Heartland Express, Inc. Reports Revenues and Earnings for the Third Quarter of 2016
October 20 2016 - 9:25AM
Heartland Express, Inc. (Nasdaq:HTLD) announced today financial
results for the three and nine months ended September 30,
2016. Highlights included:
Three months ended September 30, 2016:
- Net Income of $12.5 million, Earnings per Share of $0.15, and
Operating Revenue of $149.3 million,
- Operating Ratio of 86.7% and 85.1% Non-GAAP Adjusted Operating
Ratio(1).
Nine months ended September 30, 2016:
- Net Income of $43.3 million, Earnings per Share of $0.52, and
Operating Revenue of $472.9 million,
- Operating Ratio of 86.3% and 84.9% Non-GAAP Adjusted Operating
Ratio(1),
- Cash balance of $100.3 million, a $67.0 million increase since
December 31, 2015.
Heartland Express Chief Executive Officer
Michael Gerdin, commented on the quarterly operating results and
ongoing initiatives of the Company, "The results achieved during
the quarter and year-to-date have been hard fought and are a result
of us holding fast to the foundational principles that have made us
successful over the last thirty years during both good times and
challenging times. We have continued to experience downward
pressure on freight rates due to the softness in freight volumes
resulting from the available capacity in the industry. Through
this, our commitment and dedication to on-time service for our
customers and their partnership during these challenging times
drives our profitable results. We continued to show year over year
improvement in our operating ratio, excluding gains on disposal of
property and equipment, for both the current quarter and the year
to date results. 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 allows us to operate profitably and maintain an
efficient fleet of equipment while keeping resources in reserve to
capitalize on future investment opportunities that align with our
operating strategy and our corporate values."
Financial Results
Heartland Express ended the third quarter of
2016 with net income of $12.5 million, compared to $15.1 million in
the third quarter of 2015. Basic earnings per share were
$0.15 during the quarter compared to $0.17 earnings per share in
the third quarter of 2015. Operating revenues were $149.3
million, compared to $182.5 million in the third quarter of 2015.
Operating revenues for the quarter included fuel surcharge
revenues of $15.2 million compared to $21.8 million in the same
period of 2015, a $6.6 million decrease. Operating revenues
decreased 16.6% excluding the impact of fuel surcharge revenues
primarily due to lower miles driven due to softer freight volumes
in the third quarter compared to the same period in 2015.
Operating income for the three-month period decreased $4.9 million
mainly due to the current operating environment challenges on
freight volume and pricing. The Company posted an adjusted
operating ratio(1) of 85.1% and a 8.4% net margin (net income as a
percentage of operating revenues) in the third quarter of 2016
compared to 84.5% and 8.3%, respectively in the third quarter of
2015.
For the nine month period ended
September 30, 2016 the Company recorded net income of $43.3
million, compared to $56.0 million in the same period of
2015. Basic earnings per share were $0.52 compared to $0.64
earnings per share in the same period of 2015. Operating
revenues were $472.9 million, compared to $561.7 million in the
same period of 2015. Operating revenues included fuel
surcharge revenues of $43.7 million compared to $73.6 million in
the same period of 2015, a $29.9 million decrease. Operating
revenues decreased 12.1% excluding the impact of fuel surcharge
revenues. Operating income for the nine-month period
decreased $24.2 million mainly as a result of the continued
operating environment challenges on freight volume and
pricing. The Company posted an adjusted operating ratio(1) of
84.9% and a 9.2% net margin (net income as a percentage of
operating revenues) in the nine months ended September 30,
2016 compared to 81.8% and 10.0%, respectively in 2015.
Balance Sheet, Liquidity, and Capital
Expenditures
At September 30, 2016, the Company had
$100.3 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
September 30, 2016 after consideration of $5.5 million
outstanding letters of credit. The line of credit maximum
borrowing capacity will reduce by $25.0 million to $175.0 million
on November 1, 2016. The Company continues to be in
compliance with associated financial covenants. The Company ended
the quarter with total assets of $741.7 million and stockholders'
equity of $494.3 million.
