Heartland Express, Inc. (Nasdaq: HTLD) announced today financial
results for the quarter and year ended December 31, 2020.
Three months ended December 31, 2020:
- Net Income of $17.7 million and
Basic Earnings per Share of $0.22,
- Operating Revenue of $155.8
million,
- Operating Income of $23.8 million,
a 34.6% increase over 2019,
- Operating Ratio of 84.7% and 83.3%
Non-GAAP Adjusted Operating Ratio(1),
- Cash balance of $113.9 million and
a Debt-Free Balance Sheet,
- Increased Driver pay by
approximately 6% in late October 2020.
Twelve months ended December 31, 2020:
- Net Income of $70.8 million,
Earnings per Share of $0.87,
- Operating Revenue of $645.3
million, third highest annual revenue in the company's
history,
- Operating Income of $93.4
million,
- Operating Ratio of 85.5% and 84.0%
Non-GAAP Adjusted Operating Ratio(1),
- Our forty-third consecutive year
with an annual operating ratio in the 80's or below.
- Stockholders' Equity of $724.3
million (a record high) and Total Assets of $951.2 million.
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 twelve months ended December 31, 2020 continued to show
strength and discipline in terms of overall profitability and
operating efficiency during the volatile times experienced
throughout 2020. We continue to be extremely proud of our drivers
and our team of employees that support them and our loyal customers
each day.”
Mr. Gerdin continued, “From a financial
perspective, we delivered strong operating results as we focused on
driver utilization to take advantage of periods where freight
demand peaked in the second half of 2020, along with our consistent
focus on cost controls. Freight demand throughout 2020 showed a
wide range of peaks and valleys altered by the impacts of the
COVID-19 virus. Freight demand was also impacted by varying levels
of social, political, and economic impacts felt state by state and
industry by industry across the United States. Through all of this,
Heartland Express drivers and America's truck drivers, along with
all those who work in the transportation industry have ensured that
critical goods and supplies moved through the supply chain to
prevent shortages and re-supply where most needed, while dealing
with their own health and safety. 2020 may be looked at as one of
the most challenging periods of driver hiring and retention within
an industry already challenged with an aging and declining
population of qualified, professional, and safe-operating drivers.
For these reasons, we announced a well-deserved increase in driver
pay that approximates a 6% overall increase, effective late October
for current and future Heartland Express drivers. Since October
2017, we have increased driver pay three times and developed
strategies and initiatives to provide more consistent and elevated
pay to our newest drivers. We believe that to attract and retain
the best of the best and the safest drivers on the road, an
investment in our current and future drivers is a critical
investment for our Company and our industry as a whole.
We delivered an operating ratio of 84.7% and
83.3% Non-GAAP Adjusted Operating Ratio(1) for the three months
ended December 31, 2020 and an 85.5% and 84.0% Non-GAAP Adjusted
Operating Ratio(1) for the past twelve months. At the core of our
operating philosophy is a 40+ year target of a low 80's operating
ratio. Following the acquisition of Millis Transfer in August of
2019, we have worked diligently as a consolidated organization to
achieve this goal in 2020. Looking forward, there is still more
work to be done and opportunities still exist within the
consolidated dry van freight operations as the legacy Heartland
Express fleet is operating below this target and Millis Transfer
continues to operate above this target, as was expected only
sixteen months after acquisition. With nearly 1,200bps of operating
ratio variation between the two fleets, we continue to have
opportunities to improve our consolidated operations in the months
and years ahead.”
"We also remain focused on generating and
allocating cash from our operations. We were able to grow our cash
on hand by more than $37 million year-over-year, following
significant cash outlays, to nearly $114 million at December 31,
2020. We invested a net $111 million in our fleet of revenue
equipment and terminal upgrade projects, to ensure our drivers have
the best equipment available and can enjoy upgraded facilities and
comforts while away from home. We also returned over $32 million to
our shareholders in the form of repurchases of our common stock and
dividends paid during 2020. While making these important
investments for our future and for our shareholders, we maintained
a debt-free balance sheet throughout all of 2020. For these
reasons, we believe Heartland Express is well positioned for the
years ahead."
Financial Results
Heartland Express ended the fourth quarter of
2020 with operating revenues of $155.8 million, compared to $167.2
million in the fourth quarter of 2019. Operating revenues for the
quarter included fuel surcharge revenues of $13.9 million compared
to $21.5 million in the same period of 2019, a $7.6 million
decrease. Net income was $17.7 million, compared to $12.8 million
in the fourth quarter of 2019, an increase of 38.2%. Basic earnings
per share were $0.22 during the quarter compared to $0.16 basic
earnings per share in the fourth quarter of 2019, a 40.0% increase.
