Old Dominion Freight Line Inc. Reports Operating Results (10-Q)

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May 07, 2009
Old Dominion Freight Line Inc. (ODFL, Financial) filed Quarterly Report for the period ended 2009-03-31.

Old Dominion Freight Line Inc. is an inter-regional and multi-regional motor carrier transporting primarily less-than-truckload shipments of general commodities including consumer goods textiles and capitalgoods to a diversified customer base. Old Dominion Freight Line Inc. has a market cap of $1.1 billion; its shares were traded at around $29.5 with a P/E ratio of 17.5 and P/S ratio of 0.7. Old Dominion Freight Line Inc. had an annual average earning growth of 14.6% over the past 10 years. GuruFocus rated Old Dominion Freight Line Inc. the business predictability rank of 2.5-star.

Highlight of Business Operations:

We are subject to market changes in insurance rates, and we continue to evaluate our balance of excess insurance coverage and self-insurance to minimize that cost. We are self-insured for bodily injury and property damage claims up to $2,750,000 per occurrence. Cargo loss and damage claims are self-insured up to $100,000 per occurrence. We are exposed to workers compensation claims up to $1,000,000 per occurrence, through either self-insurance or insurance deductibles, for the states in which we operate. We are insured for group health claims under a graduated aggregating policy, where we are exposed to claims up to $350,000 per occurrence, plus an additional $235,000 for claims exceeding $650,000. Our long-term disability claims are self-insured to a maximum per individual of $3,000 per month.

Revenue per hundredweight decreased 8.8% to $12.57 in the first quarter of 2009 from $13.78 in the same period of 2008, despite a general rate increase that we implemented on February 16, 2009. Our revenue per hundredweight was negatively impacted by a decrease in fuel surcharge revenue, which resulted from a significant decline in diesel fuel prices during the quarter, as well as a 6.0% increase in weight per shipment. Excluding fuel surcharges, revenue per hundredweight declined only 1%, which further reflects our commitment to maintaining pricing discipline in this competitive environment.

We currently project capital expenditures, net of anticipated proceeds from dispositions, to be approximately $190,000,000 for the year ending December 31, 2009. Of our capital expenditures, approximately $90,000,000 is allocated for the purchase of tractors, trailers and other equipment; approximately $85,000,000 is allocated for the purchase of service center facilities, construction of new service center facilities or expansion of existing service center facilities; and approximately $13,000,000 is allocated for investments in technology. We plan to fund the remaining balance of projected capital expenditures primarily through cash flows from operations and the use of our senior unsecured revolving credit facility, if necessary.

We have a five-year, $225,000,000 senior unsecured revolving credit facility pursuant to the terms of an amended and restated credit agreement dated August 10, 2006 (the Credit Agreement), with Wachovia Bank, National Association (Wachovia) serving as administrative agent for the lenders. Of the $225,000,000 line of credit commitments, $150,000,000 may be used for letters of credit and $15,000,000 may be used for borrowings under Wachovias sweep program. The sweep program is a daily cash management tool that automatically initiates borrowings to cover overnight cash requirements up to an aggregate of $15,000,000 or initiates overnight investments for excess cash balances.

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