(State or Other Jurisdiction | (I.R.S. Employer | |||||||||||||
of Incorporation or organization) | Identification No.) | |||||||||||||
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Yes [X] | No [ ] |
Yes [X] | No [ ] |
Large accelerated filer [X] | Accelerated filer [ ] | |||||||
Non-accelerated filer [ ] | Smaller reporting company [ ] | |||||||
Emerging growth company [ ] |
Yes [ ] | No [ X ] |
Page | |||||
PART I - FINANCIAL INFORMATION | |||||
Item 1. Financial Statements | |||||
PART II - OTHER INFORMATION | |||||
HEARTLAND EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited) | ||||||||||||||
ASSETS | 2020 | December 31, 2019 | ||||||||||||
CURRENT ASSETS | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Trade receivables, net of $1.1 million allowance in 2020 and 2019, respectively | ||||||||||||||
Prepaid tires | ||||||||||||||
Other current assets | ||||||||||||||
Income tax receivable | ||||||||||||||
Total current assets | ||||||||||||||
PROPERTY AND EQUIPMENT | ||||||||||||||
Land and land improvements | ||||||||||||||
Buildings | ||||||||||||||
Leasehold improvements | ||||||||||||||
Furniture and fixtures | ||||||||||||||
Shop and service equipment | ||||||||||||||
Revenue equipment | ||||||||||||||
Construction in progress | ||||||||||||||
Property and equipment, gross | ||||||||||||||
Less accumulated depreciation | ||||||||||||||
Property and equipment, net | ||||||||||||||
GOODWILL | ||||||||||||||
OTHER INTANGIBLES, NET | ||||||||||||||
DEFERRED INCOME TAXES, NET | ||||||||||||||
OTHER ASSETS | ||||||||||||||
$ | $ | |||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
CURRENT LIABILITIES | ||||||||||||||
Accounts payable and accrued liabilities | $ | $ | ||||||||||||
Compensation and benefits | ||||||||||||||
Insurance accruals | ||||||||||||||
Other accruals | ||||||||||||||
Income tax payable | ||||||||||||||
Total current liabilities | ||||||||||||||
LONG-TERM LIABILITIES | ||||||||||||||
Income taxes payable | ||||||||||||||
Deferred income taxes, net | ||||||||||||||
Insurance accruals less current portion | ||||||||||||||
Total long-term liabilities | ||||||||||||||
COMMITMENTS AND CONTINGENCIES (Note 13) | ||||||||||||||
STOCKHOLDERS' EQUITY | ||||||||||||||
Preferred stock, par value $.01; authorized 5,000 shares; none issued | ||||||||||||||
Capital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in 2020 and 2019; outstanding 81,370 and 82,028 in 2020 and 2019, respectively | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Retained earnings | ||||||||||||||
Treasury stock, at cost; 9,319 and 8,661 in 2020 and 2019, respectively | ( | ( | ||||||||||||
$ | $ |
HEARTLAND EXPRESS, INC. | ||||||||||||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
OPERATING REVENUE | $ | $ | $ | $ | ||||||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||||
Salaries, wages, and benefits | $ | |||||||||||||||||||||||||
Rent and purchased transportation | ||||||||||||||||||||||||||
Fuel | ||||||||||||||||||||||||||
Operations and maintenance | ||||||||||||||||||||||||||
Operating taxes and licenses | ||||||||||||||||||||||||||
Insurance and claims | ||||||||||||||||||||||||||
Communications and utilities | ||||||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||
Other operating expenses | ||||||||||||||||||||||||||
Gain on disposal of property and equipment | ( | ( | ( | ( | ||||||||||||||||||||||
Operating income | ||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Interest expense | ( | ( | ||||||||||||||||||||||||
Income before income taxes | ||||||||||||||||||||||||||
Federal and state income taxes | ||||||||||||||||||||||||||
Net income | $ | $ | $ | $ | ||||||||||||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||||||||||||
Comprehensive income | $ | $ | $ | $ | ||||||||||||||||||||||
Net income per share | ||||||||||||||||||||||||||
Basic | $ | $ | $ | $ | ||||||||||||||||||||||
Diluted | $ | $ | $ | $ | ||||||||||||||||||||||
Weighted average shares outstanding | ||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||
Diluted | ||||||||||||||||||||||||||
Dividends declared per share | $ | $ | $ | $ |
HEARTLAND EXPRESS, INC | ||||||||||||||||||||||||||||||||
AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||
Capital | Additional | |||||||||||||||||||||||||||||||
Stock, | Paid-In | Retained | Treasury | |||||||||||||||||||||||||||||
Common | Capital | Earnings | Stock | Total | ||||||||||||||||||||||||||||
Balance, December 31, 2019 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||
Dividends on common stock, $0.02 per share | ( | ( | ||||||||||||||||||||||||||||||
Repurchases of common stock | ( | ( | ||||||||||||||||||||||||||||||
Stock-based compensation, net of tax | ||||||||||||||||||||||||||||||||
Balance, March 31, 2020 | ( | |||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||
Dividends on common stock, $0.02 per share | ( | ( | ||||||||||||||||||||||||||||||
Stock-based compensation, net of tax | ||||||||||||||||||||||||||||||||
Balance, June 30, 2020 | ( | |||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||
Dividends on common stock, $0.02 per share | ( | ( | ||||||||||||||||||||||||||||||
Stock-based compensation, net of tax | ( | |||||||||||||||||||||||||||||||
Balance, September 30, 2020 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Capital | Additional | |||||||||||||||||||||||||||||||
Stock, | Paid-In | Retained | Treasury | |||||||||||||||||||||||||||||
Common | Capital | Earnings | Stock | Total | ||||||||||||||||||||||||||||
Balance, December 31, 2018 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||
Dividends on common stock, $0.02 per share | ( | ( | ||||||||||||||||||||||||||||||
Stock-based compensation, net of tax | ( | |||||||||||||||||||||||||||||||
Balance, March 31, 2019 | ( | |||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||
Dividends on common stock, $0.02 per share | ( | ( | ||||||||||||||||||||||||||||||
Stock-based compensation, net of tax | ||||||||||||||||||||||||||||||||
Balance, June 30, 2019 | ( | |||||||||||||||||||||||||||||||
Net income | ||||||||||||||||||||||||||||||||
Dividends on common stock, $0.02 per share | ( | ( | ||||||||||||||||||||||||||||||
Issuance of common stock for acquisition | ||||||||||||||||||||||||||||||||
Stock-based compensation, net of tax | ||||||||||||||||||||||||||||||||
Balance, September 30, 2019 | $ | $ | $ | $ | ( | $ |
HEARTLAND EXPRESS, INC. | ||||||||||||||
AND SUBSIDIARIES | ||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
(in thousands) | ||||||||||||||
(unaudited) | ||||||||||||||
Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
OPERATING ACTIVITIES | ||||||||||||||
Net income | $ | $ | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Deferred income taxes | ||||||||||||||
