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 September 30, 2017
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
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“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
As of NovemberMay 3, 20172024 there were 82,375,945217,285,082 shares of the registrant’s Common Stock ($0.10 par value) outstanding.
INDEX
1 | |||
4 | |||
5 | |||
6 | |||
19 | |||
19 | |||
19 | |||
20 | |||
20 | |||
21 | |||
22 |
PART I. FINANCIALFINANCIAL INFORMATION
Item 1. Financial Statements
OLD DOMINION FREIGHT LINE, INC.
CONDENSED BALANCE SHEETS
September 30, | |||||||
2017 | December 31, | ||||||
(In thousands, except share and per share data) | (Unaudited) | 2016 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 78,091 | $ | 10,171 | |||
Customer receivables, less allowances of $9,315 and $8,346, respectively | 391,858 | 320,087 | |||||
Other receivables | 7,529 | 14,402 | |||||
Prepaid expenses and other current assets | 35,617 | 37,962 | |||||
Total current assets | 513,095 | 382,622 | |||||
Property and equipment: | |||||||
Revenue equipment | 1,612,380 | 1,496,697 | |||||
Land and structures | 1,481,738 | 1,377,106 | |||||
Other fixed assets | 427,271 | 402,482 | |||||
Leasehold improvements | 8,654 | 8,699 | |||||
Total property and equipment | 3,530,043 | 3,284,984 | |||||
Accumulated depreciation | (1,162,640 | ) | (1,043,582 | ) | |||
Net property and equipment | 2,367,403 | 2,241,402 | |||||
Goodwill | 19,463 | 19,463 | |||||
Other assets | 56,209 | 52,760 | |||||
Total assets | $ | 2,956,170 | $ | 2,696,247 |
|
| 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,The accompanying notes are an integral part of these condensed financial statements.
1
OLD DOMINION FREIGHT LINE, INC.
CONDENSED BALANCE SHEETS
(CONTINUED)
September 30, | |||||||
2017 | December 31, | ||||||
(In thousands, except share and per share data) | (Unaudited) | 2016 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 59,702 | $ | 89,216 | |||
Compensation and benefits | 151,406 | 129,170 | |||||
Claims and insurance accruals | 48,089 | 47,417 | |||||
Other accrued liabilities | 26,745 | 22,833 | |||||
Income taxes payable | 19,707 | — | |||||
Current maturities of long-term debt | 50,000 | — | |||||
Total current liabilities | 355,649 | 288,636 | |||||
Long-term liabilities: | |||||||
Long-term debt | 45,000 | 104,975 | |||||
Other non-current liabilities | 194,091 | 178,879 | |||||
Deferred income taxes | 274,414 | 272,599 | |||||
Total long-term liabilities | 513,505 | 556,453 | |||||
Total liabilities | 869,154 | 845,089 | |||||
Commitments and contingent liabilities | |||||||
Shareholders’ equity: | |||||||
Common stock - $0.10 par value, 140,000,000 shares authorized, 82,375,945 and 82,416,657 shares outstanding at September 30, 2017 and December 31, 2016, respectively | 8,238 | 8,242 | |||||
Capital in excess of par value | 137,533 | 135,466 | |||||
Retained earnings | 1,941,245 | 1,707,450 | |||||
Total shareholders’ equity | 2,087,016 | 1,851,158 | |||||
Total liabilities and shareholders’ equity | $ | 2,956,170 | $ | 2,696,247 |
|
| 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,The accompanying notes are an integral part of these condensed financial statements.
2
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 |
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(In thousands, except share and per share data) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue from operations | $ | 872,987 | $ | 782,611 | $ | 2,466,995 | $ | 2,245,779 | ||||||||
Operating expenses: | ||||||||||||||||
Salaries, wages and benefits | 461,799 | 425,076 | 1,320,207 | 1,234,369 | ||||||||||||
Operating supplies and expenses | 95,543 | 83,197 | 275,110 | 238,904 | ||||||||||||
General supplies and expenses | 28,785 | 22,010 | 79,940 | 65,930 | ||||||||||||
Operating taxes and licenses | 24,547 | 22,714 | 73,530 | 69,368 | ||||||||||||
Insurance and claims | 10,700 | 10,185 | 28,804 | 29,792 | ||||||||||||
Communications and utilities | 6,490 | 7,025 | 20,945 | 21,357 | ||||||||||||
Depreciation and amortization | 51,934 | 49,041 | 152,670 | 140,293 | ||||||||||||
Purchased transportation | 22,739 | 18,907 | 61,596 | 55,579 | ||||||||||||
Building and office equipment rents | 2,018 | 2,050 | 6,114 | 6,487 | ||||||||||||
Miscellaneous expenses, net | 4,557 | 5,002 | 15,650 | 13,312 | ||||||||||||
Total operating expenses | 709,112 | 645,207 | 2,034,566 | 1,875,391 | ||||||||||||
Operating income | 163,875 | 137,404 | 432,429 | 370,388 | ||||||||||||
Non-operating expense (income): | ||||||||||||||||
Interest expense | 555 | 1,131 | 1,792 | 3,378 | ||||||||||||
Interest income | (228 | ) | (10 | ) | (332 | ) | (38 | ) | ||||||||
Other (income) expense, net | (977 | ) | 6 | (999 | ) | 782 | ||||||||||
Total non-operating (income) expense | (650 | ) | 1,127 | 461 | 4,122 | |||||||||||
Income before income taxes | 164,525 | 136,277 | 431,968 | 366,266 | ||||||||||||
Provision for income taxes | 62,211 | 50,696 | 165,444 | 139,012 | ||||||||||||
Net income | $ | 102,314 | $ | 85,581 | $ | 266,524 | $ | 227,254 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 1.24 | $ | 1.03 | $ | 3.24 | $ | 2.73 | ||||||||
Diluted | $ | 1.24 | $ | 1.03 | $ | 3.23 | $ | 2.73 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 82,286,295 | 82,742,070 | 82,317,244 | 83,357,449 | ||||||||||||
Diluted | 82,380,936 | 82,811,371 | 82,417,557 | 83,389,824 | ||||||||||||
Dividends declared per share | $ | 0.10 | $ | — | $ | 0.30 | $ | — |
The accompanying notes are an integral part of these condensed financial statements.
