HEARTLAND EXPRESS, INC.
NORTH LIBERTY, IOWA - July 28, 2015 - Heartland Express, Inc. (Nasdaq: HTLD) announced today financial results for the three and six months ended June 30, 2015. Highlights included:
• Net Income increased 32.4% sequentially to 1st quarter of 2015,
• Operating Ratio improvement from 84.9% to 81.4% sequentially to 1st quarter of 2015,
• Operating Ratio improvement from 82.1% 2nd quarter of 2014 to 81.4% 2nd quarter of 2015 ,
• Operating Ratio improvement from 86.4% year to date 2014 to 83.1% same period 2015,
• Operating Ratio improvements despite a 13% increase in average driver wages implemented over
November 2014 and January 2015,
• Increased cash reserves by $27.3 million.
Operating results for the three and six months ended June 30, 2015 showed continued strength from freight demand, reduction of operating costs and generation of incremental cash reserves along with continued upgrades to our operating fleet.
Financial Results
Heartland Express (the "Company") ended the second quarter of 2015 with basic earnings per share of
$0.27 and an operating ratio (operating expenses as a percentage of operating revenues) of 81.4% compared to $0.30 basic earnings per share and 82.1% operating ratio in the second quarter of 2014. The Company ended the quarter with net income of $23.3 million, compared to $26.5 million in the second quarter of 2014, an 11.9% decrease. Operating revenues were $191.7 million, a 15.5% decrease, compared to $226.8 million in the second quarter of 2014. Operating revenues for the quarter included fuel surcharge revenues of $25.7 million compared to $46.2 million in the same period of 2014, a $20.5 million decrease. Operating revenues decreased 8.1% excluding the impact of fuel surcharge revenues. Operating revenues increased
2.2%, compared to $187.5 million in the first quarter of 2015 with relatively flat fuel surcharge revenues. The Company posted a 12.2% net margin (net income as a percentage of operating revenues) in the second quarter of 2015 compared to 11.7%, in the second quarter of 2014.
For the six month period ended June 30, 2015 the Company had basic earnings per share of $0.47 and an operating ratio (operating expenses as a percentage of operating revenues) of 83.1% compared to basic earnings per share of $0.46 and an operating ratio of 86.4% for the same six month period ended June 30,
2014. The Company ended the six month period ended June 30, 2015 with operating revenues of $379.2 million and net income of $40.9 million, compared to $451.3 million and $40.6 million, respectively for the same six month period ended June 30, 2014. Operating revenues for the six month period ended June 30,
2015 included fuel surcharge revenues of $51.8 million compared to $92.1 million for the same period of
2014, a $40.3 million decrease. Operating income for the six month period was positively impacted by a
$3.9 million increase in gains on disposal of property and equipment and a $15.0 million decrease in net fuel expense. The Company posted a 10.8% net margin (net income as a percentage of operating revenues) in the six months ended June 30, 2015 compared to 9.0%, for the same period of 2014.
The current freight environment continues to allow the Company to work on yield management along with the Company's efforts on reducing costs. These efforts resulted in operating ratio improvements for the quarter and six month periods ended June 30, 2015 compared to the respective periods of 2014, excluding the volatility of gains on disposal of property and equipment. Further, this improvement was achieved despite
an average 13% increase in average driver wages which was implemented in late 2014 to address the ongoing industry challenges of recruiting and retaining qualified drivers.
Balance Sheet, Liquidity, and Capital Expenditures
At June 30, 2015, the Company had $79.5 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 June 30, 2015 after consideration of $4.4 million outstanding letters of credit. 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 $782.1 million.
Net cash flows from operations for the first six months of 2015 showed continued improvement over the prior year at 26.4% of operating revenues or $100 million. The primary use of cash during the six month period ended June 30, 2015 was $24.6 million for the repayment of long-term debt obligations and $7.4 million for purchases of property and equipment, net of trades and sale proceeds. The Company currently anticipates a total of approximately $75 to $85 million in net capital expenditures for the calendar year. The Company ended the past twelve months with a return on total assets of 11.1% and a 17.6% return on equity.
The average age of the Company's tractor fleet was 1.7 years as of June 30, 2015 compared to 2.2 years at June 30, 2014. During the second quarter of 2015 the Company took delivery of approximately 270 new tractors and has approximately 1,000 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 4.5 years at June 30, 2015 compared to 4.6 years at June 30, 2014. The average age of trailers is currently estimated to remain flat at approximately 4.5 years through December 31, 2015. During the second quarter of 2015 the Company took delivery of approximately 200 new trailers and has approximately 250 new trailers scheduled for delivery prior to the end of 2015. The demand for used revenue equipment remains strong 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 show good progress towards our goal of getting our consolidated operating ratio, excluding gains on equipment, to our historical operating levels of the low 80's prior to the Gordon Trucking, Inc. acquisition in November 2013. During this same time period we have made significant capital investments in our fleet, increased our driver wages 13%, and paid off our entire debt balance. With the current average age of our tractor and trailer fleets, where they are estimated to be at the end of 2015, and the Company being debt free, the Company is solidly positioned for the upcoming years ahead, no matter what the environment holds."
