Heartland Express, Inc. (Nasdaq: HTLD) announced today financial
results for the three and six months ended June 30, 2021.
Three months ended June 30, 2021:
- Net Income of $20.7 million, and Basic Earnings per Share of
$0.26,
- Operating Revenue of $154.1 million,
- Operating Income of $27.4 million,
- Operating Ratio of 82.3% and 79.7% Non-GAAP Adjusted Operating
Ratio(1),
- Cash Balance of $167.2 million and Total Assets of $957.0
million,
- Stockholders' Equity of $741.8 million (a record high),
- Debt-Free Balance Sheet.
Six months ended June 30, 2021:
- Net Income of $34.5 million, and Basic Earnings per Share of
$0.43,
- Operating Revenue of $306.5 million,
- Operating Income of $45.6 million,
- Operating Ratio of 85.1% and 83.1% 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 six months ended June 30, 2021 showed strength in terms of
profit, overall operating efficiency, and our continued ability to
build cash to $167.2 million at the end of the quarter without any
debt on our balance sheet. Freight demand continued to be strong
throughout the second quarter of 2021 and is expected to continue
to be strong for the remainder of 2021. We also believe that hiring
and retaining safe and professional drivers will be the number one
challenge in order to fully capitalize on the expected freight
demand. We have increased wages and enhanced the compensation
features for our drivers multiple times in the last nine months.
Further, we have continued to get more creative in providing better
pay, benefits, equipment, and facilities for our drivers. While
this same employment challenge is facing many businesses in America
today, we believe it is more pronounced within our industry. Given
that, we intend to continue to invest in our drivers and in
creative strategies to address this significant challenge in the
months ahead.”
Mr. Gerdin continued, “From a financial
perspective, we were able to improve our operating income and
control costs to deliver an operating ratio of 82.3% and a non-GAAP
adjusted operating ratio(1) of 79.7%, an improvement to the same
quarter of 2020 where we delivered an operating ratio of 84.5% and
a non-GAAP adjusted operating ratio(1) of 83.0%. The operating
ratio delivered was also better sequentially to the first quarter
of 2021 and our best consolidated operating ratio delivered since
the 3rd quarter of 2019 (Millis Transfer was acquired on August 26,
2019). Specifically, the Heartland Express fleet operated in the
upper 70's (mid-70's non-GAAP adjusted operating ratio(1)), during
the second quarter of 2021, while the Millis Transfer fleet has
shown continued improvement over the 22 months since the
acquisition. Millis delivered an operating ratio in the low 90's
(for both operating ratio and non-GAAP adjusted operating ratio(1))
and will require additional improvements to achieve 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 second quarter was $27.4 million, a 9.5% increase,
compared to $25.0 million in the second quarter of 2020 and our
strongest quarter of operating income since the second quarter of
2019. 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 second quarter of
2021 with operating revenues of $154.1 million, compared to $160.9
million in the second quarter of 2020. The revenues recorded during
the second quarter of 2021 grew $1.7 million sequentially, from
$152.4 million recorded during the first quarter of 2021. Operating
revenues for the quarter included fuel surcharge revenues of $19.1
million, compared to $14.0 million in the same period of 2020.
Operating income for the three-month period ended June 30,
2021 was $27.4 million, an increase of $2.4 million as compared to
the same period of the prior year. Net income was $20.7 million,
compared to $19.2 million in the second quarter of 2020, an
increase of 8.1%. Basic earnings per share were $0.26 during the
quarter as compared to $0.24 during the same period of 2020. The
Company posted an operating ratio of 82.3%, non-GAAP adjusted
operating ratio(1) of 79.7%, and a 13.5% net margin (net income as
a percentage of operating revenues) in the second quarter of 2021
compared to 84.5%, 83.0%, and 11.9%, respectively, in the second
quarter of 2020.
For the six-month period ended June 30, 2021,
the Company recorded operating revenues of $306.5 million, compared
to $327.2 million in the same period of 2020. Operating revenues
for the period included fuel surcharge revenues of $35.9 million,
compared to $33.4 million in the same period of 2020. Net income
was $34.5 million, compared to $32.4 million in the same period of
2020, an increase of $2.1 million (6.3%), driven primarily by more
gains on sale of revenue equipment, tax effected, partially offset
by a decline in operating revenues. Basic earnings per share were
$0.43 during the period, compared to $0.40 basic earnings per share
in the same period of 2020. The Company posted an operating ratio
of 85.1%, non-GAAP adjusted operating ratio(1) of 83.1%, and a
11.2% net margin (net income as a percentage of operating revenues)
for the six months ended June 30, 2021 compared to 87.1%, 85.6%,
and 9.9%, respectively, in the same period of 2020.
