EX-99.1 2 htld3q2018earningsrelease.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

October 17, 2018 For Immediate Release

Press Release

Heartland Express, Inc. Reports Revenues and Earnings for the Third Quarter of 2018

NORTH LIBERTY, IOWA - October 17, 2018 - Heartland Express, Inc. (Nasdaq: HTLD) announced today financial results for the three and nine months ended September 30, 2018.

Three months ended September 30, 2018:
•
Net Income of $19.1 million, Basic Earnings per Share of $0.23,
•
Operating Revenue of $151.3 million,
•
Operating Income of $25.1 million, a 93.3% increase from September 30, 2017,
•
Operating Ratio of 83.4% and 80.7% Non-GAAP Adjusted Operating Ratio(1), 
•
Debt-Free Balance Sheet.

Nine months ended September 30, 2018:
•
Net Income of $50.2 million, Basic Earnings per Share of $0.61,
•
Operating Income of $60.2 million, a 12.2% increase from September 30, 2017,
•
Operating Ratio of 87.0% and 84.9% Non-GAAP Adjusted Operating Ratio(1),
•
Cash balance of $120.0 million, a $44.6 million increase from December 31, 2017,
•
Total Stockholders' Equity of $595.0 million and Total Assets of $813.5 million.

Heartland Express Chief Executive Officer Michael Gerdin, commented on the quarterly operating results and ongoing initiatives of the Company, "We are excited to report our results for the three and nine months ended September 30, 2018, which are our strongest operating results delivered to date since our acquisition of Interstate Distributor Co. ("IDC") on July 6, 2017. We delivered our lowest quarterly operating ratio (83.4% and 80.7% non-GAAP adjusted operating ratio(1)) showing continued sequential improvement over the last three quarters. Consistent with our acquisition plan of IDC, over the past year, we have integrated IDC into the Heartland platform and culture, focused on the most profitable customers and lanes, reduced our overall cost structure, significantly reduced the costs and operating limitations by ending many revenue equipment lease obligations, reduced the average age of our tractors and trailers, and heightened the level of service and safety afforded our customers and drivers. Comparing the third quarter of 2018 to the third quarter of 2017, our first quarter of ownership, the results of these efforts are that our operating ratio has been reduced to our historical and targeted levels and our consolidated operating income has nearly doubled. The freight environment continues to be positive, and our award-winning service continues to be highly valued by our customer base. Looking ahead, Heartland Express is well positioned to capitalize on the ongoing positive freight cycle and well positioned for future periods. I am proud of the hard work and commitment of our drivers and our entire team."

Financial Results

Heartland Express ended the third quarter of 2018 with net income of $19.1 million, compared to $7.9 million in the third quarter of 2017, an increase of $11.2 million (140.9%) which included the positive impacts of $3.6M ($0.04 basic earnings per share) decreased income tax expense due to the reduction in the federal income tax rate from the Tax Cuts and Jobs Act of 2017. Basic earnings per share were $0.23 during the quarter compared to $0.10 basic earnings per share in the third quarter of 2017. Operating revenues were $151.3 million, compared to $182.1 million in the third quarter of 2017, a decrease of $30.8 million (16.9%). Operating revenues for the quarter included fuel surcharge revenues of $21.4 million compared to $21.1 million in the same period of 2017, a $0.3 million increase. Operating revenues decreased 19.3%, excluding the impact of fuel surcharge revenues(1), primarily due to fewer miles driven during the third quarter of 2018




as compared to the same period in 2017. Operating income for the three month period increased $12.1 million primarily due to improved operating margins as we have cycled over the first quarter following the acquisition in 2017 where our financial results were impacted by the lower financial margins of IDC. The Company posted an operating ratio of 83.4%, adjusted operating ratio(1) of 80.7%, and a 12.6% net margin (net income as a percentage of operating revenues) in the third quarter of 2018 compared to 92.9%, 91.9%, and 4.3%, respectively in the third quarter of 2017.

