odfl-10q_20210630.htm

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 June 30, 2021

☐	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

(Nasdaq Global Select Market)

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 August 3, 2021 there were 115,810,083 shares of the registrant’s Common Stock ($0.10 par value) outstanding.

INDEX


Part I – FINANCIAL INFORMATION

Item 1	Financial Statements	1
	Condensed Balance Sheets – June 30, 2021 and December 31, 2020	1
	Condensed Statements of Operations – For the three and six months ended June 30, 2021 and 2020	3
	Condensed Statements of Changes in Shareholders’ Equity - For the three and six months ended June 30, 2021 and 2020	4
	Condensed Statements of Cash Flows – For the six months ended June 30, 2021 and 2020	5
	Notes to the Condensed Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3	Quantitative and Qualitative Disclosures about Market Risk	17
Item 4	Controls and Procedures	17

Part II – OTHER INFORMATION

Item 1	Legal Proceedings	18
Item 1A	Risk Factors	18
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 6	Exhibits	18

Exhibit Index		19
Signatures		20

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

OLD DOMINION FREIGHT LINE, INC.

CONDENSED BALANCE SHEETS

	June 30,
	2021			December 31,
(In thousands, except share and per share data)	(Unaudited)			2020
ASSETS
Current assets:
Cash and cash equivalents	$	484,204		$	401,430
Short-term investments		165,254			330,274
Customer receivables, less allowances of $9,915 and $8,979, respectively		548,749			444,653
Other receivables		51,307			9,569
Prepaid expenses and other current assets		61,601			57,413
Total current assets		1,311,115			1,243,339

Property and equipment:
Revenue equipment		1,991,845			1,885,649
Land and structures		2,297,101			2,218,290
Other fixed assets		493,870			475,264
Leasehold improvements		12,904			12,226
Total property and equipment		4,795,720			4,591,429
Accumulated depreciation		(1,796,993	)		(1,677,398	)
Net property and equipment		2,998,727			2,914,031

Other assets		224,604			212,040
Total assets	$	4,534,446		$	4,369,410

Note: The Condensed Balance Sheet at December 31, 2020 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.

OLD DOMINION FREIGHT LINE, INC.

CONDENSED BALANCE SHEETS

(CONTINUED)

	June 30,
	2021		December 31,
(In thousands, except share and per share data)	(Unaudited)		2020
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	90,956	$	68,511
Compensation and benefits		245,762		191,303
Claims and insurance accruals		55,620		53,092
Other accrued liabilities		89,680		51,513
Income taxes payable		—		8,711
Total current liabilities		482,018		373,130

Long-term liabilities:
Long-term debt		99,939		99,931
Other non-current liabilities		329,901		349,851
Deferred income taxes		220,210		220,210
Total long-term liabilities		650,050		669,992
Total liabilities		1,132,068		1,043,122

Commitments and contingent liabilities

Shareholders’ equity:
Common stock - $0.10 par value, 280,000,000 shares authorized, 115,810,083 and 117,057,696 shares outstanding at June 30, 2021 and December 31, 2020, respectively		11,581		11,706
Capital in excess of par value		160,204		226,451
Retained earnings		3,230,593		3,088,131
Total shareholders’ equity		3,402,378		3,326,288
Total liabilities and shareholders’ equity	$	4,534,446	$	4,369,410

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

OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands, except share and per share data)	2021			2020			2021			2020
Revenue from operations	$	1,319,409		$	896,210		$	2,445,924		$	1,883,574

Operating expenses:
Salaries, wages and benefits		611,518			460,906			1,157,177			985,389
Operating supplies and expenses		137,577			75,412			261,733			183,105
General supplies and expenses		34,427			25,881			65,595			59,489
Operating taxes and licenses		33,256			27,043			64,522			56,357
Insurance and claims		14,983			10,910			27,905			20,760
Communications and utilities		8,390			7,262			16,586			15,453
Depreciation and amortization		63,947			65,735			127,934			131,170
Purchased transportation		43,927			18,983			78,641			39,783
Miscellaneous expenses, net		5,340			4,912			10,130			9,732
Total operating expenses		953,365			697,044			1,810,223			1,501,238

Operating income		366,044			199,166			635,701			382,336

Non-operating expense (income):
Interest expense		465			765			972			865
Interest income		(196	)		(231	)		(482	)		(1,479	)
Other expense (income), net		1,387			(373	)		1,515			3,244
Total non-operating expense		1,656			161			2,005			2,630

Income before income taxes		364,388			199,005			633,696			379,706

Provision for income taxes		94,812			51,200			164,761			98,724

Net income	$	269,576		$	147,805		$	468,935		$	280,982

Earnings per share:
Basic	$	2.33		$	1.26		$	4.04		$	2.37
Diluted	$	2.31		$	1.25		$	4.01		$	2.36

