Old Dominion Freight Line Inc. (NASDAQ:ODFL)

The annual current and deferred income tax expenses exhibit notable variations over the five-year period analyzed. The current tax expense consistently increased each year, indicating a rising tax obligation associated with the company's reported earnings prior to adjustments for deferred taxes.

Current Income Tax Expense

The current income tax expense grew steadily from $152.1 million in 2018 to $402.2 million in 2022. This reflects a nearly 165% increase over the five years, with the most significant annual increments occurring between 2019 and 2020, and again from 2021 to 2022. The trend suggests escalating taxable income or changes in tax rates or policies impacting the company.

Deferred Income Tax Expense

The deferred tax expense showed more volatility during the period. In 2018, it was a positive charge of approximately $57.7 million but plummeted to a low of negative $41.0 million in 2020, indicating a tax benefit or reduction from deferred tax assets or liabilities. The amount rebounded in 2021 and 2022 to positive $30.2 million and $62.0 million respectively. This fluctuation suggests timing differences in recognition of expenses or revenues for accounting versus tax purposes, as well as possible adjustments in deferred tax assets or liabilities.

Provision for Income Taxes (Total)

The total provision for income taxes, combining current and deferred amounts, increased from approximately $209.8 million in 2018 to $464.2 million in 2022. The increase is relatively steady, with the largest jump observed between 2020 and 2021, driven primarily by the rise in current tax expense. The overall upward trend mirrors growth in taxable income, with deferred taxes adding variability but following a recovery path post-2020.

In summary, the data suggests a consistent increase in current tax liabilities, likely reflecting improved profitability or tax rate changes. The deferred tax component demonstrates temporary anomalies, particularly in 2020, before reverting to a positive expense in subsequent years. These patterns provide insight into the tax expense dynamics and timing differences affecting the company's income tax accounting over the analyzed timeframe.

U.S. Statutory Federal Income Tax Rate

The statutory federal income tax rate remained constant at 21% throughout the entire analyzed period from 2018 to 2022, indicating no changes in the baseline tax rate impacting the company during these years.

Effective Income Tax Rate

The effective income tax rate showed some variability but overall remained relatively stable over the five-year period. It started at 25.73% in 2018, experienced a slight decrease to 25.3% in 2019, and a marginal increase to 25.37% in 2020. In 2021, the rate rose slightly again to 25.5% before declining to 25.21% in 2022. Despite minor fluctuations, the effective tax rate stayed consistently above the statutory rate by approximately 4 to 5 percentage points, indicating factors such as state taxes, nondeductible expenses, or other tax adjustments influencing the company's overall tax burden.

The financial data indicates various trends and shifts in the company’s liabilities, reserves, and deferred tax positions over the five-year period.

Claims and insurance reserves

There is a steady increase over the years, rising from $27,433 thousand in 2018 to $31,736 thousand in 2022. This gradual upward trend suggests an increasing recognition of potential claims or insurance-related obligations.

Accrued vacation

Fluctuations are evident across the years. Starting at $17,932 thousand in 2018, the figure decreased to $15,867 thousand in 2020, then rose significantly to $21,518 thousand in 2021 before slightly dropping to $20,330 thousand in 2022. This indicates variability in vacation liabilities, possibly reflecting changes in workforce or accrual policies.

Deferred compensation

The values climbed significantly from $31,306 thousand in 2018 to a peak of $43,150 thousand in 2021 and then slightly declined to $39,973 thousand in 2022. This reflects an overall increasing trend in deferred compensation commitments over the review period, with a modest reduction in the latest year.

Other (positive values)

This category shows volatility, with a high of $29,451 thousand in 2020 and declines before and after that year, ending at $11,767 thousand in 2022. The fluctuations suggest inconsistent activities or adjustments within this item.

Deferred tax assets

Deferred tax assets generally increased from $97,532 thousand in 2018 to a peak of $117,315 thousand in 2020, followed by a slight decrease to $103,806 thousand in 2022. This pattern indicates that while the company recognized more tax assets up to 2020, there has been some reduction in the subsequent years.

