Monday, July 19, 2010 For Immediate Release
Press Release
Heartland Express, Inc. Reports Revenues and Earnings for the Second Quarter of 2010
NORTH LIBERTY, IOWA - July 19, 2010 - Heartland Express, Inc. (Nasdaq: HTLD) announced today financial results for the quarter ended June 30, 2010. Operating revenues for the quarter increased 8.9% to $127.4 million from $117.0 million in the second quarter of 2009. Net income was $16.7 million compared to $17.6 million in the 2009 period, a 5.5% decrease. Earnings per share decreased 5.3% to $0.18 from $0.19 reported in the second quarter of 2009. Net income decreased by $0.03 per share due to a decrease in gains on disposal of property and equipment and increased depreciation expense primarily attributable to the purchase of new tractors during 2009. For the quarter, Heartland Express, Inc. (the “Company”) posted an operating ratio (operatin g expenses as a percentage of operating revenues) of 82.7% and a 13.1% net margin (net income as a percentage of operating revenues).
Operating revenues for the six month period increased 4.8% to $243.0 million from $232.0 million in the 2009 period. Net income was $28.5 million compared to $31.8 million in the 2009 period, a 10.1% decrease. Earnings per share decreased 11.4% to $0.31 from $0.35 reported in the first six months of 2009. Net income decreased by $0.07 per share due to a decrease in gains on disposal of property and equipment and increased depreciation expense primarily attributable to the purchase of new tractors during 2009. For the six month period, the Company posted an operating ratio of 84.4%and an 11.7% net margin.
The Company continues to post low operating ratios in a very tough operating environment. The increase in operating revenues resulted from the tightening of available industry capacity. Freight demand continues to lag dramatically behind that experienced in 2007 prior to the recent recession, however, freight rates have stabilized and equipment utilization has improved in comparison to last year. The Company is positioned to add capacity and continue to increase utilization to take advantage of opportunities resulting from decreased industry capacity. The industry continues to be challenged by driver recruitment and retention. This challenge is expected to amplify with the implementation of the stringent safety requirements of CSA 2010 and the anticipated decrease in qualified drivers.
Fuel expense increased $5.9 million or 23.6% during the quarter primarily due to an increase in average fuel prices. During the quarter ended June 30, 2010 the U.S. average cost of fuel was $3.029 per gallon compared to $2.341 p er gallon for the same period of 2009, a 29.4% increase. The Company continues to benefit from the focus on the reduction of idle hours and strategic fuel purchasing decisions which offset a portion of the rise in fuel costs.
The Company ended the quarter with cash, cash equivalents, short-term and long-term investments of $255.2 million, a $54.8 million increase from the $200.4 million reported at December 31, 2009. Long-term and short-term investments include illiquid auction rate securities held since February 2008. Since February 2008, the Company has received $89.6 million in calls, at par, including $44.1 million received this year. The Company ended the quarter with $126.5 million, at par, in illiquid auction rate securities and this balance has been reduced to $108.9 million subsequent to June 30, 2010. The Company continues to be involved in efforts to bring liquidity to the auction rate securities portfolio. Net cash flows from operations continue to be strong at 19.7% of operating revenues. The Company's balance sheet continues
to be debt-free with total assets of$571.1 million. The Company ended the past four quarters with a return on total assets of 9.7% and a 14.6% return on equity.
The average age of the Company's tractor fleet was 1.8 years as of June 30, 2010. This is one of the newest and most fuel efficient fleets in the industry. The Company anticipates the delivery of new 2011 ProStar Internationals in the third quarter. This fleet upgrade will keep our fleet new and positions the Company to take advantage of growth opportunities. In addition, the Company will benefit from increased fuel economy as it continues to replace the remainder of the 2007 models in its fleet with the aerodynamic and fuel efficient ProStar and ProStar+ tractors.
Heartland Express declared a regular quarterly cash dividend during the quarter. The quarterly dividend of approximately $1.8 million at the rate of $0.02 per share was paid on July 2, 2010 to shareholders of record at the close of business on June 22, 2010. The Company has now paid cash dividends of $243.2 million over the past twenty-eight consecutive quarters.
The ability to deliver the highest quality of service to our customers has enabled us to build a strong and financially sound company. Customer service awards received thus far in 201 0 include the 2009 Quaker/Gatorade Southwest Region Carrier of the Year, 2009 Sears Partner in Progress award, 2009 Unilever Excellence Award for outstanding on-time delivery, the Nestle Waters 2009 World Class Customer Service Award, the 2009 Genpak Regional Carrier of the Year, the 2009 Eastman Chemical Company Supplier Excellence Award, the 2009 LXP Carrier of the Year - Tier One Carriers for the third consecutive year, Lowe's 2009 Platinum Carrier Award, and the Walmart Transportation 2009 General Merchandise Platinum Carrier of the Year Award.
