Old Dominion Freight Line(ODFL) - 2024 Q2 - Quarterly Results

Financial Highlights Second Quarter 2024 Performance Summary Old Dominion Freight Line reported strong financial results for the second quarter of 2024, with total revenue increasing 6.1% year-over-year to nearly $1.5 billion. Net income grew by 10.2% to $322.0 million, and diluted earnings per share rose 11.3% to $1.48, reflecting improved profitability and operational efficiency Q2 & H1 2024 Financial Summary (in thousands, except per share amounts) | Metric | Q2 2024 | Q2 2023 | % Chg. | H1 2024 | H1 2023 | % Chg. | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,498,697 | $1,413,189 | 6.1% | $2,958,770 | $2,855,325 | 3.6% | | Operating Income | $421,691 | $391,594 | 7.7% | $808,117 | $774,643 | 4.3% | | Net Income | $322,045 | $292,362 | 10.2% | $614,349 | $577,400 | 6.4% | | Diluted EPS | $1.48 | $1.33 | 11.3% | $2.82 | $2.61 | 8.0% | - All prior-period share and per-share data have been adjusted to reflect the company's March 2024 two-for-one stock split[15] Management Commentary CEO's Perspective on Q2 Results CEO Marty Freeman highlighted the company's third consecutive quarter of profitable growth despite a soft domestic economy, attributing success to a long-term strategic plan focused on superior service at a fair price, enabling yield management and market share gains, with the operating ratio improving to 71.9% as a key factor in double-digit earnings growth - The company achieved its third consecutive quarter of growth in both revenue and earnings per diluted share, with earnings increasing by double digits for the first time in over a year[16] - Q2 revenue growth was driven by a 4.4% increase in LTL revenue per hundredweight and a 1.9% increase in LTL tons per day[4] - The operating ratio improved by 40 basis points to 71.9%, driven by quality revenue growth and operating efficiencies, which led to an 11.3% increase in EPS[18] - The company's strategy of providing superior service at a fair price is considered a key differentiator that positions it to win long-term market share[20] Financial Performance Analysis Revenue and Tonnage Analysis LTL services revenue, the company's core business, grew 6.2% in Q2 2024, supported by a 3.1% increase in LTL shipments per day, partially offset by a 1.2% decrease in weight per shipment, while LTL revenue per hundredweight increased by 4.4% (or 4.9% excluding fuel surcharges), reflecting successful yield-management strategies - The increase in LTL tons per day resulted from a 3.1% increase in LTL shipments per day, which was partially offset by a 1.2% decrease in weight per shipment[4] LTL Revenue Metrics Change (Q2 2024 vs Q2 2023) | Metric | % Change | | :--- | :--- | | LTL Revenue per Hundredweight | 4.4% | | LTL Revenue per Hundredweight (ex-fuel) | 4.9% | | LTL Revenue per Shipment | 3.2% | Operating Performance The company demonstrated improved profitability with its operating ratio decreasing to 71.9% in Q2 2024 from 72.3% in Q2 2023, as total operating expenses increased to $1.077 billion, with 'Salaries, wages & benefits' remaining the largest cost component at 45.6% of revenue, a slight increase from the prior year - The operating ratio improved by 40 basis points to 71.9% for the second quarter of 2024[18] Operating Expenses as a % of Revenue (Q2 2024 vs Q2 2023) | Expense Category | Q2 2024 % | Q2 2023 % | | :--- | :--- | :--- | | Salaries, wages & benefits | 45.6% | 45.5% | | Operating supplies & expenses | 10.7% | 11.7% | | Depreciation & amortization | 5.6% | 5.6% | | Total operating expenses | 71.9% | 72.3% | Key Operating Statistics In Q2 2024, Old Dominion's key operating metrics showed positive trends in shipment volumes and pricing, with LTL shipments per day growing by 3.1% year-over-year, though efficiency metrics like weight per shipment and average length of haul experienced slight declines of 1.2% and 0.8% respectively Q2 Operating Statistics (2024 vs 2023) | Metric | Q2 2024 | Q2 2023 | % Chg. | | :--- | :--- | :--- | :--- | | LTL tons (in thousands) | 2,340 | 2,296 | 1.9% | | LTL shipments