Exhibit 99.1
October 27, 2015 For Immediate Release
Press Release
Heartland Express, Inc. Reports Revenues and Earnings for the Third Quarter of 2015 - Operating Ratio of 84.2% year-to-date 2015.
NORTH LIBERTY, IOWA - October 27, 2015 - Heartland Express, Inc. (Nasdaq: HTLD) announced today financial results for the three and nine months ended September 30, 2015. Highlights included:
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| • | Operating Ratio of 84.2% year-to-date compared to 85.4% in the same period of 2014, |
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| • | Operating Ratio improvement despite a 13% increase in average driver wages implemented in November 2014 and January 2015, |
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| • | Cash generated from operations increased 10.8%, to $142.9 million year-to-date, |
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| • | Repurchased 1.8 million shares of our outstanding common stock at $35.8 million, |
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| • | Cash balance of $64.2 million and no outstanding debt at September 30, 2015. |
Financial Results
Heartland Express (the "Company") for the three months ended September 30, 2015 had basic earnings per share of $0.17 and an operating ratio (operating expenses as a percentage of operating revenues) of 86.4% compared to $0.26 basic earnings per share and 83.3% operating ratio in the third quarter of 2014. The Company ended the quarter with net income of $15.1 million, compared to $22.7 million in the third quarter of 2014, a 33.5% decrease. Operating results for the quarter were negatively impacted by a $3.9 million decrease in gains on sales of equipment and $2.2 million increase in insurance and claims activity. Also impacting the quarter were lower than anticipated freight volumes compared to the first and second quarter of 2015. Operating revenues were $182.5 million compared to $217.1 million, a 15.9% decrease to the third quarter of 2014. Operating revenues for the quarter included fuel surcharge revenues of $21.8 million compared to $42.1 million in the same period of 2014, a $20.3 million decrease. Operating revenues decreased 8.1% excluding the impact of fuel surcharge revenues. Operating income for the three month period was positively impacted by a $4.5 million decrease in net fuel expense. The Company posted an 8.3% net margin (net income as a percentage of operating revenues) in the third quarter of 2015 compared to 10.5%, in the third quarter of 2014.
For the nine month period ended September 30, 2015 the Company had basic earnings per share of $0.64 and an operating ratio (operating expenses as a percentage of operating revenues) of 84.2% compared to basic earnings per share of $0.72 and an operating ratio of 85.4% for the same nine month period ended September 30, 2014. The Company ended the nine month period ended September 30, 2015 with operating revenues of $561.7 million and net income of $56.0 million, compared to $668.4 million and $63.3 million, respectively for the same nine month period ended September 30, 2014. Operating revenues for the nine month period ended September 30, 2015 included fuel surcharge revenues of $73.6 million compared to $134.2 million for the same period of 2014, a $60.6 million decrease. Operating revenues decreased 8.6% excluding the impact of fuel surcharge revenues. Operating income for the nine month period was positively impacted by a $19.5 million decrease in net fuel expense. The Company posted a 10.0% net margin (net income as a percentage of operating revenues) in the nine months ended September 30, 2015 compared to 9.5%, for the same period of 2014.
Our financial results year-to-date have allowed us to invest $35.8 million in the repurchase of 1.8 million shares of our common stock as of September 30, 2015. While driver attrition has slowed, since implementation of our updated pay package in late 2014 and early 2015, attracting and retaining professional drivers that meet our high standards of safety continues to be an ongoing challenge. Driver challenges coupled with our yield management efforts and current freight demand has resulted in lower revenues and
earnings period over period compared to 2014 although our operating ratio and net margin continue to show good improvement for the year ended September 30, 2015.
Balance Sheet, Liquidity, and Capital Expenditures
At September 30, 2015, the Company had $64.2 million in cash balances and no borrowings under the Company's unsecured line of credit. The Company had $220.6 million in available borrowing capacity on the line of credit at September 30, 2015 after consideration of $4.4 million outstanding letters of credit. The line of credit maximum borrowing capacity will reduce by $25.0 million to $200.0 million on November 1, 2015. The Company continues to be in compliance with associated financial covenants. The Company's debt balance decreased $24.6 million from December 31, 2014 due to repayments during January 2015. The Company ended the quarter with total assets of $767.5 million.
Net cash flows from operations for the first nine months of 2015 showed continued improvement over the prior year at 25.4% of operating revenues or $142.9 million. The primary use of cash during the nine month period ended September 30, 2015 was $24.6 million for the repayment of long-term debt obligations, $22.6 million for purchases of property and equipment, net of trades and sale proceeds, and $35.8 million for stock repurchases. The Company currently anticipates a total of approximately $65 to $70 million in net capital expenditures for the calendar year. The Company currently estimates a total of approximately $35 to $45 million in net capital expenditures for 2016. The Company ended the past twelve months with a return on total assets of 10.0% and a 15.7% return on equity.