Stock-based compensation expense | ||||||||||||||
Gain on disposal of property and equipment | ( | ( | ||||||||||||
Changes in certain working capital items: | ||||||||||||||
Trade receivables | ( | |||||||||||||
Prepaid expenses and other current assets | ( | |||||||||||||
Accounts payable, accrued liabilities, and accrued expenses | ( | |||||||||||||
Accrued income taxes | ||||||||||||||
Net cash provided by operating activities | ||||||||||||||
INVESTING ACTIVITIES | ||||||||||||||
Proceeds from sale of property and equipment | ||||||||||||||
Purchases of property and equipment | ( | ( | ||||||||||||
Acquisition of business, net of cash acquired | ( | |||||||||||||
Change in other assets | ( | |||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
FINANCING ACTIVITIES | ||||||||||||||
Payment of cash dividends | ( | ( | ||||||||||||
Shares withheld for employee taxes related to stock-based compensation | ( | ( | ||||||||||||
Repayments on acquired debt | ( | |||||||||||||
Repurchases of common stock | ( | |||||||||||||
Net cash used in financing activities | ( | ( | ||||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | |||||||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||||||||||||||
Beginning of period | ||||||||||||||
End of period | $ | $ | ||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||||||||
Cash paid during the period for interest expense | $ | $ | ||||||||||||
Cash paid during the period for income taxes, net of refunds | $ | $ | ||||||||||||
Noncash investing and financing activities: | ||||||||||||||
Purchased property and equipment in accounts payable | $ | $ | ||||||||||||
Sold revenue equipment and property in other current assets | $ | $ | ||||||||||||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash included in other current assets | ||||||||||||||
Restricted cash included in other assets | ||||||||||||||
Total cash, cash equivalents and restricted cash | $ | $ |
Amortization period (years) | Gross Amount | Accumulated Amortization | Net intangible assets | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Customer relationships | 15-20 | $ | $ | $ | |||||||||||||||||||
Tradename | 0.5-6 | ||||||||||||||||||||||
Covenants not to compete | 1-10 | ||||||||||||||||||||||
$ | $ | $ |
Three months ended September 30, 2020 | |||||||||||||||||
Net Income (numerator) | Shares (denominator) | Per Share Amount | |||||||||||||||
Basic EPS | $ | $ | |||||||||||||||
Effect of restricted stock | |||||||||||||||||
Diluted EPS | $ | $ |
Three months ended September 30, 2019 | |||||||||||||||||
Net Income (numerator) | Shares (denominator) | Per Share Amount | |||||||||||||||
Basic EPS | $ | $ | |||||||||||||||
Effect of restricted stock | |||||||||||||||||
Diluted EPS | $ | $ |
Nine Months Ended September 30, 2020 | |||||||||||||||||
Net Income (numerator) | Shares (denominator) | Per Share Amount | |||||||||||||||
Basic EPS | $ | $ | |||||||||||||||
Effect of restricted stock | |||||||||||||||||
Diluted EPS | $ | $ |
Nine Months Ended September 30, 2019 | |||||||||||||||||
Net Income (numerator) | Shares (denominator) | Per Share Amount | |||||||||||||||
Basic EPS | $ | $ | |||||||||||||||
Effect of restricted stock | |||||||||||||||||
Diluted EPS | $ | $ |
Three Months Ended September 30, 2020 | |||||||||||
Number of Shares of Restricted Stock Awards (in thousands) | Weighted Average Grant Date Fair Value | ||||||||||
Unvested at beginning of period | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | |||||||||||
Outstanding (unvested) at end of period | $ |
Three Months Ended September 30, 2019 | |||||||||||
Number of Shares of Restricted Stock Awards (in thousands) | Weighted Average Grant Date Fair Value | ||||||||||
Unvested at beginning of period | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | |||||||||||
Outstanding (unvested) at end of period | $ |
Nine Months Ended September 30, 2020 | |||||||||||
Number of Shares of Restricted Stock Awards (in thousands) | Weighted Average Grant Date Fair Value | ||||||||||
Unvested at beginning of period | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
Outstanding (unvested) at end of period | $ |
Nine Months Ended September 30, 2019 | |||||||||||
Number of Shares of Restricted Stock Awards (in thousands) | Weighted Average Grant Date Fair Value | ||||||||||
Unvested at beginning of period | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
Outstanding (unvested) at end of period | $ |
2020 | |||||
(in thousands) | |||||
Balance at January 1, 2020 | $ | ||||
Additions based on tax positions related to current year | |||||
Reductions for tax positions of prior years | ( | ||||
Settlements | ( | ||||
Balance at September 30, 2020 | $ |
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 September 30, | Nine months ended September 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
(Unaudited, in thousands) | (Unaudited, in thousands) | |||||||||||||||||||||||||
Operating revenue | $ | 162,282 | $ | 147,908 | $ | 489,473 | $ | 429,589 | ||||||||||||||||||
Less: Fuel surcharge revenue | 14,412 | 18,372 | 47,858 | 53,483 | ||||||||||||||||||||||
Operating revenue, excluding fuel surcharge revenue | 147,870 | 129,536 | 441,615 | 376,106 | ||||||||||||||||||||||
Operating expenses | 134,943 | 121,169 | 419,819 | 352,976 | ||||||||||||||||||||||
Less: Fuel surcharge revenue | 14,412 | 18,372 | 47,858 | 53,483 | ||||||||||||||||||||||
Adjusted operating expenses | 120,531 | 102,797 | 371,961 | 299,493 | ||||||||||||||||||||||
Operating income | $ | 27,339 | $ | 26,739 | $ | 69,654 | $ | 76,613 | ||||||||||||||||||
Operating ratio | 83.2% | 81.9% | 85.8% | 82.2% | ||||||||||||||||||||||
Adjusted operating ratio | 81.5% | 79.4% | 84.2% | 79.6% |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||
Operating revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||
Salaries, wages, and benefits | 41.4 | % | 41.2 | % | 42.0 | % | 39.1 | % | |||||||||||||||||||||
Rent and purchased transportation | 0.6 | % | 1.3 | % | 0.7 | % | 1.4 | % | |||||||||||||||||||||
Fuel | 13.1 | % | 17.0 | % | 13.4 | % | 16.7 | % | |||||||||||||||||||||
Operations and maintenance | 4.4 | % | 4.2 | % | 4.4 | % | 4.1 | % | |||||||||||||||||||||
Operating taxes and licenses | 2.3 | % | 2.3 | % | 2.3 | % | 2.5 | % | |||||||||||||||||||||
Insurance and claims | 3.0 | % | 2.2 | % | 3.3 | % | 2.8 | % | |||||||||||||||||||||
Communications and utilities | 0.8 | % | 0.8 | % | 0.8 | % | 0.8 | % | |||||||||||||||||||||
Depreciation and amortization | 17.0 | % | 17.3 | % | 16.7 | % | 16.4 | % | |||||||||||||||||||||
Other operating expenses | 4.1 | % | 4.1 | % | 4.0 | % | 3.8 | % | |||||||||||||||||||||