per day | 48,444 | 46,998 | 3.1% | | LTL weight per shipment (lbs.) | 1,509 | 1,527 | (1.2)% | | Average length of haul (miles) | 918 | 925 | (0.8)% | Capital Management and Shareholder Returns Cash Flow and Capital Expenditures The company generated $387.8 million in net cash from operating activities in Q2 2024, continuing its investment in growth with planned capital expenditures for the full year 2024 totaling approximately $750 million, primarily focused on real estate expansion and fleet modernization - Net cash provided by operating activities was $387.8 million for Q2 2024 and $811.7 million for the first half of the year[18] - The company expects total 2024 capital expenditures to be approximately $750 million, allocated as follows: $350 million for real estate, $325 million for tractors and trailers, and $75 million for technology and other assets[5] Share Repurchases and Dividends Old Dominion actively returned capital to shareholders in the first half of 2024, utilizing $637.1 million for its share repurchase program, which includes a $200.0 million accelerated share repurchase agreement, and paying out $112.6 million in cash dividends - In the first six months of 2024, the company used $637.1 million for share repurchases and paid $112.6 million in cash dividends[19] Company Overview and Outlook Company Profile Old Dominion Freight Line, Inc. is a leading North American less-than-truckload (LTL) motor carrier, operating a single, integrated, union-free network across the continental U.S., offering regional, inter-regional, and national LTL services, along with value-added services such as container drayage, truckload brokerage, and supply chain consulting - Old Dominion is one of the largest North American LTL motor carriers, operating through a single integrated, union-free organization[9] - In addition to its core LTL services, the company offers value-added services including container drayage, truckload brokerage, and supply chain consulting[9] Forward-Looking Statements and Risk Factors The earnings release contains forward-looking statements subject to various risks and uncertainties, highlighting numerous potential risks that could impact future results, including economic factors like inflation and recessions, competitive pricing pressures, fuel price volatility, labor market challenges, cybersecurity threats, and regulatory changes - The report cautions that forward-looking statements involve risks that could cause actual results to differ materially[20] - Key identified risks include economic downturns, fuel price fluctuations, competition, labor costs and availability, cybersecurity incidents, and regulatory compliance[8][20] Detailed Financial Statements Consolidated Statements of Operations The detailed statements of operations for Q2 2024 show a 6.1% increase in revenue to $1.5 billion and a 5.4% increase in total operating expenses to $1.08 billion, resulting in a 7.7% rise in operating income to $421.7 million compared to Q2 2023 Condensed Statement of Operations (Q2 2024 vs Q2 2023, in thousands) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Revenue | $1,498,697 | $1,413,189 | | Total operating expenses | $1,077,006 | $1,021,595 | | Operating income | $421,691 | $391,594 | | Income before income taxes | $426,446 | $391,926 | | Net income | $322,045 | $292,362 | Consolidated Balance Sheets As of June 30, 2024, Old Dominion's balance sheet shows total assets of $5.34 billion, a decrease from $5.51 billion at the end of 2023, primarily driven by a reduction in cash and cash equivalents from $433.8 million to $74.3 million due to share repurchase activities, while total liabilities remained relatively stable at $1.23 billion Condensed Balance Sheet (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $74,304 | $433,799 | | Total current assets | $807,113 | $1,143,333 | | Net property and equipment | $4,277,820 | $4,095,405 | | Total assets | $5,343,096 | $5,512,393 | | Total current liabilities | $552,754 | $544,658 | | Total liabilities | $1,231,197 | $1,254,582 | | Equity | $4,111,899 | $4,257,811 |