Heartland Express, Inc. Reports Revenues and Earnings for the First Quarter of 2017
April 21 2017 - 9:00AM
Heartland Express, Inc. (Nasdaq:HTLD) announced today financial
results for the three months ended March 31, 2017.
- Net Income of $14 million, Earnings per Share of $0.17, and
Operating Revenue of $130 million,
- Operating Ratio of 85.1% and 83.2% Non-GAAP Adjusted Operating
Ratio(1),
- Cash balance of $159.2 million, a $30.7 million increase since
December 31, 2016,
- Total Stockholders’ Equity of $518.2 million and Total Assets
of $751.7 million.
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 were a result of operating through a challenging
freight environment coupled with unfavorable weather conditions in
the western United States during the first two months of the
quarter followed by stronger freight volumes in March. Our
operating ratio and the cash generated from our operations has
allowed us to continue to build our cash reserves during the
quarter to nearly $160 million. We also increased our fleet
activity as evidenced by more equipment purchases and sales
completed during the quarter which resulted in an increase in gains
on sale of equipment as compared to the same period in 2016.
We expect to continue to own and operate a fleet of revenue
producing equipment that is relatively young in average age and
updated with the latest technology, which we believe leads to lower
costs of maintenance and better fuel economy. We remain
committed to on-time and just-in-time service for our loyal
customers and taking care of our professional drivers. These
foundational values of our company are key to our current and
expected future results, no matter what the operating environment
may hold. I am extremely pleased with the execution of our
team and our ability to stay the course and deliver these results
during a very difficult environment for the first two months of the
quarter."
Financial Results
Heartland Express ended the first quarter of
2017 with net income of $14.0 million, compared to $14.4 million in
the first quarter of 2016. Basic earnings per share were
$0.17 during the quarter compared to $0.17 earnings per share in
the first quarter of 2016. Operating revenues were $129.9
million, compared to $162.8 million in the first quarter of
2016. Operating revenues for the quarter included fuel
surcharge revenues of $14.9 million compared to $13.1 million in
the same period of 2016, a $1.8 million increase. Operating
revenues decreased 23.2% excluding the impact of fuel surcharge
revenues(1), primarily due to lower miles driven during the first
quarter compared to the same period in 2016. Operating income
for the three-month period was relatively flat to the prior year
and decreased $0.9 million. The Company posted an operating
ratio of 85.1%, adjusted operating ratio(1) of 83.2%, and a 10.8%
net margin (net income as a percentage of operating revenues) in
the first quarter of 2017 compared to 87.6%, 86.5%, and 8.8%,
respectively in the first quarter of 2016.
Balance Sheet, Liquidity, and Capital
Expenditures
At March 31, 2017, the Company had $159.2
million in cash balances and no borrowings under the Company's
unsecured line of credit. The Company had $171.3 million in
available borrowing capacity on the line of credit at
March 31, 2017 after consideration of $3.7 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 $751.7 million and stockholders' equity of
$518.2 million.
Net cash flows from operations for the first
three months of 2017 were $32.1 million, 24.7% of operating
revenue. The primary use of net cash generated from
operations during the three-month period ended March 31, 2017
was $1.7 million for dividends. The average age of the
Company's tractor fleet was 1.8 years as of March 31, 2017
compared to 1.5 years at March 31, 2016. The average age
of the Company's trailer fleet was 4.5 years at March 31, 2017
compared to 4.7 years at March 31, 2016. Through
continued investment in our fleet, the average life of our tractor
fleet is expected to be approximately 1.8 years at the end of
2017. Our trailer fleet is expected to be approximately 3.8
years at the end of 2017. The Company currently anticipates a
total of approximately $40 to $50 million in net capital
expenditures for the calendar year. The Company ended the
past twelve months with a return on total assets of 7.5% and a
11.2% 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 the first quarter of 2017. The Company has
now paid cumulative cash dividends of $465.7 million, including
three special dividends, ($2.00 in 2007, $1.00 in 2010, and $1.00
in 2012) over the past fifty-five consecutive quarters.