Gain on disposal of property and equipment | (3.5) | % | (8.5) | % | (1.8) | % | (5.6) | % | |||||||||||||||||||||
83.2 | % | 81.9 | % | 85.8 | % | 82.2 | % | ||||||||||||||||||||||
Operating income | 16.8 | % | 18.1 | % | 14.2 | % | 17.8 | % | |||||||||||||||||||||
Interest income | 0.1 | % | 0.7 | % | 0.2 | % | 0.8 | % | |||||||||||||||||||||
Interest expense | — | % | (0.3) | % | — | % | (0.1) | % | |||||||||||||||||||||
Income before income taxes | 16.9 | % | 18.5 | % | 14.4 | % | 18.5 | % | |||||||||||||||||||||
Income taxes | 4.1 | % | 4.6 | % | 3.5 | % | 4.5 | % | |||||||||||||||||||||
Net income | 12.8 | % | 13.9 | % | 10.9 | % | 14.0 | % |
Acquisition and Merger Agreement, dated August 26, 2019, by and among, Midwest Holding Group, Inc., Millis Real Estate Leasing, LLC, the members of Millis Real Estate Leasing, LLC, Heartland Trucking, Inc., Heartland Express Inc. of Iowa, Heartland Express, Inc., in its capacity as guarantor, and David P. Millis, in his capacity as Sellers’ Representative. | |||||||||||
Articles of Incorporation, as amended. Incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q for the quarter ended September 30, 2017, dated November 9, 2017. | |||||||||||
Amended and Restated Bylaws. Incorporated by reference to Exhibit 3.2 of the Company's Form 10-Q for the quarter ended September 30, 2017, dated November 9, 2017. | |||||||||||
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. | |||||||||||
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. | |||||||||||
Certification of Principal Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||||||
Certification of the Principal Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | ||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||||||||||
104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
HEARTLAND EXPRESS, INC. | ||||||||
Date: | November 9, 2020 | By: /s/ Christopher A. Strain | ||||||
Christopher A. Strain | ||||||||
Vice President of Finance | ||||||||
and Chief Financial Officer | ||||||||
(Principal Accounting and Financial Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Heartland Express Inc. (the “Registrant”); | |||||||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; | |||||||
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report; | |||||||
4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and we have: | |||||||
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; | |||||||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||||
c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and | |||||||
d) | Disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant's fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and | |||||||
5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s independent registered public accounting firm and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions): | |||||||
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |||||||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Date: | November 9, 2020 | By: | /s/ Michael J. Gerdin | |||||||||||
Michael J. Gerdin | ||||||||||||||
Chairman, President and Chief Executive Officer | ||||||||||||||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Heartland Express Inc. (the “Registrant”); | |||||||
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; | |||||||
3. | Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report; | |||||||
4. | The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and we have: | |||||||
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; | |||||||
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |||||||
c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and | |||||||
d) | Disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant's fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and | |||||||
5. | The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s independent registered public accounting firm and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions): | |||||||
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and | |||||||
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
Date: | November 9, 2020 | By: | /s/ Christopher A. Strain | |||||||||||
Christopher A. Strain | ||||||||||||||
Vice President-Finance | ||||||||||||||
Treasurer and Chief Financial Officer | ||||||||||||||
(Principal Accounting and Financial Officer) |
In connection with the Quarterly Report of Heartland Express, Inc. (the "Company"), on Form 10-Q for the period ended September 30, 2020 (the "Report"), filed with the Securities and Exchange Commission, I, Michael J. Gerdin, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: | |||||
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and | ||||
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. | ||||
Date: | November 9, 2020 | By: | /s/ Michael J. Gerdin | |||||||||||
Michael J. Gerdin | ||||||||||||||
Chairman, President and Chief Executive Officer |
In connection with the Quarterly Report of Heartland Express, Inc. (the "Company"), on Form 10-Q for the period ended September 30, 2020 (the "Report"), filed with the Securities and Exchange Commission, I, Christopher A. Strain, Vice President-Finance, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: | |||||
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and | ||||
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. | ||||
Date: | November 9, 2020 | By: | /s/ Christopher A. Strain | |||||||||||
Christopher A. Strain | ||||||||||||||
Vice President-Finance, Treasurer | ||||||||||||||
and Chief Financial Officer |
Consolidated Balance Sheets Consolidated Balance Sheets (Parentheticals) - USD ($) shares in Thousands, $ in Millions |
Sep. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Consolidated Balance Sheets Parentheticals [Abstract] | ||
Accounts Receivable, Allowance for Credit Loss, Current | $ 1.1 | $ 1.1 |
Preferred Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 5,000 | 5,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 395,000 | 395,000 |
Common Stock, Shares, Issued | 90,689 | 90,689 |
Common Stock, Shares, Outstanding | 81,370 | 82,028 |
Treasury Stock, Shares | 9,319 | 8,661 |
Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Income Statement [Abstract] | ||||
Operating Revenue | $ 162,282 | $ 147,908 | $ 489,473 | $ 429,589 |
Operating Expenses | ||||
Salaries, wages, and benefits | 67,178 | 60,909 | 205,579 | 168,137 |
Rent and purchased transportation | 999 | 1,936 | 3,635 | 6,216 |
Fuel | 21,218 | 25,211 | 65,445 | 71,730 |
Operating Costs and Expenses | 7,118 | 6,260 | 21,516 | 17,730 |
Cost, Direct Tax and License | 3,664 | 3,416 | 11,229 | 10,808 |
Insurance and claims | 4,827 | 3,256 | 16,034 | 12,030 |
Communications and utilities | 1,398 | 1,211 | 4,091 | 3,538 |
