Heartland Express, Inc. (Nasdaq: HTLD) announced today financial
results for the three and nine months ended September 30,
2021.
Three months ended September 30, 2021:
- Net Income of $24.5 million, and Basic Earnings per Share of
$0.31,
- Operating Revenue of $152.6 million,
- Operating Income of $33.3 million,
- Operating Ratio of 78.2% and 75.0% Non-GAAP Adjusted Operating
Ratio(1),
- Cash Balance of $180.4 million and Total Assets of $958.3
million,
- Stockholders' Equity of $708.8 million (after special dividend
of $39.5 million),
- Debt-Free Balance Sheet.
Nine months ended September 30, 2021:
- Net Income of $58.9 million, and Basic Earnings per Share of
$0.74,
- Operating Revenue of $459.1 million,
- Operating Income of $78.9 million,
- Operating Ratio of 82.8% and 80.5% Non-GAAP Adjusted Operating
Ratio(1)
Heartland Express Chief Executive Officer Mike
Gerdin, commented on the quarterly operating results and ongoing
initiatives of the Company, “Our operating results for the three
and nine months ended September 30, 2021 showed strength in
terms of profit, overall operating efficiency, and our continued
ability to grow our cash balance. At the end of the quarter we had
$180 million in cash with no debt on our balance sheet. Further,
these quarterly operating results and financial strength allowed us
to reward our shareholders with a special dividend of $0.50 per
common share ($39.5 million), paid on October 1, 2021.
“Freight demand has continued to be strong and
has reached unprecedented levels throughout the third quarter of
2021 and we expect these trends to continue for the remainder of
2021 and well into 2022. We also believe that hiring and retention
of employees has reached levels of unprecedented challenge across
our industry for both carriers and shippers. We continue to partner
with our customers who have had to navigate their own employment
related disruptions in order to deliver our strong operating
results during the quarter. We believe that this shared challenge
of hiring and retaining both drivers and other supply chain
critical employees will continue in the year ahead. To address that
challenge, we have increased wages and enhanced the compensation
features for our drivers multiple times in the last twelve months.
We will continue to invest in our drivers, our fleet of revenue
equipment, our terminal locations, and technology to ensure our
drivers receive a rewarding level of compensation along with the
tools to have a safe and successful career at Heartland
Express.”
Mr. Gerdin continued, “From a financial
perspective, we were able to improve our operating income and
control costs to deliver an operating ratio of 78.2% and a non-GAAP
adjusted operating ratio(1) of 75.0%, an improvement to the same
quarter of 2020 where we delivered an operating ratio of 83.2% and
a non-GAAP adjusted operating ratio(1) of 81.5%. The operating
ratio delivered was also better sequentially to the first and
second quarters of 2021 and was our best consolidated operating
ratio delivered since the 2nd quarter of 2013 (prior to the
acquisitions of Gordon Trucking (2013), Interstate Distributor
(2017) and Millis Transfer (2019)). Specifically, the Heartland
Express fleet produced an operating ratio in the mid 70's, during
the third quarter of 2021, while the Millis Transfer fleet has
shown continued improvement over the two years since the
acquisition. Millis delivered an operating ratio in the upper 80's
and is progressing toward the three-year operating ratio target of
85% or lower by the end of the third quarter of 2022, which we
believe is attainable. Our operating income for the third quarter
was $33.3 million, a 21.8% increase, compared to $27.3 million in
the third quarter of 2020 and our strongest quarter of operating
income since the second quarter of 2015. We continue to be
extremely proud of our employees and what we have accomplished. We
believe we are well positioned for the future.”
Financial Results
Heartland Express ended the third quarter of
2021 with operating revenues of $152.6 million, compared to $162.3
million in the third quarter of 2020. Operating revenues for the
quarter included fuel surcharge revenues of $19.6 million, compared
to $14.4 million in the same period of 2020. Operating income for
the three-month period ended September 30, 2021 was $33.3
million, an increase of $6.0 million as compared to the same period
of the prior year. Net income was $24.5 million, compared to $20.7
million in the third quarter of 2020, an increase of 18.1%. Basic
earnings per share were $0.31 during the quarter as compared to
$0.25 during the same period of 2020. The Company posted an
operating ratio of 78.2%, non-GAAP adjusted operating ratio(1) of
75.0%, and a 16.0% net margin (net income as a percentage of
operating revenues) in the third quarter of 2021 compared to 83.2%,
81.5%, and 12.8%, respectively, in the third quarter of 2020.