Weighted average shares outstanding:
Basic		115,820,522			117,610,178			116,157,336			118,330,176
Diluted		116,561,242			118,359,884			116,906,572			119,082,728

Dividends declared per share	$	0.20		$	0.15		$	0.40		$	0.30

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

OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

	Three Months Ended							Six Months Ended
	June 30,							June 30,
(In thousands)	2021			2020			2021				2020
Common stock:
Beginning balance	$	11,596		$	11,813		$		11,706		$	11,953
Share repurchases		(16	)		(80	)			(129	)		(223	)
Share-based compensation and share issuances		1			1				6			7
Taxes paid in exchange for shares withheld		—			—				(2	)		(2	)
Cash paid for fractional shares		—			—				—			(1	)
Ending balance		11,581			11,734				11,581			11,734

Capital in excess of par value:
Beginning balance		156,126			217,187				226,451			218,462
Share-based compensation and share issuances		4,078			2,208				7,042			4,275
Taxes paid in exchange for shares withheld		—			—				(4,539	)		(2,731	)
Forward contract for accelerated share repurchases		—			(37,500	)			(68,750	)		(37,500	)
Cash paid for fractional shares		—			—				—			(611	)
Ending balance		160,204			181,895				160,204			181,895

Retained earnings:
Beginning balance		3,024,195			2,787,049				3,088,131			2,850,302
Share repurchases		(39,984	)		(128,417	)			(280,086	)		(306,568	)
Cash dividends declared		(23,194	)		(17,598	)			(46,387	)		(35,877	)
Net income		269,576			147,805				468,935			280,982
Ending balance		3,230,593			2,788,839				3,230,593			2,788,839

Total shareholders' equity	$	3,402,378		$	2,982,468		$		3,402,378		$	2,982,468

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

OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	June 30,
(In thousands)	2021			2020
Cash flows from operating activities:
Net income	$	468,935		$	280,982
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		127,942			131,170
Loss on disposal of property and equipment		701			140
Other, net		15,352			(9,118	)
Changes in operating assets and liabilities, net		(104,639	)		113,042
Net cash provided by operating activities		508,291			516,216

Cash flows from investing activities:
Purchase of property and equipment		(206,109	)		(120,128	)
Proceeds from sale of property and equipment		15,512			2,570
Purchase of short-term investments		(89,965	)		—
Proceeds from maturities of short-term investments		255,072			—
Net cash used in investing activities		(25,490	)		(117,558	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		—			99,923
Payments for share repurchases		(280,215	)		(306,791	)
Forward contract for accelerated share repurchases		(68,750	)		(37,500	)
Dividends paid		(46,408	)		(35,892	)
Other financing activities, net		(4,654	)		(3,345	)
Net cash used in financing activities		(400,027	)		(283,605	)

Increase in cash and cash equivalents		82,774			115,053
Cash and cash equivalents at beginning of period		401,430			403,571
Cash and cash equivalents at end of period	$	484,204		$	518,624

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

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				Six Months Ended
	June 30,				June 30,
(In thousands)	2021		2020		2021		2020
LTL services	$	1,299,760	$	884,069	$	2,409,382	$	1,858,500
Other services		19,649		12,141		36,542		25,074
Total revenue from operations	$	1,319,409	$	896,210	$	2,445,924	$	1,883,574

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 June 30, 2021 are not necessarily indicative of the results that may be expected for the subsequent quarterly periods or the year ending December 31, 2021.

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, 2020. 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, 2020, other than those 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 May 1, 2020, we announced that our Board of Directors had approved a two-year stock repurchase program authorizing us to repurchase up to an aggregate of $700.0 million of our outstanding common stock (the “2020 Repurchase Program”). The 2020 Repurchase Program became effective upon the termination of our $350.0 million repurchase program on May 29, 2020. 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 February 25, 2021, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with a third-party financial institution as part of our 2020 Repurchase Program. Under the ASR Agreement, we paid the third-party financial institution $275.0 million and received an initial delivery of 960,330 shares of our common stock for $206.3 million, representing approximately 75% of the total value of shares to be received by us under the ASR Agreement. The remaining shares are expected to settle during the third quarter of 2021. At final settlement, we may receive additional shares of our common stock, or, under certain circumstances, we may be required to provide the third-party financial institution additional shares or may elect to make a cash payment to the third-party financial institution as part of the final settlement. The total shares repurchased will be based on the daily volume-weighted average share price of our common stock during the term of the ASR Agreement, less a negotiated discount.