Depreciation and amortization | 27,625 | 25,572 | 81,427 | 70,414 |
Other operating expenses | 6,637 | 5,993 | 19,602 | 16,351 |
Gain on disposal of property and equipment | (5,721) | (12,595) | (8,739) | (23,978) |
Total operating expenses | 134,943 | 121,169 | 419,819 | 352,976 |
Operating income | 27,339 | 26,739 | 69,654 | 76,613 |
Interest income | 171 | 1,128 | 704 | 3,502 |
Interest Expense | 0 | (452) | 0 | (452) |
Income before income taxes | 27,510 | 27,415 | 70,358 | 79,663 |
Federal and state income taxes | 6,796 | 6,914 | 17,224 | 19,483 |
Net Income | 20,714 | 20,501 | 53,134 | 60,180 |
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 |
Comprehensive income | $ 20,714 | $ 20,501 | $ 53,134 | $ 60,180 |
Net income per share | ||||
Basic | $ 0.25 | $ 0.25 | $ 0.65 | $ 0.73 |
Diluted | $ 0.25 | $ 0.25 | $ 0.65 | $ 0.73 |
Weighted average shares outstanding | ||||
Basic | 81,370 | 81,992 | 81,530 | 81,965 |
Diluted | 81,404 | 82,040 | 81,587 | 82,008 |
Dividends declared per share | $ 0.02 | $ 0.02 | $ 0.06 | $ 0.06 |
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands |
Total |
Capital Stock, Common |
Additional Paid-in Capital |
Retained Earnings |
Treasury Stock |
---|---|---|---|---|---|
Balance at Dec. 31, 2018 | $ 615,972 | $ 907 | $ 3,454 | $ 760,262 | $ (148,651) |
Net income | 17,318 | 0 | 0 | 17,318 | 0 |
Dividends on common stock, $0.02 per share | (1,640) | 0 | 0 | (1,640) | 0 |
Stock-based compensation, net of tax | 177 | 0 | (30) | 0 | 207 |
Balance at Mar. 31, 2019 | 631,827 | 907 | 3,424 | 775,940 | (148,444) |
Net income | 22,361 | 0 | 0 | 22,361 | 0 |
Dividends on common stock, $0.02 per share | (1,640) | 0 | 0 | (1,640) | 0 |
Stock-based compensation, net of tax | 781 | 0 | 375 | 0 | 406 |
Balance at Jun. 30, 2019 | 653,329 | 907 | 3,799 | 796,661 | (148,038) |
Net income | 20,501 | 0 | 0 | 20,501 | 0 |
Dividends on common stock, $0.02 per share | (1,642) | 0 | 0 | (1,642) | 0 |
Stock-based compensation, net of tax | 197 | 0 | 33 | 0 | 164 |
Proceeds from Issuance of Common Stock | 750 | 0 | 113 | 0 | 637 |
Balance at Sep. 30, 2019 | 673,135 | 907 | 3,945 | 815,520 | (147,237) |
Balance at Dec. 31, 2019 | 684,659 | 907 | 4,141 | 826,666 | (147,055) |
Net income | 13,238 | 0 | 0 | 13,238 | 0 |
Dividends on common stock, $0.02 per share | (1,628) | 0 | 0 | (1,628) | 0 |
Repurchases of common stock | (12,278) | 0 | 0 | 0 | (12,278) |
Stock-based compensation, net of tax | 697 | 0 | 291 | 0 | 406 |
Balance at Mar. 31, 2020 | 684,688 | 907 | 4,432 | 838,276 | (158,927) |
Net income | 19,182 | 0 | 0 | 19,182 | 0 |
Dividends on common stock, $0.02 per share | (1,628) | 0 | 0 | (1,628) | 0 |
Stock-based compensation, net of tax | 373 | 0 | 174 | 0 | 199 |
Balance at Jun. 30, 2020 | 702,615 | 907 | 4,606 | 855,830 | (158,728) |
Net income | 20,714 | 0 | 0 | 20,714 | 0 |
Dividends on common stock, $0.02 per share | (1,628) | 0 | 0 | (1,628) | 0 |
Stock-based compensation, net of tax | 8 | 0 | (208) | 0 | 216 |
Balance at Sep. 30, 2020 | $ 721,709 | $ 907 | $ 4,398 | $ 874,916 | $ (158,512) |
Consolidated Statement of Stockholders' Equity Parentheticals - $ / shares |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Dividends declared per share | $ 0.02 | $ 0.02 | $ 0.06 | $ 0.06 |
Basis of Presentation |
9 Months Ended |
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Sep. 30, 2020 | |
Basis of Presentation and Accounting Pronouncements [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | Basis of Presentation and New Accounting Pronouncements Heartland Express, Inc. is a holding company incorporated in Nevada, which owns all of the stock of Heartland Express, Inc. of Iowa, Heartland Express Services, Inc., Heartland Express Maintenance Services, Inc., Midwest Holding Group, LLC and Millis Transfer, LLC. On August 26, 2019, Heartland Express, Inc. of Iowa acquired Midwest Holding Group, Inc. and Millis Real Estate Leasing, LLC (together, "Millis Transfer"), a truckload carrier headquartered in Black River Falls, Wisconsin. Effective December 31, 2019, Millis Transfer, Inc. and Midwest Holding Group, Inc. were converted to Millis Transfer, LLC and Midwest Holding Group, LLC, respectively. Further, effective December 31, 2019, Millis Real Estate Leasing, LLC, Rivera Real Estate, LLC, and Great River Leasing, LLC were merged into Millis Transfer, LLC. We, together with our subsidiaries, are a short-to-medium haul truckload carrier (predominately 500 miles or less per load). We primarily provide nationwide asset-based dry van truckload service for major shippers from major shippers across the United States. The accompanying consolidated financial statements include the parent company, Heartland Express, Inc., and its subsidiaries, all of which are wholly owned. The consolidated financial results for the three and nine months ended September 30, 2020 include the results of Millis Transfer while the three and nine months ended September 30, 2019 include Millis Transfer only for the period of August 26, 2019 through September 30, 2019. All material intercompany items and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and notes to the financial statements required by U.S. GAAP for complete financial statements. In the opinion of management, all normal, recurring adjustments considered necessary for a fair presentation have been included. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2019 included in the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission (the "SEC") on February 25, 2020, as amended on July 21, 2020. Interim results of operations are not necessarily indicative of the results to be expected for the full year or any other interim periods. There were no changes to the Company's significant accounting policies during the nine month period ended September 30, 2020. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments". This update requires measurement and recognition of expected versus incurred credit losses for financial assets held. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods therein. We have adopted this standard effective January 1, 2020 and the impact of adoption of the standard did not have a material impact on our financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): "Simplifying the Accounting for Income Taxes". The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also clarifies and amends existing guidance to improve consistent application among reporting entities. This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within that reporting period; however, early adoption is permitted. We expect to adopt in the period beginning January 1, 2021 and expect the impact to be immaterial to our financial statements.
