| Significant Accounting Policies | Note 1. Significant Accounting Policies Business 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. Basis of Presentation The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 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 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. 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. Revenue and Expense Recognition We recognize revenue based upon when our transportation and related services have been completed in accordance with the bill of lading (“BOL”) contract, our general tariff provisions and contractual agreements with our customers. Generally, our performance obligations begin when we receive a BOL from a customer and are satisfied when we complete the delivery of a shipment and related services. We recognize revenue for our performance obligations under our customer contracts over time, as our customers receive the benefits of our services in accordance with Accounting Standards Codification (“ASC”) Topic 606. With respect to services not completed at the end of a reporting period, we use a percentage of completion method to allocate the appropriate revenue to each separate reporting period. Under this method, we develop a factor for each uncompleted shipment by dividing the actual number of days in transit at the end of a reporting period by that shipment’s standard delivery time schedule. This factor is applied to the total revenue for that shipment and revenue is allocated between reporting periods accordingly. Payment terms vary by customer and are short-term in nature. Expenses are recognized when incurred. The composition of our revenue is summarized below:
Year Ended December 31,
(In thousands) 2024 2023 2022
LTL services $ 5,761,105 $ 5,804,939 $ 6,177,055
Other services 53,705 61,213 83,022
Total revenue $ 5,814,810 $ 5,866,152 $ 6,260,077 Allowances for Uncollectible Accounts and Revenue Adjustments We maintain an allowance for uncollectible accounts for estimated losses resulting from the inability of our customers to make required payments. We estimate this allowance by analyzing the aging of our customer receivables, our historical loss experience and other trends and factors affecting the credit risk of our customers, including anticipated changes to future performance. Write-offs occur when we determine an account to be uncollectible and could differ from our allowance estimate as a result of factors such as changes in the overall economic environment or risks surrounding our customers. Additional allowances may be required if the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments. We periodically review the underlying assumptions in our estimate of the allowance for uncollectible accounts to ensure that the allowance reflects the most recent trends and factors. We also maintain an allowance for estimated revenue adjustments resulting from future billing corrections, customer allowances, money-back service guarantees and other miscellaneous revenue adjustments. These revenue adjustments are recorded in our revenue from operations. We use historical experience, trends and current information to update and evaluate these estimates. Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist principally of customer receivables and, when held, short-term investments. We perform initial and ongoing credit evaluations of our customers to minimize credit risk. We generally do not require collateral but may requ ire prepayment of our services under certain circumstances. Credit risk is generally diversified due to the large number of entities comprising our customer base and their dispersion across many different industries and geographic regions. We generally expect our short-term investments will be diversified over various high-quality issuers. Such short-term investments may also subject us to concentrations of credit risk. Cash and Cash Equivalents We consider cash on hand and deposits in banks along with certificates of deposit and short-term marketable securities with original maturities of three months or less as cash and cash equivalents. Short-term Investments From time to time, the Company invests in commercial paper and certificates of deposits with an original maturity of greater than three months, which are classified and accounted for as trading securities and are reported in “Short-term investments” on our Balance Sheets. These investments are measured at fair value on a recurring basis each reporting period, with gains or losses recorded in “Non-operating (income) expense” on our Statements of Operations. As of December 31, 2024 and 2023, we held no short-term investments. Property and Equipment Property and equipment are recorded at cost. Major additions and improvements are capitalized, while maintenance and repairs that do not improve or extend the lives of the respective assets are charged to expense as incurred. We capitalize the cost of tires mounted on purchased revenue equipment as a part of the total equipment cost. Subsequent replacement tires are expensed at the time those tires are placed in service. We assess the realizable value of our long-lived assets and evaluate such assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Depreciation of property and equipment is calculated using the straight-line method over the estimated useful lives of the related assets. The following table provides the estimated useful lives by asset type:
Structures 7 to 30 years
Revenue equipment 4 to 15 years
Other equipment 2 to 20 years
Leasehold improvements Lesser of economic life or life of lease Depreciation expense was $ 344.5 million, $ 324.0 million and $ 275.6 million for 2024, 2023 and 2022, respectively. Claims and Insurance Accruals We carry a significant amount of insurance with third-party insurance carriers that provides various levels of protection for our risk exposure, including protection in the areas of property, casualty, cyber, management, and group health, with coverage limits and retention and deductible levels that we believe are reasonable given historical claim activity and severity. We believe that our policy of maintaining self-insured retentions or deductibles under these various insurance programs for a portion of our risks, supported by our safety, claims management and loss prevention programs, is an effective means of managing insurance costs. We periodically review our risk exposure and insurance coverage applicable to those risks and believe that we maintain sufficient insurance coverage. Claims and insurance accruals reflect the Company’s estimated cost of claims for cargo loss and damage, bodily injury/property damage (“BIPD”), workers’ compensation, group health and group dental. These accruals include amounts for future claims development and claims incurred but not reported, which are primarily based on historical claims development experience. The related cost for cargo loss and damage and BIPD is charged to “Insurance and claims” on