Attached files
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| 8-K - 8-K - HEARTLAND EXPRESS INC | earningsrelease8k2016q2.htm |
Exhibit 99.1
July 28, 2016 For Immediate Release
Press Release
Heartland Express, Inc. Reports Revenues and Earnings for the Second Quarter of 2016
NORTH LIBERTY, IOWA - July 28, 2016 - Heartland Express, Inc. (Nasdaq: HTLD) announced today financial results for the three and six months ended June 30, 2016.
Three months ended June 30, 2016 highlights included:
• | Net Income of $16.4 million, Earnings per Share of $0.20, and Operating Revenue of $160.8 million, |
• | Net Income increased 13.8% sequentially to 1st quarter of 2016, |
• | Operating Ratio of 84.8% and 83.2% Non-GAAP Adjusted Operating Ratio(1). |
Six months ended June 30, 2016 highlights included:
• | Net Income of $30.7 million, Earnings per Share of $0.37, and Operating Revenue of $323.6 million, |
• | Cash generated from operations was $77.9 million, |
• | Cash balance of $77.6 million, a $44.4 million increase since December 31, 2015, |
• | Operating Ratio of 86.2% and 84.8% Non-GAAP Adjusted Operating Ratio(1). |
Heartland Express Chief Executive Officer Michael Gerdin, commented on the quarterly operating results and ongoing initiatives of the Company, "Throughout the first half of 2016 we continued to experience downward pressure on freight rates due to the softness in freight volumes resulting from the available capacity in the industry. Typically, freight volumes improve during the second quarter as compared to the first three months of the year but that has not been our experience during 2016 as freight volumes didn't improve until mid-June. During this time, our commitment and dedication to on-time service for our customers has helped carry us through the current freight rate pressures. We remain committed and focused to returning our operating ratio to the low 80’s and we've now delivered four consecutive quarters of improvement, excluding gains on disposals of property and equipment, which tend to be volatile based on timing of fleet upgrades. Further, we were able to generate another quarter of solid cash flows from operations, which allowed us to increase our cash reserves and pay for capital expenditures while remaining debt free. This foundation of financial discipline allows us to maintain a fleet of tractors and trailers equipped with the latest technology available in the industry."
Financial Results
Heartland Express ended the second quarter of 2016 with net income of $16.4 million, compared to $23.3 million in the second quarter of 2015. Basic earnings per share were $0.20 during the quarter compared to $0.27 earnings per share in the second quarter of 2015. Operating revenues were $160.8 million, compared to $191.7 million in the second quarter of 2015. Operating revenues for the quarter included fuel surcharge revenues of $15.3 million compared to $25.7 million in the same period of 2015, a $10.4 million decrease. Operating revenues decreased 12.4% excluding the impact of fuel surcharge revenues primarily due to lower miles driven due to softer freight volumes in the second quarter compared to the same period in 2015. Operating income for the three-month period decreased $5.2 million as a result of lower gains on disposal of property and equipment from lower trade volumes. The Company posted an adjusted operating ratio(1) of 83.2% and a 10.2% net margin (net income as a percentage of operating revenues) in the second quarter of 2016 compared to 78.5% and 12.2%, respectively in the second quarter of 2015.
For the six month period ended June 30, 2016, the Company recorded net income of $30.7 million, compared to $40.9 million in the same period of 2015. Basic earnings per share were $0.37 compared to $0.47 earnings per share in the same period of 2015. Operating revenues were $323.6 million, compared to
$379.2 million in the same period of 2015. Operating revenues included fuel surcharge revenues of $28.4 million compared to $51.8 million in the same period of 2015, a $23.4 million decrease. Operating revenues decreased 9.9% excluding the impact of fuel surcharge revenues. Operating income for the six-month period decreased $14.0 million as a result of lower gains on disposal of property and equipment from lower trade volumes. The Company posted an adjusted operating ratio(1) of 84.8% and a 9.5% net margin (net income as a percentage of operating revenues) in the six months ended June 30, 2016 compared to 80.5% and 10.8%, respectively in 2015.
