SEC Form 10-Q filed by Old Dominion Freight Line Inc.

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 March 31, 2024

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: 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

 

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 May 3, 2024 there were 217,285,082 shares of the registrant’s Common Stock ($0.10 par value) outstanding.

 

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INDEX

 

Part I – FINANCIAL INFORMATION		1
Item 1	Financial Statements	1
	Condensed Balance Sheets – March 31, 2024 and December 31, 2023	1
	Condensed Statements of Operations – For the three months ended March 31, 2024 and 2023	3
	Condensed Statements of Changes in Shareholders’ Equity – For the three months ended March 31, 2024 and 2023	4
	Condensed Statements of Cash Flows – For the three months ended March 31, 2024 and 2023	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		19
Item 1	Legal Proceedings	19
Item 1A	Risk Factors	19
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 6	Exhibits	20
Exhibit Index		21
Signatures		22

 

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

OLD DOMINION FREIGHT LINE, INC.

CONDENSED BALANCE SHEETS

		March 31,
		2024				December 31,
(In thousands, except share and per share data)		(Unaudited)				2023
ASSETS
Current assets:
Cash and cash equivalents		$	580,974			$	433,799
Customer receivables, less allowances of $10,137 and $10,405, respectively			582,209				578,885
Income taxes receivable			—				18,554
Other receivables			21,320				17,884
Prepaid expenses and other current assets			79,157				94,211
Total current assets			1,263,660				1,143,333
Property and equipment:
Revenue equipment			2,578,067				2,590,770
Land and structures			3,110,076				3,021,447
Other fixed assets			642,377				623,164
Leasehold improvements			14,534				14,436
Total property and equipment			6,345,054				6,249,817
Accumulated depreciation			(2,216,953	)			(2,154,412	)
Net property and equipment			4,128,101				4,095,405
Other assets			259,595				273,655
Total assets		$	5,651,356			$	5,512,393

 

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.

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OLD DOMINION FREIGHT LINE, INC.

CONDENSED BALANCE SHEETS

(CONTINUED)

 

		March 31,
		2024				December 31,
(In thousands, except share and per share data)		(Unaudited)				2023
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	97,689			$	112,774
Compensation and benefits			232,502				278,953
Claims and insurance accruals			62,839				63,346
Other accrued liabilities			60,930				69,585
Income taxes payable			76,714				—
Current maturities of long-term debt			20,000				20,000
Total current liabilities			550,674				544,658
Long-term liabilities:
Long-term debt			59,980				59,977
Other non-current liabilities			275,933				286,815
Deferred income taxes			363,132				363,132
Total long-term liabilities			699,045				709,924
Total liabilities			1,249,719				1,254,582
Commitments and contingent liabilities
Shareholders’ equity:
Common stock - $0.10 par value, 280,000,000 shares authorized, 217,598,722 and 217,930,932 shares outstanding at March 31, 2024 and December 31, 2023, respectively			21,760				21,793
Capital in excess of par value			225,497				231,449
Retained earnings			4,154,380				4,004,569
Total shareholders’ equity			4,401,637				4,257,811
Total liabilities and shareholders’ equity		$	5,651,356			$	5,512,393

 

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.

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OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

		Three Months Ended
		March 31,
(In thousands, except per share data)		2024				2023
Revenue from operations		$	1,460,073			$	1,442,136
Operating expenses:
Salaries, wages and benefits			668,390				652,075
Operating supplies and expenses			172,472				192,384
General supplies and expenses			45,576				39,545
Operating taxes and licenses			35,838				36,701
Insurance and claims			18,194				16,028
Communications and utilities			10,995				11,017
Depreciation and amortization			84,531				75,947
Purchased transportation			30,710				30,615
Miscellaneous expenses, net			6,941				4,775
Total operating expenses			1,073,647				1,059,087
Operating income			386,426				383,049
Non-operating (income) expense:
Interest expense			37				200
Interest income			(7,372	)			(2,811	)
Other expense, net			879				1,511
Total non-operating income			(6,456	)			(1,100	)
Income before income taxes			392,882				384,149
Provision for income taxes			100,578				99,111
Net income		$	292,304			$	285,038
Earnings per share:
Basic		$	1.34			$	1.30
Diluted		$	1.34			$	1.29
Weighted average shares outstanding:
Basic			217,594				219,912
Diluted			218,808				221,358
Dividends declared per share		$	0.26			$	0.20

 

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OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(UNAUDITED)

 