3
OLD DOMINION FREIGHT LINE, INC.
(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 |
| 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 |
| 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 |
|
Nine Months Ended | |||||||
September 30, | |||||||
(In thousands) | 2017 | 2016 | |||||
Cash flows from operating activities: | |||||||
Net income | $ | 266,524 | $ | 227,254 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 152,670 | 140,293 | |||||
Loss on sale of property and equipment | 705 | 542 | |||||
Share-based compensation | 2,416 | 944 | |||||
Other operating activities, net | (34,302 | ) | 41,095 | ||||
Net cash provided by operating activities | 388,013 | 410,128 | |||||
Cash flows from investing activities: | |||||||
Purchase of property and equipment | (288,840 | ) | (351,121 | ) | |||
Proceeds from sale of property and equipment | 9,637 | 4,571 | |||||
Other investing, net | 2,139 | — | |||||
Net cash used in investing activities | (277,064 | ) | (346,550 | ) | |||
Cash flows from financing activities: | |||||||
Principal payments under long-term debt agreements | — | (26,488 | ) | ||||
Net (payments) proceeds on revolving line of credit | (9,975 | ) | 85,812 | ||||
Payments for share repurchases | (8,013 | ) | (119,022 | ) | |||
Dividends paid | (24,697 | ) | — | ||||
Other financing activities, net | (344 | ) | (338 | ) | |||
Net cash used in financing activities | (43,029 | ) | (60,036 | ) | |||
Increase in cash and cash equivalents | 67,920 | 3,542 | |||||
Cash and cash equivalents at beginning of period | 10,171 | 11,472 | |||||
Cash and cash equivalents at end of period | $ | 78,091 | $ | 15,014 |
The accompanying notes are an integral part of these condensed financial statements.
4
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 |
|
The accompanying notes are an integral part of these condensed financial statements.
5
NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Significant Accounting Policies
Business
We are a leading,one of the largest North American less-than-truckload (“LTL”), union-free motor carrier providingcarriers. We provide regional, inter-regional and national LTL services which include ground and air expedited transportation and consumer household pickup and delivery, 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 and warehousing. consulting. We have one operating segment and the composition of our revenue is summarized below:
Three Months Ended | Nine Months Ended |
| Three Months Ended |
| ||||||||||||||||||||
September 30, | September 30, |
| March 31, |
| ||||||||||||||||||||
(In thousands) | 2017 | 2016 | 2017 | 2016 |
| 2024 |
|
| 2023 |
| ||||||||||||||
LTL services | $ | 859,832 | $ | 769,854 | $ | 2,426,419 | $ | 2,206,642 |
| $ | 1,446,733 |
|
| $ | 1,424,372 |
| ||||||||
Other services | 13,155 | 12,757 | 40,576 | 39,137 |
|
| 13,340 |
|
|
| 17,764 |
| ||||||||||||
Total revenue | $ | 872,987 | $ | 782,611 | $ | 2,466,995 | $ | 2,245,779 | ||||||||||||||||
Total revenue from operations |
| $ | 1,460,073 |
|
| $ | 1,442,136 |
|
Basis of Presentation
The accompanying unaudited, interim condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"(“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 September 30, 2017March 31, 2024 are not necessarily indicative of the results that may be expected for the subsequent quarterly periodperiods or the year ending December 31, 2017.
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, 2016.2023. 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, 2016,2023, other than those disclosed in this Form 10-Q.
Certain amounts in prior years have been reclassified to conform prior years’ financial statements to the current presentation.
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.
Common Stock Split
On February 16, 2024, we announced that our Board of Financial Instruments
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 this stock split.
6
Stock Repurchase Program
On July 28, 2021, we announced that correlate with current market rates. The carrying valueour Board of Directors had approved a stock repurchase program authorizing us to repurchase up to an aggregate of $2.0 billion of our total long-term debt, including current maturities, was $95.0 million and $105.0 million at September 30, 2017 and December 31, 2016, respectively.outstanding common stock (the “2021 Repurchase Program”). The estimated fair value2021 Repurchase Program, which does not have an expiration date, began after the completion of our total long-term debt, including current maturities, was $98.2prior repurchase program in January 2022. At March 31, 2024, we had $140.2 million and $108.3 million at September 30, 2017 and December 31, 2016, respectively. The fair value measurementremaining authorized under the 2021 Repurchase Program. 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 senior notes was determined using a discounted cash flow analysis that factorsoutstanding 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 currentopen market yields for comparable borrowing arrangementspurchases or through privately negotiated transactions. Shares of our common stock repurchased under our credit profile. Since this methodology is based upon market yields for comparable arrangements,repurchase programs are canceled at the measurement is categorized as Level 2 under the three-level fair value hierarchy as established by the Financial Accounting Standards Board (the “FASB”).
Note 2. Earnings Per Share
Basic earnings per share of the Company 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 in the balance sheets. on our Condensed Balance Sheets.
Diluted earnings per share is computed using the treasury stock method andmethod. The denominator used in calculating diluted earnings per share includes the impact of shares of unvested restricted stock.
