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

Part I – FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Old Dominion Freight Line, Inc. as of June 30, 2024, and for the three and six-month periods then ended, including balance sheets, statements of operations, changes in shareholders' equity, cash flows, and accompanying notes Condensed Balance Sheets Total assets decreased to $5.34 billion as of June 30, 2024, from $5.51 billion at December 31, 2023, primarily due to reduced cash, while shareholders' equity declined from $4.26 billion to $4.11 billion due to share repurchases and dividends Condensed Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | 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 | | Total Shareholders' Equity | $4,111,899 | $4,257,811 | - Cash and cash equivalents significantly decreased from $433.8 million at the end of 2023 to $74.3 million at June 30, 2024, largely due to share repurchases and dividend payments[5] Condensed Statements of Operations For Q2 2024, revenue increased 6.1% year-over-year to $1.50 billion, with net income growing 10.2% to $322.0 million, and diluted EPS reaching $1.48 Key Performance Indicators (Q2 & H1 2024 vs 2023, in thousands except per share data) | Metric | Q2 2024 | Q2 2023 | YoY Change | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 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% | Condensed Statements of Changes in Shareholders' Equity Shareholders' equity decreased from $4.26 billion at the end of 2023 to $4.11 billion at June 30, 2024, primarily due to $602.9 million in share repurchases and $112.6 million in dividends, partially offset by net income - For the six months ended June 30, 2024, the company repurchased $602.9 million of its common stock and paid $112.6 million in dividends[10] - An accelerated share repurchase (ASR) agreement was initiated, resulting in a $40.0 million reduction to capital in excess of par value related to a forward contract[10] Condensed Statements of Cash Flows Net cash from operating activities increased to $811.7 million for the first six months of 2024, while cash used in financing activities significantly rose to $788.4 million due to higher share repurchases and dividend payments Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $811,748 | $703,207 | | Net Cash used in Investing Activities | ($382,809) | ($412,934) | | Net Cash used in Financing Activities | ($788,434) | ($421,444) | | Decrease in Cash | ($359,495) | ($131,171) | | Cash at End of Period | $74,304 | $55,141 | Notes to the Condensed Financial Statements The notes detail the company's LTL motor carrier business, a two-for-one stock split in March 2024, the completion of a $2.0 billion stock repurchase program, the initiation of a new $3.0 billion program, and its long-term debt structure - The company's primary business is Less-Than-Truckload (LTL) services, which accounted for $2.93 billion of the $2.96 billion total revenue for the first six months of 2024[12] - A two-for-one stock split was completed in March 2024, with all share and per-share data in the report retroactively adjusted to reflect this split[16] - The company completed its $2.0 billion 2021 Repurchase Program in May 2024 and began repurchasing shares under a new $3.0 billion 2023 Repurchase Program, with $2.63 billion remaining available as of June 30, 2024[17][20] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's Q2 and H1 2024 financial performance, highlighting revenue growth from market share gains and improved revenue quality, operating ratio improvements, and strategic investments in capacity and technology Overview The company, a leading North American LTL motor carrier, focuses on increasing density and managing yield within its network to maximize asset utilization and improve its operating ratio - The company's strategic focus is on increasing density and managing yield to offset cost inflation and support investments in capacity and technology[35][36] - Key performance indicators used to analyze revenue include: * LTL Revenue Per Hundredweight * LTL Weight Per Shipment * Average Length of Haul * LTL Revenue Per Shipment[34] Results of Operations In Q2 2024, revenue grew 6.1% to $1.5 billion, with the operating ratio improving to 71.9%, driven by increased LTL shipments per day and LTL revenue per hundredweight, while operating supplies expenses decreased due to lower diesel fuel costs Key Operating Metrics (Q2 2024 vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue (in thousands) | $1,498,697 | $1,413,189 | 6.1% | | Operating Ratio | 71.9% | 72.3% | -40 bps | | LTL Shipments per day | 48,444 | 46,998 | 3.1% | | LTL Revenue per hundredweight | $31.77 | $30.44 | 4.4% | - Excluding fuel surcharges, LTL revenue per hundredweight increased 4.9% in Q2 2024 and 5.8% in H1 2024, reflecting the success of the company's yield management strategy[43] - July 2024 revenue per day increased 4.6% YoY, driven by a 5.7% increase in LTL revenue per hundredweight, partially offset by a 0.9% decrease in LTL tons per day[44] - Operating supplies and expenses decreased in Q2 and H1 2024 due to lower diesel fuel costs, with the average cost per gallon decreasing 3.4% and 8.3% in the respective periods[49] Liquidity and Capital Resources The company maintains liquidity through operating cash flow of $811.7 million for H1 2024, with planned $750 million in capital expenditures for the full year, and significant shareholder returns through $597.1 million in share repurchases and $112.6 million in dividends - The company estimates total capital expenditures for 2024 to be approximately $750 million, allocated to real estate ($350M), tractors and trailers ($325M), and technology ($75M)[54] - The Board of Directors declared a cash dividend of $0.26 per share for each of the first three quarters of 2024, an increase from $0.20 per share in 2023[56] Available Borrowing Capacity (as of June 30, 2024, in thousands) | Item | Amount | | :--- | :--- | | Facility Limit | $250,000 | | Outstanding Letters of Credit | ($38,106) | | Available Borrowing Capacity | $211,894 | Critical Accounting Policies There have been no changes to the critical accounting policies as described in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - The company applied the same critical accounting policies as described in its 2023 Annual Report on Form 10-K[64] Other Factors This section addresses factors influencing the company's business, including typical industry seasonality with lower revenue and margins in Q1 and Q4, and environmental regulations, with no material adverse effects expected from compliance costs in 2024 - The company's business is subject to seasonal trends, with revenue and operating margins typically lower in the first and fourth quarters due to reduced shipments during winter months[65] - The company does not believe the cost of compliance with current environmental laws will have a material adverse effect on its operations or financial condition for fiscal year 2024[67] Quantitative and Qualitative Disclosures about Market Risk There have been no material changes to the company's market risk exposures since the fiscal year ended December 31, 2023 - No material changes to market risk exposures have occurred since the end of the most recent fiscal year[71] Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control over financial reporting during the last fiscal quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[72] - No changes in internal control over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[73] Part II – OTHER INFORMATION Legal Proceedings The company is involved in various legal proceedings in the ordinary course of business, but management does not anticipate any material adverse effect on its financial position, results of operations, or cash flows - The company does not expect any ongoing legal proceedings to have a material adverse effect on its financial condition or results of operations[74] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - No material changes have been made to the risk factors identified in the company's 2023 Annual Report on Form 10-K[75] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases during Q2 2024, totaling 2,877,217 shares at an average price of $178.54 per share, including the completion of the 2021 Repurchase Program and the initiation of a new $3.0 billion program Share Repurchases (Q2 2024) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2024 | 231,386 | $211.05 | | May 2024 | 2,012,259 | $176.45 | | June 2024 | 633,572 | $173.31 | | Total | 2,877,217 | $178.54 | - The May 2024 repurchases include an initial delivery of 923,201 shares under an accelerated share repurchase (ASR) agreement[78] Exhibits This section provides an index of the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications and financial data formatted in iXBRL - The exhibits filed with the report include Sarbanes-Oxley certifications and financial statements formatted in iXBRL[80][81]