NORTH LIBERTY, Iowa, April 23, 2014 (GLOBE NEWSWIRE) -- Heartland Express, Inc. (Nasdaq: HTLD ) announced today financial results for the quarter ended March 31, 2014.
Financial Results
Heartland Express ended the first quarter of 2014 with record operating revenues of $224.5 million, a net income of $14.1 million, and $0.16 earnings per share. Operating revenues increased 67.2% primarily due to the November 11, 2013 acquisition of Gordon Trucking, Inc. ("GTI"). Operating revenues for the quarter included fuel surcharge revenues of $45.9 million compared to $28.0 million in the same period of 2013. Operating income for the three-month period was positively impacted by a $1.4 million reduction in depreciation expense attributable to changing to the 125% declining balance method in the third quarter of 2013 and was negatively impacted by a $9.1 million decrease in gains on disposal of property and equipment. The Company posted an operating ratio (operating expenses as a percentage of operating revenues) of 90.8% and a 6.3% net margin (net income as a percentage of operating revenues) in the first quarter of 2014.
Fleet utilization and operating results for the quarter were negatively impacted by severe winter weather across the eastern half of the U.S. The Company continues to be challenged by the impact of government hours-of-service regulations including the thirty-four hour restart and a thirty minute break within the first eight hours of driving that were effective July 1, 2013.
Balance Sheet, Liquidity, and Capital Expenditures
At March 31, 2014, the Company had $16.9 million in cash balances and $62.0 million in borrowings under the Company's $250 million unsecured line of credit. Borrowings under the line of credit bore interest at a weighted average interest rate of 0.78%. The Company had $182.5 million in available borrowing capacity on the line of credit at March 31, 2014, after consideration of outstanding letters of credit, and was in compliance with associated financial covenants. The Company's debt balance decreased $13.0 million from December 31, 2013 due to net repayments during the quarter on the Company's line of credit. The Company ended the quarter with total assets of $723.7 million, net debt (total borrowing less cash on hand) of $45.1 million, and a net debt to total capitalization ratio of approximately 9.9%.
During the quarter ended March 31, 2014 the Company finalized the post-closing true-up of working capital balances related to the acquisition of GTI. As a result, the Company paid cash of $3.0 million during the quarter to the previous owners of GTI, which included $1.5 million for a difference between estimated and actual cash balances delivered at the close of the transaction. The Company continues to work towards the full integration of the two companies on a single information technology platform which it expects to complete during 2014.
The average age of the Company's tractor fleet was 2.6 years as of March 31, 2014 compared to 2.1 at March 31, 2013. The Company took delivery of 151 new trucks during the first quarter. Approximately 1,000 new trucks are currently scheduled to be delivered throughout 2014 which is expected to decrease the overall age of the Company's tractor fleet throughout 2014. The new trucks to be delivered will be a mix of International ProStar Plus and Freightliner Cascadia models. The average age of the Company's trailer fleet was 4.8 years at March 31, 2014 compared to 3.1 years at March 31, 2013. The increase in the trailer average age was primarily due to the age of the GTI fleet upon acquisition on November 11, 2013. The Company is continuing its process of updating GTI's trailer fleet exiting model years 2007 and prior. The Company began taking delivery of 1,000 new Wabash dry van trailers during March 2014 which will reduce the average age of the trailer fleet throughout 2014.
Net cash flows from operations continued to be strong at 14.3% of operating revenues during 2014 or $32.0 million. The primary uses of cash were $13.0 million for the repayment of long-term debt obligations, net capital expenditures during the quarter of $16.7 million mainly related to tractor fleet upgrades, and an additional payment of $3.0 million related to the acquisition of GTI. The Company currently anticipates net capital expenditures of approximately $115.0 million for the 2014 calendar year. The Company ended the past twelve months with a return on total assets of 10.4% and a 17.6% return on equity compared to 12.4% and 19.3%, respectively, during the twelve month period ending March 31, 2013.
The Company continued its commitment to stockholders through the payment of cash dividends. A dividend of $0.02 per share was declared during the quarter and was paid on April 2, 2014. The Company has now paid cumulative cash dividends of $445.2 million, including three special dividends, over the past forty-three consecutive quarters.
Other Information
Heartland Express and GTI have had a long history of offering safe, high-quality service to their customers. Recently Heartland was recognized by Nestle Waters as their 2013 Southeast Region Carrier of the Year. GTI was named a top 20 national carrier to drive for by the Truckload Carriers Association (TCA) for the third year in a row. In addition, GTI has been named the safest U.S. based trucking company in its division (carriers over 100 million miles per year) by the TCA for the fifth consecutive year. GTI was also recognized by the California Trucking Association with two 2014 Fleet Safety Awards. This marks the fourth time in five years that GTI has been recognized as an outstanding and safe carrier by the State of California. These awards are a direct reflection upon our combined safety and operational excellence which starts with our outstanding group of drivers.