The following table provides a reconciliation of the number of shares of common sharesstock used in computing basic and diluted earnings per share:
|
| Three Months Ended |
| |||||
|
| March 31, |
| |||||
(In thousands) |
| 2024 |
|
| 2023 |
| ||
Weighted average shares outstanding - basic |
|
| 217,594 |
|
|
| 219,912 |
|
Dilutive effect of share-based awards |
|
| 1,214 |
|
|
| 1,446 |
|
Weighted average shares outstanding - diluted |
|
| 218,808 |
|
|
| 221,358 |
|
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||
Weighted average shares outstanding - basic | 82,286,295 | 82,742,070 | 82,317,244 | 83,357,449 | ||||||||
Dilutive effect of share-based awards | 94,641 | 69,301 | 100,313 | 32,375 | ||||||||
Weighted average shares outstanding - diluted | 82,380,936 | 82,811,371 | 82,417,557 | 83,389,824 |
Note 3. Shareholders' Equity
Long-term debt, net of unamortized debt issuance costs, consisted of the second quarterfollowing:
(In thousands) |
| March 31, |
|
| December 31, |
| ||
Senior notes |
| $ | 79,980 |
|
| $ | 79,977 |
|
Revolving credit facility |
|
| — |
|
|
| — |
|
Total long-term debt |
|
| 79,980 |
|
|
| 79,977 |
|
Less: Current maturities |
|
| (20,000 | ) |
|
| (20,000 | ) |
Total maturities due after one year |
| $ | 59,980 |
|
| $ | 59,977 |
|
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 7 The Series B Notes bear interest at 3.10% per annum and mature on May 4, 2027, unless prepaid. The first principal payment of The Credit Agreement At our option, borrowings under the Credit Agreement bear interest at either: (i) 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 0.090%. The Credit Agreement replaced our previous five-year, $250.0 million senior unsecured revolving credit agreement dated as There were General Debt Provisions The Credit Agreement and Note Agreement contain customary covenants, including financial covenants that require us to observe a maximum ratio of Note 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 Long-term Debt The carrying value of our total long-term debt, including current maturities, was $80.0 million at each of March 31, 2024 and December 31, 2023, respectively. The estimated fair value of our total long-term debt, including current maturities, was $74.5 million and $75.4 million at March 31, 2024 and December 31, 2023, respectively. The fair value measurement of our Series B Notes was determined using a discounted cash flow analysis that factors in current market yields for comparable borrowing arrangements under our credit profile. Since this methodology is based upon market yields for comparable arrangements, the measurement is categorized as Level 2 under the three-level fair value hierarchy as established by the Financial Accounting Standards Board. 8 ITEM 2. Overview We are In analyzing the components of our revenue, we monitor changes and trends in our LTL 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 9 yield-management philosophy, continued increases in density, and ongoing improvements in 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 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 % 10 Key financial and operating metrics for the Three Months Ended March 31, 2024 2023 % 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 Revenue Our revenue in the April 2024 Update Revenue per day increased 6.3% in Operating Costs and Other Expenses Salaries, wages, and benefits increased $16.3 million, or 2.5%, in the first quarter of Our productive labor 11 however, in our platform productivity metrics and The Operating supplies and expenses Depreciation and amortization costs increased Our effective tax rate for the 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 The The 12 We have Capital Expenditures The table below sets forth our net capital expenditures for property and equipment 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 We currently estimate capital expenditures will be approximately Stock Repurchase Program On On Under our repurchase programs, we may repurchase shares from time to Dividends to Shareholders On 13 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 Financing Agreements Note Agreement The Note Agreement, which is uncommitted and subject to Prudential’s sole discretion, provides for the 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 Credit Agreement The Credit Agreement At our option, borrowings under the 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 14 Agreement also We do not anticipate 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, Seasonality Our tonnage levels and revenue mix are subject to seasonal trends common in our industry, although other factors, such as macroeconomic 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 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, 15 16 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) 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, 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. 17 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. 18 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, 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. 19 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 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 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 Item 6. Exhibits The exhibits listed in the accompanying Exhibit Index are filed as a part of this report. 20 EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q Exhibit No. Description 31.1 31.2 32.1 32.2 101 The following financial information from our Quarterly Report on Form 10-Q for the quarter ended 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. 21 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 (Principal Financial Officer) DATE: May 7, 2024 /s/ KIMBERLY S. MAREADY Kimberly S. Maready Vice President - Accounting and Finance (Principal Accounting Officer) 222016, we completed our stock repurchase program, previously announcedPrudential (as subsequently amended on November 10, 2014,March 22, 2023, the “Note Agreement”). The Note Agreement, which is uncommitted and subject to repurchasePrudential’s sole discretion, provides for the issuance of senior promissory notes with an aggregate principal amount of up to an aggregate of $200.0$350.0 million of our outstanding common stock.through March 22, 2026. On May 23, 2016,4, 2020, we announced that our Boardissued $100.0 million aggregate principal amount of Directors had approved a new two-year stock repurchase program authorizing us to repurchase up to an aggregate of $250.0 million of our outstanding common stocksenior promissory notes (the “2016 Repurchase Program”“Series B Notes”). Under the 2016 Repurchase Program, 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 program are canceled at the time of repurchase and are classified as authorized but unissued shares of our common stock.We repurchased 9,305 shares of our common stock for $0.9 million and 91,921 shares of our common stock for $8.0 million during the three and nine months ended September 30, 2017, respectively. As of September 30, 2017, we had $192.0 million remaining authorizedBorrowing availability under the 2016 Repurchase Program.DividendsOn February 2, 2017, we announced that our BoardNote Agreement is reduced by the outstanding amount of Directors had declared a quarterly cash dividendthe existing Series B Notes, and all other senior promissory notes issued pursuant to the Note Agreement.$0.10 per share, which$20.0 million was paid on March 20, 2017 to shareholdersMay 4, 2023. The remaining $80.0 million will be paid in four equal annual installments of record at the close of business on March 6, 2017. On $20.0 million through May 17, 2017, we announced that4, 2027. The Series B Notes are senior unsecured obligations and rank pari passu with borrowings under our Board of Directors had declared a quarterly cash dividend of $0.10 per share, which was paid on June 20, 2017 to shareholders of record at the close of business on June 6, 2017. On July 31, 2017, we announced that our Board of Directors had declared a quarterly cash dividend of $0.10 per share, which was paid on September 20, 2017 to shareholders of record at the close of business on September 6, 2017.Note 4. Long-Term DebtLong-term debt consisted of the following:(In thousands) September 30,
2017 December 31,
2016Senior notes $ 95,000 $ 95,000 Revolving credit facility — 9,975 Total long-term debt 95,000 104,975 Less: Current maturities (50,000 ) — Total maturities due after one year $ 45,000 $ 104,975 We had one unsecured senior note agreement with an amount outstanding of $95.0 million at each of September 30, 2017 and December 31, 2016. Our unsecured senior note agreement calls for two scheduled principal payments of $50.0 million and $45.0 million on January 3, 2018 and January 3, 2021, respectively. Interest rates on the January 3, 2018 and January 3, 2021 scheduled principal payments are 4.00% and 4.79%, respectively. The effective average interest rate on our outstanding senior note agreement was 4.37% at each of September 30, 2017 and December 31, 2016.On December 15, 2015, we entered into anthird amended and restated credit agreement, dated March 22, 2023, with Wells Fargo Bank, National Association ("Wells Fargo") serving as administrative agent for the lenders (the "Credit Agreement"“Credit Agreement”). or other senior promissory notes issued pursuant to the Note Agreement.