The Company posted an operating ratio of 84.7%, non-GAAP adjusted
operating ratio(1) of 83.3%, and a 11.3% net margin (net income as
a percentage of operating revenues) in the fourth quarter of 2020
compared to 89.4%, 87.9% and 7.6%, respectively in the fourth
quarter of 2019. During the fourth quarter, operating revenues,
less fuel surcharge revenues, declined $3.8 million, as a result of
less miles driven mainly due to an overall fleet reduction. Net
income, basic earnings per share, and operating ratio results were
aided by operating and margin improvements at Millis Transfer.
For the twelve month period ended
December 31, 2020, operating revenues were $645.3 million,
compared to $596.8 million in the same period of 2019. Operating
revenues included fuel surcharge revenues of $61.7 million compared
to $75.0 million in the same period of 2019, a $13.3 million
decrease. Net income was $70.8 million, compared to $73.0 million
in the same period of 2019. Basic earnings per share were $0.87
compared to $0.89 earnings per share in the same period of 2019.
Operating income for the twelve-month period decreased $0.9
million, primarily as a result of $16.5 million less gains on
disposal of property and equipment nearly offset by increased
revenue and operational improvements over the prior year. The
Company posted an operating ratio of 85.5%, non-GAAP adjusted
operating ratio(1) of 84.0% and a 11.0% net margin (net income as a
percentage of operating revenues) in the twelve months ended
December 31, 2020 compared to 84.2%, 81.9% and 12.2%,
respectively in 2019. The operating results for the twelve months
ended December 31, 2019 included the financial results of Millis
Transfer for the period August 26, 2019 to December 31, 2019.
Balance Sheet, Liquidity, and Capital
Expenditures
At December 31, 2020, the Company had
$113.9 million in cash balances and no borrowings under the
Company's unsecured line of credit. In addition to the current
borrowing base of $100 million, the Company has the ability to
increase the available borrowing base by $100 million, subject to
normal credit and lender approvals. The Company continues to be in
compliance with associated financial covenants.
The Company ended the quarter with total assets
of $951.2 million and stockholders' equity of $724.3 million, an
all-time record. During the third quarter of 2020, the Company
delivered an all-time record of total assets of $959.8 million. We
continue to rely on our cash generated from operations and cash on
our balance sheet as our main sources for capital deployment, but
we maintain our ability to borrow against our line of credit for a
potential strategic acquisition opportunity.
Net cash flows from operations for the twelve
month period ended December 31, 2020 were $178.9 million,
27.7% of operating revenues. The primary use of cash during the
twelve month period ended December 31, 2020 was $111.2 million
for net property and equipment transactions, $25.7 million for
repurchases of shares of our common stock, and $6.5 million for
dividends.
The average age of the Company's tractor fleet
was 1.7 years as of December 31, 2020 compared to 1.8 years at
December 31, 2019. The average age of the Company's trailer
fleet was 3.7 years at December 31, 2020 compared to 3.6 years
at December 31, 2019. We continued to refresh our fleet of
revenue equipment and also focused on significant renovations and
upgrades across our terminal locations to provide updated
facilities and comforts for our drivers away from home. The Company
currently estimates approximately $80 to $90 million in net capital
expenditures for revenue equipment and our terminal network
infrastructure and related improvements during 2021. The Company
ended the past twelve months with a return on total assets of 7.5%
and a 10.0% return on equity. The Company
continued its commitment to shareholders through the payment of
cash dividends. Dividends of $0.02 per share were declared and paid
during each quarter of 2020. The Company has now paid cumulative
cash dividends of $490.4 million, including three special
dividends, ($2.00 in 2007, $1.00 in 2010, and $1.00 in 2012) over
the past seventy consecutive quarters. During the three months
ended December 31, 2020, the Company repurchased 0.7 million shares
of our common stock for $13.9 million and 1.5 million shares for
$26.1 million during the twelve months ended December 31, 2020. The
Company purchased no shares of common stock during 2019. The
Company has repurchased 3.8 million shares of common stock for
approximately $65.9 million over the past five years. The Company
has the ability to repurchase an additional 5.4 million shares
under the current authorization which would result in 75.3 million
outstanding shares if fully executed.