Balance Sheet, Liquidity, and Capital
Expenditures
As of June 30, 2021, the Company had $167.2
million in cash balances, an increase of $19.0 million since the
first quarter of 2021, and no borrowings under the Company's
unsecured line of credit. The Company had $88.9 million in
available borrowing capacity on the line of credit as of
June 30, 2021 after consideration of $11.1 million outstanding
letters of credit. In addition to the current borrowing base of
$100 million, the Company has the ability to increase the available
borrowing base by an additional $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 $957.0 million and stockholders'
equity of $741.8 million, an all-time high.
Net cash flows from operations for the first six
months of 2021 were $62.8 million, 20.5% of operating revenue. Net
revenue equipment and terminal transactions provided $8.4 million
of cash. The primary uses of net cash during the six-month period
ended June 30, 2021 were $15.0 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 1.8 years as of June 30, 2021 compared to 2.1 years on
June 30, 2020. The average age of the Company's trailer fleet
was 3.6 years as of June 30, 2021 compared to 3.7 years on
June 30, 2020. The Company currently anticipates a total of
approximately $35 to $45 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 $0.02 per share was declared and paid during the first
and second quarters of 2021, respectively. The Company has now paid
cumulative cash dividends of $493.6 million, including three
special dividends, ($2.00 in 2007, $1.00 in 2010, and $1.00 in
2012) over the past seventy-two consecutive quarters since 2003.
During the three months ended June 30, 2021, the Company purchased
no shares of our common stock. We purchased 768,801 shares of our
common stock for $14.5 million, during the six months ended June
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 quarter of 2020. Our
outstanding shares at June 30, 2021 were 79.9 million. A
total of 3.6 million shares of common stock have been repurchased
for $65.8 million over the past five years. The Company has the
ability to repurchase an additional 4.7 million shares under the
current authorization which would result in 75.2 million
outstanding shares if fully executed.
Other Information
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 EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
OPERATING REVENUE |
|
$ |
154,128 |
|
|
$ |
160,873 |
|
|
$ |
306,530 |
|
|
$ |
327,191 |
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
Salaries, wages, and
benefits |
|
$ |
62,931 |
|
|
$ |
68,147 |
|
|
$ |
127,713 |
|
|
$ |
138,401 |
|
|
Rent and purchased
transportation |
|
1,009 |
|
|
1,028 |
|
|
1,973 |
|
|
2,636 |
|
|
Fuel |
|
24,804 |
|
|
18,287 |
|
|
48,961 |
|
|
44,228 |
|
|
Operations and
maintenance |
|
5,670 |
|
|
7,597 |
|
|
11,358 |
|
|
14,398 |
|
|
Operating taxes and
licenses |
|
3,413 |
|
|
3,724 |
|
|
7,034 |
|
|
7,566 |
|
|
Insurance and claims |
|
4,678 |
|
|
5,852 |
|
|
10,117 |
|
|
11,206 |
|
|
Communications and
utilities |
|
967 |
|
|
1,272 |
|
|
2,193 |
|
|
2,692 |
|
|
Depreciation and
amortization |
|
25,956 |
|
|
27,168 |
|
|
52,882 |
|
|
53,803 |
|
|
Other operating expenses |
|
5,204 |
|
|
6,056 |
|
|
10,756 |
|
|
12,965 |
|
|
Gain on disposal of property
and equipment |
|
(7,855 |
) |
|
(3,247 |
) |
|
(12,088 |
) |
|
(3,018 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
126,777 |
|
|
135,884 |
|
|
260,899 |
|
|
284,877 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
27,351 |
|
|
24,989 |
|
|
45,631 |
|
|
42,314 |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
175 |
|
|
157 |
|
|
312 |
|
|
534 |
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