	Three Months Ended March 31, 2024 and 2023
									Capital in
	Common Stock								Excess of				Retained
(In thousands, except per share data)	Shares				Amount				Par Value				Earnings				Total
Balance as of December 31, 2023		217,931			$	21,793			$	231,449			$	4,004,569			$	4,257,811
Net income		—				—				—				292,304				292,304
Share repurchases		(422	)			(42	)			—				(85,910	)			(85,952	)
Cash dividends declared ($0.26 per share)		—				—				—				(56,583	)			(56,583	)
Share-based compensation and share issuances, net of       forfeitures		133				13				3,321				—				3,334
Taxes paid in exchange for shares withheld		(43	)			(4	)			(9,273	)			—				(9,277	)
Balance as of March 31, 2024		217,599			$	21,760			$	225,497			$	4,154,380			$	4,401,637
Balance as of December 31, 2022		220,446			$	22,045			$	233,086			$	3,397,786			$	3,652,917
Net income		—				—				—				285,038				285,038
Share repurchases		(861	)			(86	)			—				(142,814	)			(142,900	)
Cash dividends declared ($0.20 per share)		—				—				—				(43,994	)			(43,994	)
Share-based compensation and share issuances, net of       forfeitures		124				12				3,784				—				3,796
Taxes paid in exchange for shares withheld		(47	)			(5	)			(8,353	)			—				(8,358	)
Balance as of March 31, 2023		219,662			$	21,966			$	228,517			$	3,496,016			$	3,746,499

 

 

 

 

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OLD DOMINION FREIGHT LINE, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		Three Months Ended
		March 31,
(In thousands)		2024				2023
Cash flows from operating activities:
Net income		$	292,304			$	285,038
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			84,534				75,951
Loss (Gain) on disposal of property and equipment			726				(4,345	)
Other, net			7,732				8,390
Changes in operating assets and liabilities, net			38,597				50,333
Net cash provided by operating activities			423,893				415,367
Cash flows from investing activities:
Purchase of property and equipment			(119,511	)			(234,736	)
Proceeds from sale of property and equipment			1,559				10,283
Proceeds from maturities of short-term investments			—				24,578
Net cash used in investing activities			(117,952	)			(199,875	)
Cash flows from financing activities:
Payments for share repurchases			(85,280	)			(141,666	)
Dividends paid			(56,633	)			(44,052	)
Other financing activities, net			(16,853	)			(8,462	)
Net cash used in financing activities			(158,766	)			(194,180	)
Increase in cash and cash equivalents			147,175				21,312
Cash and cash equivalents at beginning of period			433,799				186,312
Cash and cash equivalents at end of period		$	580,974			$	207,624

 

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NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

 

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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

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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:

		Three Months Ended
		March 31,
		2024				2023
Revenue from operations			100.0	%			100.0	%
Operating expenses:
Salaries, wages and benefits			45.8				45.2
Operating supplies and expenses			11.8				13.3
General supplies and expenses			3.1				2.7
Operating taxes and licenses			2.5				2.6
Insurance and claims			1.2				1.1
Communications and utilities			0.7				0.8
Depreciation and amortization			5.8				5.3
Purchased transportation			2.1				2.1
Miscellaneous expenses, net			0.5				0.3
Total operating expenses			73.5				73.4
Operating income			26.5				26.6
Interest income, net			(0.5	)			(0.2	)
Other expense, net			0.1				0.2
Income before income taxes			26.9				26.6
Provision for income taxes			6.9				6.8
Net income			20.0	%			19.8	%

 

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Key financial and operating metrics for the three-month periods ended March 31, 2024 and 2023 are presented below:

		Three Months Ended
		March 31,
		2024				2023				% Change
Work days			64				64				—	%
Revenue (in thousands)		$	1,460,073			$	1,442,136				1.2	%
Operating ratio			73.5	%			73.4	%
Net income (in thousands)		$	292,304			$	285,038				2.5	%
Diluted earnings per share		$	1.34			$	1.29				3.9	%
LTL tons (in thousands)			2,264				2,339				(3.2	)%
LTL tonnage per day			35,380				36,540				(3.2	)%
LTL shipments (in thousands)			3,004				3,018				(0.5	)%
LTL shipments per day			46,931				47,155				(0.5	)%
LTL weight per shipment (lbs.)			1,508				1,550				(2.7	)%
LTL revenue per hundredweight		$	31.98			$	30.71				4.1	%
LTL revenue per shipment		$	482.24			$	475.88				1.3	%
Average length of haul (miles)			919				925				(0.6	)%

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 the two-for-one stock split effected in March 2024.