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Use of Estimates |
9 Months Ended |
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Sep. 30, 2020 | |
Use of Estimates [Abstract] | |
Use of Estimates | Use of EstimatesThe preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. There were no significant changes in estimates and assumptions used by management related to our critical accounting policies during the three and nine months ended September 30, 2020. |
Segment Information |
9 Months Ended |
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Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment InformationWe provide truckload services across the United States (U.S.) and parts of Canada. These truckload services are primarily asset-based transportation services in the dry van truckload market, and we also offer truckload temperature-controlled transportation services to select dedicated customers, which are not significant to our operations. Our Chief Operating Decision Maker oversees and manages all of our transportation services, on a combined basis, including previously acquired entities. As a result of the foregoing, we have determined that we have one segment, consistent with the authoritative accounting guidance on disclosures about segments of an enterprise and related information. |
Revenue Recognition (Notes) |
9 Months Ended |
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Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer [Text Block] | Revenue Recognition The Company recognizes revenue over time as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. The delivery of the shipment and completion of the performance obligation allows for the collection of payment generally within 30 days after the delivery date of the shipment for the majority of our customers. The Company's operations are consistent with those in the trucking industry where freight is hauled twenty-four hours a day and seven days a week, subject to hours of service rules. The Company’s average length of haul is 400-500 miles per trip and each individual shipment accepted by the Company is considered a separate contract with the performance obligation being the delivery of the freight. Our average length of haul for each load of freight generally equals less than one day of continuous transit time. The Company estimates revenue for multiple-stop loads based on miles run and estimates revenue for single stop loads based on transit time, as the customer simultaneously receives and consumes the benefit provided. The Company hauls freight and earns revenue on a consistent basis throughout the periods presented. A corresponding contract asset existed for the estimated revenue of these in-process loads for $1.1 million and $1.2 million at September 30, 2020 and December 31, 2019, respectively. Recorded contract assets are included in the accounts receivable line item of the balance sheet. Corresponding liabilities are recorded in the accounts payable and accrued liabilities and compensation and benefits line items for the estimated expenses on these same in-process loads. The Company had no contract liabilities associated with our operations as of September 30, 2020 and December 31, 2019, respectively. Total revenues recorded were $162.3 million and $147.9 million for the three months ended September 30, 2020 and 2019, respectively. Fuel surcharge revenues were $14.4 million and $18.4 million for the three months ended September 30, 2020 and 2019, respectively. Accessorial and other revenues recorded in the consolidated statements of comprehensive income collectively represented $3.6 million and $3.5 million for the three months ended September 30, 2020 and 2019, respectively. Total revenues recorded were $489.5 million and $429.6 million for the nine months ended September 30, 2020 and 2019, respectively. Fuel surcharge revenues were $47.9 million and $53.5 million for the nine months ended September 30, 2020 and 2019, respectively. Accessorial and other revenues recorded in the consolidated statements of comprehensive income collectively represented $10.5 million and $9.1 million for the nine months ended September 30, 2020 and 2019, respectively.
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Cash and Cash Equivalents |
9 Months Ended |
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Sep. 30, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Cash and Cash EquivalentsCash equivalents are short-term, highly liquid investments with insignificant interest rate risk and original maturities of three months or less at acquisition. At September 30, 2020, restricted and designated cash and investments totaled $17.2 million, of which $1.1 million was included in other current assets and $16.1 million was included in other non-current assets in the consolidated balance sheet. Restricted and designated cash and investments totaled $19.4 million at December 31, 2019, of which $1.6 million was included in other current assets and $17.8 million was included in other non-current assets in the consolidated balance sheet. The restricted funds represent deposits required by state agencies for self-insurance purposes and designated funds that are earmarked for a specific purpose and not for general business use. |
Prepaid Tires, Property, Equipment and Depreciation |
9 Months Ended |
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Sep. 30, 2020 | |
Property, Plant and Depreciation [Abstract] | |
Property, Equipment, and Depreciation | Prepaid Tires, Property, Equipment, and DepreciationProperty and equipment are reported at cost, net of accumulated depreciation. Maintenance and repairs are charged to operations as incurred. New tires are capitalized separately from revenue equipment and are reported separately as “Prepaid tires” in the consolidated balance sheets and amortized over two years. Depreciation for financial statement purposes is computed by the straight-line method for all assets other than tractors. We recognize depreciation expense on new tractors using the 125% declining balance method. New tractors are depreciated to salvage values of $15,000 while new trailers are depreciated to salvage values of $4,000. At September 30, 2020, there were $5.2 million amounts receivable related to equipment sales recorded in other current assets compared to $1.3 million at December 31, 2019. |
Other Intangible, Net and Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill | Other Intangibles, Net and GoodwillAll intangible assets determined to have finite lives are amortized over their estimated useful lives. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows. There was no change in the gross amount of identifiable intangible assets during the three and nine months ended September 30, 2020. Amortization expense of $0.6 million and $0.7 million for the three months ended September 30, 2020 and 2019, respectively, was included in depreciation and amortization in the consolidated statements of comprehensive income. Amortization expense of $1.8 million and $1.9 million for the nine months ended September 30, 2020 and 2019, respectively, was included in depreciation and amortization in the consolidated statements of comprehensive income. Intangible assets subject to amortization consisted of the following at September 30, 2020:
The carrying amount of goodwill was $168.3 million at September 30, 2020 and December 31, 2019, respectively.