Other Information
Historical commitment to customer service has
allowed us to build solid, long-term relationships and brand
ourselves as an industry leader for on-time service. This past year
we once again were recognized for customer service by several of
our customers. These awards received include:
- FedEx Express Core Carrier of the
Year (10 years in a row)
- FedEx Express Platinum Award
(99.96% On-Time Delivery)
- FedEx Ground Superior Performance
Award
- Lowe's - One-Way Store Carrier of
the Year
- MillerCoors National Logistics
& Transportation Supplier of the Year
- Quaker/Gatorade - Central West
Region Carrier of the Year
- Unilever - 2019 Carrier of the
Year
- DHL - 2019 National Truckload
Carrier of the Year
- Hills Pet Nutrition for Commitment,
Dedication, and Outstanding Service
During 2020, we were also recognized with the
following safety, operational, community service, and environmental
awards:
- BP Driving Safety Standards Award
2019
- Logistics Management Quest for
Quality Award (our seventeenth award in eighteen years)
- Commercial Carrier Journal Top 250
Award (#39)
- Wreaths Across America Honor
Fleet
- US EPA SmartWay Excellence
Award
These awards are hard-earned and are a direct
reflection upon our outstanding group of employees and our focus on
excellence in all areas of our business.
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, 2019 and updated in the
Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 2020 and June 30, 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 EndedDecember 31, |
|
Twelve Months EndedDecember 31, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
OPERATING REVENUE |
$ |
155,789 |
|
|
|
$ |
167,226 |
|
|
|
$ |
645,262 |
|
|
|
$ |
596,815 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
Salaries, wages, and
benefits |
$ |
63,904 |
|
|
|
$ |
72,002 |
|
|
|
$ |
269,482 |
|
|
|
$ |
240,139 |
|
|
Rent and purchased
transportation |
1,007 |
|
|
|
1,768 |
|
|
|
4,643 |
|
|
|
7,984 |
|
|
Fuel |
20,648 |
|
|
|
30,141 |
|
|
|
86,094 |
|
|
|
101,871 |
|
|
Operations and
maintenance |
6,131 |
|
|
|
6,749 |
|
|
|
27,647 |
|
|
|
24,479 |
|
|
Operating taxes and
licenses |
3,732 |
|
|
|
3,651 |
|
|
|
14,962 |
|
|
|
14,459 |
|
|
Insurance and claims |
6,196 |
|
|
|
4,973 |
|
|
|
22,229 |
|
|
|
17,003 |
|
|
Communications and
utilities |
1,191 |
|
|
|
1,415 |
|
|
|
5,281 |
|
|
|
4,953 |
|
|
Depreciation and
amortization |
28,510 |
|
|
|
29,798 |
|
|
|
109,937 |
|
|
|
100,212 |
|
|
Other operating expenses |
6,796 |
|
|
|
6,429 |
|
|
|
26,398 |
|
|
|
22,781 |
|
|
Gain on disposal of property
and equipment |
(6,091 |
) |
|
|
(7,362 |
) |
|
|
(14,830 |
) |
|
|
(31,341 |
) |
|
|
|
|
|
|
|
|
|
|
132,024 |
|
|
|
149,564 |
|
|
|
551,843 |
|
|
|
502,540 |
|
|
|
|
|
|
|
|
|
|
Operating income |
23,765 |
|
|
|
17,662 |
|
|
|
93,419 |
|
|
|
94,275 |
|
|
|
|
|
|
|
|
|
|
Interest income |
138 |
|
|
|
454 |
|
|
|
842 |
|
|
|
3,955 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
— |
|
|
|
(600 |
) |
|
|
— |
|
|
|
(1,052 |
) |
|
|
|
|
|
|
|
|
|
Income before income
taxes |
23,903 |
|
|
|
17,516 |
|
|
|
94,261 |
|
|
|
97,178 |
|
|
|
|
|
|
|
|
|
|
Federal and state income
taxes |
6,232 |
|
|
|
4,727 |
|
|
|
23,455 |
|
|
|
24,211 |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
17,671 |
|
|
|
$ |
12,789 |
|
|
|
$ |
70,806 |
|
|
|
$ |
72,967 |
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
Basic |
$ |
0.22 |
|
|
|
$ |
0.16 |
|
|
|
$ |
0.87 |
|
|
|
$ |
0.89 |
|
|
Diluted |
$ |
0.22 |
|
|
|
$ |
0.16 |
|
|
|
$ |
0.87 |
|
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
|
|
Basic |
80,964 |
|
|
|
82,025 |
|