Net cash flows from operations for the first
nine months of 2016 were $120.2 million. The primary use of
cash during the nine month period ended September 30, 2016 was
$32.7 million for purchases of property and equipment, net of
trades and sale proceeds, $14.7 million for stock repurchases, and
$5.0 million for dividends. The average age of the Company's
tractor fleet was 1.6 years as of September 30, 2016 compared
to 1.6 years at September 30, 2015. The average age of
the Company's trailer fleet was 4.7 years at September 30,
2016 compared to 4.4 years at September 30, 2015. The
Company currently anticipates a total of approximately $30 to $35
million in net capital expenditures for the calendar year.
The Company ended the past twelve months with a return on total
assets of 8.2% and a 12.6% return on equity.
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
and paid during each of the first three quarters of 2016. The
Company has now paid cumulative cash dividends of $462.4 million,
including three special dividends, ($2.00 in 2007, $1.00 in 2010,
and $1.00 in 2012) over the past fifty-three consecutive
quarters. During the nine months ended September 30,
2016, 0.9 million shares of our common stock were repurchased for
$14.7 million reducing outstanding shares at September 30,
2016 to 83.3 million shares. During 2015 and 2016, the
Company has repurchased 4.7 million shares of our common stock for
$88.7 million. A total of 6.5 million shares of common stock have
been repurchased for approximately $112.9 million over the past
five years. The Company has the ability to repurchase an
additional 3.3 million shares under the current authorization.
Other Information
We continued to deliver award-winning service
and safety to our customers. In addition to the ten customer and
safety awards previously announced through the second quarter of
2016, we received the following additional awards during the third
quarter:
- United Sugars - Carrier of the Year
- Logistics Management Quest for Quality Award
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 September 30, |
|
Nine Months Ended September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
OPERATING REVENUE |
|
$ |
149,316 |
|
|
$ |
182,533 |
|
|
$ |
472,893 |
|
|
$ |
561,739 |
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
|
|
|
|
Salaries, wages, and
benefits |
|
$ |
58,351 |
|
|
$ |
68,987 |
|
|
$ |
185,342 |
|
|
$ |
210,886 |
|
Rent and purchased
transportation |
|
5,472 |
|
|
8,238 |
|
|
18,353 |
|
|
26,775 |
|
Fuel |
|
22,987 |
|
|
29,414 |
|
|
68,575 |
|
|
97,866 |
|
Operations and
maintenance |
|
6,391 |
|
|
9,213 |
|
|
19,999 |
|
|
25,725 |
|
Operating taxes and
licenses |
|
3,889 |
|
|
4,498 |
|
|
11,722 |
|
|
13,690 |
|
Insurance and
claims |
|
4,536 |
|
|
7,379 |
|
|
17,607 |
|
|
17,491 |
|
Communications and
utilities |
|
1,156 |
|
|
1,699 |
|
|
3,420 |
|
|
4,695 |
|
Depreciation and
amortization |
|
27,271 |
|
|
28,415 |
|
|
78,823 |
|
|
81,266 |
|
Other operating
expenses |
|
824 |
|
|
7,230 |
|
|
11,655 |
|
|
21,734 |
|
Gain on disposal of
property and equipment |
|
(1,474 |
) |
|
(7,401 |
) |
|
(7,273 |
) |
|
(27,250 |
) |
|
|
|
|
|
|
|
|
|
|
|
129,403 |
|
|
157,672 |
|
|
408,223 |
|
|
472,878 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
19,913 |
|
|
24,861 |
|
|
64,670 |
|
|
88,861 |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
124 |
|
|
64 |
|
|
308 |
|
|
156 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
— |
|
|
— |
|
|
— |
|
|
(19 |
) |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
20,037 |
|
|
24,925 |
|
|
64,978 |
|
|
88,998 |
|
|
|
|
|
|
|
|
|
|
Federal and state
income taxes |
|
7,510 |
|
|
9,812 |
|
|
21,706 |