For the nine-month period ended September 30,
2021, the Company recorded operating revenues of $459.1 million,
compared to $489.5 million in the same period of 2020. Operating
revenues for the period included fuel surcharge revenues of $55.5
million, compared to $47.9 million in the same period of 2020. Net
income was $58.9 million, compared to $53.1 million in the same
period of 2020, an increase of $5.8 million (10.9%). Basic earnings
per share were $0.74 during the period, compared to $0.65 basic
earnings per share in the same period of 2020. The Company posted
an operating ratio of 82.8%, non-GAAP adjusted operating ratio(1)
of 80.5%, and a 12.8% net margin (net income as a percentage of
operating revenues) for the nine months ended September 30, 2021
compared to 85.8%, 84.2%, and 10.9%, respectively, in the same
period of 2020.
Balance Sheet, Liquidity, and Capital
Expenditures
As of September 30, 2021, the Company had
$180.4 million in cash balances, an increase of $13.1 million since
the second quarter of 2021, and a $66.5 million increase since
December 31, 2020. The Company amended its unsecured line of credit
as of August 31, 2021 which reduced the available borrowing
capacity from $100 million to $25 million. The Company continues to
have the ability to increase the available borrowing base by an
additional $100 million, subject to normal credit and lender
approvals. The Company had $14.2 million in available borrowing
capacity on the line of credit as of September 30, 2021 after
consideration of $10.8 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
$958.3 million and stockholders' equity of $708.8 million,
following the declaration of $41.1 million regular and special
dividends payable to our shareholders on October 1, 2021.
Net cash flows from operations for the first
nine months of 2021 were $95.7 million, 20.8% of operating revenue.
Net revenue equipment and terminal transactions provided $5.2
million of cash. The primary uses of net cash during the nine-month
period ended September 30, 2021 were $31.4 million for the
repurchase of our common stock (including amounts payable at
December 31, 2020) and $3.2 million for dividends.
The average age of the Company's tractor fleet
was 1.7 years as of September 30, 2021 compared to 2.0 years
on September 30, 2020. The average age of the Company's
trailer fleet was 3.3 years as of September 30, 2021 compared
to 3.6 years on September 30, 2020. The Company currently
anticipates a total of approximately $15 to $20 million in net
capital expenditures for the remainder of calendar year 2021.
The Company continues its commitment to
stockholders through the payment of cash dividends and repurchases
of common stock. A dividend of $0.52 ($0.50 special dividend and
$0.02 regular dividend) per share was declared during the third
quarter 2021 and paid on October 1, 2021, along with regular
dividends declared and paid during the first and second quarters of
2021, respectively. The Company has now paid cumulative cash
dividends of $534.7 million, including four special dividends,
($2.00 in 2007, $1.00 in 2010, $1.00 in 2012, and $0.50 in 2021)
over the past seventy-three consecutive quarters since 2003.
During the three months ended September 30,
2021, the Company purchased 987,627 shares of our common stock for
$16.4 million. We purchased 1,756,428 shares of our common stock
for $30.9 million, during the nine months ended September 30, 2021.
As compared to 710,376 shares of our common stock purchased for
$12.3 million during the first quarter of 2020, with no shares
purchased during the second or third quarters of 2020. Our
outstanding shares at September 30, 2021 were
78.9 million. A total of 4.6 million shares of common stock
have been repurchased for $82.2 million over the past five years.
The Company has the ability to repurchase an additional 6.7 million
shares under the current authorization which would result in 72.2
million outstanding shares if fully executed.