The average age of the Company's tractor fleet was 1.6 years as of September 30, 2015 compared to 2.1 years at September 30, 2014. During the third quarter of 2015 the Company took delivery of approximately 380 new tractors and has approximately 600 new tractors scheduled for delivery prior to the end of the year. The new tractors have been and will continue to be a mix of International ProStar Plus and Freightliner Cascadia models in 2015. The average age of tractors is currently expected to decrease throughout the remainder of 2015 to an estimated average age of 1.3 years by December 31, 2015. The average age of the Company's trailer fleet was 4.4 years at September 30, 2015 compared to 4.3 years at September 30, 2014. The average age of trailers is currently estimated to remain flat at approximately 4.5 years through December 31, 2015. During the third quarter of 2015 the Company took delivery of approximately 250 new trailers and has approximately 50 new trailers scheduled for delivery prior to the end of 2015. The demand for used revenue equipment remains solid and the Company will continue to take advantage of a favorable used equipment market during the remainder of 2015. It is currently estimated that the Company's dry-van trailer fleet, excluding specialty equipment, will be 100% 2012 and newer model years by the end of 2015.
Heartland Express Chief Executive Officer Michael Gerdin, commented on the quarterly results and positioning of the Company, "We continue to leverage our strong cash position and our ability to generate cash to invest in our operating fleet, infrastructure and ourselves by repurchasing 1.8 million shares of our common stock. We continue to focus on making progress towards our goal of getting our consolidated operating ratio, excluding gains on equipment, to our historical operating levels of the low 80's. We also remain committed to operating safely, efficiently, and profitably now and in the years ahead, no matter what the environment holds."
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 during the quarter and was paid on October 1, 2015. The Company has now paid cumulative cash dividends of $455.7 million, including three special dividends, ($2.00 in 2007, $1.00 in 2010, and $1.00 in 2012) over the past forty-nine consecutive quarters. The Company has repurchased 7.8 million shares of common stock for approximately $116.3 million over the past five years, including 1.8 million shares for $35.8 million in the three and nine months ended September 30, 2015. There were no shares repurchased during the three and nine months ended 2014.
We continued to deliver award-winning service and safety to our customers along with strong operational and environmentally-focused performance as evidenced by the following awards received during the quarter:
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| • | Unilever - The Winning Quality and Service Award |
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| • | US EPA 2015 SmartWay Excellence Award |
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| • | Logistics Management Magazine's Dry Freight Carrier Quest for Quality Award |
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| • | Journal of Commerce - Top 50 Trucking Companies in U.S. |
For the nine months ended September 30, 2015, we have received sixteen total awards.
Other Information
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.
Contact: Heartland Express, Inc.
Mike Gerdin, Chief Executive Officer
John Cosaert, Chief Financial Officer
319-626-3600
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
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| | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | | 2015 | | 2014 | | 2015 | | 2014 |
| OPERATING REVENUE | | $ | 182,533 |
| | $ | 217,092 |
| | $ | 561,739 |
| | $ | 668,358 |
|
| | | | | | | | | |
| OPERATING EXPENSES: | | | | | | | | |
| Salaries, wages, and benefits | | $ | 68,987 |
| | $ | 68,688 |
| | $ | 210,886 |
| | $ | 210,872 |
|
| Rent and purchased transportation | | 8,238 |
| | 12,518 |
| | 26,775 |
| | 40,770 |