Depreciation and amortization

These expenses, recorded as negative values, show a consistent increase in magnitude from approximately -$339,311 thousand in 2018 to -$407,942 thousand in 2022, pointing to higher non-cash expenses likely due to capital investments and related asset base growth.

Other (negative values)

These minor negative entries exhibit a gradual increase in magnitude from -$3,151 thousand in 2018 to -$5,113 thousand in 2022, representing increasing small expenses or adjustments over time.

Deferred tax liabilities

Deferred tax liabilities have increased steadily in absolute value from -$342,462 thousand in 2018 to -$413,055 thousand in 2022. This rise may indicate growing future tax obligations or timing differences on asset/liability recognition.

Net deferred tax asset (liability)

This net figure shows a negative balance throughout, deepening from -$244,930 thousand in 2018 to -$309,249 thousand in 2022. The increasing net liability suggests that deferred tax obligations exceed deferred tax assets by a widening margin over time.

Overall, the data reveals increasing claims and compensation liabilities alongside rising deferred tax liabilities and depreciation expenses. Some volatility is observed in accrued vacation and "Other" categories. Deferred tax assets peaked in 2020 but declined somewhat afterward, contributing to a growing net deferred tax liability. These trends collectively indicate expanding future obligations and investment in assets generating higher non-cash charges.

The financial data over the five-year period reveals distinct movements in the deferred tax assets and liabilities of the company, indicating underlying shifts in tax-related accounting and possibly broader operational or financial factors.

Deferred tax assets

Deferred tax assets, included in other assets, showed an initial increase from 2,739 thousand US dollars at the end of 2018 to 3,877 thousand US dollars by the end of 2019. This suggests a rising recognition of future tax benefits early in the period. However, from 2019 onwards, a declining trend is evident, with values falling to 3,134 thousand in 2020, 1,477 thousand in 2021, and further down to 1,266 thousand in 2022. This consistent reduction in deferred tax assets over the last three years may reflect adjustments in projections of future taxable income or changes in tax planning strategies.

Deferred tax liabilities

Deferred tax liabilities exhibit a different pattern. Starting at 247,669 thousand US dollars at the end of 2018, there was a moderate increase to 261,964 thousand in 2019. In 2020, the liabilities decreased to 220,210 thousand, indicating some reduction in taxable temporary differences or other influencing factors during that year. However, this was followed by an upward trend, with liabilities rising to 248,718 thousand in 2021 and then markedly increasing to 310,515 thousand in 2022, the highest point within the timeframe. This substantial increase in deferred tax liabilities during the last two years suggests growing obligations for future tax payments, possibly due to accelerated depreciation, timing differences in revenue recognition, or other tax accounting changes.

Overall, the contrasting trends of declining deferred tax assets alongside rising deferred tax liabilities in recent years may indicate an evolving tax position. The growth in deferred tax liabilities, especially the sharp rise in 2022, could have implications for future cash flows and tax expense, warranting further examination of the underlying causes behind these movements.

The analysis of the financial data over the five-year period reveals several notable trends and patterns.

Total Assets

Both reported and adjusted total assets show a consistent upward trajectory from 2018 through 2022. Reported total assets increased from approximately $3.55 billion in 2018 to nearly $4.84 billion in 2022, reflecting steady growth. Adjusted total assets closely mirror this trend, showing a similar increase over the same period, indicating minor adjustments related to income tax considerations do not significantly distort the overall asset base.

Total Liabilities

Reported total liabilities exhibit an increasing trend, rising from about $865 million in 2018 to roughly $1.19 billion in 2022. However, the adjusted total liabilities present a different pattern, increasing from $617 million in 2018 to a peak of approximately $893 million in 2021 before slightly declining to about $875 million in 2022. This divergence suggests that adjustments for deferred taxes materially reduce the total liabilities reported, and that the company has managed to stabilize its adjusted liabilities in recent years.