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.
| HEARTLAND EXPRESS, INC. | ||
| AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENTS OF INCOME | ||
| (In thousands, except per share amounts) | ||
| (unaudited) | ||
| Three Months Ended March 31, | ||
| 2014 | 2013 | |
| OPERATING REVENUE | $ 224,481 | $ 134,273 |
| OPERATING EXPENSES: | ||
| Salaries, wages, and benefits | $ 70,945 | $ 40,598 |
| Rent and purchased transportation | 14,510 | 1,298 |
| Fuel | 63,225 | 42,978 |
| Operations and maintenance | 10,121 | 5,441 |
| Operating taxes and licenses | 4,846 | 2,416 |
| Insurance and claims | 7,095 | 2,860 |
| Communications and utilities | 1,830 | 774 |
| Depreciation and amortization | 24,573 | 15,066 |
| Other operating expenses | 8,691 | 3,813 |
| Gain on disposal of property and equipment | (2,043) | (11,178) |
| 203,793 | 104,066 | |
| Operating income | 20,688 | 30,207 |
| Interest income | 36 | 123 |
| Interest expense | (155) | — |
| Income before income taxes | 20,569 | 30,330 |
| Federal and state income taxes | 6,490 | 10,596 |
| Net income | $ 14,079 | $ 19,734 |
| Earnings per share | ||
| Basic | $ 0.16 | $ 0.23 |
| Diluted | $ 0.16 | $ 0.23 |
| Weighted average shares outstanding | ||
| Basic | 87,704 | 84,770 |
| Diluted | 87,917 | 85,046 |
| Dividends declared per share | $ 0.02 | $ 0.02 |
| HEARTLAND EXPRESS, INC. | ||
| AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (in thousands, except per share amounts) | ||
| (unaudited) | ||
| March 31, | December 31, | |
| ASSETS | 2014 | 2013 |
| CURRENT ASSETS | ||
| Cash and cash equivalents | $ 16,931 | $ 17,763 |
| Trade receivables, net | 91,165 | 84,400 |
| Prepaid tires | 7,955 | 6,999 |
| Prepaid shop supplies | 3,287 | 4,194 |
| Other current assets | 12,410 | 11,061 |
| Income tax receivable | 2,179 | 5,706 |
| Deferred income taxes, net | 13,773 | 14,177 |
| Total current assets | 147,700 | 144,300 |
| PROPERTY AND EQUIPMENT | 638,351 | 622,864 |
| Less accumulated depreciation | 194,612 | 173,605 |
| 443,739 | 449,259 | |
| GOODWILL | 100,212 | 98,686 |
| OTHER INTANGIBLES, NET | 18,155 | 18,746 |
| OTHER ASSETS | 13,940 | 13,850 |
| $ 723,746 | $ 724,841 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| CURRENT LIABILITIES | ||
| Accounts payable and accrued liabilities | $ 26,539 | $ 26,912 |
| Compensation and benefits | 27,333 | 28,084 |
| Insurance accruals | 20,250 | 20,945 |
| Other accruals | 11,860 | 12,627 |
| Total current liabilities | 85,982 | 88,568 |
| LONG-TERM LIABILITIES | ||
| Income taxes payable | 18,915 | 20,089 |
| Long-term debt | 62,000 | 75,000 |
| Deferred income taxes, net | 65,260 | 61,948 |
| Insurance accruals less current portion | 67,736 | 67,965 |
| Other long-term liabilities | 13,618 | 13,618 |
| Total long-term liabilities | 227,529 | 238,620 |
| COMMITMENTS AND CONTINGENCIES | ||
| STOCKHOLDERS' EQUITY | ||
| Capital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in 2014 and 2013; outstanding 87,705 in 2014 and 2013, respectively | 907 | 907 |
| Additional paid-in capital | 6,158 | 5,897 |
| Retained earnings | 444,355 | 432,034 |
| Treasury stock, at cost; 2,984 in 2014 and 2013, respectively | (41,185) | (41,185) |
| 410,235 | 397,653 | |
| $ 723,746 | $ 724,841 | |
Heartland Express, Inc. Mike Gerdin, Chief Executive Officer John Cosaert, Chief Financial Officer 319-626-3600