Credit Agreementoriginally providedprovides for a five-year, $250.0$250.0 million senior unsecured revolving line of credit and a $100.0$150.0 million accordion feature, which if fully exercised and approved, would expand the total borrowing capacity up to an aggregate of $350.0 million.On September 9, 2016, we exercised a portion of the accordion feature and entered into an amendment to the Credit Agreement to increase the aggregate commitments from existing lenders by $50.0 million to an aggregate ofNOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)300.0400.0 million. Of the $300.0$250.0 million line of credit commitments under the Credit Agreement, as amended, up to $100.0$100.0 million may be used for letters of credit and $30.0 million may be used for borrowings under the Wells Fargo Sweep Plus Loan Program (the "Sweep Program"). We utilize the Sweep Program to manage our daily cash needs, as it automatically initiates borrowings to cover overnight cash requirements primarily for working capital needs.LIBORthe Secured Overnight Financing Rate (SOFR) plus the Term SOFR Adjustment, as defined in the Credit Agreement, equal to 0.100%, plus an applicable margin (based on our ratio of net debt-to-total capitalization) that ranges from 1.0%1.000% to 1.50%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 0.0%0.000% to 0.5%0.375%. Loans under the Sweep Program bear interest at the LIBOR plusThe applicable margin rate.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 LIBORSOFR 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 0.125%0.090% to 0.2%0.175% (based upon the ratio of net debt-to-total capitalization)our consolidated debt to total consolidated capitalization ratio) are charged quarterly in arrears on the aggregate unutilized portion of the Credit Agreement. Wells Fargo,administrative agent, also receives an annual fee for providing administrative services.each ofperiods in 2023 covered under the three- and nine-month periods ended September 30, 2017 and 2016,Prior Credit Agreement, the applicable margin on LIBOR loans and letter of credit fees was 1.0%1.000% and commitment fees were 0.125% under the Credit Agreement. 0.100%.$71.4 $38.1million and $74.6$40.0 million of outstanding letters of credit at September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively. Lettercredit fees remained at 1.0% during eachdebt 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 the three- and nine-month periods ended September 30, 2017 and 2016.default are ongoing (or would be caused by such restricted payment).5.4. Commitments and ContingenciesMANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDa leading,one of the largest North American less-than-truckload (“LTL”), union-free motor carrier providingcarriers. We provide regional, inter-regional and national LTL services which include ground and air expedited transportation and consumer household pickup and delivery, 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 and warehousing.consulting. More than 97%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.services usingvolumes 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 followingLTL 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 metrics, which exclude certain transportation and logistics services where pricing is generally not determined by weight, commodity or distance:measurement.measurement, and we regularly monitor the components that impact our pricing. The fuel surcharge is generally designed to offset fluctuations in the cost of our petroleum-based products and is indexed to diesel fuel prices published by the U.S. Department of Energy, which reset each week. Revenue for undelivered freight is deferred for financial statement purposes in accordance with our revenue recognition policy; however, we believe including it in our revenue per hundredweight metrics results in a better indicatormore accurate representation of the underlying changes in this metricour yields by matching total billed revenue with the corresponding weight of those shipments.Revenue per hundredweight is a commonly-used indicator of pricing trends, but this metric can be influenced by many other factors, such as changes in fuel surcharges, weight per shipment, length of haul and the class, or mix, of our freight. As a result, changes in revenue per hundredweight do not necessarily indicate actual changes in underlying base rates.customers'customers’ products and overall increased economic activity. Changes in weight per shipment can also be influenced by shifts between LTL and other modes of transportation, such as truckload and intermodal, in response to capacity, service and pricing issues. Fluctuations in weight per shipment generally have an inverse effect on our revenue per hundredweight, as a decrease in weight per shipment will typically cause an increase in revenue per hundredweight.
