Heartland Express, Inc. Reports Revenues and Earnings for the Second Quarter of 2016


NORTH LIBERTY, Iowa, July 28, 2016 (GLOBE NEWSWIRE) -- Heartland Express, Inc. (Nasdaq:HTLD) announced today financial results for the three and six months ended June 30, 2016.

Three months ended June 30, 2016 highlights included:

  • Net Income of $16.4 million, Earnings per Share of $0.20, and Operating Revenue of $160.8 million, 
  • Net Income increased 13.8% sequentially to 1st quarter of 2016, 
  • Operating Ratio of 84.8% and 83.2% Non-GAAP Adjusted Operating Ratio(1).

Six months ended June 30, 2016 highlights included:

  • Net Income of $30.7 million, Earnings per Share of $0.37, and Operating Revenue of $323.6 million,
  • Cash generated from operations was $77.9 million,
  • Cash balance of $77.6 million, a $44.4 million increase since December 31, 2015,
  • Operating Ratio of 86.2% and 84.8% Non-GAAP Adjusted Operating Ratio(1).

Heartland Express Chief Executive Officer Michael Gerdin, commented on the quarterly operating results and ongoing initiatives of the Company, "Throughout the first half of 2016 we continued to experience downward pressure on freight rates due to the softness in freight volumes resulting from the available capacity in the industry. Typically, freight volumes improve during the second quarter as compared to the first three months of the year but that has not been our experience during 2016 as freight volumes didn't improve until mid-June.  During this time, our commitment and dedication to on-time service for our customers has helped carry us through the current freight rate pressures. We remain committed and focused to returning our operating ratio to the low 80’s and we've now delivered four consecutive quarters of improvement, excluding gains on disposals of property and equipment, which tend to be volatile based on timing of fleet upgrades. Further, we were able to generate another quarter of solid cash flows from operations, which allowed us to increase our cash reserves and pay for capital expenditures while remaining debt free.  This foundation of financial discipline allows us to maintain a fleet of tractors and trailers equipped with the latest technology available in the industry."

Financial Results

Heartland Express ended the second quarter of 2016 with net income of $16.4 million, compared to $23.3 million in the second quarter of 2015.  Basic earnings per share were $0.20 during the quarter compared to $0.27 earnings per share in the second quarter of 2015.  Operating revenues were $160.8 million, compared to $191.7 million in the second quarter of 2015.  Operating revenues for the quarter included fuel surcharge revenues of $15.3 million compared to $25.7 million in the same period of 2015, a $10.4 million decrease.  Operating revenues decreased 12.4% excluding the impact of fuel surcharge revenues primarily due to lower miles driven due to softer freight volumes in the second quarter compared to the same period in 2015.  Operating income for the three-month period decreased $5.2 million as a result of lower gains on disposal of property and equipment from lower trade volumes.  The Company posted an adjusted operating ratio(1) of 83.2% and a 10.2% net margin (net income as a percentage of operating revenues) in the second quarter of 2016 compared to 78.5% and 12.2%, respectively in the second quarter of 2015. 

For the six month period ended June 30, 2016, the Company recorded net income of $30.7 million, compared to $40.9 million in the same period of 2015.  Basic earnings per share were $0.37 compared to $0.47 earnings per share in the same period of 2015.  Operating revenues were $323.6 million, compared to $379.2 million in the same period of 2015.  Operating revenues included fuel surcharge revenues of $28.4 million compared to $51.8 million in the same period of 2015, a $23.4 million decrease.  Operating revenues decreased 9.9% excluding the impact of fuel surcharge revenues.  Operating income for the six-month period decreased $14.0 million as a result of lower gains on disposal of property and equipment from lower trade volumes.  The Company posted an adjusted operating ratio(1) of 84.8% and a 9.5% net margin (net income as a percentage of operating revenues) in the six months ended June 30, 2016 compared to 80.5% and 10.8%, respectively in 2015. 

Balance Sheet, Liquidity, and Capital Expenditures

At June 30, 2016, the Company had $77.6 million in cash balances and no borrowings under the Company's unsecured line of credit.  The Company had $194.5 million in available borrowing capacity on the line of credit at June 30, 2016 after consideration of outstanding letters of credit.  The Company continues to be in compliance with associated financial covenants. The Company ended the quarter with total assets of $742.1 million and stockholders' equity of $483.3 million. 

Net cash flows from operations for the first six months of 2016 were $77.9 million.  The primary use of cash during the six month period ended June 30, 2016 was $15.6 million for equipment purchases, $14.7 million for stock repurchases and $3.3 million for dividends.  The average age of the Company's tractor fleet was 1.5 years as of June 30, 2016 compared to 1.7 years at June 30, 2015.  The average age of the Company's trailer fleet was 4.7 years at June 30, 2016 compared to 4.5 years at June 30, 2015. The Company currently anticipates a total of approximately $40 to $50 million in net capital expenditures for the calendar year 2016.  The Company ended the past twelve months with a return on total assets of 8.5% and a 13.1% return on equity.

The Company continues its commitment to stockholders through the payment of cash dividends and repurchase of common stock.  Dividends of $0.02 per share were declared and paid during the first and second quarters of 2016.  The Company has now paid cumulative cash dividends of $460.8 million, including three special dividends, ($2.00 in 2007, $1.00 in 2010, and $1.00 in 2012) over the past fifty-two consecutive quarters.  During the six months ended June 30, 2016, 0.9 million shares of our common stock were repurchased for $14.7 million reducing outstanding shares at June 30, 2016 to 83.3 million shares.  The Company has repurchased 4.7 million shares of our common stock for $88.7 million since August 2015 and a total of 10.7 million shares of common stock for approximately $169.2 million over the past five years. 

