10-QPeriod: Q1 FY2018

OLD DOMINION FREIGHT LINE, INC. Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 7, 2018For Securities:ODFL

Summary

Old Dominion Freight Line, Inc. (ODFL) reported strong performance for the first quarter of 2018, showcasing significant year-over-year growth in key financial and operational metrics. Revenue surged by 22.7% to $925.0 million, driven by a combination of increased LTL tonnage and improved pricing (yield). This top-line growth, coupled with enhanced operational efficiencies, resulted in a substantial 180 basis point improvement in the operating ratio to 83.9%. Net income more than doubled, increasing by 66.2% to $109.3 million, with diluted earnings per share rising to $1.33 from $0.80 in the prior year period. This significant profit increase was also bolstered by a lower effective tax rate, largely due to the Tax Cuts and Jobs Act. The company continues to invest in its infrastructure, with substantial capital expenditures planned for 2018 to support long-term growth and market share expansion.

Financial Highlights

41 data points
Beta

Revenue

$925.02M

Net Income

$109.33M

11.8% Net Margin

EPS (Diluted)

$0.44

Total Assets

$3.14B

Cash & Equivalents

$159.94M

Free Cash Flow

$211.25M

Financial Statements
Beta
Revenue$925.02M
Operating Expenses$775.68M
Operating Income$149.34M
Net Income$109.33M
EPS (Basic)$0.44
EPS (Diluted)$0.44
Shares Outstanding (Basic)246.76M
Shares Outstanding (Diluted)247.07M

Key Highlights

  • 1Revenue increased by 22.7% to $925.0 million in Q1 2018, marking the fourth consecutive quarter of double-digit growth.
  • 2Net income surged by 66.2% to $109.3 million, and diluted EPS grew to $1.33 from $0.80 in Q1 2017.
  • 3Operating ratio improved significantly by 180 basis points to 83.9% due to increased density and yield.
  • 4LTL tons increased by 15.4% and LTL shipments by 10.5%, indicating strong demand and market penetration.
  • 5LTL revenue per hundredweight increased by 5.9% to $20.16, reflecting successful yield management and a favorable pricing environment.
  • 6Capital expenditures were $100.2 million in Q1 2018, with approximately $555 million planned for the full year 2018 to support growth initiatives.
  • 7The company's effective tax rate decreased from 38.6% in Q1 2017 to 25.9% in Q1 2018 due to the Tax Cuts and Jobs Act.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in LTL tons, resulting from higher LTL shipments and increased weight per shipment, and an improvement in LTL revenue per hundredweight. These factors are attributed to the continued strength of the U.S. domestic economy, growth in market share, and effective yield management in a favorable pricing environment.

The Tax Cuts and Jobs Act significantly reduced Old Dominion's effective tax rate from 38.6% in the first quarter of 2017 to 25.9% in the first quarter of 2018. This reduction in the corporate income tax rate from 35% to 21% contributed substantially to the increase in net income and earnings per share.

Old Dominion plans substantial capital expenditures of approximately $555 million for the full year 2018, focusing on service center facilities, tractors, trailers, and technology. This investment strategy is designed to support the company's long-term growth plan and market share expansion, and is expected to be funded primarily through cash flows from operations and existing cash reserves.

During the first quarter of 2018, Old Dominion paid down $50.0 million of its senior notes, reducing the outstanding long-term debt. The company has a $300 million senior unsecured revolving credit facility with substantial available borrowing capacity ($231.8 million as of March 31, 2018), providing ample liquidity for its operations and capital needs.