Other Information
During the third quarter of 2021, we continued
to deliver award-winning service and safety to our customers as
evidenced by the following awards received:
- FedEx Express - 2021 National
Carrier of the Year (11 years in a row)
- FedEx Express - Platinum Service
Level (99.99% On-Time Delivery)
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, our ability to react to changing market conditions,
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, 2020. 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 OfficerChris Strain, Chief Financial Officer |
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, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
OPERATING REVENUE |
|
$ |
152,612 |
|
|
$ |
162,282 |
|
|
$ |
459,142 |
|
|
$ |
489,473 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
Salaries, wages, and
benefits |
|
$ |
62,733 |
|
|
$ |
67,178 |
|
|
$ |
190,446 |
|
|
$ |
205,579 |
|
Rent and purchased
transportation |
|
950 |
|
|
999 |
|
|
2,922 |
|
|
3,635 |
|
Fuel |
|
25,258 |
|
|
21,218 |
|
|
74,220 |
|
|
65,445 |
|
Operations and
maintenance |
|
5,372 |
|
|
7,118 |
|
|
16,729 |
|
|
21,516 |
|
Operating taxes and
licenses |
|
3,311 |
|
|
3,664 |
|
|
10,345 |
|
|
11,229 |
|
Insurance and claims |
|
5,053 |
|
|
4,827 |
|
|
15,171 |
|
|
16,034 |
|
Communications and
utilities |
|
1,218 |
|
|
1,398 |
|
|
3,412 |
|
|
4,091 |
|
Depreciation and
amortization |
|
25,280 |
|
|
27,625 |
|
|
78,162 |
|
|
81,427 |
|
Other operating expenses |
|
5,418 |
|
|
6,637 |
|
|
16,173 |
|
|
19,602 |
|
Gain on disposal of property
and equipment |
|
(15,254 |
) |
|
(5,721 |
) |
|
(27,341 |
) |
|
(8,739 |
) |
|
|
|
|
|
|
|
|
|
|
|
119,339 |
|
|
134,943 |
|
|
380,239 |
|
|
419,819 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
33,273 |
|
|
27,339 |
|
|
78,903 |
|
|
69,654 |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
181 |
|
|
171 |
|
|
493 |
|
|
704 |
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
33,454 |
|
|
27,510 |
|
|
79,396 |
|
|
70,358 |
|
|
|
|
|
|
|
|
|
|
Federal and state income
taxes |
|
8,988 |
|
|
6,796 |
|
|
20,454 |
|
|
17,224 |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
24,466 |
|
|
$ |
20,714 |
|
|
$ |
58,942 |
|
|
$ |
53,134 |
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.31 |
|
|
$ |
0.25 |
|
|
$ |
0.74 |
|
|
$ |
0.65 |
|
Diluted |
|
$ |
0.31 |
|
|
$ |
0.25 |
|
|
$ |
0.74 |
|
|
$ |
0.65 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
79,336 |
|
|
81,370 |
|
|
79,795 |
|
|
81,530 |
|
Diluted |
|
79,364 |
|
|
81,404 |
|
|
79,839 |
|
|
81,587 |
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
|
$ |
0.52 |
|
|
$ |
0.02 |
|
|
$ |
0.56 |
|
|
$ |
0.06 |
|
HEARTLAND EXPRESS, INC.AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, except per share
amounts)(unaudited) |
|
|
September 30, |
|
December 31, |
ASSETS |
|
2021 |
|
2020 |
CURRENT
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
180,366 |
|
|
$ |
113,852 |
|
Trade receivables, net |
|
58,538 |
|
|
55,577 |
|
Prepaid tires |
|
9,272 |
|
|
8,241 |
|
Other current assets |
|
10,398 |
|
|
15,342 |
|
Total current assets |
|
258,574 |
|
|
193,012 |
|
|
|
|
|
|
PROPERTY AND
EQUIPMENT |
|
725,502 |
|
|
779,360 |
|
Less accumulated depreciation |
|
234,444 |
|
|
240,080 |
|
|
|
491,058 |
|
|
539,280 |
|
GOODWILL |
|
168,295 |
|
|
168,295 |
|
OTHER INTANGIBLES,
NET |
|
22,953 |
|
|
24,746 |
|
DEFERRED INCOME TAXES,
NET |
|
— |
|
|
8,164 |
|
OTHER
ASSETS |