Shareholders’ Equity

Reported shareholders' equity increased steadily from approximately $2.68 billion in 2018 to $3.65 billion in 2022, demonstrating a solid growth trend. Adjusted shareholders’ equity follows a similar upward path, with values consistently higher than reported equity, starting at about $2.93 billion in 2018 and reaching nearly $3.96 billion in 2022. This indicates that after adjusting for income tax effects, the equity position is strengthened, reflecting retained earnings or other adjustments.

Net Income

Reported net income shows significant growth over the period, increasing from about $606 million in 2018 to nearly $1.38 billion in 2022. This growth is particularly notable between 2020 and 2022. Adjusted net income exhibits a similar pattern, although the adjusted figures are generally higher than reported income, starting at $663 million in 2018 and reaching approximately $1.44 billion in 2022. The gap between adjusted and reported net income widens over time, implying an increasing impact of deferred tax adjustments on profitability measures.

Overall, the data reflects strong financial growth in assets, equity, and income, with liabilities growing more moderately when adjusted. The presence of deferred income tax adjustments consistently results in higher equity and net income figures compared to reported values, underscoring the importance of these adjustments in assessing the company’s financial position and performance.

Net Profit Margin

The reported net profit margin exhibited a consistent upward trend, increasing from 14.98% in 2018 to 22% in 2022. The adjusted net profit margin followed a similar pattern, rising from 16.41% to 22.99% over the same period. Notably, the adjusted margin was higher than the reported margin in all years except 2019, indicating adjustments made for income tax considerations improved profit margin presentation.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios started at 1.14 in 2018, declined to a low of 0.92 in 2020, and subsequently increased to 1.29 by 2022. This U-shaped pattern suggests a temporary decline in asset efficiency around 2020, followed by an improvement surpassing the initial levels by 2022.

Financial Leverage

Reported financial leverage remained stable, ranging narrowly from 1.30 to 1.32 throughout the five-year span. Adjusted financial leverage was slightly lower overall, fluctuating between 1.20 and 1.23, with no clear upward or downward trend. This stability indicates a consistent capital structure without significant changes in debt usage.

Return on Equity (ROE)

The reported ROE decreased from 22.6% in 2018 to 19.98% in 2019 and 20.22% in 2020, but then increased sharply to 28.11% in 2021 and 37.7% in 2022. The adjusted ROE displayed a similar pattern with slightly lower values, reaching 36.32% in 2022. This strong increase in recent years points to enhanced profitability and shareholder returns, potentially driven by improved operational performance or financial leverage.

Return on Assets (ROA)

The reported ROA mirrored the trend in ROE, declining slightly early on and then rising notably from 15.4% in 2020 to 28.46% in 2022. The adjusted ROA values were higher in 2018 and 2022 but lower in 2019 and 2020 compared to reported figures, which might reflect deferred tax impact adjustments. Overall, the increasing ROA indicates gains in asset utilization and operational efficiency over time.

Reported Net Income

The reported net income demonstrates a consistent upward trajectory from 2018 through 2022. Beginning at 605,668 thousand US dollars in 2018, it shows moderate growth until 2020, followed by a substantial increase in 2021 and 2022, reaching 1,377,159 thousand US dollars. This indicates robust profitability growth over the five-year period.

Adjusted Net Income

Adjusted net income follows a similar trend to reported net income but shows slightly different values. Starting at 663,375 thousand US dollars in 2018, adjusted net income exhibits a slight decline in 2019 and 2020 before sharply rising in 2021 and 2022. The adjusted net income surpasses reported figures in every year, peaking at 1,439,167 thousand US dollars in 2022, which may reflect the impact of deferred income tax adjustments.

Reported Net Profit Margin

The reported net profit margin reveals steady improvement over the period. It maintains a level of 14.98% in 2018 and 2019, then increases to 16.75% in 2020. More significant gains are noted in 2021 and 2022, reaching 19.68% and 22.00%, respectively, indicating enhanced efficiency and profitability relative to revenue.