•are committedfocus on the profitability of each customer account and generally seek to a disciplinedobtain an appropriate yield management process that focuses on individual account profitability.to offset our cost inflation and support our ongoing investments in capacity and technology. We believe yield managementthe continued execution of thisefficiencyoperating efficiencies are the key components inof our ability to produce further improvement in our operating ratio and long-term profitable growth.continuallyregularly 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. Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenue from operations 100.0 % 100.0 % 100.0 % 100.0 % Operating expenses: Salaries, wages and benefits 52.9 54.3 53.5 55.0 Operating supplies and expenses 11.0 10.6 11.2 10.6 General supplies and expenses 3.3 2.8 3.2 2.9 Operating taxes and licenses 2.8 2.9 3.0 3.1 Insurance and claims 1.2 1.3 1.2 1.3 Communications and utilities 0.7 0.9 0.9 1.0 Depreciation and amortization 6.0 6.3 6.2 6.2 Purchased transportation 2.6 2.4 2.5 2.5 Building and office equipment rents 0.2 0.3 0.2 0.3 Miscellaneous expenses, net 0.5 0.6 0.6 0.6 Total operating expenses 81.2 82.4 82.5 83.5 Operating income 18.8 17.6 17.5 16.5 Interest expense, net * 0.0 0.2 0.1 0.2 Other (income) expense, net (0.1 ) 0.0 (0.1 ) 0.0 Income before income taxes 18.9 17.4 17.5 16.3 Provision for income taxes 7.2 6.5 6.7 6.2 Net income 11.7 % 10.9 % 10.8 % 10.1 % *For the purpose of this table, interest expense is presented net of interest income.Results of Operationsthree- and nine-monththree-month periods ended September 30, 2017March 31, 2024 and 20162023 are presented below: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Work days 63 64 (1.6 )% 191 192 (0.5 )% $ 872,987 $ 782,611 11.5 % $ 2,466,995 $ 2,245,779 9.9 % Operating ratio 81.2 % 82.4 % 82.5 % 83.5 % $ 102,314 $ 85,581 19.6 % $ 266,524 $ 227,254 17.3 % Diluted earnings per share $ 1.24 $ 1.03 20.4 % $ 3.23 $ 2.73 18.3 % 2,190 2,049 6.9 % 6,308 5,997 5.2 % 2,774 2,641 5.0 % 8,039 7,727 4.0 % 1,579 1,551 1.8 % 1,569 1,552 1.1 % LTL revenue per hundredweight $ 19.47 $ 18.79 3.6 % $ 19.28 $ 18.44 4.6 % LTL revenue per shipment $ 307.45 $ 291.51 5.5 % $ 302.52 $ 286.23 5.7 % 919 925 (0.6 )% 918 930 (1.3 )%
Changethirdfirst quarter and first nine months of 2017 benefited from2024 include growth in our revenue. We believe our results were positively impacted by the strengthening economy and an upward trend in the pricing environment during a period of tightening industry capacity. We believe our consistent investments in our service center network and equipment provide us with the capacity needed to serve our customers’ increasing freight demands and win market share. The increased freight density in our service center network and improvement in yield, combined with our continued focus on managing our costs, led to the 120 and 100 basis-point improvements in our operating ratio for the third quarter and first nine months of 2017, respectively, over the same periods of 2016. As a result, ourrevenue, net income and earnings per diluted share eachdespite 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 double-digit percentages10 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 thirdfirst quarter and first nine months of 20172024 as compared to the third quarter and first nine months of 2016.Revenue increased $90.4 million and $221.2 millionthirdfirst quarter and first nine months of 2017, respectively, as2024 increased $17.9 million, or 1.2%, when compared to the thirdfirst quarter and first nine months of 2016, due primarily to increases2023 as the 4.1% increase in LTL tons andour LTL revenue per hundredweight despite one less workday insufficiently offset the third quarter and first nine months of 2017. The increases in LTL tons during the third quarter and first nine months of 2017 were due to increases in LTL shipments and LTL weight per shipment as compared to the respective periods of 2016. LTL tonnage per day increased 8.6% and 5.7% in the third quarter and first nine months of 2017, respectively. We believe these increases were driven by an improving economic environment and increased demand for the consistent levels of premium service that we provide to our customers.LTL revenue per hundredweight increased 3.6% and 4.6% in the third quarter and first nine months of 2017, respectively, as compared to the third quarter and first nine months of 2016, despite the downward pressure on these metrics created by the increase3.2% decrease in our LTL weighttons per shipment and the decline in our average length of haul. We believe these increases in LTL revenue per hundredweight reflect our focus on yield management and an increase in fuel surcharges between the periods compared.day. Excluding fuel surcharges, LTL revenue per hundredweight increased 2.4% and 2.9%6.7% in the thirdfirst quarter and first nine months of 2017, respectively,2024 as compared to the same periods in 2016.Mostfirst quarter of 2023. We believe this yield improvement reflects our tariffscontinued focus on revenue quality and contracts provide for a fuel surcharge thatour consistent, long-term approach to pricing, which is generally indexed to the diesel fuel prices published by the U.S. Department of Energy ("DOE") that reset each week. Our fuel surcharges are designed to offset fluctuationsour 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 cost of petroleum-based products and are one of the many components includeddomestic economic environment.the overall negotiated price we charge for our services. As a percent of revenue, fuel surcharges increased to 10.8% forthe third quarter and first nine months of 2017, asApril 2024 compared to 9.8% and 9.4% for the same periods of 2016. These increases were due primarily to an increase in the average price per gallon for diesel fuel during the third quarter and first nine months of 2017 from the comparable periods of 2016. We regularly monitor the components of our pricing, including base freight rates and fuel surcharges. We also address any individual account profitability issues with our customers as part of our effort to minimize the negative impact on our profitability that would likely result from a rapid and significant change in any of our operating expenses.Fourth Quarter 2017 Update13.7% in October 20172.3%, due primarily to an 11.1%a 3.3% increase in LTL shipments per day, andpartially offset by a 2.3% increase1.0% decrease in LTL weight per shipment as compared to October 2016. For October 2017,shipment. LTL revenue per hundredweight increased approximately 4.4%4.2% as compared to the same month last year.Operating Costs and Other ExpensesSalaries, wages and benefits for the third quarter of 2017 LTL revenue per hundredweight, excluding fuel surcharges, increased $36.7 million, or 8.6%, over the prior-year comparable quarter due to a $29.0 million increase in the costs attributable to salaries and wages and a $7.7 million increase in benefit costs. Salaries, wages and benefits for the first nine months of 2017 increased $85.8 million, or 7.0%, over the prior-year comparable period due to a $65.6 million increase in the costs attributable to salaries and wages and a $20.2 million increase in benefit costs. We intend to hire additional employees during the fourth quarter of 2017 to support our continued growth, which is expected to drive additional increases in employee-related costs.The increase in the costs attributable to salaries and wages was due primarily to increases