Our financial results for the first quarter of 2024 include growth in revenue, net income and earnings per diluted share despite continued softness in the domestic economy. We improved our financial results for the quarter by continuing to execute our long-term strategic plan, which is centered on our ability to provide customers with superior service at a fair price. We also maintained our focus on operating efficiently and controlling our discretionary spending. Our operating ratio increased by 10 basis point to 73.5% for the first quarter, however, due primarily to an increase in our overhead expenses as a percent of revenue. We were still able to increase our net income and diluted earnings per share by 2.5% and 3.9%, respectively, for the first quarter of 2024 as compared to the same period last year.

Revenue

Our revenue in the first quarter of 2024 increased $17.9 million, or 1.2%, when compared to the first quarter of 2023 as the 4.1% increase in our LTL revenue per hundredweight sufficiently offset the 3.2% decrease in our LTL tons per day. Excluding fuel surcharges, LTL revenue per hundredweight increased 6.7% in the first quarter of 2024 as compared to the first quarter of 2023. We believe this yield improvement reflects our continued focus on revenue quality and our consistent, long-term approach to pricing, which is designed to offset our cost inflation and support our continued investments in capacity and technology. The decline in our LTL tons per day was primarily due to the decrease in our LTL weight per shipment, which generally reflects the softness in the domestic economic environment.

April 2024 Update

Revenue per day increased 6.3% in April 2024 compared to the same month last year. LTL tons per day increased 2.3%, due to a 3.3% increase in LTL shipments per day, partially offset by a 1.0% decrease in LTL weight per shipment. LTL revenue per hundredweight increased 4.2% as compared to the same month last year. LTL revenue per hundredweight, excluding fuel surcharges, increased 4.7% as compared to the same month last year.

Operating Costs and Other Expenses

Salaries, wages, and benefits increased $16.3 million, or 2.5%, in the first quarter of 2024 as compared to the first quarter of 2023, due primarily to a $16.9 million, or 3.5%, increase in salaries and wages resulting from the annual wage increase provided to employees in September 2023. Our average number of active full-time employees remained consistent between the comparable periods.

Our productive labor costs, which include wages for drivers, platform employees, and fleet technicians, increased as a percent of revenue to 24.1% in the first quarter of 2024 as compared to 23.8% in the first quarter of 2023. This slight increase reflects our commitment to delivering superior service while also operating efficiently despite the decrease in volumes during the quarter. Our P&D shipments per hour increased during the first quarter of 2024 as compared to the first quarter of 2023. We had decreases,

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however, in our platform productivity metrics and our linehaul laden load factor. These metrics were negatively impacted by the ongoing expansion of our service center network as well as the decrease in our LTL weight per shipment. We were still able to reduce our total intercity miles, which allowed us to manage our linehaul costs as a percent of revenue while also reducing the number of gallons of diesel fuel consumed during the quarter. Our other salaries and wages as a percent of revenue increased to 9.7% in the first quarter of 2024 as compared to 9.2% in the first quarter of 2023.

The costs attributable to employee benefits remained relatively consistent in the first quarter of 2024 as compared to the same prior year period. Our employee benefit costs decreased as a percent of salaries and wages to 35.6% in the first quarter of 2024 from 37.0% in the first quarter of 2023.

Operating supplies and expenses decreased $19.9 million, or 10.4%, in the first quarter of 2024 as compared to the first quarter of 2023. The cost of diesel fuel, excluding fuel taxes, represents the largest component of operating supplies and expenses, and can vary based on both average price per gallon and consumption. Our average cost per gallon of diesel fuel decreased 12.1% in the first quarter of 2024 as compared to the first quarter of 2023. We do not use diesel fuel hedging instruments; therefore, our costs are subject to market price fluctuations. Our gallons consumed decreased 4.4% in the first quarter of 2024 as compared to the first quarter of 2023 due primarily to a decrease in miles driven as well as an improvement in our miles per gallon. Our other operating supplies and expenses also decreased as a percent of revenue between the periods compared, due primarily to lower maintenance and repair costs, as we improve the average age of our fleet by consistently executing our capital expenditure programs.

