Heartland Express, Inc. Reports Revenues and Earnings for the Third Quarter of 2015 – Operating Ratio of 84.2% year-to-date 2015

NORTH LIBERTY, Iowa, Oct. 27, 2015 (GLOBE NEWSWIRE) — Heartland Express, Inc. (Nasdaq:HTLD) announced today financial results for the three and nine months ended September 30, 2015.  Highlights included:

  • Operating Ratio of 84.2% year-to-date compared to 85.4% in the same period of 2014,
  • Operating Ratio improvement despite a 13% increase in average driver wages implemented in November 2014 and January 2015,
  • Cash generated from operations increased 10.8%, to $142.9 million year-to-date,
  • Repurchased 1.8 million shares of our outstanding common stock at $35.8 million,
  • Cash balance of $64.2 million and no outstanding debt at September 30, 2015.

Financial Results

Heartland Express (the “Company”) for the three months ended September 30, 2015 had basic earnings per share of $0.17 and an operating ratio (operating expenses as a percentage of operating revenues) of 86.4% compared to $0.26 basic earnings per share and 83.3% operating ratio in the third quarter of 2014.  The Company ended the quarter with net income of $15.1 million, compared to $22.7 million in the third quarter of 2014, a 33.5% decrease.  Operating results for the quarter were negatively impacted by a $3.9 million decrease in gains on sales of equipment and $2.2 million increase in insurance and claims activity.  Also impacting the quarter were lower than anticipated freight volumes compared to the first and second quarter of 2015.  Operating revenues were $182.5 million compared to $217.1 million, a 15.9% decrease to the third quarter of 2014.  Operating revenues for the quarter included fuel surcharge revenues of $21.8 million compared to $42.1 million in the same period of 2014, a $20.3 million decrease.  Operating revenues decreased 8.1% excluding the impact of fuel surcharge revenues.  Operating income for the three month period was positively impacted by a $4.5 million decrease in net fuel expense.  The Company posted an 8.3% net margin (net income as a percentage of operating revenues) in the third quarter of 2015 compared to 10.5%, in the third quarter of 2014.

For the nine month period ended September 30, 2015 the Company had basic earnings per share of $0.64 and an operating ratio (operating expenses as a percentage of operating revenues) of 84.2% compared to basic earnings per share of $0.72 and an operating ratio of 85.4% for the same nine month period ended September 30, 2014.  The Company ended the nine month period ended September 30, 2015 with operating revenues of $561.7 million and net income of $56.0 million, compared to $668.4 million and $63.3 million, respectively for the same nine month period ended September 30, 2014.  Operating revenues for the nine month period ended September 30, 2015 included fuel surcharge revenues of $73.6 million compared to $134.2 million for the same period of 2014, a $60.6 million decrease.  Operating revenues decreased 8.6% excluding the impact of fuel surcharge revenues.  Operating income for the nine month period was positively impacted by a $19.5 million decrease in net fuel expense.  The Company posted a 10.0% net margin (net income as a percentage of operating revenues) in the nine months ended September 30, 2015 compared to 9.5%, for the same period of 2014.

Our financial results year-to-date have allowed us to invest $35.8 million in the repurchase of 1.8 million shares of our common stock as of September 30, 2015. While driver attrition has slowed, since implementation of our updated pay package in late 2014 and early 2015, attracting and retaining professional drivers that meet our high standards of safety continues to be an ongoing challenge.  Driver challenges coupled with our yield management efforts and current freight demand has resulted in lower revenues and earnings period over period compared to 2014 although our operating ratio and net margin continue to show good improvement for the year ended September 30, 2015. 

Balance Sheet, Liquidity, and Capital Expenditures

At September 30, 2015, the Company had $64.2 million in cash balances and no borrowings under the Company’s unsecured line of credit.  The Company had $220.6 million in available borrowing capacity on the line of credit at September 30, 2015 after consideration of $4.4 million outstanding letters of credit.  The line of credit maximum borrowing capacity will reduce by $25.0 million to $200.0 million on November 1, 2015.  The Company continues to be in compliance with associated financial covenants. The Company’s debt balance decreased $24.6 million from December 31, 2014 due to repayments during January 2015.   The Company ended the quarter with total assets of $767.5 million. 