|
17,400 |
|
|
17,679 |
|
|
|
$ |
958,280 |
|
|
$ |
951,176 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
14,431 |
|
|
$ |
12,751 |
|
Dividend payable |
|
41,094 |
|
|
— |
|
Compensation and benefits |
|
24,355 |
|
|
22,422 |
|
Insurance accruals |
|
13,645 |
|
|
15,837 |
|
Income taxes payable |
|
4,513 |
|
|
1,475 |
|
Other accruals |
|
19,001 |
|
|
18,557 |
|
Total current liabilities |
|
117,039 |
|
|
71,042 |
|
LONG-TERM
LIABILITIES |
|
|
|
|
Income taxes payable |
|
5,385 |
|
|
5,801 |
|
Deferred income taxes, net |
|
87,217 |
|
|
104,004 |
|
Insurance accruals less current portion |
|
39,823 |
|
|
45,995 |
|
Total long-term liabilities |
|
132,425 |
|
|
155,800 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
|
Capital stock, common, $.01 par value; authorized 395,000 shares;
issued 90,689 in 2021 and 2020; outstanding 78,943 and 80,653 in
2021 and 2020, respectively |
|
907 |
|
|
907 |
|
Additional paid-in capital |
|
4,319 |
|
|
4,330 |
|
Retained earnings |
|
905,620 |
|
|
890,970 |
|
Treasury stock, at cost; 11,746 and 10,036 in 2021 and 2020,
respectively |
|
(202,030 |
) |
|
(171,873 |
) |
|
|
708,816 |
|
|
724,334 |
|
|
|
$ |
958,280 |
|
|
$ |
951,176 |
|
(1)
GAAP to
Non-GAAP Reconciliation Schedule: |
|
|
|
|
Operating
revenue, operating revenue excluding fuel surcharge revenue, fuel
surcharge revenue, operating income, operating ratio, and adjusted
operating ratio reconciliation (a) |
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
(Unaudited, in thousands) |
|
(Unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
152,612 |
|
|
$ |
162,282 |
|
|
$ |
459,142 |
|
|
$ |
489,473 |
|
Less: Fuel surcharge
revenue |
|
19,628 |
|
|
14,412 |
|
|
55,544 |
|
|
47,858 |
|
Operating revenue, excluding
fuel surcharge revenue |
|
132,984 |
|
|
147,870 |
|
|
403,598 |
|
|
441,615 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
119,339 |
|
|
134,943 |
|
|
380,239 |
|
|
419,819 |
|
Less: Fuel surcharge
revenue |
|
19,628 |
|
|
14,412 |
|
|
55,544 |
|
|
47,858 |
|
Adjusted operating
expenses |
|
99,711 |
|
|
120,531 |
|
|
324,695 |
|
|
371,961 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
33,273 |
|
|
$ |
27,339 |
|
|
$ |
78,903 |
|
|
$ |
69,654 |
|
Operating ratio |
|
78.2 |
% |
|
83.2 |
% |
|
82.8 |
% |
|
85.8 |
% |
Adjusted operating ratio |
|
75.0 |
% |
|
81.5 |
% |
|
80.5 |
% |
|
84.2 |
% |
(a) Operating revenue excluding fuel surcharge
revenue, 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. We believe that adjusted
operating ratio is more representative of our underlying operations
by excluding the volatility of fuel prices, which we cannot
control. Adjusted operating ratio is not a substitute for operating
ratio measured in accordance with GAAP. There are limitations to
using non-GAAP financial measures. Although we believe that
adjusted operating ratio improves comparability in analyzing our
period-to-period performance, it could limit comparability to other
companies in our industry if those companies define adjusted
operating ratio differently. Because of these limitations, adjusted
operating ratio should not be considered a measure of income
generated by our business or discretionary cash available to us to
invest in the growth of our business. Management compensates for
these limitations by primarily relying on GAAP results and using
non-GAAP financial measures on a supplemental basis.
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