|
| Fuel | | 29,414 |
| | 53,435 |
| | 97,866 |
| | 175,998 |
|
| Operations and maintenance | | 9,213 |
| | 9,977 |
| | 25,725 |
| | 29,874 |
|
| Operating taxes and licenses | | 4,498 |
| | 5,189 |
| | 13,690 |
| | 15,354 |
|
| Insurance and claims | | 7,379 |
| | 5,155 |
| | 17,491 |
| | 16,621 |
|
| Communications and utilities | | 1,699 |
| | 1,564 |
| | 4,695 |
| | 4,947 |
|
| Depreciation and amortization | | 28,415 |
| | 27,754 |
| | 81,266 |
| | 78,996 |
|
| Other operating expenses | | 7,230 |
| | 7,779 |
| | 21,734 |
| | 24,465 |
|
| Gain on disposal of property and equipment | | (7,401 | ) | | (11,257 | ) | | (27,250 | ) | | (27,160 | ) |
| | | | | | | | | |
| | | 157,672 |
| | 180,802 |
| | 472,878 |
| | 570,737 |
|
| | | | | | | | | |
| Operating income | | 24,861 |
| | 36,290 |
| | 88,861 |
| | 97,621 |
|
| | | | | | | | | |
| Interest income | | 64 |
| | 21 |
| | 156 |
| | 163 |
|
| | | | | | | | | |
| Interest expense | | — |
| | (97 | ) | | (19 | ) | | (384 | ) |
| | | | | | | | | |
| Income before income taxes | | 24,925 |
| | 36,214 |
| | 88,998 |
| | 97,400 |
|
| | | | | | | | | |
| Federal and state income taxes | | 9,812 |
| | 13,477 |
| | 32,957 |
| | 34,111 |
|
| | | | | | | | | |
| Net income | | $ | 15,113 |
| | $ | 22,737 |
| | $ | 56,041 |
| | $ | 63,289 |
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| | | | | | | | | |
| Earnings per share | | | | | | | | |
| Basic | | $ | 0.17 |
| | $ | 0.26 |
| | $ | 0.64 |
| | $ | 0.72 |
|
| Diluted | | $ | 0.17 |
| | $ | 0.26 |
| | $ | 0.64 |
| | $ | 0.72 |
|
| | | | | | | | | |
| Weighted average shares outstanding | | | | | | | | |
| Basic | | 87,387 |
| | 87,778 |
| | 87,663 |
| | 87,737 |
|
| Diluted | | 87,492 |
| | 87,923 |
| | 87,806 |
| | 87,921 |
|
| | | | | | | | | |
| Dividends declared per share | | $ | 0.02 |
| | $ | 0.02 |
| | $ | 0.06 |
| | $ | 0.06 |
|
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HEARTLAND EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited) |
| | | September 30, | | December 31, |
| ASSETS | | 2015 | | 2014 |
| CURRENT ASSETS | | | | |
| Cash and cash equivalents | | $ | 64,165 |
| | $ | 17,303 |
|
| Trade receivables, net | | 64,519 |
| | 77,034 |
|
| Prepaid tires | | 9,673 |
| | 10,160 |
|
| Prepaid shop supplies | | 561 |
| | 2,056 |
|
| Other current assets | | 24,379 |
| | 8,992 |
|
| Income tax receivable | | 4,651 |
| | 19,920 |
|
| Deferred income taxes, net | | 17,219 |
| | 14,767 |
|
| Total current assets | | 185,167 |
| | 150,232 |
|
| | | | | |
| PROPERTY AND EQUIPMENT | | 668,585 |
| | 678,566 |
|
| Less accumulated depreciation | | 212,179 |
| | 198,007 |
|
| | | 456,406 |
| | 480,559 |
|
| GOODWILL | | 100,212 |
| | 100,212 |
|
| OTHER INTANGIBLES, NET | | 14,558 |
| | 16,380 |
|
| OTHER ASSETS | | 11,116 |
| | 12,611 |
|
| | | $ | 767,459 |
| | $ | 759,994 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | |
| CURRENT LIABILITIES | | | | |
| Accounts payable and accrued liabilities | | $ | 24,720 |
| | $ | 8,261 |
|
| Compensation and benefits | | 28,486 |
| | 26,303 |
|
| Insurance accruals | | 19,906 |
| | 19,249 |
|
| Other accruals | | 12,411 |
| | 14,475 |
|
| Total current liabilities | | 85,523 |
| | 68,288 |
|
| LONG-TERM LIABILITIES | | | | |
| Income taxes payable | | 15,804 |
| | 18,296 |
|
| Long-term debt | | — |
| | 24,600 |
|
| Deferred income taxes, net | | 99,489 |
| | 101,605 |
|
| Insurance accruals less current portion | | 61,843 |
| | 59,300 |
|
| Other long-term liabilities | | 12,153 |
| | 11,318 |
|
| Total long-term liabilities | | 189,289 |
| | 215,119 |
|
| COMMITMENTS AND CONTINGENCIES | | | | |
| STOCKHOLDERS' EQUITY | | | | |
| Capital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in 2015 and 2014; outstanding 86,097 in 2015 and 87,781 in 2014, respectively | | 907 |
| | 907 |
|
| Additional paid-in capital | | 3,942 |
| | 4,058 |
|
| Retained earnings | | 560,621 |
| | 509,834 |
|
| Treasury stock, at cost; 4,592 in 2015 and 2,908 in 2014, respectively | | (72,823 | ) | | (38,212 | ) |
| | | 492,647 |
| | 476,587 |
|
| | | $ | 767,459 |
| | $ | 759,994 |
|