27,526 |
|
|
25,146 |
|
|
45,943 |
|
|
42,848 |
|
|
|
|
|
|
|
|
|
|
|
|
Federal and state income
taxes |
|
6,784 |
|
|
5,964 |
|
|
11,466 |
|
|
10,428 |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
20,742 |
|
|
$ |
19,182 |
|
|
$ |
34,477 |
|
|
$ |
32,420 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.26 |
|
|
$ |
0.24 |
|
|
$ |
0.43 |
|
|
$ |
0.40 |
|
|
Diluted |
|
$ |
0.26 |
|
|
$ |
0.24 |
|
|
$ |
0.43 |
|
|
$ |
0.40 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding |
|
|
|
|
|
|
|
|
|
Basic |
|
79,906 |
|
|
81,351 |
|
|
80,028 |
|
|
81,611 |
|
|
Diluted |
|
79,957 |
|
|
81,415 |
|
|
80,081 |
|
|
81,680 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
2021 |
|
2020 |
CURRENT
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
167,241 |
|
|
|
$ |
113,852 |
|
|
Trade receivables, net |
|
59,290 |
|
|
|
55,577 |
|
|
Prepaid tires |
|
8,768 |
|
|
|
8,241 |
|
|
Other current assets |
|
12,212 |
|
|
|
15,342 |
|
|
Total current assets |
|
247,511 |
|
|
|
193,012 |
|
|
|
|
|
|
|
PROPERTY AND
EQUIPMENT |
|
744,891 |
|
|
|
779,360 |
|
|
Less accumulated depreciation |
|
244,510 |
|
|
|
240,080 |
|
|
|
|
500,381 |
|
|
|
539,280 |
|
|
GOODWILL |
|
168,295 |
|
|
|
168,295 |
|
|
OTHER INTANGIBLES,
NET |
|
23,550 |
|
|
|
24,746 |
|
|
DEFERRED INCOME TAXES,
NET |
|
— |
|
|
|
8,164 |
|
|
OTHER
ASSETS |
|
17,248 |
|
|
|
17,679 |
|
|
|
|
$ |
956,985 |
|
|
|
$ |
951,176 |
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
18,952 |
|
|
|
$ |
12,751 |
|
|
Compensation and benefits |
|
24,002 |
|
|
|
22,422 |
|
|
Insurance accruals |
|
14,521 |
|
|
|
15,837 |
|
|
Income taxes payable |
|
1,090 |
|
|
|
1,475 |
|
|
Other accruals |
|
18,654 |
|
|
|
18,557 |
|
|
Total current liabilities |
|
77,219 |
|
|
|
71,042 |
|
|
LONG-TERM
LIABILITIES |
|
|
|
|
Income taxes payable |
|
5,306 |
|
|
|
5,801 |
|
|
Deferred income taxes, net |
|
90,471 |
|
|
|
104,004 |
|
|
Insurance accruals less current portion |
|
42,223 |
|
|
|
45,995 |
|
|
Total long-term liabilities |
|
138,000 |
|
|
|
155,800 |
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
STOCKHOLDERS'
EQUITY |
|
|
|
|
Capital stock, common, $.01 par value; authorized 395,000 shares;
issued 90,689 in 2021and 2020; outstanding 79,913 and 80,653 in
2021 and 2020, respectively |
|
907 |
|
|
|
907 |
|
|
Additional paid-in capital |
|
4,531 |
|
|
|
4,330 |
|
|
Retained earnings |
|
922,249 |
|
|
|
890,970 |
|
|
Treasury stock, at cost; 10,776 and 10,036 in 2021 and 2020,
respectively |
|
(185,921 |
) |
|
|
(171,873 |
) |
|
|
|
741,766 |
|
|
|
724,334 |
|
|
|
|
$ |
956,985 |
|
|
|
$ |
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 EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
(Unaudited, in thousands) |
|
(Unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
154,128 |
|
|
$ |
160,873 |
|
|
$ |
306,530 |
|
|
$ |
327,191 |
|
Less: Fuel surcharge
revenue |
|
19,132 |
|
|
13,981 |
|
|
35,916 |
|
|
33,445 |
|
Operating revenue, excluding
fuel surcharge revenue |
|
134,996 |
|
|
146,892 |
|
|
270,614 |
|
|
293,746 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
126,777 |
|
|
135,884 |
|
|
260,899 |
|
|
284,877 |
|
Less: Fuel surcharge
revenue |
|
19,132 |
|
|
13,981 |
|
|
35,916 |
|
|
33,445 |
|
Adjusted operating
expenses |
|
107,645 |
|
|
121,903 |
|
|
224,983 |
|
|
251,432 |
|
|
|
|
|
|
|
|
|
|
Operating income |
|
$ |
27,351 |
|
|
$ |
24,989 |
|
|
$ |
45,631 |
|
|
$ |
42,314 |
|
Operating ratio |
|
82.3 |
% |
|
84.5 |
% |
|
85.1 |
% |
|
87.1 |
% |
Adjusted operating ratio |
|
79.7 |
% |
|
83.0 |
% |
|
83.1 |
% |
|
85.6 |
% |
(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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