Balance Sheet, Liquidity, and Capital Expenditures
At June 30, 2016, the Company had $77.6 million in cash balances and no borrowings under the Company's unsecured line of credit. The Company had $194.5 million in available borrowing capacity on the line of credit at June 30, 2016 after consideration of outstanding letters of credit. The Company continues to be in compliance with associated financial covenants. The Company ended the quarter with total assets of $742.1 million and stockholders' equity of $483.3 million.
Net cash flows from operations for the first six months of 2016 were $77.9 million. The primary use of cash during the six month period ended June 30, 2016 was $15.6 million for equipment purchases, $14.7 million for stock repurchases and $3.3 million for dividends. The average age of the Company's tractor fleet was 1.5 years as of June 30, 2016 compared to 1.7 years at June 30, 2015. The average age of the Company's trailer fleet was 4.7 years at June 30, 2016 compared to 4.5 years at June 30, 2015. The Company currently anticipates a total of approximately $40 to $50 million in net capital expenditures for the calendar year 2016. The Company ended the past twelve months with a return on total assets of 8.5% and a 13.1% return on equity.
The Company continues its commitment to stockholders through the payment of cash dividends and repurchase of common stock. Dividends of $0.02 per share were declared and paid during the first and second quarters of 2016. The Company has now paid cumulative cash dividends of $460.8 million, including three special dividends, ($2.00 in 2007, $1.00 in 2010, and $1.00 in 2012) over the past fifty-two consecutive quarters. During the six months ended June 30, 2016, 0.9 million shares of our common stock were repurchased for $14.7 million reducing outstanding shares at June 30, 2016 to 83.3 million shares. The Company has repurchased 4.7 million shares of our common stock for $88.7 million since August 2015 and a total of 10.7 million shares of common stock for approximately $169.2 million over the past five years.
Other Information
We continued to deliver award-winning service and safety to our customers. In addition to the seven customer and safety awards received during the first quarter of 2016, we received the following additional awards during the second quarter:
• | Fedex Express - Carrier of the Year (6th consecutive year and 9th time in 10 years) |
• | Fedex Express - Platinum Award for On-Time Service (99.96% on-time service) |
• | Winegard - Truckload Carrier of the Year |
Adjusted operating ratio is a non-GAAP financial measure and is not intended to replace financial measures calculated in accordance with GAAP. This non-GAAP financial measure supplements our GAAP results. We believe that using this measure 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 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 or
John Cosaert, Chief Financial Officer
319-626-3600
HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
OPERATING REVENUE | $ | 160,791 | $ | 191,684 | $ | 323,577 | $ | 379,207 | ||||||||
OPERATING EXPENSES: | ||||||||||||||||
Salaries, wages, and benefits | $ | 61,524 | $ | 70,904 | $ | 126,990 | $ | 141,900 | ||||||||
Rent and purchased transportation | 6,181 | 9,211 | 12,881 | 18,537 | ||||||||||||
Fuel | 24,394 | 34,196 | 45,588 | 68,452 | ||||||||||||
Operations and maintenance | 6,969 | 8,379 | 13,607 | 16,512 | ||||||||||||
Operating taxes and licenses | 3,943 | 4,378 | 7,834 | 9,192 | ||||||||||||
Insurance and claims | 4,979 | 3,469 | 13,072 | 10,113 | ||||||||||||
Communications and utilities | 1,060 | 1,453 | 2,265 | 2,996 | ||||||||||||
Depreciation and amortization | 25,847 | 26,876 | 51,552 | 52,850 | ||||||||||||
Other operating expenses | 5,898 | 6,747 | 10,831 | 14,505 | ||||||||||||
Gain on disposal of property and equipment | (4,511 | ) | (9,668 | ) | (5,800 | ) | (19,849 | ) | ||||||||