our Statements of Operations, while the related costs for workers’ compensation, group health and group dental are charged to “Salaries, wages and benefits” on our Statements of Operations. Our liability for claims and insurance totaled $ 164.2 million and $ 153.8 million at December 31, 2024 and 2023, respectively. The long-term portions of those reserves were $ 91.4 million and $ 90.4 million at December 31, 2024 and 2023, respectively, which were included in “Other non-current liabilities” on our Balance Sheets. Share-Based Compensation We have various share-based compensation plans for our employees and non-employee directors. Our share-based compensation includes awards of phantom stock, restricted stock, and performance-based restricted stock units which are accounted for under ASC Topic 718, Compensation - Stock Compensation . All share-based compensation expense is presented in “Salaries, wages and benefits” for employees and “Miscellaneous expenses, net” for non-employee directors in the accompanying Statements of Operations. Total compensation expense recognized for all share-based compensation awards was $ 11.3 million, $ 11.1 million and $ 15.9 million during 2024, 2023, and 2022, respectively. The total tax benefit recognized related to these awards was $ 6.9 million, $ 3.3 million and $ 3.3 million during 2024, 2023, and 2022, respectively. Awards of restricted stock, phantom stock and performance-based restricted stock units are accounted for as equity under ASC Topic 718. We recognize compensation cost, net of estimated forfeitures, for restricted stock awards and phantom stock awards on a straight-line basis over the requisite service period of each award. Compensation cost for performance-based restricted stock unit awards is recognized using the accelerated attribution method over the requisite service period of each award. At the end of each reporting period, we reassess the probability of achieving performance targets and changes to our initial assessment are reflected in the reporting period in which the change in estimate occurs. Advertising The costs of advertising our services are expensed as incurred and are included in “General supplies and expenses” on our Statements of Operations. Advertising costs charged to expense totaled $ 34.5 million, $ 34.6 million and $ 29.0 million for 2024, 2023 and 2022, respectively. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are: Level 1 — Quoted prices for identical instruments in active markets; Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and Level 3 — Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates. Our long-term debt, including current maturities, is measured at fair value and further described in Note 9. Our other financial securities in current assets and current liabilities approximate their fair value due to the short-term maturities of these instruments. 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 began in January 2022 and was completed in May 2024. 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 “2023 Repurchase Program”). The 2023 Repurchase Program, which does not have an expiration date, began after the completion of the 2021 Repurchase Program in May 2024. 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. We entered into accelerated share repurchase agreements with a third-party financial institution on each of August 26, 2021, February 24, 2022 and May 28, 2024. The Company’s accelerated share repurchase agreements were each accounted for as a settled treasury stock purchase and a forward stock purchase contract. The par value of the initial shares received was recorded as a reduction to common stock, with the excess purchase price recorded as a reduction to retained earnings. The forward stock purchase contract was accounted for as a contract indexed to our own stock and was classified within capital in excess of par value on our Balance Sheets. The Company's accelerated share repurchase agreements were each settled with the final number of shares received based on the daily volume-weighted average share price of our common stock over the term of the agreement, less a negotiated discount. The table below summarizes our accelerated share repurchase activity settled in 2024 and 2022. We did not enter into any accelerated share repurchase agreements during 2023.
Agreement
Agreement Settlement Amount Initial Shares Shares Received Total Shares
Date Date (In millions) Received at Settlement Received
August 2021 January 2022 $ 250.0 1,310,730 246,820 1,557,550
February 2022 April 2022 $ 400.0 2,036,314 745,618 2,781,932
May 2024 November 2024 $ 200.0 923,201 133,012 1,056,213 At December 31, 2024, we had $ 2.26 billion remaining authorized under the 2023 Repurchase Program. Dividends to Shareholders Our Board of Directors declared a cash dividend of $ 0.26 per share for each quarter of 2024, declared a cash dividend of $ 0.20 per share for each quarter of 2023 and declared a cash dividend of $ 0.15 per share for each quarter of 2022. On February 5, 2025, we announced that our Board of Directors had declared a cash dividend of $ 0.28 per share of our common stock. The dividend is payable on March 19, 2025 to shareholders of record at the close of business on March 5, 2025. 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, and, if needed, borrowings under our Credit Agreement or Note Agreement. Comprehensive Income The Company has no components of other comprehensive income. Accordingly, net income equals comprehensive income for all periods presented in this report. Recently Adopted Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, requiring public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC topic 280 on an interim and annual basis. We adopted ASU 2023-07 effective December 31, 2024 on a retrospective basis. While the new accounting rules did not have any impact on our financial condition, results of operations or cash flows, the adoption of the new accounting rules resulted in additional disclosures, which are included in Note 11. Recently Issued Accounting Pronouncements Not Yet Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. While the new accounting rules will not have any impact on our financial condition, results of operations or cash flows, the adoption of the new accounting rules will result in additional disclosures. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. ASU 2024-03 requires public entities to disclose additional disclosure of the nature of expenses included on the statement of operations as well as disclosures about specific types of expenses included in the expense captions presented on the statement of operations in the notes to the financial statements on an interim and annual basis. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. While the new accounting rules will not have any impact on our financial condition, results of operations or cash flows, the adoption of the new accounting rules will result in additional disclosures. |