Adjusted Net Profit Margin

Adjusted net profit margin displays a pattern close to the reported margin but with some fluctuations. It starts higher than the reported margin at 16.41% in 2018, decreases to 15.30% in 2019, then slightly increases to 15.73% in 2020. From 2021 onward, it rises sharply to 20.25% and 22.99% in 2022, consistently outperforming the reported margin. This suggests that when deferred tax effects are adjusted, profitability margins present a more favorable picture, especially in the last two years.

Overall Insights

Both reported and adjusted figures illustrate a strong growth trend in profitability and margin performance from 2018 to 2022. The divergence between reported and adjusted results is more pronounced in recent years, indicating that deferred tax adjustments have a meaningful impact on the financial presentation. The company’s increasing net profit margins, particularly adjusted margins, reflect improving operational efficiency and effective tax management over the analyzed period.

The financial data reveals a consistent upward trend in both reported and adjusted total assets over the five-year period, indicating continuous growth in asset base. Specifically, total assets increased from approximately 3.55 billion USD at the end of 2018 to nearly 4.84 billion USD by the end of 2022. The close similarity between reported and adjusted total assets suggests minimal impact of income tax adjustments on the asset valuation.

Regarding asset utilization efficiency, the total asset turnover ratio exhibits fluctuations across the years. Beginning at 1.14 in 2018, the ratio declined notably to 0.92 in 2020, possibly reflecting a period of diminished operational efficiency or growth in assets outpacing revenue generation. However, the subsequent recovery to 1.09 in 2021 and a further increase to 1.29 in 2022 indicates an improvement in asset management or operational productivity, surpassing the initial 2018 level by the end of the observed period.

Overall, the data suggests an expanding asset base complemented by an initial efficiency dip followed by a significant improvement in asset turnover, highlighting enhanced revenue generation relative to total assets in the most recent year.

Asset Growth

Reported and adjusted total assets increased steadily every year from 2018 to 2022.

The growth in assets approximated a 36% increase over the period.

The alignment between reported and adjusted figures indicates stable accounting treatment regarding deferred and reported income tax impacts.

Asset Turnover Ratio

The ratio declined from 1.14 in 2018 to a low point of 0.92 in 2020, indicating a reduced ability to generate revenues from each unit of assets.

Subsequently, the ratio improved significantly to 1.29 in 2022, suggesting stronger operational efficiency and better utilization of assets.

This pattern reflects a temporary setback in asset performance during 2019-2020, followed by a robust recovery and enhanced productivity.

The analysis of the financial data over the five-year period reveals several noteworthy trends in the company’s asset base, shareholders’ equity, and financial leverage ratios, both on reported and adjusted bases.

Total Assets

The reported total assets show a steady increase each year, growing from approximately $3.55 billion in 2018 to about $4.84 billion in 2022. The adjusted total assets follow a very similar upward trend, with values marginally lower than the reported amounts but closely aligned throughout the period. This consistent growth indicates ongoing asset accumulation or appreciation, reflecting expansion or capital investments over these years.

Shareholders’ Equity

The reported shareholders’ equity increased consistently from around $2.68 billion in 2018 to a peak near $3.68 billion in 2021, followed by a slight decline to approximately $3.65 billion in 2022. Conversely, the adjusted shareholders’ equity shows a continuous upward trajectory throughout all years, rising from about $2.93 billion in 2018 to nearly $4.0 billion in 2022. The adjustment appears to result in higher equity values, suggesting some recognition of deferred income tax benefits or other accounting adjustments not reflected in reported figures. The steady increase in adjusted equity illustrates strengthening net asset value on an adjusted basis.

Financial Leverage

Regarding leverage, the reported financial leverage ratio remains relatively stable, fluctuating narrowly between 1.30 and 1.32 over the five-year span. This indicates a consistent use of debt relative to equity in the reported data. The adjusted financial leverage ratio is consistently lower than the reported ratio across all periods, ranging from 1.20 to 1.23. The marginally lower adjusted leverage suggests a stronger equity position relative to reported figures when considering deferred tax adjustments. Both measures show little volatility, signifying a stable capital structure without significant shifts in financial risk levels during these years.