For the nine month period ended September 30, 2018 the Company recorded net income of $50.2 million, compared to $36.6 million in the same period of 2017, an increase of $13.6 million (37.3%) which included the positive impacts of $8.6 million ($0.10 basic earnings per share) decreased income tax expense due to the reduction in the federal income tax rate noted above. Basic earnings per share were $0.61 compared to $0.44 basic earnings per share in the same period of 2017. Operating revenues were $463.8 million, compared to $441.6 million in the same period of 2017. Operating revenues included fuel surcharge revenues of $65.3 million compared to $50.7 million in the same period of 2017, a $14.6 million increase. Operating revenues excluding fuel surcharge revenue(1) increased 1.9%. Operating income for the nine month period increased $6.6 million mainly as a result of improved operating margins and operating expense reductions partially offset by $4.4 million less gains on disposal of property and equipment. The Company posted an operating ratio of 87.0%, an adjusted operating ratio(1) of 84.9% and a 10.8% net margin (net income as a percentage of operating revenues) in the nine months ended September 30, 2018 compared to 87.8%, 86.3% and 8.3%, respectively in 2017.

Balance Sheet, Liquidity, and Capital Expenditures

At September 30, 2018, the Company had $120.0 million in cash balances and no borrowings under the Company's unsecured line of credit. Following the first amendment to our existing line of credit on August 31, 2018, the Company had $90.8 million in available borrowing capacity on the line of credit at September 30, 2018 after consideration of $9.2 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 $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 $813.5 million and stockholders' equity of $595.0 million.

Net cash flows from operations for the nine months of 2018 were $108.6 million, 23.4% of operating revenue. The primary use of net cash generated from operations during the nine month period ended September 30, 2018 was $42.6 million for net equipment transactions, $5.0 million for dividends, and $25.1 million for the repurchase of our common stock. The average age of the Company's tractor fleet was 1.3 years as of September 30, 2018 compared to 1.8 years at December 31, 2017. The average age of the Company's trailer fleet was 4.2 years at September 30, 2018 compared to 5.1 years at December 31, 2017. The Company expects to continue to reduce the revenue equipment operating lease obligations during the fourth quarter of 2018. Further, the Company expects to end the existing revenue equipment lease obligations and return to the historical owned asset-based operating fleet in the near future. The Company currently anticipates a total of approximately $45 to $50 million in net capital expenditures for calendar year 2018. The Company ended the past twelve months with a return on total assets of 11.1% and a 15.2% return on equity.
            
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 third quarter of 2018. The Company has now paid cumulative cash dividends of $475.7 million, including three special dividends, ($2.00 in 2007, $1.00 in 2010, and $1.00 in 2012) over the past sixty-one consecutive quarters.

During the nine months ended September 30, 2018, the Company purchased 1.4 million shares of our common stock for $25.1 million. Our outstanding shares at September 30, 2018 were 81.9 million shares. A total of 6.1 million shares of common stock have been repurchased for $113.8 million over the past four




years. The Company has the ability to repurchase an additional 6.9 million shares under the current authorization which would result in 75.0 million outstanding shares if fully executed.

Other Information

During the third quarter of 2018, we continued to deliver award-winning service and safety to our customers, as evidenced by the following awards received:

•
United Sugars - National Dry Van Carrier of the Year
•
Transplace - 2018 Carrier of the Year - National Truckload
•
Logistics Management - Quest for Quality Award, our fifteenth award in the last sixteen years

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, 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, 2017. 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 Officer
Chris Strain, Chief Financial Officer










HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2018
 
2017
 
2018
 
2017
OPERATING REVENUE
 
$
151,279

 
$
182,114

 
$
463,800

 
$
441,632

 
 
 
 
 
 
 
 
 
OPERATING EXPENSES:
 
 
 
 
 
 
 
 
Salaries, wages, and benefits
 
$
55,126

 
$
71,399

 
$
174,694

 
$
169,020

Rent and purchased transportation
 
4,067

 
16,619

 
15,652

 
21,301

Fuel
 
27,460

 
29,739

 
85,340

 
73,731

Operations and maintenance
 
6,469

 
9,122

 
20,970

 
21,951

Operating taxes and licenses
 
3,938

 
5,410

 
12,039

 
11,845

Insurance and claims
 
4,407

 
5,979

 
12,862

 
13,339

Communications and utilities
 
1,416

 
1,487

 
4,852

 
3,623

Depreciation and amortization
 
25,133

 
28,784

 
75,490

 
74,318

Other operating expenses
 
5,287

 
8,047

 
17,083

 
18,674

Gain on disposal of property and equipment
 
(7,156
)
 
(7,471
)
 
(15,410
)
 
(19,845
)
 
 
 
 
 
 
 
 
 
 
 
126,147

 
169,115

 
403,572

 
387,957

 
 
 
 
 
 
 
 
 
Operating income
 
25,132

 
12,999

 
60,228

 
53,675

 
 
 
 
 
 
 
 