Net cash flows from operations for the first nine months of 2015 showed continued improvement over the prior year at 25.4% of operating revenues or $142.9 million.  The primary use of cash during the nine month period ended September 30, 2015 was $24.6 million for the repayment of long-term debt obligations, $22.6 million for purchases of property and equipment, net of trades and sale proceeds, and $35.8 million for stock repurchases.  The Company currently anticipates a total of approximately $65 to $70 million in net capital expenditures for the calendar year.  The Company currently estimates a total of approximately $35 to $45 million in net capital expenditures for 2016.  The Company ended the past twelve months with a return on total assets of 10.0% and a 15.7% return on equity.

The average age of the Company’s tractor fleet was 1.6 years as of September 30, 2015 compared to 2.1 years at September 30, 2014.  During the third quarter of 2015 the Company took delivery of approximately 380 new tractors and has approximately 600 new tractors scheduled for delivery prior to the end of the year.  The new tractors have been and will continue to be a mix of International ProStar Plus and Freightliner Cascadia models in 2015.  The average age of tractors is currently expected to decrease throughout the remainder of 2015 to an estimated average age of 1.3 years by December 31, 2015.  The average age of the Company’s trailer fleet was 4.4 years at September 30, 2015 compared to 4.3 years at September 30, 2014.  The average age of trailers is currently estimated to remain flat at approximately 4.5 years through December 31, 2015.  During the third quarter of 2015 the Company took delivery of approximately 250 new trailers and has approximately 50 new trailers scheduled for delivery prior to the end of 2015.  The demand for used revenue equipment remains solid and the Company will continue to take advantage of a favorable used equipment market during the remainder of 2015.  It is currently estimated that the Company’s dry-van trailer fleet, excluding specialty equipment, will be 100% 2012 and newer model years by the end of 2015.

Heartland Express Chief Executive Officer Michael Gerdin, commented on the quarterly results and positioning of the Company, “We continue to leverage our strong cash position and our ability to generate cash to invest in our operating fleet, infrastructure and ourselves by repurchasing 1.8 million shares of our common stock.  We continue to focus on making progress towards our goal of getting our consolidated operating ratio, excluding gains on equipment, to our historical operating levels of the low 80’s.  We also remain committed to operating safely, efficiently, and profitably now and in the years ahead, no matter what the environment holds.”

The Company continues its commitment to stockholders through the payment of cash dividends and repurchase of common stock.  A dividend of $0.02 per share was declared during the quarter and was paid on October 1, 2015.  The Company has now paid cumulative cash dividends of $455.7 million, including three special dividends, ($2.00 in 2007, $1.00 in 2010, and $1.00 in 2012) over the past forty-nine consecutive quarters.  The Company has repurchased 7.8 million shares of common stock for approximately $116.3 million over the past five years, including 1.8 million shares for $35.8 million in the three and nine months ended September 30, 2015.  There were no shares repurchased during the three and nine months ended 2014. 

We continued to deliver award-winning service and safety to our customers along with strong operational and environmentally-focused performance as evidenced by the following awards received during the quarter:

  • Unilever – The Winning Quality and Service Award
  • US EPA 2015 SmartWay Excellence Award
  • Logistics Management Magazine’s Dry Freight Carrier Quest for Quality Award
  • Journal of Commerce – Top 50 Trucking Companies in U.S.

For the nine months ended September 30, 2015, we have received sixteen total awards.

Other Information

This press release may contain statements that might be considered as forward-looking statements or predictions of future operations.  Such statements are based on management’s belief or interpretation of information currently available.  These statements and assumptions involve certain risks and uncertainties.  Actual events may differ from these expectations as specified from time to time in filings with the Securities and Exchange Commission.

HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
         
    Three Months Ended
September 30,
  Nine Months Ended 
September 30,
    2015   2014   2015   2014
OPERATING REVENUE   $ 182,533     $ 217,092     $ 561,739     $ 668,358  
                 
OPERATING EXPENSES:                
Salaries, wages, and benefits   $ 68,987     $ 68,688     $ 210,886     $ 210,872  
Rent and purchased transportation   8,238     12,518     26,775     40,770  
Fuel   29,414     53,435     97,866     175,998  
Operations and maintenance   9,213     9,977     25,725     29,874  
Operating taxes and licenses   4,498     5,189     13,690     15,354  
Insurance and claims   7,379     5,155     17,491     16,621  
Communications and utilities   1,699     1,564     4,695     4,947  
Depreciation and amortization   28,415     27,754     81,266     78,996  
Other operating expenses   7,230     7,779     21,734     24,465  
Gain on disposal of property and equipment   (7,401 )   (11,257 )   (27,250 )   (27,160 )
                 
    157,672     180,802     472,878     570,737  
                 
Operating income   24,861     36,290     88,861     97,621  
                 
Interest income   64     21     156     163  
                 
Interest expense       (97 )   (19 )   (384 )
                 
Income before income taxes   24,925     36,214     88,998     97,400  
                 
Federal and state income taxes   9,812     13,477     32,957     34,111  
                 
Net income   $ 15,113     $ 22,737     $ 56,041     $ 63,289  
                 
Earnings per share                
Basic   $ 0.17     $ 0.26     $ 0.64     $ 0.72  
Diluted   $ 0.17     $ 0.26     $ 0.64     $ 0.72  
                 
Weighted average shares outstanding                
Basic   87,387     87,778     87,663     87,737  
Diluted   87,492     87,923     87,806     87,921  
                 
Dividends declared per share   $ 0.02     $ 0.02     $ 0.06     $ 0.06  

HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
    September 30,   December 31,
ASSETS   2015   2014
CURRENT ASSETS        
Cash and cash equivalents   $ 64,165     $ 17,303  
Trade receivables, net   64,519     77,034  
Prepaid tires   9,673     10,160  
Prepaid shop supplies   561     2,056  
Other current assets   24,379     8,992  
Income tax receivable   4,651     19,920  
Deferred income taxes, net   17,219     14,767  
Total current assets   185,167     150,232  
         
PROPERTY AND EQUIPMENT   668,585     678,566  
Less accumulated depreciation   212,179     198,007  
    456,406     480,559  
GOODWILL   100,212     100,212  
OTHER INTANGIBLES, NET   14,558     16,380  
OTHER ASSETS   11,116     12,611  
    $ 767,459     $ 759,994  
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES        
Accounts payable and accrued liabilities   $ 24,720     $ 8,261  
Compensation and benefits   28,486     26,303  
Insurance accruals   19,906     19,249  
Other accruals   12,411     14,475  
Total current liabilities   85,523     68,288  
LONG-TERM LIABILITIES        
Income taxes payable   15,804     18,296  
Long-term debt       24,600  
Deferred income taxes, net   99,489     101,605  
Insurance accruals less current portion   61,843     59,300  
Other long-term liabilities   12,153     11,318  
Total long-term liabilities   189,289     215,119  
COMMITMENTS AND CONTINGENCIES        
STOCKHOLDERS’ EQUITY        
Capital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in 2015 and 2014; outstanding 86,097 in 2015 and 87,781 in 2014, respectively   907     907  
Additional paid-in capital   3,942     4,058  
Retained earnings   560,621     509,834  
Treasury stock, at cost; 4,592 in 2015 and 2,908 in 2014, respectively   (72,823 )   (38,212 )
    492,647     476,587  
    $ 767,459     $ 759,994  

 

CONTACT: Contact: Heartland Express, Inc.
Mike Gerdin, Chief Executive Officer
John Cosaert, Chief Financial Officer
319-626-3600