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Earnings Per Share | Earnings per Share Basic earnings per share is based upon the weighted average common shares outstanding during each year. Diluted earnings per share is based on the basic weighted earnings per share with additional weighted common shares for common stock equivalents. During the three and nine months ended September 30, 2020 and September 30, 2019, we had outstanding restricted shares of common stock to certain of our employees under the Company's 2011 Restricted Stock Award Plan (the "Plan"). A reconciliation of the numerator (net income) and denominator (weighted average number of shares outstanding of the basic and diluted earnings per share ("EPS")) for the three and nine months ended September 30, 2020 and September 30, 2019 is as follows (in thousands, except per share data):
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Equity |
9 Months Ended |
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Sep. 30, 2020 | |
Share Repurchases [Abstract] | |
Stockholders' Equity | Equity We have a stock repurchase program with 6.2 million shares remaining authorized for repurchase as of September 30, 2020. There were no shares repurchased in the open market during the three months ended September 30, 2020 and 2019 respectively. There were 0.7 million shares repurchased in the open market for $12.3 million during the nine months ended September 30, 2020 and there were no shares repurchased during the nine months ended September 30, 2019. Repurchases are expected to continue from time to time, as determined by market conditions, cash flow requirements, securities law limitations, and other factors, until the number of shares authorized have been repurchased, or until the authorization is terminated. The share repurchase authorization is discretionary and has no expiration date. During the three months ended September 30, 2020 and 2019, our Board of Directors declared regular quarterly dividends totaling $1.6 million and $1.6 million, respectively. During the nine months ended September 30, 2020 and 2019, our Board of Directors declared regular quarterly dividends totaling $4.9 million and $4.9 million, respectively. Future payment of cash dividends and the amount of such dividends will depend upon our financial conditions, our results of operations, our cash requirements, our tax treatment, and certain corporate law requirements, as well as factors deemed relevant by our Board of Directors.
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Stock-Based Compensation |
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Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Based Compensation | Stock-Based Compensation In July 2011, a Special Meeting of Stockholders of Heartland Express, Inc. was held, at which meeting the approval of the Heartland Express, Inc. 2011 Restricted Stock Award Plan (the "Plan") was ratified. The Plan made available up to 0.9 million shares for the purpose of making restricted stock grants to our eligible officers and employees. There were no shares that were issued during the period 2011 to 2016 that remain unvested at September 30, 2020. Shares granted in 2017 through 2020 have various vesting terms that range from immediate to four years from the date of grant. Compensation expense associated with these awards is based on the market value of our stock on the grant date. Compensation expense associated with restricted stock awards is included in salaries, wages and benefits in the consolidated statements of comprehensive income. There were no significant assumptions made in determining fair value. Compensation expense associated with restricted stock awards was $0.2 million and $1.5 million respectively, for the three and nine months ended September 30, 2020. Compensation expense associated with restricted stock awards was $0.3 million and $1.6 million respectively, for the three and nine months ended September 30, 2019. Unrecognized compensation expense was $0.3 million at September 30, 2020 which will be recognized over a weighted average period of 0.7 years. The following tables summarize our restricted stock award activity for the three and nine months ended September 30, 2020 and 2019.
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Long-Term Debt |
9 Months Ended |
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Sep. 30, 2020 | |
Long-term Line of Credit [Abstract] | |
Long-Term Debt | Long-Term Debt In November 2013, Heartland Express, Inc. of Iowa, (the "Borrower"), a wholly owned subsidiary of the Company, entered into a Credit Agreement with Wells Fargo Bank, National Association, (the “Bank”). Pursuant to the Credit Agreement, the Bank provided a five-year, $250.0 million unsecured revolving line of credit which may be used for future working capital, equipment financing, and general corporate purposes. The Bank's original commitment decreased to $175.0 million on November 1, 2016 through scheduled maturity on October 31, 2018. However, on August 31, 2018, Borrower and the Bank entered into the First Amendment to this Credit Agreement. The First Amendment (i) provides for a $100.0 million unsecured revolving line of credit (the “Revolver”), which may be used for working capital, equipment financing, permitted acquisitions, and general corporate purposes, (ii) provides an uncommitted accordion feature, which allows the Company a one-time request, at the discretion of the Bank, to increase the Revolver by up to an additional $100.0 million, (iii) increases the letter of credit subfeature of the Credit Agreement from $20.0 million to $30.0 million, and (iv) extends the maturity of the Credit Agreement to August 31, 2021, subject to the Borrower’s ability to terminate the commitment at any time at no additional cost to the Borrower. The Credit Agreement is unsecured, with a negative pledge against all assets of our consolidated group, except for debt associated with permitted acquisitions, new purchase-money debt and capital lease obligations as described in the Credit Agreement. Borrowings under the Credit Agreement can either be, at Borrower's election, (i) one-month or three-month LIBOR (Index) plus a spread between 0.700% and 0.900%, based on the Company's consolidated funded debt to adjusted EBITDA ratio or (ii) Prime (Index) plus 0.0%. There is a commitment fee on the unused portion of the Revolver between 0.0725% and 0.1750%, based on the Company's consolidated funded debt to adjusted EBITDA ratio. The Credit Agreement contains customary financial covenants including, but not limited to, (i) a maximum adjusted leverage ratio of 2:1, measured quarterly on a trailing twelve month basis, (ii) a minimum net income requirement of $1.00, measured quarterly on a trailing twelve month basis, (iii) a minimum tangible net worth of $250.0 million requirement, measured quarterly, and (iv) limitations on other indebtedness and liens. The Credit Agreement also includes customary events of default, conditions, representations and warranties, and indemnification provisions. We were in compliance with the respective financial covenants at September 30, 2020 and during the nine months then ended.We had zero outstanding debt at September 30, 2020 and December 31, 2019, respectively. Outstanding letters of credit associated with the revolving line of credit at September 30, 2020 were $11.5 million. As of September 30, 2020, the line of credit available for future borrowing was $88.5 million.