Depreciation and amortization costs increased $8.6 million, or 11.3%, in the first quarter of 2024 as compared to the first quarter of 2023, due primarily to the increases in depreciation and amortization costs of the assets acquired as part of our 2023 and 2024 capital expenditure programs. We believe depreciation costs will continue to increase in future periods based on our 2024 capital expenditure plan. While our investments in real estate, equipment, and technology can increase our costs in the short-term, we believe these investments are necessary to support our continued long-term growth and strategic initiatives.

Our effective tax rate for the first quarter of 2024 was 25.6% as compared to 25.8% for the first quarter of 2023. Our effective tax rate generally exceeds the federal statutory rate due to the impact of state taxes and, to a lesser extent, certain other discrete or non-deductible items.

Liquidity and Capital Resources

A summary of our cash flows is presented below:

		Three Months Ended
		March 31,
(In thousands)		2024				2023
Cash and cash equivalents at beginning of period		$	433,799			$	186,312
Cash flows provided by (used in):
Operating activities			423,893				415,367
Investing activities			(117,952	)			(199,875	)
Financing activities			(158,766	)			(194,180	)
Increase in cash and cash equivalents			147,175				21,312
Cash and cash equivalents at end of period		$	580,974			$	207,624

The change in our cash flows provided by operating activities during the first quarter of 2024 as compared to the first quarter of 2023 was due primarily to increases in net income and depreciation, as well as fluctuations in certain working capital accounts.

The decline in our cash flows used in investing activities during the first quarter of 2024 as compared to the first quarter of 2023 was due primarily to fluctuations in the timing of our expenditures under our capital expenditure programs. Capital expenditures for tractors and trailers were higher in the first quarter of 2023, due to delivery delays under our 2022 capital expenditure program. The majority of our equipment is generally delivered during the second and third quarters, and our deliveries under our 2024 capital expenditure program are in line with our historical trend. Changes in our capital expenditures are more fully described below in “Capital Expenditures.”

The decrease in our cash flows used in financing activities during the first quarter of 2024 as compared to the first quarter of 2023 was due primarily to lower repurchases of our common stock, the impact of which was partially offset by higher cash utilized for dividend payments to our shareholders. Our return of capital to shareholders is more fully described below under “Stock Repurchase Program” and “Dividends to Shareholders.”

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We have four primary sources of available liquidity: cash flows from operations, our existing cash and cash equivalents, available borrowings under our third amended and restated credit agreement with Wells Fargo Bank, National Association serving as administrative agent for the lenders, dated March 22, 2023 (the “Credit Agreement”), and our Note Purchase and Private Shelf Agreement with PGIM, Inc. (“Prudential”) and certain affiliates and managed accounts of Prudential, as amended by the First Amendment dated March 22, 2023 (as amended, the “Note Agreement”). The Credit Agreement and the Note Agreement are described in more detail below under “Financing Arrangements.” We believe we also have sufficient access to debt and equity markets to provide other sources of liquidity, if needed.

Capital Expenditures

The table below sets forth our net capital expenditures for property and equipment for the three-month period ended March 31, 2024 and the years ended December 31, 2023 and 2022:

		March 31,				December 31,
(In thousands)		2024				2023				2022
Land and structures		$	91,965			$	291,070			$	299,529
Tractors			8,681				203,417				148,719
Trailers			1,473				181,534				216,697
Technology			7,224				44,358				33,783
Other equipment and assets			10,169				36,930				68,920
Proceeds from sales			(1,559	)			(48,637	)			(22,096	)
Total		$	117,953			$	708,672			$	745,552

Our capital expenditures vary based upon the change in the number and size of our service center facilities necessary to support our plan for long-term growth, our planned tractor and trailer replacement cycle, and forecasted tonnage and shipment growth. Expenditures for land and structures can be dependent upon the availability of land in the geographic areas where we are looking to expand. We historically spend 10% to 15% of our revenue on capital expenditures each year. We expect to continue to maintain a high level of capital expenditures in order to support our long-term plan for market share growth.

We currently estimate capital expenditures will be approximately $750 million for the year ending December 31, 2024. Approximately $350 million is allocated for the purchase of service center facilities, construction of new service center facilities or expansion of existing service center facilities, subject to the availability of suitable real estate and the timing of construction projects; approximately $325 million is allocated for the purchase of tractors and trailers; and approximately $75 million is allocated for investments in technology and other assets. We expect to fund these capital expenditures primarily through cash flows from operations, our existing cash and cash equivalents and, if needed, borrowings available under our Credit Agreement or Note Agreement. We believe our current sources of liquidity will be sufficient to satisfy our expected capital expenditures.