|
|
81,388 |
|
|
|
81,980 |
|
|
Diluted |
81,016 |
|
|
|
82,074 |
|
|
|
81,444 |
|
|
|
82,024 |
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
$ |
0.02 |
|
|
|
$ |
0.02 |
|
|
|
$ |
0.08 |
|
|
|
$ |
0.08 |
|
|
HEARTLAND EXPRESS, INC.AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS(in thousands, except per share
amounts)(unaudited) |
|
|
December 31, |
|
December 31, |
ASSETS |
|
2020 |
|
2019 |
CURRENT
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
113,852 |
|
|
|
$ |
76,684 |
|
|
Trade receivables, net |
|
55,577 |
|
|
|
56,753 |
|
|
Prepaid tires |
|
8,241 |
|
|
|
9,107 |
|
|
Other current assets |
|
15,342 |
|
|
|
8,947 |
|
|
Income tax receivable |
|
— |
|
|
|
323 |
|
|
Total current assets |
|
193,012 |
|
|
|
151,814 |
|
|
|
|
|
|
|
PROPERTY AND
EQUIPMENT |
|
779,360 |
|
|
|
739,143 |
|
|
Less accumulated depreciation |
|
240,080 |
|
|
|
212,856 |
|
|
|
|
539,280 |
|
|
|
526,287 |
|
|
GOODWILL |
|
168,295 |
|
|
|
168,295 |
|
|
OTHER INTANGIBLES,
NET |
|
24,746 |
|
|
|
27,136 |
|
|
DEFERRED INCOME TAXES,
NET |
|
8,164 |
|
|
|
6,006 |
|
|
OTHER
ASSETS |
|
17,679 |
|
|
|
19,393 |
|
|
|
|
$ |
951,176 |
|
|
|
$ |
898,931 |
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
12,751 |
|
|
|
$ |
11,060 |
|
|
Compensation and benefits |
|
22,422 |
|
|
|
24,712 |
|
|
Insurance accruals |
|
15,837 |
|
|
|
17,584 |
|
|
Other accruals |
|
18,557 |
|
|
|
10,051 |
|
|
Income taxes payable |
|
1,475 |
|
|
|
— |
|
|
Total current liabilities |
|
71,042 |
|
|
|
63,407 |
|
|
LONG-TERM
LIABILITIES |
|
|
|
|
Income taxes payable |
|
5,801 |
|
|
|
5,956 |
|
|
Deferred income taxes, net |
|
104,004 |
|
|
|
93,698 |
|
|
Insurance accruals less current portion |
|
45,995 |
|
|
|
51,211 |
|
|
Total long-term liabilities |
|
155,800 |
|
|
|
150,865 |
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
|
Capital stock, common, $.01 par value; authorized 395,000 shares;
issued 90,689 in 2020 and 2019; outstanding 80,653 and 82,028 in
2020 and 2019, respectively |
|
$ |
907 |
|
|
|
$ |
907 |
|
|
Additional paid-in capital |
|
4,330 |
|
|
|
4,141 |
|
|
Retained earnings |
|
890,970 |
|
|
|
826,666 |
|
|
Treasury stock, at cost; 10,036 and 8,661 shares in 2020 and 2019,
respectively |
|
(171,873 |
) |
|
|
(147,055 |
) |
|
|
|
724,334 |
|
|
|
684,659 |
|
|
|
|
$ |
951,176 |
|
|
|
$ |
898,931 |
|
|
(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 Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited, in thousands) |
|
(Unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
155,789 |
|
|
$ |
167,226 |
|
|
$ |
645,262 |
|
|
$ |
596,815 |
|
Less: Fuel surcharge revenue
(non-GAAP) |
|
13,868 |
|
|
21,472 |
|
|
61,725 |
|
|
74,955 |
|
Operating revenue excluding
fuel surcharge revenue |
|
141,921 |
|
|
145,754 |
|
|
583,537 |
|
|
521,860 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
132,024 |
|
|
149,564 |
|
|
551,843 |
|
|
502,540 |
|
Less: Fuel surcharge revenue
(non-GAAP) |
|
13,868 |
|
|
21,472 |
|
|
61,725 |
|
|
74,955 |
|
Adjusted operating
expenses |
|
118,156 |
|
|
128,092 |
|
|
490,118 |
|
|
427,585 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
23,765 |
|
|
$ |
17,662 |
|
|
$ |
93,419 |
|
|
$ |
94,275 |
|
Operating ratio |
|
84.7 |
% |
|
89.4 |
% |
|
85.5 |
% |
|
84.2 |
% |
Adjusted operating ratio
(non-GAAP) |
|
83.3 |
% |
|
87.9 |
% |
|
84.0 |
% |
|
81.9 |
% |
(a) Adjusted operating ratio as reported in this
press release is 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.
Heartland Express (NASDAQ:HTLD)
Historical Stock Chart
From Mar 2024 to Apr 2024
Heartland Express (NASDAQ:HTLD)
Historical Stock Chart
From Apr 2023 to Apr 2024