in the number of full-time employees and increases in our employees’ wage rates. Our average number of full-time employees increased 4.4% and 1.3% in the third quarter of 2017 and the first nine months of 2017, respectively,4.7% as compared to the same periodsmonth last year.2016,2024 as compared to support our shipment growth. We also providedthe first quarter of 2023, due primarily to a $16.9 million, or 3.5%, increase in salaries and wages resulting from the annual wage increasesincrease provided to our employees atin September 2023. Our average number of active full-time employees remained consistent between the beginning of both September 2016 and 2017. Although our costs increased, ourcomparable periods.improvedcosts, which include wages for drivers, platform employees, and fleet technicians, increased as a percent of revenue to 27.9%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,28.1%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 thirdfirst quarter andof 2024 as compared to 9.2% in the first nine monthsquarter of 2017, respectively, from 28.5% and 28.9% of revenue for the same periods of 2016. increase in the costs attributable to employee benefits forremained relatively consistent in the thirdfirst quarter and first nine months of 2017 was due primarily to the increases in our average number of full-time employees and higher wage rates in 20172024 as compared to 2016.the same prior year period. Our employee benefit costs also included increased workers' compensation expense, partially offset by lower group health and dental plan costs as compared to the third quarter and first nine months of 2016. Our employee benefit costs,decreased as a percent of salaries and wages decreased to 33.7% and 33.4% for35.6% in the thirdfirst quarter andof 2024 from 37.0% in the first nine monthsquarter of 2017, respectively, from 34.4% and 33.6% for the comparable periods of 2016.increased $12.3decreased $19.9 million, and $36.2 millionor 10.4%, in the thirdfirst quarter and first nine months of 2017, respectively,2024 as compared to the same prior-year periods.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. The increase in diesel fuel costs, excluding fuel taxes, was due primarily to a 17.0% and 23.3% increase in ourOur average cost per gallon of diesel fuel decreased 12.1% in the thirdfirst quarter and first nine months of 2017, respectively,2024 as compared to the same periodsfirst quarter of 2016. In addition, our gallons consumed increased 4.2% and 2.0% in the third quarter and first nine months of 2017, respectively, as compared to the same prior-year periods due primarily to increases in miles driven.2023. We do not use diesel fuel hedging instruments andinstruments; therefore, our costs are therefore subject to market price fluctuations.General supplies and expenses increased $6.8 million and $14.0 million Our gallons consumed decreased 4.4% in the thirdfirst quarter and first nine months of 2017, respectively,2024 as compared to the same prior-year periods. These increases werefirst quarter of 2023 due primarily to a decrease in miles driven as well as an increaseimprovement in our advertisingmiles per gallon. Our other operating supplies and marketingexpenses also decreased as a percent of revenue between the periods compared, due primarily to lower maintenance and repair costs, and higher costs for technology and related support.$2.9$8.6 million, and $12.4 millionor 11.3%, in the thirdfirst quarter and first nine months of 2017, respectively,2024 as compared to the same prior-year periodsfirst quarter of 2023, due primarily to the increases in depreciation and amortization costs of the assets acquired as part of our 20172023 and 2024 capital expenditure plan.programs. We believe depreciation costs will continue to increase in future periods as we execute upon the remainder ofbased on our 20172024 capital expenditure program.plan. While our investments in real estate, equipment, and technology can increase our costs in the short-term, we remain committed to investing in our businessbelieve these investments are necessary to support our continued long-term growth strategy.thirdfirst quarter and first nine months of 20172024 was 37.8% and 38.3%, respectively,25.6% as compared to 37.2% and 38.0%, respectively,25.8% for eachthe first quarter of the same prior-year periods.2023. Our effective tax rate generally exceeds the federal statutory rate of 35% due to the impact of state taxes. Nine Months Ended September 30, (In thousands) 2017 2016 Cash and cash equivalents at beginning of period $ 10,171 $ 11,472 Cash flows provided by (used in): Operating activities 388,013 410,128 Investing activities (277,064 ) (346,550 ) Financing activities (43,029 ) (60,036 ) Increase in cash and cash equivalents 67,920 3,542 Cash and cash equivalents at end of period $ 78,091 $ 15,014 Cashdecreased during the first nine monthsquarter of 20172024 as compared to 2016the first quarter of 2023 was due primarily to increases in net income and depreciation, as well as fluctuations in accounts receivable and othercertain working capital accounts.net decrease from these fluctuations was partially offset by the increasedecline in net income.The change inour cash flows used in investing activities during the first nine monthsquarter of 20172024 as compared to 2016the first quarter of 2023 was due primarily to fluctuations in the timing of equipment purchasesour expenditures under our capital expenditure plans.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.“Capital Expenditures.”changedecrease in our cash flows used in financing activities during the first nine monthsquarter of 20172024 as compared to 2016the first quarter of 2023 was due primarily to fluctuations in capital returnedlower repurchases of our common stock, the impact of which was partially offset by higher cash utilized for dividend payments to shareholders and fluctuations in our long-term debt, which includes our senior unsecured revolving line of credit.shareholders. Our return of capital to shareholders is more fully described below under "Stock“Stock Repurchase Program"Program” and "Dividends“Dividends to Shareholders," respectively.Shareholders.”threefour primary sources of available liquidity: cash and cash equivalents, cash flows from operations, our existing cash and cash equivalents, available borrowings under our senior unsecured revolvingthird amended and restated credit agreement whichwith 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 below.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.including capital assets obtained through capital leases, for the nine-monththree-month period ended September 30, 2017March 31, 2024 and the years ended December 31, 2016, 20152023 and 2014: September 30, December 31, (In thousands) 2017 2016 2015 2014 Land and structures $ 109,257 $ 161,646 $ 153,460 $ 117,487 Tractors 117,924 114,166 128,911 91,750 Trailers 27,227 94,040 114,209 80,853 Technology 13,309 18,428 32,044 38,264 Other equipment and assets 21,123 29,661 36,987 39,326 Proceeds from sales (9,637 ) (10,541 ) (24,442 ) (21,866 ) Total $ 279,203 $ 407,400 $ 441,169 $ 345,814 variedvary based upon the projected increasechange 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$400$750 million for the year ending December 31, 2017.2024. Approximately $185$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 $170$325 million is allocated for the purchase of tractors and trailers; and approximately $45$75 million is allocated for investments in technology and other assets. We expect to fund these capital expenditures primarily through cash flows from operations, and our existing cash and cash equivalents.