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 $2.0 billion of our outstanding common stock (the “2021 Repurchase Program”). The 2021 Repurchase Program, which does not have an expiration date, began after completion of our prior repurchase program in January 2022. At March 31, 2024, our 2021 Repurchase Program had $140.2 million remaining authorized.

On July 26, 2023, we announced that our Board of Directors had approved a new stock repurchase program authorizing us to repurchase up to an aggregate of $3.0 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 2021 Repurchase Program.

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.

Dividends to Shareholders

On February 16, 2024, we announced that our Board of Directors approved a two-for-one split of our common stock for shareholders of record as of the close of business on the record date of March 13, 2024. On March 27, 2024, those shareholders received one additional share of common stock for every share owned.

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All references in this report to dividend amounts have been restated retroactively to reflect this stock split.

Our Board of Directors also declared a cash dividend of $0.26 per share for the first quarter of 2024, and declared a cash dividend of $0.20 per share for each quarter of 2023.

Although we intend to pay a quarterly cash dividend on our common stock for the foreseeable future, the declaration and amount of any future dividend is subject to approval by our Board of Directors, and is restricted by applicable state law limitations on distributions to shareholders as well as certain covenants under our Credit Agreement and Note Agreement. We anticipate that any future quarterly cash dividends will be funded through cash flows from operations, our existing cash and cash equivalents, short-term investments, and, if needed, borrowings under our Credit Agreement or Note Agreement.

Financing Agreements

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 March 22, 2026. On May 4, 2020, we issued $100.0 million aggregate principal amount of senior promissory notes (the “Series B Notes”). 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. Our first principal payment of $20.0 million was paid on May 4, 2023. The remaining $80.0 million will be paid in four equal annual installments of $20.0 million through May 4, 2027. The Series B Notes are senior unsecured obligations and rank pari passu with borrowings under the Credit Agreement or other senior promissory notes issued pursuant to the Note Agreement.

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) the Secured Overnight Financing Rate (SOFR) plus the Term SOFR Adjustment, as defined in the Credit Agreement, equal to 0.100%, plus an applicable margin that ranges from 1.000% to 1.375%; or (ii) a Base Rate, as defined in the Credit Agreement, plus an applicable margin that ranges from 0.000% to 0.375%. The applicable margin for each of the foregoing options is dependent upon our consolidated debt to consolidated total capitalization ratio. Letter of credit fees equal to the applicable margin for SOFR 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 0.090% to 0.175% (based upon our consolidated debt to consolidated total capitalization ratio) 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 SOFR loans and letter of credit fees were 1.000% and commitment fees were 0.09%.

The amounts outstanding and available borrowing capacity under the Credit Agreement are presented below:

		March 31,				December 31,
(In thousands)		2024				2023
Facility limit		$	250,000			$	250,000
Line of credit borrowings			—				—
Outstanding letters of credit			(38,106	)			(39,966	)
Available borrowing capacity		$	211,894			$	210,034

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

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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). We were in compliance with all covenants in our outstanding debt instruments for the period ended March 31, 2024.

We do not anticipate financial performance that would cause us to violate any such covenants in the future, and we believe the combination of our existing Credit Agreement and Note Agreement along with our additional borrowing capacity will be sufficient to meet foreseeable seasonal and long-term capital needs.

The interest rate is fixed on the Series B Notes. Therefore, short-term exposure to fluctuations in interest rates is limited to our Credit Agreement. We do not currently use interest rate derivative instruments to manage exposure to interest rate changes.

Critical Accounting Policies

In preparing our condensed financial statements, we applied the same critical accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2023 that we believe affect our judgments and estimates of amounts recorded in certain assets, liabilities, revenue and expenses.

Seasonality

Our tonnage levels and revenue mix are subject to seasonal trends common in our industry, although other factors, such as macroeconomic changes, could cause variation in these trends. Our revenue and operating margins in the first and fourth quarters are typically lower than those during the second and third quarters due to reduced shipments during the winter months. We believe seasonal trends will continue to impact our business. Harsh winter weather, hurricanes, tornadoes, floods and other natural disasters can also adversely impact our performance by reducing demand and increasing operating expenses.

Environmental Regulation

We are subject to various federal, state and local environmental laws and regulations that focus on, among other things: the disposal, emission and discharge of hazardous waste, hazardous materials, or other materials into the environment or their presence at our properties or in our vehicles; fuel storage tanks; transportation of certain materials; and the discharge or retention of storm water. Under specific environmental laws, we could also be held responsible for any costs relating to contamination at our past or present facilities and at third-party waste disposal sites, as well as costs associated with clean-up of accidents involving our vehicles. We do not believe that the cost of future compliance with current environmental laws or regulations will have a material adverse effect on our operations, financial condition, competitive position or capital expenditures for fiscal year 2024. However, future changes to laws or regulations may adversely affect our operations and could result in unforeseen costs to our business.