During the three months ended March 31, 2017, the Company did
not purchase any shares of our common stock. Our outstanding shares
at March 31, 2017 were 83.3 million shares. 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. We received the following customer and
community service awards during the first quarter:
• Quaker/Gatorade - Carrier of the Year (Southwest
Region)• Quaker/Gatorade - Carrier of the Year (Northwest
Region)• Quaker/Gatorade - Carrier of the Year (Central West
Region)• Lowe's - Gold Service Award• Wreaths Across
America - Going the Extra Mile Award
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 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 March 31, |
|
|
2017 |
|
2016 |
OPERATING REVENUE |
|
$ |
129,903 |
|
|
$ |
162,786 |
|
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
|
Salaries, wages, and
benefits |
|
$ |
48,979 |
|
|
$ |
65,466 |
|
Rent and purchased
transportation |
|
2,863 |
|
|
6,700 |
|
Fuel |
|
22,702 |
|
|
21,194 |
|
Operations and
maintenance |
|
5,869 |
|
|
6,639 |
|
Operating taxes and
licenses |
|
3,292 |
|
|
3,891 |
|
Insurance and
claims |
|
3,779 |
|
|
8,092 |
|
Communications and
utilities |
|
1,098 |
|
|
1,204 |
|
Depreciation and
amortization |
|
22,930 |
|
|
25,705 |
|
Other operating
expenses |
|
5,103 |
|
|
4,933 |
|
Gain on disposal of
property and equipment |
|
(6,075 |
) |
|
(1,288 |
) |
|
|
|
|
|
|
|
110,540 |
|
|
142,536 |
|
|
|
|
|
|
Operating income |
|
19,363 |
|
|
20,250 |
|
|
|
|
|
|
Interest income |
|
288 |
|
|
75 |
|
|
|
|
|
|
Interest expense |
|
— |
|
|
— |
|
|
|
|
|
|
Income before income
taxes |
|
19,651 |
|
|
20,325 |
|
|
|
|
|
|
Federal and state
income taxes |
|
5,615 |
|
|
5,948 |
|
|
|
|
|
|
Net income |
|
$ |
14,036 |
|
|
$ |
14,377 |
|
|
|
|
|
|
Earnings per share |
|
|
|
|
Basic |
|
$ |
0.17 |
|
|
$ |
0.17 |
|
Diluted |
|
$ |
0.17 |
|
|
$ |
0.17 |
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
Basic |
|
83,292 |
|
|
83,369 |
|
Diluted |
|
83,337 |
|
|
83,460 |
|
|
|
|
|
|
Dividends declared per
share |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
HEARTLAND EXPRESS, INC.AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, except per share
amounts)(unaudited) |
|
|
March 31, |
|
December 31, |
ASSETS |
|
2017 |
|
2016 |
CURRENT
ASSETS |
|
|
|
|
Cash and
cash equivalents |
|
$ |
159,170 |
|
|
$ |
128,507 |
|
Trade
receivables, net |
|
46,221 |
|
|
46,844 |
|
Prepaid
tires |
|
10,379 |
|
|
8,181 |
|
Other
current assets |
|
21,867 |
|
|
13,841 |
|
Income
tax receivable |
|
— |
|
|
4,738 |
|
Total
current assets |
|
237,637 |
|
|
202,111 |
|
|
|
|
|
|
PROPERTY AND
EQUIPMENT |
|
640,531 |
|
|
659,053 |
|
Less
accumulated depreciation |
|
252,038 |
|
|
251,405 |
|
|
|
388,493 |
|
|
407,648 |
|
GOODWILL |
|
100,212 |
|
|
100,212 |
|
OTHER
INTANGIBLES, NET |
|
11,609 |
|
|
12,090 |
|
DEFERRED INCOME
TAXES, NET |
|
1,568 |
|
|
3,785 |
|
OTHER
ASSETS |
|
12,190 |
|
|
12,382 |
|
|
|
$ |
751,709 |
|
|
$ |
738,228 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
Accounts
payable and accrued liabilities |
|
$ |
16,228 |
|
|
$ |
12,355 |
|
Compensation and benefits |
|
22,239 |
|
|
23,320 |
|
Insurance
accruals |
|
18,415 |
|
|
19,132 |
|
Income
taxes payable |
|
3,281 |
|
|
— |
|
Other
accruals |
|
13,286 |
|
|
10,727 |
|
Total
current liabilities |
|
73,449 |
|
|
65,534 |
|
LONG-TERM
LIABILITIES |
|
|
|
|
Income
taxes payable |
|
9,509 |
|
|
11,954 |
|
Deferred
income taxes, net |
|
92,493 |
|
|
94,657 |
|
Insurance
accruals less current portion |
|
58,013 |
|
|
60,257 |
|
Total
long-term liabilities |
|
160,015 |
|
|
166,868 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
|
Capital
stock, common, $.01 par value; authorized 395,000 shares; issued
90,689 in 2017 and 2016; outstanding 83,292 in 2017 and 83,287 in
2016, respectively |
|
907 |
|
|
907 |
|
Additional paid-in capital |
|
3,403 |
|
|
3,433 |
|
Retained
earnings |
|
638,037 |
|
|
625,668 |
|
Treasury
stock, at cost; 7,396 in 2017 and 7,402 in 2016, respectively |
|
(124,102 |
) |
|
(124,182 |
) |
|
|
518,245 |
|
|
505,826 |
|
|
|
$ |
751,709 |
|
|
$ |
738,228 |
|
(1)
GAAP to Non-GAAP Reconciliation Schedule: |
Operating
revenue, operating revenue excluding fuel surcharge revenue,
operating income, operating ratio, and adjusted operating ratio
reconciliation (a) |
|
|
|
Three Months Ended March
31, |
|
2017 |
|
2016 |
|
(Unaudited, in thousands) |
|
|
|
|
Operating revenue |
$ |
129,903 |
|
|
$ |
162,786 |
|
Less: Fuel surcharge
revenue |
14,881 |
|
|
13,094 |
|
Operating revenue,
excluding fuel surcharge revenue |
115,022 |
|
|
149,692 |
|
|
|
|
|
Operating expenses |
110,540 |
|
|
142,536 |
|
Less: Fuel surcharge
revenue |
14,881 |
|
|
13,094 |
|
Adjusted operating
expenses |
95,659 |
|
|
129,442 |
|
|
|
|
|
Operating income |
$ |
19,363 |
|
|
$ |
20,250 |
|
Operating ratio |
85.1 |
% |
|
87.6 |
% |
Adjusted operating
ratio |
83.2 |
% |
|
86.5 |
% |
(a) Operating revenue excluding 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.
Contact: Heartland Express, Inc.
Mike Gerdin, Chief Executive Officer
John Cosaert, Chief Financial Officer
319-626-3600
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