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.Dividends to ShareholdersFebruary 2, 2017,July 28, 2021, we announced that our Board of Directors had declaredapproved a quarterly cash dividendstock repurchase program authorizing us to repurchase up to an aggregate of $0.10 per share,$2.0 billion of our outstanding common stock (the “2021 Repurchase Program”). The 2021 Repurchase Program, which was paid ondoes not have an expiration date, began after completion of our prior repurchase program in January 2022. At March 20, 2017 to shareholders of record at the close of business on March 6, 2017. 31, 2024, our 2021 Repurchase Program had $140.2 million remaining authorized.May 17, 2017,July 26, 2023, we announced that our Board of Directors had declaredapproved a quarterly cash dividendnew stock repurchase program authorizing us to repurchase up to an aggregate of $0.10 per share,$3.0 billion of our outstanding common stock. The new repurchase program, which was paid on June 20, 2017does not have an expiration date, will be effective upon the completion of our 2021 Repurchase Program.shareholderstime in open market purchases or through privately negotiated transactions. Shares of recordour common stock repurchased under our repurchase programs are canceled at the closetime of business on June 6, 2017. repurchase and are classified as authorized but unissued shares of our common stock.July 31, 2017,February 16, 2024, we announced that our Board of Directors had declaredapproved a quarterly cash dividendtwo-for-one split of $0.10 per share, which was paid on September 20, 2017 toour common stock for shareholders of record atas of the close of business on September 6, 2017.the record date of March 13, 2024. On March 27, 2024, those shareholders received one additional share of common stock for every share owned.revolving credit facility.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 revolving credit facility. We did not declareCredit Agreement or pay a dividend on our common stock in 2016 or 2015.Stock Repurchase ProgramDuringNote Agreement.second quarterissuance of 2016, we completed our stock repurchase program, previously announced on November 10, 2014, to repurchasesenior promissory notes with an aggregate principal amount of up to an aggregate of $200.0$350.0 million of our outstanding common stock.through March 22, 2026. On May 23, 2016,4, 2020, we announced that our Boardissued $100.0 million aggregate principal amount of Directors had approved a new two-year stock repurchase program authorizing us to repurchase up to an aggregate of $250.0 million of our outstanding common stocksenior promissory notes (the “2016 Repurchase Program”“Series B Notes”). Under the 2016 Repurchase Program, 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 program are canceled at the time of repurchase and are classified as authorized but unissued shares of our common stock. As of September 30, 2017, we had $192.0 million remaining authorizedBorrowing availability under the 2016 Repurchase Program.Financing AgreementsWe had oneNote 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.note agreement with an amount outstanding of $95.0 million at each of September 30, 2017 and December 31, 2016. Our unsecured senior note agreement calls for two scheduled principal payments of $50.0 million and $45.0 million on January 3, 2018 and January 3, 2021, respectively. Interest rates onpromissory notes issued pursuant to the January 3, 2018 and January 3, 2021 scheduled principal payments are 4.00% and 4.79%, respectively. The effective average interest rate on our outstanding senior note agreement was 4.37% at each of September 30, 2017 and December 31, 2016.On December 15, 2015, we entered into an amended and restated credit agreement with Wells Fargo Bank, National Association ("Wells Fargo") serving as administrative agent for the lenders (the "Credit Agreement"). Note Agreement.originally providedprovides for a five-year, $250.0 million senior unsecured revolving line of credit and a $100.0$150.0 million accordion feature, which if fully exercised and approved, would expand the total borrowing capacity up to an aggregate of $350.0 million.On September 9, 2016, we exercised a portion of the accordion feature and entered into an amendment to the Credit Agreement to increase the aggregate commitments from existing lenders by $50.0 million to an aggregate of $300.0$400.0 million. Of the $300.0$250.0 million line of credit commitments under the Credit Agreement, as amended, up to$100.0 $100.0 million may be used for letters of credit and $30.0 million may be used forcredit.Wells Fargo Sweep Plus Loan Program (the "Sweep Program")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%. We utilizeThe applicable margin for each of the Sweep Programforegoing options is dependent upon our consolidated debt to manageconsolidated 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 daily cash needs, as it automatically initiates borrowingsconsolidated debt to cover overnight cash requirements primarily for working capital needs.(In thousands) September 30, December 31, 2017 2016 Facility limit $ 300,000 $ 300,000 Line of credit borrowings — (9,975 ) Outstanding letters of credit (71,368 ) (74,611 ) Available borrowing capacity $ 228,632 $ 215,414 With the exception of borrowings pursuant to theinterest rates are fixed on all of our debt instruments. Therefore, short-term exposure to fluctuations in interest rates is limited to our line of credit facility. We do not currently use interest rate derivative instruments to manage exposure to interest rate changes.Our senior note agreement and CreditNote 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. Any future wholly-owned material domestic subsidiaries of the Company would be required to guarantee payment of all of our obligations under these agreements. The Credit Agreement and Noteincludesinclude 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).A significant decrease in demand for our services could limit our ability to generate cash flow and affect profitability. Most of our debt agreements have covenants that require stated levels of financial performance, which if not achieved could cause acceleration of the payment schedules. As of September 30, 2017, we We were in compliance with these covenants. all covenants in our outstanding debt instruments for the period ended March 31, 2024. a significant decline in business levels or 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.20162023 that we believe affect our judgments and estimates of amounts recorded forin certain assets, liabilities, revenue and expenses.or freight mix changes, could cause variation in these trends. OperatingOur revenue and operating margins in the first and fourth quarters are typically lower than those during the second and third quarters due to fewerreduced shipments during the winter months. We believe seasonal trends will continue to impact our business. Harsh winter weather, orhurricanes, tornadoes, floods and other natural disasters such as hurricanes, tornadoes and floods, can also adversely impact our performance by reducing demand and increasing operating expenses. We believe seasonal trends will continue to impact our business.wasteother 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,the remainder of 2017 or fiscal year 2018.2024. However, future changes to laws or regulations may adversely affect our operations and could result in unforeseen costs to our business.20162023 and in other reports and statements that we file with the SEC.