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Heartland Express, Inc. Reports Revenues and Earnings for the Second Quarter of 2018

NORTH LIBERTY, Iowa, July 19, 2018 (GLOBE NEWSWIRE) -- Heartland Express, Inc. (Nasdaq:HTLD) announced today financial results for the three and six months ended June 30, 2018.

Three months ended June 30, 2018:

  • Net Income of $17.8 million, Basic Earnings per Share of $0.22,
  • Operating Revenue of $155.8 million a year-over-year increase of 20.2%,
  • Operating Ratio of 85.8% and 83.4% Non-GAAP Adjusted Operating Ratio(1).

Six months ended June 30, 2018:

  • Net Income of $31.2 million, Basic Earnings per Share of $0.38,
  • Operating Ratio of 88.8% and 86.9% Non-GAAP Adjusted Operating Ratio(1),
  • Cash balance of $106.4 million, a $31.0 million increase from December 31, 2017,
  • Debt-Free Balance Sheet,
  • Total Stockholders' Equity of $581.8 million and Total Assets of $785.3 million.

Heartland Express Chief Executive Officer Michael Gerdin, commented on the quarterly operating results and ongoing initiatives of the Company, "We are excited to report our results for the three and six months ended June 30, 2018 which are our strongest operating results delivered to date since our acquisition of Interstate Distributor Co. approximately one year ago on July 6, 2017.  We delivered our lowest quarterly operating ratio (85.8% and 83.4% non-GAAP adjusted operating ratio(1)) showing continued improvement over the last three quarters following the acquisition along with increased earnings.  I am extremely pleased with our ability to acquire, integrate, and overhaul the operations of our recent acquisitions and return to a quarterly operating ratio which we expect will be at or near the best across our industry.  This is a testament to the hard work and commitment of our drivers and the financial diligence of our entire team over the last several years as they have and will continue to focus on operating our company effectively and efficiently.  We also have continued to invest in our drivers as we just announced our second driver pay increase in the last ten months.  These two driver pay increases together account for a consolidated pay increase of approximately $12 million annually to reward our committed, safe, and hardworking drivers.  It will also enable us to attract and retain more good drivers."

Financial Results

Heartland Express ended the second quarter of 2018 with net income of $17.8 million, compared to $14.6 million in the second quarter of 2017.  Basic earnings per share were $0.22 during the quarter compared to $0.18 earnings per share in the second quarter of 2017.  Operating revenues were $155.8 million, compared to $129.6 million in the second quarter of 2017, a 20.2% increase.  Operating revenues for the quarter included fuel surcharge revenues of $22.4 million compared to $14.7 million in the same period of 2017, a $7.7 million increase.  Operating revenues increased 16.1%, excluding the impact of fuel surcharge revenues(1), primarily due to higher miles driven following the Interstate Distributor Co. ("IDC") acquisition during the second quarter of 2018 as compared to the same period in 2017.  Operating income for the three month period increased $0.8 million primarily due to higher miles driven partially offset by the negative operating margin impacts from the consolidation of IDC financial results when compared to the prior period.  The Company posted an operating ratio of 85.8%, adjusted operating ratio(1) of 83.4%, and an 11.4% net margin (net income as a percentage of operating revenues) in the second quarter of 2018 compared to 83.6%, 81.4%, and 11.3%, respectively in the second quarter of 2017.

For the six month period ended June 30, 2018 the Company recorded net income of $31.2 million, compared to $28.7 million in the same period of 2017.  Basic earnings per share were $0.38 compared to $0.34 earnings per share in the same period of 2017.  Operating revenues were $312.5 million, compared to $259.5 million in the same period of 2017.  Operating revenues included fuel surcharge revenues of $43.9 million compared to $29.6 million in the same period of 2017, a $14.3 million increase.  Operating revenues excluding fuel surcharge revenue(1) increased 16.8%.  Operating income for the six month period decreased $5.6 million mainly as a result of $4.1 million less gains on disposal of property and equipment along with the negative operating margin impacts following the acquisition of IDC.  The Company posted an operating ratio of 88.8%, an adjusted operating ratio(1) of 86.9% and a 10.0% net margin (net income as a percentage of operating revenues) in the six months ended June 30, 2018 compared to 84.3%, 82.3% and 11.0%, respectively in 2017.

