Old Dominion Freight Line Inc. (NASDAQ:ODFL)

Receivables Turnover

The receivables turnover ratio demonstrated fluctuations over the five-year period. It increased from 9.46 in 2018 to 10.34 in 2019, indicating improved efficiency in collecting receivables during that year. However, it declined to 9.03 in 2020 and slightly recovered to 9.26 in 2021 before rising significantly to 10.82 in 2022. This overall pattern suggests some variability, but a general strengthening in the ability to convert receivables into cash by the end of the period.

Payables Turnover

The payables turnover ratio increased consistently from 51.5 in 2018 to a peak of 63.7 in 2021, reflecting a tendency to pay suppliers more quickly over this timeframe. In 2022, there was a slight decrease to 58.9, but the ratio remained higher than the initial years. This pattern indicates an overall acceleration in paying off liabilities, with a minor relaxation in the last year observed.

Working Capital Turnover

The working capital turnover ratio experienced a significant decline from 11.57 in 2018 to 4.61 in 2020, indicating a reduction in efficiency in utilizing working capital to generate revenues. Although it improved modestly to 5.72 in 2021, it surged markedly to 15.5 in 2022. This sharp increase in the final year suggests a strong improvement in operational efficiency related to working capital management.

Average Receivable Collection Period

The average receivable collection period decreased from 39 days in 2018 to 35 days in 2019, signaling faster collection. It then increased to 40 days in 2020, indicating a slight slowdown, and remained stable at 39 days in 2021. In 2022, it decreased again to 34 days, the shortest period in the timeline, which aligns with the increased receivables turnover noted for that year.

Average Payables Payment Period

The average payables payment period remained stable throughout the years, consistently ranging between 6 and 7 days. This stability corresponds with the overall high payables turnover ratios, showing a consistent pattern of timely payments to suppliers without significant variation.

The financial data reveals several noteworthy trends over the five-year period.

Revenue from operations

There is a general upward trajectory in revenue, starting at approximately 4.04 billion US dollars at the end of 2018 and increasing to roughly 6.26 billion US dollars by the end of 2022. This reflects considerable growth, with a notable acceleration beginning in 2021, where revenues surged from about 4.02 billion in 2020 to over 5.25 billion in 2021, continuing the upward trend into 2022 despite a slight dip in 2020.

Customer receivables, less allowances

The value of customer receivables initially declined from approximately 427.6 million US dollars in 2018 to about 397.6 million in 2019 but then increased consistently each subsequent year, reaching nearly 578.6 million US dollars by the end of 2022. The rise in receivables in 2021 and 2022 aligns with the increased revenue, indicating a corresponding growth in amounts owed by customers.

Receivables turnover ratio

The receivables turnover ratio fluctuated throughout the period. It increased from 9.46 times in 2018 to a peak of 10.34 in 2019, then dropped to 9.03 in 2020 and remained relatively stable at 9.26 in 2021 before rising sharply to 10.82 in 2022. The increase in 2022 suggests a more efficient collection process or faster conversion of receivables to cash, despite higher receivables balances.

In summary, the data points to strong revenue growth, especially from 2021 onward, accompanied by an increase in receivables in monetary terms. However, the receivables turnover ratio's variation suggests changes in collection efficiency, with a positive trend reinstated in the latest year. This combination indicates scaling operations with ongoing improvements in receivables management.

The financial data reveals several key trends in the company's operational and financial metrics over the five-year period.

Revenue from operations

The revenue showed a moderate increase from 2018 to 2019, rising from approximately $4.04 billion to $4.11 billion. However, in 2020, revenue slightly declined to about $4.02 billion, possibly reflecting external challenges during that year. Starting in 2021, there was a notable increase, with revenue growing to $5.26 billion, followed by a further substantial rise in 2022 to $6.26 billion. This indicates strong recovery and growth momentum in the most recent years.

Accounts payable

Accounts payable figures generally followed an upward trend over the period. Beginning at roughly $78.5 million in 2018, the amount decreased slightly in 2019 and 2020 to about $70.3 million and $68.5 million, respectively. In 2021, accounts payable increased to approximately $82.5 million and further increased to $106.3 million in 2022, indicating growing obligations to suppliers or creditors consistent with expanding operations.

