historically been derived from transporting LTL shipments for our customers, whose demand for our services is generally tied to industrial production and the overall health of the U.S. domestic economy.
In analyzing the components of our revenue, we monitor changes and trends in our LTL volumes and LTL revenue per hundredweight. While LTL revenue per hundredweight is a yield measurement, it is also a commonly-used indicator for general pricing trends in the LTL industry. This yield metric is not a true measure of price, however, as it can be influenced by many other factors, such as changes in fuel surcharges, weight per shipment and length of haul. As a result, changes in revenue per hundredweight do not necessarily indicate actual changes in underlying base rates. LTL revenue per hundredweight and the key factors that can impact this metric are described in more detail below:
Our primary revenue focus is to increase density, which is shipment and tonnage growth within our existing infrastructure. Increases in density allow us to maximize our asset utilization and labor productivity, which we measure over many different functional areas of our operations including linehaul load factor, pickup and delivery (“P&D”) stops per hour, P&D shipments per hour, platform pounds handled per hour and platform shipments per hour. In addition to our focus on density and operating efficiencies, it is critical for us to obtain an appropriate yield, which is measured as revenue per hundredweight, on the shipments we handle. We focus on the profitability of each customer account and generally seek to obtain an appropriate yield to offset our cost inflation and support our ongoing investments in capacity and technology. We believe the continued execution of this
10
yield-management philosophy, continued increases in density, and ongoing improvements in operating efficiencies are the key components of our ability to produce further improvement in our operating ratio and long-term profitable growth.
Our primary cost elements are direct wages and benefits associated with the movement of freight, operating supplies and expenses, which include diesel fuel, and depreciation of our equipment fleet and service center facilities. We gauge our overall success in managing costs by monitoring our operating ratio, a measure of profitability calculated by dividing total operating expenses by revenue, which also allows for industry-wide comparisons with our competition.
We regularly upgrade our technological capabilities to improve our customer service and lower our operating costs. Our technology provides our customers with visibility of their shipments throughout our network, increases the productivity of our workforce, and provides key metrics that we use to monitor and enhance our processes.
Results of Operations
The following table sets forth, for the periods indicated, expenses and other items as a percentage of revenue from operations:
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue from operations |
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100.0 |
% |
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100.0 |
% |
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100.0 |
% |
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100.0 |
% |
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Operating expenses: |
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Salaries, wages and benefits |
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46.3 |
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43.8 |
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45.9 |
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44.8 |
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Operating supplies and expenses |
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10.6 |
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11.9 |
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11.1 |
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12.3 |
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General supplies and expenses |
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3.1 |
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2.8 |
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3.1 |
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2.7 |
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Operating taxes and licenses |
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2.6 |
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2.4 |
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2.5 |
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2.5 |
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Insurance and claims |
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1.2 |
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1.1 |
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1.2 |
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1.1 |
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Communications and utilities |
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0.7 |
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0.7 |
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0.6 |
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0.8 |
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Depreciation and amortization |
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5.9 |
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5.5 |
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5.8 |
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5.5 |
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Purchased transportation |
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2.1 |
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2.0 |
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2.1 |
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2.1 |
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Miscellaneous expenses, net |
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0.2 |
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0.4 |
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0.4 |
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0.3 |
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Total operating expenses |
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72.7 |
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70.6 |
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72.7 |
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72.1 |
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Operating income |
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27.3 |
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29.4 |
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27.3 |
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27.9 |
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Interest (income) expense, net |
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(0.1 |
) |
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(0.2 |
) |
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(0.3 |
) |
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(0.2 |
) |
Other expense, net |
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0.0 |
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0.1 |
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0.0 |
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0.1 |
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Income before income taxes |
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27.4 |
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29.5 |
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27.6 |
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28.0 |
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Provision for income taxes |
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6.4 |
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7.1 |
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6.8 |
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7.0 |
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Net income |
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21.0 |
% |
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22.4 |
% |
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20.8 |
% |
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21.0 |
% |
11
Key financial and operating metrics for the three- and nine-month periods ended September 30, 2024 and 2023 are presented below:
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2024 |
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2023 |
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% |
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2024 |
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2023 |
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% |
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Work days |
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64 |
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63 |
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1.6 |
% |
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192 |
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191 |
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0.5 |
% |
Revenue (in thousands) |
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$ |
1,470,211 |
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$ |
1,515,277 |
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(3.0 |
)% |
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$ |
4,428,981 |
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$ |
4,370,602 |
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1.3 |
% |
Operating ratio |
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72.7 |
% |
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70.6 |
% |
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72.7 |
% |
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72.1 |
% |
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Net income (in thousands) |
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$ |
308,580 |
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$ |
339,287 |
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(9.1 |
)% |
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$ |
922,929 |
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$ |
916,687 |
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0.7 |
% |
Diluted earnings per share |
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$ |
1.43 |
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$ |
1.54 |
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(7.1 |
)% |
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$ |
4.25 |
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$ |
4.16 |
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2.2 |
% |
LTL tons (in thousands) |
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2,266 |
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2,342 |
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(3.2 |
)% |
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6,870 |
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6,977 |
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(1.5 |
)% |
LTL tonnage per day |
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35,408 |
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37,181 |
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(4.8 |
)% |
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35,783 |
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36,529 |
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(2.0 |
)% |
LTL shipments (in thousands) |
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3,070 |
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3,129 |
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(1.9 |
)% |
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9,174 |
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9,155 |
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0.2 |
% |
LTL shipments per day |
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47,967 |
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49,670 |
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(3.4 |
)% |
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47,781 |
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47,932 |
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(0.3 |
)% |
LTL weight per shipment (lbs.) |
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1,476 |
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1,497 |
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(1.4 |
)% |
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1,498 |
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