136,284 | 155,945 | 278,820 | 315,208 | |||||||||||||
Operating income | 24,507 | 35,739 | 44,757 | 63,999 | ||||||||||||
Interest income | 109 | 61 | 184 | 93 | ||||||||||||
Interest expense | — | — | — | (19 | ) | |||||||||||
Income before income taxes | 24,616 | 35,800 | 44,941 | 64,073 | ||||||||||||
Federal and state income taxes | 8,248 | 12,484 | 14,196 | 23,145 | ||||||||||||
Net income | $ | 16,368 | $ | 23,316 | $ | 30,745 | $ | 40,928 | ||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.20 | $ | 0.27 | $ | 0.37 | $ | 0.47 | ||||||||
Diluted | $ | 0.20 | $ | 0.27 | $ | 0.37 | $ | 0.47 | ||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 83,248 | 87,814 | 83,308 | 87,802 | ||||||||||||
Diluted | 83,319 | 87,967 | 83,390 | 87,966 | ||||||||||||
Dividends declared per share | $ | 0.02 | $ | 0.02 | $ | 0.04 | $ | 0.04 | ||||||||
HEARTLAND EXPRESS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited) | ||||||||
June 30, | December 31, | |||||||
ASSETS | 2016 | 2015 | ||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 77,607 | $ | 33,232 | ||||
Trade receivables, net | 57,009 | 61,009 | ||||||
Prepaid tires | 8,793 | 9,584 | ||||||
Other current assets | 11,468 | 8,316 | ||||||
Income tax receivable | 7,773 | 7,641 | ||||||
Deferred income taxes, net | — | 16,662 | ||||||
Total current assets | 162,650 | 136,444 | ||||||
PROPERTY AND EQUIPMENT | 676,170 | 671,946 | ||||||
Less accumulated depreciation | 225,482 | 197,948 | ||||||
450,688 | 473,998 | |||||||
GOODWILL | 100,212 | 100,212 | ||||||
OTHER INTANGIBLES, NET | 13,051 | 14,013 | ||||||
DEFERRED INCOME TAXES, NET | 4,222 | — | ||||||
OTHER ASSETS | 11,266 | 11,363 | ||||||
$ | 742,089 | $ | 736,030 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued liabilities | $ | 21,535 | $ | 7,516 | ||||
Compensation and benefits | 25,667 | 24,636 | ||||||
Insurance accruals | 22,330 | 21,573 | ||||||
Other accruals | 13,040 | 12,443 | ||||||
Total current liabilities | 82,572 | 66,168 | ||||||
LONG-TERM LIABILITIES | ||||||||
Income taxes payable | 12,433 | 16,228 | ||||||
Deferred income taxes, net | 94,337 | 112,118 | ||||||
Insurance accruals less current portion | 61,420 | 59,435 | ||||||
Other long-term liabilities | 8,000 | 12,153 | ||||||
Total long-term liabilities | 176,190 | 199,934 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Capital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in 2016 and 2015; outstanding 83,279 in 2016 and 84,115 in 2015, respectively | 907 | 907 | ||||||
Additional paid-in capital | 3,378 | 4,126 | ||||||
Retained earnings | 603,361 | 575,948 | ||||||
Treasury stock, at cost; 7,410 in 2016 and 6,574 in 2015, respectively | (124,319 | ) | (111,053 | ) | ||||
483,327 | 469,928 | |||||||
$ | 742,089 | $ | 736,030 | |||||
(1)
GAAP to Non-GAAP Reconciliation Schedule: | ||||||||||||||||
Operating income, operating ratio, and adjusted operating ratio reconciliation (a) | ||||||||||||||||
(In thousands) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Operating revenue | $ | 160,791 | $ | 191,684 | $ | 323,577 | $ | 379,207 | ||||||||
Less: Fuel surcharge revenue | 15,341 | 25,705 | 28,434 | 51,809 | ||||||||||||
Operating revenue, excluding fuel surcharge revenue | 145,450 | 165,979 | 295,143 | 327,398 | ||||||||||||
Operating expenses | 136,284 | 155,945 | 278,820 | 315,208 | ||||||||||||
Less: Fuel surcharge revenue | 15,341 | 25,705 | 28,434 | 51,809 | ||||||||||||
Adjusted operating expenses | 120,943 | 130,240 | 250,386 | 263,399 | ||||||||||||
Operating income | $ | 24,507 | $ | 35,739 | $ | 44,757 | $ | 63,999 | ||||||||
Operating ratio | 84.8 | % | 81.4 | % | 86.2 | % | 83.1 | % | ||||||||
Adjusted operating ratio | 83.2 | % | 78.5 | % | 84.8 | % | 80.5 | % | ||||||||
(a) Adjusted operating ratio as reported in this press release is based upon total operating expenses, net of fuel surcharge, as a percentage of operating revenue excluding fuel surcharge revenue.