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes We use the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Such amounts are adjusted, as appropriate, to reflect changes in tax rates expected to be in effect when temporary differences reverse. The effect of changes in tax rates on deferred taxes is recognized in the period that the change is enacted. A valuation allowance is recorded to reduce the Company's deferred tax assets to the amount that is more likely than not to be realized. We had no recorded valuation allowance at September 30, 2020 and December 31, 2019. Our effective tax rate was 24.7% and 25.2% for the three months ended September 30, 2020 and 2019, respectively. The change in the effective tax rate is primarily the result of a favorable prior period provision to actual adjustment. Our effective tax rate was 24.5% and 24.5% for the nine months ended September 30, 2020 and 2019, respectively. We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense. At September 30, 2020 and December 31, 2019, we had a total of $4.7 million and $5.0 million in gross unrecognized tax benefits, respectively included in long-term income taxes payable in the consolidated balance sheet. Of this amount, $3.7 million and $4.0 million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate as of September 30, 2020 and December 31, 2019. The net change in unrecognized tax benefits was a decrease of $0.2 million and a decrease of $0.1 million during the three months ended September 30, 2020 and September 30, 2019, respectively. The net decrease in unrecognized tax benefits during the three months ended September 30, 2020 was due to settlements with corresponding reductions to uncertain tax liabilities net of additions. The net change in unrecognized tax benefits was a decrease of $0.3 million and an increase of $0.3 million during the nine months ended September 30, 2020 and September 30, 2019, respectively. The net decrease in unrecognized tax benefits during the nine months ended September 2020 was mainly due to the expiration of certain statutes of limitation net of additions. This change had the corresponding increasing or decreasing impact on the effective state tax rate during the respective periods. The total net amount of accrued interest and penalties for such unrecognized tax benefits was $0.8 million and $0.9 million at September 30, 2020 and December 31, 2019, respectively and is included in long-term income taxes payable in the consolidated balance sheets. Income tax expense is increased each period for the accrual of interest on outstanding positions and penalties when the uncertain tax position is initially recorded. Income tax expense is reduced in periods by the amount of accrued interest and penalties associated with reversed uncertain tax positions due to lapse of applicable statute of limitations, when applicable or when a position is settled. Net interest and penalties included in income tax expense for the three month period ended September 30, 2020 and September 30, 2019 was a net expense of approximately zero and $0.1 million, respectively. The favorable impact for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 was due to the accrual reductions for interest and penalties in excess of settlements. Net interest and penalties included in income tax expense for the nine month period ended September 30, 2020 and September 30, 2019 was a net benefit of approximately $0.1 million and $0.1 million, respectively. The favorable impact for the nine month period ended September 30, 2020 to income tax expense was due to reversals of interest and penalties due to lapse of applicable statute of limitations and settlements, net of additions for interest and penalty accruals during the same period. These unrecognized tax benefits relate to risks associated with state income tax filing positions for our corporate subsidiaries. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances. We do not have any outstanding litigation related to income tax matters. At this time, management’s best estimate of the reasonably possible change in the amount of gross unrecognized tax benefits is approximately no change to an increase of $1.0 million during the next twelve months, due to the combination of expiration of certain statute of limitations and estimated additions. The federal statute of limitations remains open for the years 2017 and forward. Tax years 2010 and forward are subject to audit by state tax authorities depending on the tax code and administrative practice of each state. On March 27, 2020, the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Act (the "CARES Act"). The CARES Act is an emergency economic stimulus package in response to the coronavirus outbreak which, among other things, contains numerous income tax provisions. The Company has evaluated the impact of the CARES Act and believes it will not have a material impact on the Company's consolidated financial statements or related disclosures.
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Commitments and Contingencies |
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Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies We are a party to ordinary, routine litigation and administrative proceedings incidental to our business. In the opinion of management, our potential exposure under pending legal proceedings is adequately provided for in the accompanying consolidated financial statements. We do not have a significant amount of purchase commitments for tractors (net of tractor sale commitments) and trailer equipment as of September 30, 2020.
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events, Policy [Policy Text Block] | Subsequent EventsNo events occurred requiring disclosure other than the repurchase of 0.6 million shares of our common stock for $10.8 million subsequent to September 30, 2020. |
Basis of Presentation Basis of Presentation (Policies) |
9 Months Ended |
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Sep. 30, 2020 | |
Basis of Presentation [Abstract] | |
Basis of Presentation [Policy Text Block] | Basis of Presentation and New Accounting PronouncementsHeartland Express, Inc. is a holding company incorporated in Nevada, which owns all of the stock of Heartland Express, Inc. of Iowa, Heartland Express Services, Inc., Heartland Express Maintenance Services, Inc., Midwest Holding Group, LLC and Millis Transfer, LLC. On August 26, 2019, Heartland Express, Inc. of Iowa acquired Midwest Holding Group, Inc. and Millis Real Estate Leasing, LLC (together, "Millis Transfer"), a truckload carrier headquartered in Black River Falls, Wisconsin. Effective December 31, 2019, Millis Transfer, Inc. and Midwest Holding Group, Inc. were converted to Millis Transfer, LLC and Midwest Holding Group, LLC, respectively. Further, effective December 31, 2019, Millis Real Estate Leasing, LLC, Rivera Real Estate, LLC, and Great River Leasing, LLC were merged into Millis Transfer, LLC. We, together with our subsidiaries, are a short-to-medium haul truckload carrier (predominately 500 miles or less per load). We primarily provide nationwide asset-based dry van truckload service for major shippers from major shippers across the United States.The accompanying consolidated financial statements include the parent company, Heartland Express, Inc., and its subsidiaries, all of which are wholly owned. The consolidated financial results for the three and nine months ended September 30, 2020 include the results of Millis Transfer while the three and nine months ended September 30, 2019 include Millis Transfer only for the period of August 26, 2019 through September 30, 2019. All material intercompany items and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and notes to the financial statements required by U.S. GAAP for complete financial statements. In the opinion of management, all normal, recurring adjustments considered necessary for a fair presentation have been included. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2019 included in the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission (the "SEC") on February 25, 2020, as amended on July 21, 2020. Interim results of operations are not necessarily indicative of the results to be expected for the full year or any other interim periods. |