Overall, the company demonstrates steady growth in asset size and equity, with adjusted figures implying a more robust equity position than reported figures alone. Financial leverage remains stable, indicating a consistent approach to financial risk management. The adjustments for deferred income taxes contribute to higher adjusted equity and slightly lower leverage ratios, providing a more conservative view of the company's financial health.

The financial data reveals several notable trends over the five-year period under review.

Net Income

Both reported and adjusted net income exhibit a positive trajectory from 2018 through 2022. The reported net income increased steadily from approximately $605.7 million in 2018 to $1.38 billion in 2022. Similarly, adjusted net income rose from about $663.4 million in 2018 to nearly $1.44 billion in 2022. The adjustments appear to consistently increase reported figures, with the differential remaining significant but stable over time.

Shareholders’ Equity

Reported shareholders’ equity shows a consistent increase from $2.68 billion in 2018 to $3.65 billion in 2022. Adjusted shareholders’ equity follows a similar upward trend, starting at $2.93 billion in 2018 and reaching approximately $3.96 billion in 2022. The adjusted figures are consistently higher than the reported equity, indicating the impact of tax adjustments on equity capitalization. Growth rates appear steady without any abrupt fluctuations.

Return on Equity (ROE)

The reported ROE demonstrates an overall upward trend, starting at 22.6% in 2018, with a slight dip in 2019 and 2020 to around 20%, followed by a sharp increase to 28.11% in 2021 and a further rise to 37.7% in 2022. Adjusted ROE follows a similar pattern but remains slightly lower than reported ROE each year, moving from 22.68% in 2018 down to around 17.8% in 2020, before surging to 27.11% in 2021 and 36.32% in 2022.

General Observations

The steady increases in net income and shareholders’ equity suggest consistent growth and profitability expansion over the period. The adjustments made for deferred tax effects slightly elevate reported equity and net income values, which implies tax timing differences impact the financial position and performance measures. The convergence of reported and adjusted figures in the later years indicates diminishing tax adjustment effects or alignment in accounting recognition.

The substantial improvement in ROE from 2020 to 2022 reflects enhanced efficiency in generating profit from equity capital. The sharper increase in reported ROE compared to adjusted ROE might suggest certain tax-related adjustments influence profitability metrics, but both measures confirm significant profitability improvements in the latter period.

The financial data reveals a consistent upward trajectory in both reported and adjusted net income over the five-year period. Starting at $605,668 thousand in 2018, reported net income experiences moderate growth through 2019 and 2020, followed by a marked acceleration in 2021 and 2022, culminating at $1,377,159 thousand. Adjusted net income similarly trends upward, from $663,375 thousand in 2018 to $1,439,167 thousand in 2022, showing a slight variation compared to reported net income but maintaining the same growth pattern.

Total assets, both reported and adjusted, display steady increases each year, though growth moderates in the final year. Reported total assets rise from approximately $3,545 million in 2018 to about $4,839 million by 2022. Adjusted total assets follow a nearly identical pattern, starting at $3,543 million and reaching $4,837 million. The minor adjustments do not significantly alter the asset base figures over time.

Return on assets (ROA), expressed as a percentage, presents an overall positive trend, reflecting increasing profitability relative to asset size. Reported ROA declines slightly from 17.08% in 2018 to 15.4% in 2020, after which it increases sharply to 21.45% in 2021 and further to 28.46% in 2022. Adjusted ROA follows a similar progression, starting higher at 18.73%, dipping modestly to 14.47% in 2020, then rising to 22.09% and 29.75% in the two subsequent years. This pattern suggests improving efficiency and profitability, particularly in the latter part of the period reviewed.

Overall, the data indicates robust growth in earnings and asset base, coupled with improving returns on asset investments, especially notable in the years 2021 and 2022. Adjusted figures generally show higher net income and ROA compared to reported figures, pointing to the positive impact of tax adjustments on the company's financial performance metrics.