 
Interest income
 
586

 
238

 
1,351

 
950

Interest expense
 
—

 
(175
)
 
—

 
(175
)
 
 
 
 
 
 
 
 
 
Income before income taxes
 
25,718

 
13,062

 
61,579

 
54,450

 
 
 
 
 
 
 
 
 
Federal and state income taxes
 
6,662

 
5,146

 
11,342

 
17,882

 
 
 
 
 
 
 
 
 
Net income
 
$
19,056

 
$
7,916

 
$
50,237

 
$
36,568

 
 
 
 
 
 
 
 
 
Earnings per share
 
 
 
 
 
 
 
 
Basic
 
$
0.23

 
$
0.10

 
$
0.61

 
$
0.44

Diluted
 
$
0.23

 
$
0.09

 
$
0.61

 
$
0.44

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
 
 
 
 
 
 
 
 
Basic
 
81,965

 
83,303

 
82,530

 
83,296

Diluted
 
81,992

 
83,333

 
82,564

 
83,336

 
 
 
 
 
 
 
 
 
Dividends declared per share
 
$
0.02

 
$
0.02

 
$
0.06

 
$
0.06






HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
 
 
September 30,
 
December 31,
ASSETS
 
2018
 
2017
CURRENT ASSETS
 
 
 
 
Cash and cash equivalents
 
$
120,000

 
$
75,378

Trade receivables, net
 
55,520

 
64,293

Prepaid tires
 
9,898

 
10,989

Other current assets
 
25,422

 
13,782

Income tax receivable
 
5,366

 
6,393

Total current assets
 
216,206

 
170,835

 
 
 
 
 
PROPERTY AND EQUIPMENT
 
635,857

 
666,763

Less accumulated depreciation
 
210,569

 
223,901

 
 
425,288

 
442,862

GOODWILL
 
132,410

 
132,410

OTHER INTANGIBLES, NET
 
15,096

 
17,022

DEFERRED INCOME TAXES, NET
 
4,424

 
1,737

OTHER ASSETS
 
20,091

 
24,261

 
 
$
813,515

 
$
789,127

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
CURRENT LIABILITIES
 
 
 
 
Accounts payable and accrued liabilities
 
$
26,431

 
$
14,366

Compensation and benefits
 
24,200

 
26,752

Insurance accruals
 
19,022

 
21,368

Other accruals
 
11,811

 
12,835

Total current liabilities
 
81,464

 
75,321

LONG-TERM LIABILITIES
 
 
 
 
Income taxes payable
 
5,220

 
8,147

Deferred income taxes, net
 
76,443

 
65,488

Insurance accruals less current portion
 
55,349

 
65,526

Total long-term liabilities
 
137,012

 
139,161

COMMITMENTS AND CONTINGENCIES
 
 
 
 
STOCKHOLDERS' EQUITY
 
 
 
 
Capital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in 2018 and 2017; outstanding 81,927 in 2018 and 83,303 in 2017, respectively
 
907

 
907

Additional paid-in capital
 
3,373

 
3,518

Retained earnings
 
739,461

 
694,174

Treasury stock, at cost; 8,762 in 2018 and 7,386 in 2017, respectively
 
(148,702
)
 
(123,954
)
 
 
595,039

 
574,645

 
 
$
813,515

 
$
789,127







(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 September 30,
 
Nine Months Ended
September 30,
 
 
2018
 
2017
 
2018
 
2017
 
 
(Unaudited, in thousands)
 
 
 
 
 
 
 
 
 
Operating revenue
 
$
151,279

 
$
182,114

 
$
463,800

 
$
441,632

Less: Fuel surcharge revenue
 
21,371

 
21,082

 
65,308

 
50,706

Operating revenue, excluding fuel surcharge revenue
 
129,908

 
161,032

 
398,492

 
390,926

 
 
 
 
 
 
 
 
 
Operating expenses
 
126,147

 
169,115

 
403,572

 
387,957

Less: Fuel surcharge revenue
 
21,371

 
21,082

 
65,308

 
50,706

Adjusted operating expenses
 
104,776

 
148,033

 
338,264


337,251

 
 
 
 
 
 
 
 
 
Operating income
 
$
25,132

 
$
12,999

 
$
60,228

 
$
53,675

Operating ratio
 
83.4
%
 
92.9
%
 
87.0
%
 
87.8
%
Adjusted operating ratio
 
80.7
%
 
91.9
%
 
84.9
%
 
86.3
%

(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.