Other Information

We continued to deliver award-winning service and safety to our customers. In addition to the seven customer and safety awards received during the first quarter of 2016, we received the following additional awards during the second quarter:

  • Fedex Express - Carrier of the Year (6th consecutive year and 9th time in 10 years)
  • Fedex Express - Platinum Award for On-Time Service (99.96% on-time service)
  • Winegard - Truckload Carrier of the Year

Adjusted operating ratio is a non-GAAP financial measure and is not intended to replace financial measures calculated in accordance with GAAP. This non-GAAP financial measure supplements our GAAP results. We believe that using this measure 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 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
June 30,
 Six Months Ended
June 30,
  2016 2015 2016 2015
OPERATING REVENUE $160,791  $191,684  $323,577  $379,207 
         
OPERATING EXPENSES:        
Salaries, wages, and benefits $61,524  $70,904  $126,990  $141,900 
Rent and purchased transportation 6,181  9,211  12,881  18,537 
Fuel 24,394  34,196  45,588  68,452 
Operations and maintenance 6,969  8,379  13,607  16,512 
Operating taxes and licenses 3,943  4,378  7,834  9,192 
Insurance and claims 4,979  3,469  13,072  10,113 
Communications and utilities 1,060  1,453  2,265  2,996 
Depreciation and amortization 25,847  26,876  51,552  52,850 
Other operating expenses 5,898  6,747  10,831  14,505 
Gain on disposal of property and equipment (4,511) (9,668) (5,800) (19,849)
         
  136,284  155,945  278,820  315,208 
         
Operating income 24,507  35,739  44,757  63,999 
         
Interest income 109  61  184  93 
         
Interest expense       (19)
         
Income before income taxes 24,616  35,800  44,941  64,073 
         
Federal and state income taxes 8,248  12,484  14,196  23,145 
         
Net income $16,368  $23,316  $30,745  $40,928 
         
Earnings per share        
Basic $0.20  $0.27  $0.37  $0.47 
Diluted $0.20  $0.27  $0.37  $0.47 
         
Weighted average shares outstanding        
Basic 83,248  87,814  83,308  87,802 
Diluted 83,319  87,967  83,390  87,966 
         
Dividends declared per share $0.02  $0.02  $0.04  $0.04 


HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
 
  June 30, December 31,
ASSETS 2016 2015
CURRENT ASSETS    
Cash and cash equivalents $77,607  $33,232 
Trade receivables, net 57,009  61,009 
Prepaid tires 8,793  9,584 
Other current assets 11,468  8,316 
Income tax receivable 7,773  7,641 
Deferred income taxes, net   16,662 
Total current assets 162,650  136,444 
     
PROPERTY AND EQUIPMENT 676,170  671,946 
Less accumulated depreciation 225,482  197,948 
  450,688  473,998 
GOODWILL 100,212  100,212 
OTHER INTANGIBLES, NET 13,051  14,013 
DEFERRED INCOME TAXES, NET 4,222   
OTHER ASSETS 11,266  11,363 
  $742,089  $736,030 
LIABILITIES AND STOCKHOLDERS' EQUITY    
CURRENT LIABILITIES    
Accounts payable and accrued liabilities $21,535  $7,516 
Compensation and benefits 25,667  24,636 
Insurance accruals 22,330  21,573 
Other accruals 13,040  12,443 
Total current liabilities 82,572  66,168 
LONG-TERM LIABILITIES    
Income taxes payable 12,433  16,228 
Deferred income taxes, net 94,337  112,118 
Insurance accruals less current portion 61,420  59,435 
Other long-term liabilities 8,000  12,153 
Total long-term liabilities 176,190  199,934 
COMMITMENTS AND CONTINGENCIES    
STOCKHOLDERS' EQUITY    
Capital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in
2016 and 2015; outstanding 83,279 in 2016 and 84,115 in 2015, respectively
 907  907 
Additional paid-in capital 3,378  4,126 
Retained earnings 603,361  575,948 
Treasury stock, at cost; 7,410 in 2016 and 6,574 in 2015, respectively (124,319) (111,053)
  483,327  469,928 
  $742,089  $736,030 
 

(1)

GAAP to Non-GAAP Reconciliation Schedule:    
Operating income, operating ratio, and adjusted operating ratio reconciliation (a)
(In thousands)    
(unaudited)      
       
  Three Months Ended
June 30,
 Six Months Ended
June 30,
  2016 2015 2016 2015
         
Operating revenue $160,791  $191,684  $323,577  $379,207 
Less: Fuel surcharge revenue 15,341  25,705  28,434  51,809 
Operating revenue, excluding fuel surcharge revenue 145,450  165,979  295,143  327,398 
         
Operating expenses 136,284  155,945  278,820  315,208 
Less: Fuel surcharge revenue 15,341  25,705  28,434  51,809 
Adjusted operating expenses 120,943  130,240  250,386  263,399 
         
Operating income $24,507  $35,739  $44,757  $63,999 
Operating ratio 84.8% 81.4% 86.2% 83.1%
Adjusted operating ratio 83.2% 78.5% 84.8% 80.5%
             

(a) Adjusted operating ratio as reported in this press release is based upon total operating expenses, net of fuel surcharge, as a percentage of operating revenue excluding fuel surcharge revenue.

 


            

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