Payables turnover ratio

The payables turnover ratio started at 51.5 in 2018 and increased consistently through 2019 (58.49), 2020 (58.61), and peaked at 63.7 in 2021. However, in 2022, it declined to 58.9. The initial increase suggests improved efficiency in managing payables or faster payments to suppliers, reaching a peak efficiency in 2021. The subsequent decrease in 2022 could reflect a strategic shift to slower payments or changes in supplier terms, coinciding with the larger accounts payable balance.

The financial data reveals several key trends over the five-year period.

Working Capital

Working capital increased steadily from 2018 through 2021, rising from approximately $349.5 million to about $919.6 million. However, in 2022, there was a significant decline, with working capital decreasing to roughly $404.0 million. This sharp downturn indicates a notable change in the company's short-term financial position in the most recent year.

Revenue from Operations

Revenue exhibited a generally upward trajectory over the period under review. Starting at around $4.04 billion in 2018, revenue saw a slight increase in 2019, followed by a minor dip in 2020. Subsequently, revenue experienced strong growth in 2021 and 2022, reaching approximately $6.26 billion by the end of 2022. This suggests robust operational performance, particularly in the last two years.

Working Capital Turnover Ratio

The working capital turnover ratio declined substantially from 11.57 in 2018 to a low of 4.61 in 2020, indicating a slower turnover of working capital relative to revenue during this period. In 2021, the ratio improved to 5.72, and then surged dramatically to 15.5 in 2022. This sharp increase aligns with the significant drop in working capital and the strong revenue growth in 2022, reflecting an accelerated utilization of working capital to generate revenue.

Overall, the data suggests a period of steady growth in working capital and relatively stable revenue until 2020, followed by a phase of rapid revenue expansion and a notable contraction in working capital in 2022. The marked increase in the working capital turnover ratio in the final year indicates a more efficient use of working capital in relation to revenue generation, albeit with reduced liquidity reserves.

Receivables Turnover

The receivables turnover ratio exhibited some fluctuation over the five-year period. Starting at 9.46 in 2018, it increased to 10.34 in 2019, indicating enhanced efficiency in collecting receivables that year. However, this was followed by a decline to 9.03 in 2020 and a slight recovery to 9.26 in 2021. In 2022, the ratio rose significantly to 10.82, representing the highest turnover in the period and suggesting improved management of receivables by the end of the examined timeframe.

Average Receivable Collection Period

The average collection period mirrored the inverse trend of the receivables turnover ratio. It decreased from 39 days in 2018 to 35 days in 2019, indicating faster collection of accounts receivable. Subsequently, this period increased to 40 days in 2020 and remained relatively stable at 39 days in 2021. By 2022, it shortened noticeably to 34 days, the shortest span observed during the analysis. This reduction corresponds with the increase in receivables turnover, reflecting a more efficient collection process.

Summary of Trends

Overall, the data indicate improvements in accounts receivable management, particularly marked in 2019 and 2022. The fluctuations between 2019 and 2021 suggest some variability in collection efficiency, potentially due to operational or market conditions. The strong performance in 2022, characterized by the highest turnover and shortest collection period, points to optimized working capital management during that year.

Payables Turnover

The payables turnover ratio demonstrated an overall increasing trend from 51.5 in 2018 to a peak of 63.7 in 2021, indicating improved efficiency in managing payables during this period. However, there was a noticeable decline to 58.9 in 2022, suggesting a slight reduction in the rate at which payables were being settled compared to the previous year.

Average Payables Payment Period

The average payables payment period remained quite stable over the five-year period, consistently at 6 days from 2019 onwards, following a decrease from 7 days in 2018. This stability indicates the company maintained a consistent and relatively short timeframe for settling its payables throughout most of the period reviewed.

Overall Insight

The data reflects a company maintaining strong control over its payables with efficient turnover and a consistently short payment period. Despite the slight dip in payables turnover in the most recent year, the overall management of payables appears effective and stable, minimizing the time liabilities remain outstanding.