Balance Sheet, Liquidity, and Capital Expenditures

At June 30, 2018, the Company had $106.4 million in cash balances and no borrowings under the Company's unsecured line of credit.  The Company had $171.3 million in available borrowing capacity on the line of credit at June 30, 2018 after consideration of $3.7 million outstanding letters of credit. The Company continues to be in compliance with associated financial covenants.  The Company ended the quarter with total assets of $785.3 million and stockholders' equity of $581.8 million.

Net cash flows from operations for the first six months of 2018 were $69.7 million, 22.3% of operating revenue.  The primary use of net cash generated from operations during the six month period ended June 30, 2018 was $22.6 million for net equipment transactions, $3.3 million for dividends, and $20.9 million for the repurchase of our common stock.  The average age of the Company's tractor fleet was 1.5 years as of June 30, 2018 compared to 1.8 years at December 31, 2017.  The average age of the Company's trailer fleet was 4.6 years at June 30, 2018 compared to 5.1 years at December 31, 2017.  The Company currently anticipates a total of approximately $70 to $80 million in net capital expenditures for calendar year 2018.  The Company ended the past twelve months with a return on total assets of 9.7% and a 13.6% return on equity.

The Company continues its commitment to stockholders through the payment of cash dividends and repurchases of common stock.  A dividend of $0.02 per share was declared and paid during the second quarter of 2018.  The Company has now paid cumulative cash dividends of $474.0 million, including three special dividends, ($2.00 in 2007, $1.00 in 2010, and $1.00 in 2012) over the past sixty consecutive quarters.

During the six months ended June 30, 2018, the Company purchased 1.2 million shares of our common stock for $20.9 million. Our outstanding shares at June 30, 2018 were 82.2 million shares.  A total of 5.8 million shares of common stock have been repurchased for approximately $109.6 million over the past five years.  The Company has the ability to repurchase an additional 7.1 million shares under the current authorization which would result in 75.1 million outstanding shares if fully executed.

Other Information

During the second quarter of 2018, we continued to deliver award-winning service and safety to our customers as we were recognized by Fedex Ground with the 100% Service Award in recognition of 100% on-time service.  This award is further evidence of our continued partnership with Fedex over the years and is a testament of our ability and commitment in regards to on-time service.

Operating revenue excluding fuel surcharge revenue and adjusted operating ratio are non-GAAP financial measures and are not intended to replace financial measures calculated in accordance with GAAP. These non-GAAP financial measures supplement our GAAP results. We believe that using these measures affords a more consistent basis for comparing our results of operations from period to period. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP, is included in the table at the end of this press release.

This press release may contain statements that might be considered as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “seek,” “expects,” “estimates,” “anticipates,” “projects,” “believes,” “hopes,” “plans,” “goals,” “intends,” “may,” “might,” “likely,” “will,” “should,” “would,” “could,” “potential,” “predict,” “continue,” “strategy,” “future,” “outlook,” and similar terms and phrases. In this press release, the statements relating to reducing unnecessary or unproductive costs, operational improvements, progress toward our goals, and future capital expenditures are forward-looking statements. Such statements are based on management's belief or interpretation of information currently available. These statements and assumptions involve certain risks and uncertainties, and undue reliance should not be placed on such statements. Actual events may differ materially from those set forth in, contemplated by, or underlying such statements as a result of numerous factors, including, without limitation, those specified in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. The Company assumes no obligation to update any forward-looking statements, which speak as of their respective dates.

Contact: Heartland Express, Inc. (319-626-3600)

Mike Gerdin, Chief Executive Officer
Chris Strain, Chief Financial Officer

 
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
 
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018   2017   2018   2017
OPERATING REVENUE   $ 155,826     $ 129,616     $ 312,521     $ 259,518  
                 
OPERATING EXPENSES:                
Salaries, wages, and benefits   $ 57,558     $ 48,642     $ 119,568     $ 97,621  
Rent and purchased transportation   5,460     1,820     11,584     4,682  
Fuel   28,941     21,289     57,880     43,991  
Operations and maintenance   6,637     6,961     14,501     12,830  
Operating taxes and licenses   4,150     3,143     8,101     6,435  
Insurance and claims   4,231     3,581     8,455     7,361  
Communications and utilities   1,566     1,038     3,436     2,136  
Depreciation and amortization   24,757     22,604     50,358     45,534  
Other operating expenses   5,765     5,524     11,796     10,627  
Gain on disposal of property and equipment   (5,386 )   (6,299 )   (8,254 )   (12,375 )
                 