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 currentl y 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, President
John Cosaert, Chief Financial Officer
319-626-3600
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in thousands, except per share amounts)
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | | | | | | |
| | 2010 | | 2009 | | 2010 | | 2009 |
| OPERATING REVENUE | $ | 127,411 | | | $ | 116,974 | | | $ | 243,028 | | | $ | 231,953 | |
| | | | | | | | |
| OPERATING EXPENSES: | | | | | | | |
| Salaries, wages, and benefits | $ | 42,320 | | | $ | 42,938 | | | $ | 82,858 | | | $ | 86,997 | |
| Rent and purchased transportation | 2,533 | | | 2,806 | | | 4,927 | | | 5,744 | |
| Fuel | 31,012 | | | 25,086 | | | 60,552 | | | 49,644 | |
| Operations and maintenance | 4,141 | | | 4,314 | | | 7,571 | | | 8,354 | |
| Operating taxes and licenses | 2,202 | | | 2,433 | | | 4,025 | | | 4,716 | |
| Insurance and claims | 5,422 | | | 4,625 | | | 8,373 | | | 8,139 | |
| Communications and utilities | 860 | | | 906 | | | 1,762 | | | 1,902 | |
| Depreciation | 15,379 | | | 13,160 | | | 31,102 | | | 24,974 | |
| Other operating expenses | 3,535 | | | 3,188 | | | 6,527 | | | 6,591 | |
| Gain on disposal of property and equipment | (2,026 | ) | | (4,190 | ) | | (2,533 | ) | | (5,857 | ) |
| | | | | | | | |
| | 105,378 | | | 95,266 | | | 205,164 | | | 191,204 | |
| | | | | | | | |
| Operating Income | 22,033 | | | 21,708 | | | 37,864 | | | 40,749 | |
| | | | | | | | |
| Interest income | 416 | | | 563 | | | 819 | | | 1,434 | |
| | | | | | | | |
| Income before income taxes | 22,449 | | | 22,271 | | | 38,683 | | | 42,183 | |
| | | | | | | | |
| Federal and state income taxes | 5,796 | | | 4,656 | | | 10,143 | | | 10,427 | |
| | | | | | | | |
| Net Income | $ | 16,653 | | | $ | 17,615 | | | $ | 28,540 | | | $ | 31,756 | |
| | | | | | | | |
| Earnings per share | $ | 0.18 | | | $ | 0.19 | | | $ | 0.31 | | | $ | 0.35 | |
| | | | | | | | |
| Weighted average shares outstanding | 90,689 | | | 90,689 | | | 90,689 | | | 91,582 | |
| | | | | | | | |
| Dividends declared per share | $ | 0.02 | | | $ | 0.02 | | &n bsp; | $ | 0.04 | | | $ | 0.04 | |
HEARTLAN D EXPRESS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
| | | | | | | |
| ASSETS | June 30,
2010 | | December 31,
2009 |
| CURRENT ASSETS | (Unaudited) | | |
| Cash and cash equivalents | $ | 116,271 | | | $ | 52,351 | |
| Short-term investments | 36,030 | | | 7,126 | |
| Trade receivables, net | 42,592 | | | 37,361 | |
| Prepaid tires | 4,526 | | | 6,579 | |
| Other current assets | 5,129 | | | 1,923 | |
| Income tax receivable | 1,363 | | | 4,658 | |
| Deferred income taxes, net | 13,911 | | | 14,516 | |
| Total current assets | 219,822 | | | 124,514 | |
| | | | |
| PROPERTY AND EQUIPMENT | 400,924 | | | 413,564 | |
| Less accumulated depreciation | 163,680 | | | 138,394 | |
| | 237,244 | | | 275,170 | |
| LONG-TERM INVESTMENTS | 102,939 | | | 140,884 | |
| OTHER ASSETS | 11,107 | | | 10,595 | |
| | $ | 571,112 | | | $ | 551,163 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| CURRENT LIABILITIES | | | |
| Accounts payable and accrued liabilities | $ | 8,467 | | | $ | 6,953 | |
| Compensation and benefits | 16,745 | | | 13,770 | |
| Insurance accruals | 19,980 | | | 19,236 | |
| Other accruals | 6,849 | | | 7,095 | |
| Total current liabilities | 52,041 | | | 47,054 | |
| LONG-TERM LIABILITIES | | | |
| Income taxes payable | 26,362 | | | 31,323 | |
| Deferred income taxes, net | 44,358 | | | 51,218 | |
| Insurance accruals less current portion | 56,023 | | | 53,898 | |
| Total long-term liabilities | 126,743 | | | 136,439 | |
| COMMITMENTS AND CONTINGENCIES | | | |
| STOCKHOLDERS' EQUITY | | | |
| Capital stock, common, $.01 par value; authorized 395,000 shares; issued and outstanding 90,689 in 2010 and 2009 | 907 | | | 907 | |
| Additional paid-in capital | 439 | | | 439 | |
| Retained earnings | 396,563 | | | 371,650 | |
| Accumulated other comprehensive loss | (5,581 | ) | | (5,326 | ) |
| | 392,328 | | | 367,670 | |
| | $ | 571,112 | | | $ | 551,163 | |