Forward-Looking Information

Forward-looking statements appear in this report, including, but not limited to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in other written and oral statements made by or on behalf of us. These forward-looking statements include, but are not limited to, statements relating to our goals, strategies, expectations, competitive environment, regulation, availability of resources, future events and future financial performance. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements typically can be identified by such words as “anticipate,” “estimate,” “forecast,” “project,” “intend,” “expect,” “believe,” “should,” “could,” “may” or other similar words or expressions. We caution readers that such forward-looking statements involve risks and uncertainties, including, but not limited to, the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other reports and statements that we file with the Securities and Exchange Commission (“SEC”). Such forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied herein, including, but not limited to, the following:

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Our forward-looking statements are based upon our beliefs and assumptions using information available at the time the statements are made. We caution the reader not to place undue reliance on our forward-looking statements as (i) these statements are neither a prediction nor a guarantee of future events or circumstances; and (ii) the assumptions, beliefs, expectations and projections about future events may differ materially from actual results. We undertake no obligation to publicly update any forward-looking statement to reflect developments occurring after the statement is made, except as otherwise required by law.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to our market risk exposures since our most recent fiscal year end. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report, our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), conducted an evaluation of the effectiveness of our disclosure controls and procedures in accordance with Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this quarterly report, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (a) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure, and (b) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

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There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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.

Consistent with SEC Regulation S-K Item 103, we have elected to disclose any environmental legal proceedings with a governmental authority if management reasonably believes that the proceedings may involve potential monetary sanctions of $1.0 million or more. Applying this threshold, there are no such unresolved proceedings to disclose for the three months ended March 31, 2024.

Item 1A. Risk Factors

In addition to the other information set forth in this report and in our other reports and statements that we file with the SEC, including our quarterly reports on Form 10-Q, careful consideration should be given to the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and operating results.

There have been no material changes to the risk factors identified in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023.

 

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information regarding our repurchases of our common stock during the first quarter of 2024:

		ISSUER PURCHASES OF EQUITY SECURITIES
		Total Number of Shares Purchased (1)				Average Price Paid per Share (2)				Total Number of Shares Purchased as Part of Publicly Announced Programs				Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
January 1-31, 2024			252,044			$	195.22				240,948			$	178,481,387
February 1-28, 2024			146,730			$	209.08				117,516			$	154,096,030
March 1-31, 2024			66,618			$	220.29				63,292			$	140,156,843
Total			465,392			$	203.18				421,756

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 $2.0 billion of our outstanding common stock (the “2021 Repurchase Program”). The 2021 Repurchase Program, which does not have an expiration date, began after the completion of our prior repurchase program in January 2022. At March 31, 2024, our 2021 Repurchase Program had $140.2 million remaining authorized.

On July 26, 2023, we announced that our Board of Directors had approved a new stock repurchase program authorizing us to repurchase up to an aggregate of $3.0 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 2021 Repurchase Program.

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.

Item 6. Exhibits

The exhibits listed in the accompanying Exhibit Index are filed as a part of this report.

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EXHIBIT INDEX

TO QUARTERLY REPORT ON FORM 10-Q

 

Exhibit No.		Description
31.1		Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification Pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		The following financial information from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed on May 7, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language) includes: (i) the Condensed Balance Sheets at March 31, 2024 and December 31, 2023, (ii) the Condensed Statements of Operations for the three months ended March 31, 2024 and 2023, (iii) the Condensed Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2024 and 2023, (iv) the Condensed Statements of Cash Flows for the three months ended March 31, 2024 and 2023, and (v) the Notes to the Condensed Financial Statements
104		The cover page from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in iXBRL

Our SEC file number reference for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 0-19582.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

				OLD DOMINION FREIGHT LINE, INC.
DATE:	May 7, 2024			/s/ ADAM N. SATTERFIELD
				Adam N. Satterfield
				Executive Vice President and Chief Financial Officer (Principal Financial Officer)
DATE:	May 7, 2024			/s/ KIMBERLY S. MAREADY
				Kimberly S. Maready
				Vice President - Accounting and Finance (Principal Accounting Officer)

 

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