    133,679     108,303     277,425     218,842  
                 
Operating income   22,147     21,313     35,096     40,676  
                 
Interest income   423     424     765     713  
Interest expense                
                 
Income before income taxes   22,570     21,737     35,861     41,389  
                 
Federal and state income taxes   4,767     7,121     4,679     12,736  
                 
Net income   $ 17,803     $ 14,616     $ 31,182     $ 28,653  
                 
Earnings per share                
Basic   $ 0.22     $ 0.18     $ 0.38     $ 0.34  
Diluted   $ 0.22     $ 0.18     $ 0.38     $ 0.34  
                 
Weighted average shares outstanding                
Basic   82,330     83,294     82,817     83,293  
Diluted   82,368     83,338     82,855     83,337  
                 
Dividends declared per share   $ 0.02     $ 0.02     $ 0.04     $ 0.04  

/EIN News/ --

HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
    June 30,   December 31,
ASSETS   2018   2017
CURRENT ASSETS        
Cash and cash equivalents   $ 106,402     $ 75,378  
Trade receivables, net   58,483     64,293  
Prepaid tires   9,900     10,989  
Other current assets   17,032     13,782  
Income tax receivable   4,361     6,393  
Total current assets   196,178     170,835  
         
PROPERTY AND EQUIPMENT   636,291     666,763  
Less accumulated depreciation   219,637     223,901  
    416,654     442,862  
GOODWILL   132,410     132,410  
OTHER INTANGIBLES, NET   15,700     17,022  
DEFERRED INCOME TAXES, NET   3,173     1,737  
OTHER ASSETS   21,141     24,261  
    $ 785,256     $ 789,127  
LIABILITIES AND STOCKHOLDERS' EQUITY        
CURRENT LIABILITIES        
Accounts payable and accrued liabilities   $ 11,823     $ 14,366  
Compensation and benefits   24,692     26,752  
Insurance accruals   19,165     21,368  
Other accruals   12,665     12,835  
Total current liabilities   68,345     75,321  
LONG-TERM LIABILITIES        
Income taxes payable   4,829     8,147  
Deferred income taxes, net   71,291     65,488  
Insurance accruals less current portion   59,002     65,526  
Total long-term liabilities   135,122     139,161  
COMMITMENTS AND CONTINGENCIES        
STOCKHOLDERS' EQUITY        
Capital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in 2018 and 2017; outstanding 82,151 in 2018 and 83,303 in 2017, respectively   907     907  
Additional paid-in capital   3,462     3,518  
Retained earnings   722,045     694,174  
Treasury stock, at cost; 8,538 in 2018 and 7,386 in 2017, respectively   (144,625 )   (123,954 )
    581,789     574,645  
    $ 785,256     $ 789,127  



(1)        
         
GAAP to Non-GAAP Reconciliation Schedule:        
         
Operating revenue, operating revenue excluding fuel surcharge revenue, operating income, operating ratio, and adjusted operating ratio reconciliation (a)
             
    Three Months Ended
June 30,
  Six Months Ended
June 30,
    2018   2017   2018   2017
                                 
    (Unaudited in thousands)
                 
Operating revenue   $ 155,826     $ 129,616     $ 312,521     $ 259,518  
Less: Fuel surcharge revenue   22,407     14,743     43,937     29,624  
Operating revenue, excluding fuel surcharge revenue   133,419     114,873     268,584     229,894  
                 
Operating expenses   133,679     108,303     277,425     218,842  
Less: Fuel surcharge revenue   22,407     14,743     43,937     29,624  
Adjusted operating expenses   111,272     93,560     233,488     189,218  
                 
Operating income   $ 22,147     $ 21,313     $ 35,096     $ 40,676  
Operating ratio   85.8 %   83.6 %   88.8 %   84.3 %
Adjusted operating ratio   83.4 %   81.4 %   86.9 %   82.3 %
                         

(a) Operating revenue excluding fuel surcharge revenue and adjusted operating ratio as reported in this press release are based upon operating expenses, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue.

 

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