New Accounting Pronouncements, Policy [Policy Text Block] | In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments". This update requires measurement and recognition of expected versus incurred credit losses for financial assets held. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods therein. We have adopted this standard effective January 1, 2020 and the impact of adoption of the standard did not have a material impact on our financial statements.In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): "Simplifying the Accounting for Income Taxes". The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The ASU also clarifies and amends existing guidance to improve consistent application among reporting entities. This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within that reporting period; however, early adoption is permitted. We expect to adopt in the period beginning January 1, 2021 and expect the impact to be immaterial to our financial statements. |
Use of Estimates, Policy [Policy Text Block] | Use of EstimatesThe preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Segment Reporting, Policy [Policy Text Block] | Segment InformationWe provide truckload services across the United States (U.S.) and parts of Canada. These truckload services are primarily asset-based transportation services in the dry van truckload market, and we also offer truckload temperature-controlled transportation services to select dedicated customers, which are not significant to our operations. Our Chief Operating Decision Maker oversees and manages all of our transportation services, on a combined basis, including previously acquired entities. As a result of the foregoing, we have determined that we have one segment, consistent with the authoritative accounting guidance on disclosures about segments of an enterprise and related information. |
Revenue [Policy Text Block] | The Company recognizes revenue over time as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. The delivery of the shipment and completion of the performance obligation allows for the collection of payment generally within 30 days after the delivery date of the shipment for the majority of our customers. The Company's operations are consistent with those in the trucking industry where freight is hauled twenty-four hours a day and seven days a week, subject to hours of service rules. The Company’s average length of haul is 400-500 miles per trip and each individual shipment accepted by the Company is considered a separate contract with the performance obligation being the delivery of the freight. Our average length of haul for each load of freight generally equals less than one day of continuous transit time. The Company estimates revenue for multiple-stop loads based on miles run and estimates revenue for single stop loads based on transit time, as the customer simultaneously receives and consumes the benefit provided. The Company hauls freight and earns revenue on a consistent basis throughout the periods presented. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash EquivalentsCash equivalents are short-term, highly liquid investments with insignificant interest rate risk and original maturities of three months or less at acquisition. |
Property, Plant and Equipment, Policy [Policy Text Block] | Prepaid Tires, Property, Equipment, and DepreciationProperty and equipment are reported at cost, net of accumulated depreciation. Maintenance and repairs are charged to operations as incurred. New tires are capitalized separately from revenue equipment and are reported separately as “Prepaid tires” in the consolidated balance sheets and amortized over two years. Depreciation for financial statement purposes is computed by the straight-line method for all assets other than tractors. We recognize depreciation expense on new tractors using the 125% declining balance method. New tractors are depreciated to salvage values of $15,000 while new trailers are depreciated to salvage values of $4,000. |
Earnings Per Share, Policy [Policy Text Block] | Earnings per ShareBasic earnings per share is based upon the weighted average common shares outstanding during each year. Diluted earnings per share is based on the basic weighted earnings per share with additional weighted common shares for common stock equivalents. |
Income Tax, Policy [Policy Text Block] | Income TaxesWe use the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Such amounts are adjusted, as appropriate, to reflect changes in tax rates expected to be in effect when temporary differences reverse. The effect of changes in tax rates on deferred taxes is recognized in the period that the change is enacted. A valuation allowance is recorded to reduce the Company's deferred tax assets to the amount that is more likely than not to be realized. |
Income Tax Uncertainties, Policy [Policy Text Block] | We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense. |
Subsequent Events, Policy [Policy Text Block] | Subsequent EventsNo events occurred requiring disclosure other than the repurchase of 0.6 million shares of our common stock for $10.8 million subsequent to September 30, 2020. |
Other Intangible, Net and Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets [Table Text Block] |
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] |
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Stock-Based Compensation (Tables) |
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Stock-Based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of restricted stock award activity | The following tables summarize our restricted stock award activity for the three and nine months ended September 30, 2020 and 2019.
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
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Segment Information (Details) |
9 Months Ended |
---|---|
Sep. 30, 2020
segments
| |
Segment Reporting Information [Line Items] | |
Number of Segments | 1 |
Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
Dec. 31, 2019 |
|
Disaggregation of Revenue [Line Items] | |||||
Contract with Customer, Asset, after Allowance for Credit Loss | $ 1,100 | $ 1,100 | $ 1,200 | ||
Operating Revenue | 162,282 | $ 147,908 | 489,473 | $ 429,589 | |
Revenue from Contract with Customer, Including Assessed Tax | 3,600 | 3,500 | 10,500 | 9,100 | |
fuel surcharge [Member] | |||||
Disaggregation of Revenue [Line Items] | |||||
Fuel surcharge revenue | $ 14,400 | $ 18,400 | $ 47,900 | $ 53,500 |
Cash and Cash Equivalents (Details) - USD ($) $ in Thousands |
Sep. 30, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
---|---|---|---|
Property, Plant and Equipment [Line Items] | |||
Restricted Cash and Cash Equivalents | $ 17,200 | $ 19,400 | |
Restricted Cash included in other current assets | 1,097 | 1,600 | $ 2,040 |
Restricted Cash included in other assets | $ 16,145 | $ 17,800 | $ 16,784 |
Prepaid Tires, Property, Equipment and Depreciation (Details) - USD ($) $ in Thousands |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2020 |
Dec. 31, 2019 |
|
Property, Plant and Equipment [Line Items] | ||
Amortization Period of Tires | two years | |
Sold revenue equipment in other current assets | $ 5,200 | $ 1,300 |
Tractors [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant, and Equipment, Salvage Value | 15 | |
Trailers [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant, and Equipment, Salvage Value | $ 4 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Net Income | $ 20,714 | $ 20,501 | $ 53,134 | $ 60,180 |
Basic EPS, Shares | 81,370 | 81,992 | 81,530 | 81,965 |
Basic EPS, Per Share Amount | $ 0.25 | $ 0.25 | $ 0.65 | $ 0.73 |
Effect of restricted stock | $ 0 | $ 0 | $ 0 | $ 0 |
Effect of restricted stock, Shares | 34 | 48 | 57 | 43 |
Diluted EPS, Net Income | $ 20,714 | $ 20,501 | $ 53,134 | $ 60,180 |
Diluted EPS, Shares | 81,404 | 82,040 | 81,587 | 82,008 |
Diluted EPS, Per Share Amount | $ 0.25 | $ 0.25 | $ 0.65 | $ 0.73 |
Equity (Details) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2020 |
Sep. 30, 2019 |
Sep. 30, 2020 |
Sep. 30, 2019 |
|
Share Repurchases [Abstract] | ||||
Number of Shares Authorized to be Repurchased | 6,200 | 6,200 | ||
Treasury Stock, Shares, Acquired | 0 | 0 | 700 | 0 |
Dividends, Common Stock, Cash | $ 1,600 | $ 1,600 | $ 4,900 | $ 4,900 |
Treasury Stock Value, Acquired, Cost Method | $ 12,300 |
Commitments and Contingencies (Details) $ in Millions |
Sep. 30, 2020
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Unrecorded Unconditional Purchase Obligation | $ 0.0 |
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