Analysis of Debt
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Old Dominion Freight Line Inc. pages available for free this week:
- Cash Flow Statement
- Analysis of Solvency Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Total Debt (Carrying Amount)
Old Dominion Freight Line Inc., balance sheet: debt
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Current maturities of long-term debt
- No data is reported from 2018 through 2021. In 2022, the current maturities appear as $20,000 thousand, indicating a new or newly disclosed short-term debt obligation within the next year.
- Long-term debt, excluding current maturities
- From 2018 to 2019, long-term debt remained steady at $45,000 thousand. In 2020 and 2021, it more than doubled, rising sharply to approximately $99,931 thousand and $99,947 thousand respectively, suggesting a significant increase or refinancing of long-term borrowings during this period. In 2022, there is a noticeable reduction to $79,963 thousand, implying partial repayment or restructuring of long-term debt.
- Total long-term debt, including current maturities (carrying amount)
- This metric mirrors the long-term debt values from 2018 to 2021, staying constant at $45,000 thousand for the first two years, then increasing sharply to nearly $99,931 thousand and $99,947 thousand respectively. In 2022, the total long-term debt increased slightly to $99,963 thousand, reflecting the addition of current maturities ($20,000 thousand) and the decrease in non-current portion. Overall, the total carrying amount remains elevated compared to earlier years, indicating increased leverage sustained through 2022.
- Summary of Trends and Insights
- Over the five-year span, long-term liabilities exhibited significant growth starting in 2020, with the total carrying amount more than doubling compared to the 2018-2019 period. The introduction or disclosure of current maturities of long-term debt in 2022 signals a shift in debt structure, possibly due to upcoming repayments or reclassification of debt portions from long-term to short-term. Despite a reduction in the non-current portion of long-term debt in 2022, the overall debt obligation remains substantially higher than the initial years, suggesting increased reliance on debt financing. These trends imply active debt management involving incurment and partial repayment or restructuring, reflective of strategic financial decisions during this period.
Total Debt (Fair Value)
| Dec 31, 2022 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Total long-term debt, including current maturities (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2022-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on senior notes:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
Old Dominion Freight Line Inc., interest costs incurred
US$ in thousands
| 12 months ended: | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expense | |||||||||||
| Capitalized interest | |||||||||||
| Interest costs incurred |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Interest Expense Trends
- The interest expense experienced significant fluctuation over the five-year period. Initially, it started at a low value of 189 thousand US dollars in 2018, followed by an increase to 377 thousand US dollars in 2019. A notable surge occurred in 2020, with interest expense rising sharply to 2,782 thousand US dollars. Subsequently, the expense decreased to 1,727 thousand US dollars in 2021 and further declined to 1,563 thousand US dollars in 2022. Overall, after a peak in 2020, the interest expense showed a lowering trend in the last two years.
- Capitalized Interest Patterns
- Capitalized interest displayed a more stable and less volatile pattern in comparison to interest expense. Starting from 3,237 thousand US dollars in 2018, it saw a slight decline to 3,128 thousand US dollars in 2019, followed by a more pronounced decrease to 2,473 thousand US dollars in 2020. Nevertheless, the amount increased again to 2,655 thousand US dollars in 2021 and reached its highest value of 3,260 thousand US dollars in 2022, surpassing the initial value in 2018. This suggests an upward movement in capitalized interest in recent years after a dip in 2020.
- Interest Costs Incurred Variation
- The total interest costs incurred, which include both interest expense and capitalized interest, reflected a general upward trend despite some fluctuations. Starting at 3,426 thousand US dollars in 2018, it slightly increased to 3,505 thousand US dollars in 2019. A marked rise was observed in 2020 with interest costs reaching 5,255 thousand US dollars, the highest in the period under review. After 2020, the costs decreased to 4,382 thousand US dollars in 2021 but rose again to 4,823 thousand US dollars in 2022. Though the total costs have not returned to the peak level observed in 2020, they remain elevated compared to the earlier years.
- Summary of Observations
- The data indicates that the company experienced a spike in interest expense and total interest costs in 2020, followed by a reduction but maintaining relatively high levels in subsequent years. In contrast, capitalized interest followed a U-shaped pattern, decreasing until 2020 and increasing thereafter to a level higher than at the start of the period. The fluctuations observed in interest expense and total interest costs might suggest changes in borrowing levels, interest rates, or capital expenditure strategies. The steady increase in capitalized interest after 2020 points to potentially higher investment activity or changes in accounting capitalization policies.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= ÷ =
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio experienced a significant decline from 4315.88 in 2018 to 325 in 2020, indicating a substantial reduction in earnings available to cover interest expenses during this period. Subsequently, the ratio increased markedly to 804.95 in 2021 and further improved to 1179.09 in 2022, suggesting a recovery in the company’s ability to cover interest obligations over the last two years.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- This ratio showed a relatively stable trend from 2018 through 2019, with a slight decrease from 238.09 to 235.19. A more noticeable decline occurred in 2020, reaching 172.05, reflective of potentially higher capitalized interest costs or reduced operational earnings. However, from 2020 onwards, the ratio demonstrated consistent improvement, increasing to 317.24 in 2021 and further to 382.11 in 2022, indicating a strengthening financial position when adjusted for capitalized interest costs.