|
|
32,957 |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
12,527 |
|
|
$ |
15,113 |
|
|
$ |
43,272 |
|
|
$ |
56,041 |
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.15 |
|
|
$ |
0.17 |
|
|
$ |
0.52 |
|
|
$ |
0.64 |
|
Diluted |
|
$ |
0.15 |
|
|
$ |
0.17 |
|
|
$ |
0.52 |
|
|
$ |
0.64 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
Basic |
|
83,286 |
|
|
87,387 |
|
|
83,301 |
|
|
87,663 |
|
Diluted |
|
83,342 |
|
|
87,492 |
|
|
83,373 |
|
|
87,806 |
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
0.06 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEARTLAND EXPRESS, INC.AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, except per share
amounts)(unaudited) |
|
|
September 30, |
|
December 31, |
ASSETS |
|
2016 |
|
2015 |
CURRENT
ASSETS |
|
|
|
|
Cash and
cash equivalents |
|
$ |
100,264 |
|
|
$ |
33,232 |
|
Trade
receivables, net |
|
51,704 |
|
|
61,009 |
|
Prepaid
tires |
|
8,747 |
|
|
9,584 |
|
Other
current assets |
|
9,395 |
|
|
8,316 |
|
Income
tax receivable |
|
6,555 |
|
|
7,641 |
|
Deferred
income taxes, net |
|
— |
|
|
16,662 |
|
Total
current assets |
|
176,665 |
|
|
136,444 |
|
|
|
|
|
|
PROPERTY AND
EQUIPMENT |
|
679,743 |
|
|
671,946 |
|
Less
accumulated depreciation |
|
242,987 |
|
|
197,948 |
|
|
|
436,756 |
|
|
473,998 |
|
GOODWILL |
|
100,212 |
|
|
100,212 |
|
OTHER
INTANGIBLES, NET |
|
12,570 |
|
|
14,013 |
|
DEFERRED INCOME
TAXES, NET |
|
4,156 |
|
|
— |
|
OTHER
ASSETS |
|
11,353 |
|
|
11,363 |
|
|
|
$ |
741,712 |
|
|
$ |
736,030 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
Accounts
payable and accrued liabilities |
|
$ |
16,755 |
|
|
$ |
7,516 |
|
Compensation and benefits |
|
23,748 |
|
|
24,636 |
|
Insurance
accruals |
|
22,494 |
|
|
21,573 |
|
Other
accruals |
|
13,747 |
|
|
12,443 |
|
Total
current liabilities |
|
76,744 |
|
|
66,168 |
|
LONG-TERM
LIABILITIES |
|
|
|
|
Income
taxes payable |
|
12,668 |
|
|
16,228 |
|
Deferred
income taxes, net |
|
93,933 |
|
|
112,118 |
|
Insurance
accruals less current portion |
|
60,104 |
|
|
59,435 |
|
Other
long-term liabilities |
|
4,000 |
|
|
12,153 |
|
Total
long-term liabilities |
|
170,705 |
|
|
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 83,287 in 2016 and 84,115 in
2015, respectively |
|
907 |
|
|
907 |
|
Additional paid-in capital |
|
3,323 |
|
|
4,126 |
|
Retained
earnings |
|
614,221 |
|
|
575,948 |
|
Treasury
stock, at cost; 7,402 in 2016 and 6,574 in 2015, respectively |
|
(124,188 |
) |
|
(111,053 |
) |
|
|
494,263 |
|
|
469,928 |
|
|
|
$ |
741,712 |
|
|
$ |
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 September
30, |
|
Nine Months Ended September 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
149,316 |
|
|
$ |
182,533 |
|
|
$ |
472,893 |
|
|
$ |
561,739 |
|
Less: Fuel surcharge
revenue |
|
15,229 |
|
|
21,800 |
|
|
43,664 |
|
|
73,609 |
|
Operating revenue,
excluding fuel surcharge revenue |
|
134,087 |
|
|
160,733 |
|
|
429,229 |
|
|
488,130 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
129,403 |
|
|
157,672 |
|
|
408,223 |
|
|
472,878 |
|
Less: Fuel surcharge
revenue |
|
15,229 |
|
|
21,800 |
|
|
43,664 |
|
|
73,609 |
|
Adjusted operating
expenses |
|
114,174 |
|
|
135,872 |
|
|
364,559 |
|
|
399,269 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
19,913 |
|
|
$ |
24,861 |
|
|
$ |
64,670 |
|
|
$ |
88,861 |
|
Operating ratio |
|
86.7 |
% |
|
86.4 |
% |
|
86.3 |
% |
|
84.2 |
% |
Adjusted operating
ratio |
|
85.1 |
% |
|
84.5 |
% |
|
84.9 |
% |
|
81.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
Contact: Heartland Express, Inc.
Mike Gerdin, Chief Executive Officer
John Cosaert, Chief Financial Officer
319-626-3600
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