The ASR Agreement was accounted for as a settled treasury stock purchase and a forward stock purchase contract. The par value of the initial share delivery was 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 Statements of Changes in Shareholders’ Equity.

During the three and six months ended June 30, 2021, we repurchased 159,485 shares of our common stock for $40.0 million and 1,286,517 shares of our common stock for $280.2 million under our 2020 Repurchase Program, respectively, including shares repurchased under the ASR Agreement. At June 30, 2021, our 2020 Repurchase Program had $275.0 million remaining available, including $68.7 million that is deferred until the third quarter when the final settlement occurs on our current ASR Agreement, leaving $206.3 million remaining available and uncommitted.

On July 28, 2021, we announced that our Board of Directors had approved a new stock repurchase program authorizing us to repurchase up to an aggregate of $2.0 billion of our outstanding common stock. The new repurchase program, which does not have an expiration date, will be effective upon the completion of our 2020 Repurchase Program.

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:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Weighted average shares outstanding - basic		115,820,522		117,610,178		116,157,336		118,330,176
Dilutive effect of share-based awards		740,720		749,706		749,236		752,552
Weighted average shares outstanding - diluted		116,561,242		118,359,884		116,906,572		119,082,728

Note 3. Long-Term Debt

Long-term debt, net of unamortized debt issuance costs, consisted of the following:

(In thousands)	June 30, 2021		December 31, 2020
Senior notes	$	99,939	$	99,931
Revolving credit facility		—		—
Total long-term debt		99,939		99,931
Less: Current maturities		—		—
Total maturities due after one year	$	99,939	$	99,931

Senior 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 (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 $350.0 million through May 4, 2023. Pursuant to the Note Agreement, we issued $100.0 million aggregate principal amount of senior promissory notes (the “Series B Notes”), the proceeds of which are available for capital expenditures, share repurchases, dividends, acquisitions, or general corporate purposes. Borrowing availability under the Note Agreement is reduced by the outstanding amount of the existing Series B Notes, and all other senior promissory notes issued pursuant to the Note Agreement.

The Series B Notes bear interest at 3.10% per annum and mature on May 4, 2027, unless prepaid. Principal payments are required annually beginning on May 4, 2023 in equal installments of $20.0 million through May 4, 2027. The Series B Notes are senior unsecured obligations and rank pari passu with borrowings under our Credit Agreement or Note Agreement.

Credit Agreement

On November 21, 2019, we entered into a second amended and restated credit agreement with Wells Fargo Bank, National Association serving as administrative agent for the lenders (the “Credit Agreement”). The Credit Agreement provides for a five-year, $250.0 million senior unsecured revolving line of credit and a $150.0 million accordion feature, which if fully exercised and approved, would expand the total borrowing capacity up to an aggregate of $400.0 million. Of the $250.0 million line of credit commitments under the Credit Agreement, up to $100.0 million may be used for letters of credit.

At our option, borrowings under the Credit Agreement bear interest at either: (i) LIBOR (including applicable successor provisions) plus an applicable margin (based on our ratio of net debt-to-total capitalization) that ranges from 1.000% to 1.375%; or (ii) a Base Rate, as defined in the Credit Agreement, plus an applicable margin (based on our ratio of net debt-to-total capitalization) that ranges from 0.000% to 0.375%. Letter of credit fees equal to the applicable margin for LIBOR loans are charged quarterly in arrears on the daily average aggregate stated amount of all letters of credit outstanding during the quarter. Commitment fees ranging from 0.100% to 0.175% (based upon the ratio of net debt-to-total capitalization) are charged quarterly in arrears on the aggregate unutilized portion of the Credit Agreement.

For periods covered under the Credit Agreement, the applicable margin on LIBOR loans and letter of credit fees were 1.000% and commitment fees were 0.100%.

There were $39.2 million and $42.1 million of outstanding letters of credit at June 30, 2021 and December 31, 2020, respectively.

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

A summary of the fair value of our short-term investments as of June 30, 2021 is shown in the table below.

(In thousands)	Total		Level 1		Level 2		Level 3
Certificates of deposit	$	45,062	$	—	$	45,062	$	—
U.S. government securities		50,211		50,211		—		—
Commercial paper		69,981		—		69,981		—
Total	$	165,254	$	50,211	$	115,043	$	—

Our certificates of deposit are measured at carrying value including accrued interest, which approximates fair value due to their short-term nature. Our commercial paper is valued using broker quotes that utilize observable market inputs.

Long-term Debt

The carrying value of our total long-term debt was $99.9 million at June 30, 2021 and December 31, 2020. The estimated fair value of our total long-term debt was $104.0 million and $105.4 million at