The Company continues its commitment to stockholders through the payment of cash dividends. A dividend of $0.02 per share was declared during the quarter and was paid on July 2, 2015. The Company has now paid cumulative cash dividends of $454.0 million, including three special dividends, ($2.00 in 2007, $1.00 in 2010, and $1.00 in 2012) over the past forty-eight consecutive quarters. The Company has also repurchased approximately $80.5 million of common stock over the past five years although there were no shares repurchased during 2014 or 2015.
We continued to deliver award-winning service and safety to our customers and leveraged technology to drive improvements across our organization as evidenced by the following awards received during the quarter:
• Fedex Express - Carrier of the Year (2015, our 5th consecutive year and 8th time in 9 years)
• Fedex Express - Platinum Award for On-Time Service (2015, 99.92% on-time service)
• Georgia Pacific - Consumer Products Dedicated Carrier of the Year (2015)
• Indiana Safe Fleet - 1st Place (5-10 million mile category)
• Illinois Safe Fleet - 1st Place (Category IV)
• CIO 100 Award (2015) - Awarded by IDG's CIO Magazine
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.
Contact: Heartland Express, Inc. Mike Gerdin, Chief Executive Officer John Cosaert, Chief Financial Officer
319-626-3600
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,
2015 2014 2015 2014OPERATING REVENUE $ 191,684 $ 226,785 $ 379,207 $ 451,265
OPERATING EXPENSES:
Salaries, wages, and benefits $ 70,904 $ 71,240 $ 141,900 $ 142,185
Rent and purchased transportation 9,211 13,741 18,537 28,252
Fuel 34,196 59,338 68,452 122,563
Operations and maintenance 8,379 9,776 16,512 19,897
Operating taxes and licenses 4,378 5,319 9,192 10,165
Insurance and claims 3,469 4,370 10,113 11,465
Communications and utilities 1,453 1,553 2,996 3,383
Depreciation and amortization 26,876 26,668 52,850 51,241
Other operating expenses 6,747 7,997 14,505 16,687
Gain on disposal of property and equipment (9,668) (13,859) (19,849) (15,903)
155,945 186,143 315,208 389,935
Operating income 35,739 40,642 63,999 61,330
Interest income 61 106 93 142
Interest expense - (132) (19) (287) Income before income taxes 35,800 40,616 64,073 61,185
Federal and state income taxes 12,484 14,144 23,145 20,634
Net income $ 23,316 $ 26,472 $ 40,928 $ 40,551
Earnings per share
Basic $ 0.27 $ 0.30 $ 0.47 $ 0.46
Diluted $ 0.27 $ 0.30 $ 0.47 $ 0.46
Weighted average shares outstanding
Basic 87,814 87,728 87,802 87,716
Diluted 87,967 87,900 87,966 87,908
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 2015 2014Cash and cash equivalents $ 79,476 $ 17,303
Trade receivables, net 70,460 77,034
Prepaid tires 9,399 10,160
Prepaid shop supplies 1,429 2,056
Other current assets 16,482 8,992
Income tax receivable 2,900 19,920
Deferred income taxes, net 16,536 14,767
Total current assets 196,682 150,232
PROPERTY AND EQUIPMENT 667,247 678,566Less accumulated depreciation 208,124 198,007
459,123 480,559
GOODWILL 100,212 100,212 OTHER INTANGIBLES, NET 15,148 16,380 OTHER ASSETS 10,929 12,611$ 782,094 $ 759,994
Accounts payable and accrued liabilities $ 16,834 $ 8,261
Compensation and benefits 28,262 26,303
Insurance accruals 19,353 19,249
Other accruals 13,475 14,475
Total current liabilities 77,924 68,288
LONG-TERM LIABILITIESIncome taxes payable 15,498 18,296
Long-term debt - 24,600
Deferred income taxes, net 101,311 101,605
Insurance accruals less current portion 60,998 59,300
Other long-term liabilities 11,653 11,318
Total long-term liabilities 189,460 215,119
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITYCapital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in
2015 and 2014; outstanding 87,862 in 2015 and 87,781 in 2014, respectively 907 907
Additional paid-in capital 3,734 4,058
Retained earnings 547,243 509,834
Treasury stock, at cost; 2,827 in 2015 and 2,908 in 2014, respectively (37,174) (38,212)
514,710 476,587
$ 782,094 $ 759,994
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