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:competitive environmentchallenges associated with respect to industry capacity and pricing, including the use of fuel surcharges, which could negatively impactexecuting our total overall pricinggrowth strategy, and developing, marketing and consistently delivering high-quality services that meet customer expectations;abilityrelationships with significant customers;coverclaims related to cargo loss and damage, property damage, personal injury, workers’ compensation and healthcare, increased self-insured retention or deductible levels or premiums for excess coverage, and claims in excess of insured coverage levels;operating expenses;inability to sufficiently increase our customer rates to offset the increase in our costs;andas well as the effectiveness of those fuel surcharges in mitigating the impact of fluctuating prices for diesel fuel and other petroleum-based products;associated with executing our growth strategy,and to attract or retain qualified employees, including drivers and maintenance technicians;successfully consummateretain our key employees and integrate any acquisitions;continue to effectively execute our succession plan;changes in our goals and strategies, which are subject to change at any time at our discretion;various economic factors such as recessions, downturns in the economy, global uncertainty and instability, changes in U.S. social, political, and regulatory conditions or a disruption of financial markets, which may decrease demand for our services;increases in driver compensation or difficulties attracting and retaining qualified drivers to meet freight demand;our exposure to claims related to cargo loss and damage, property damage, personal injury, workers' compensation, group health and group dental, including increased premiums, adverse loss development, increased self-insured retention levels and claims in excess of insured coverage levels;cost increases associated with employee benefits, including costs associated with employee healthcare plans;the availability and cost of capital for our significant ongoing cash requirements;the availability and cost of new equipment and replacement parts, including regulatory changes and supply constraints that could impact the cost of these assets;decreases in demand for, and the value of, used equipment;the availability and cost of diesel fuel;thepotential costs and potential liabilities related to compliance with, or violations of, existing or future governmental laws and regulations, including environmental laws, engine emissions standards, hours-of-service for our drivers, driver fitness requirements and new safety standards for drivers and equipment;the costs and potential liabilities related to various legal proceedings and claims that have arisen in the ordinary course of our business, some of which include class-action allegations;the costs and potential liabilities related to governmental proceedings, inquiries, notices or investigations;the costs and potential liabilities related to our international business relationships;the costs and potential adverse impact of compliance with, or violations of, current and future rules issued by the Department of Transportation, the Federal Motor Carrier Safety Administration (the “FMCSA”) and other regulatory agencies;the costs and potential adverse impact of compliance associated with addressing interoperability between legacy electronic automatic on-board recording devices and electronic logging devices (“ELDs”) that comply with FMCSA’s ELD regulations and guidance;seasonal trends in the less-than-truckload industry, including harsh weather conditions and disasters;our dependence on key employees;the concentration of our stock ownership with the Congdon family;the costs and potential adverse impact associated with future changes in accounting standards or practices;potential costs associated with cyber incidents and other risks with respect to our information technology systems or those of our third-party service providers, including system failure, security breach, disruption by malware or ransomware or other damage;costsCompliance, Safety, Accountability initiative of the Federal Motor Carrier Safety Administration (“FMCSA”), which could adversely impact our ability to hire qualified drivers, meet our growth projections and potential adverse impact associated with transitional challenges in upgrading or enhancingmaintain our technology systems;customer relationships;damage to our reputation through unfavorable publicity;anti-terrorism measures on our business;or violations of, current and future rules issued by the Department of Transportation, the FMCSA and other regulatory agencies;dilution•shareholders caused by any issuanceor future governmental laws and regulations, including environmental laws;additional equity;legal, regulatory or market responses to climate change concerns;a quarterly cash dividendchanges in tax laws, rates, guidance and interpretations; as these statements are neither a prediction nor a guarantee of future events or circumstancescircumstances; 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.2016.a)Evaluation of disclosure controls and proceduresb)Changes in internal control over financial reporting2016,2023, 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.thirdfirst quarter of 2017:(2) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs July 1-31, 2017 1,651 $ 94.81 1,651 $ 192,680,542 August 1-31, 2017 7,654 $ 94.21 7,654 $ 191,959,458 September 1-30, 2017 — $ — — $ 191,959,458 Total 9,305 $ 94.32 9,305 May 23, 2016,July 28, 2021, we announced that our Board of Directors had approved a two-year stock repurchase program authorizing us to repurchase up to an aggregate of $250.0 million$2.0 billion of our outstanding common stock (the “2016“2021 Repurchase Program”). Under the 2016The 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.programprograms are canceled at the time of repurchase and are classified as authorized but unissued shares of our common stock.Exhibit No.Description31.1September 30, 2017,March 31, 2024, filed on November 6, 2017,May 7, 2024, formatted in XBRL (eXtensibleiXBRL (Inline eXtensible Business Reporting Language) includes: (i) the Condensed Balance Sheets at September 30, 2017March 31, 2024 and December 31, 2016,2023, (ii) the Condensed Statements of Operations for the three and nine months ended September 30, 2017March 31, 2024 and 2016,2023, (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 ninethree months ended September 30, 2017March 31, 2024 and 2016,2023, and (iv)(v) the Notes to the Condensed Financial StatementsNovember 6, 2017Senior - Finance and Chief Financial OfficerNovember 6, 2017EXHIBIT INDEXTO QUARTERLY REPORT ON FORM 10-QExhibit No.Description31.131.232.132.2101The following financial information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 6, 2017, formatted in XBRL (eXtensible Business Reporting Language) includes: (i) the Condensed Balance Sheets at September 30, 2017 and December 31, 2016, (ii) the Condensed Statements of Operations for the three and nine months ended September 30, 2017 and 2016, (iii) the Condensed Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (iv) the Notes to the Condensed Financial StatementsOur SEC file number reference for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 0-19582.21