Heartland Express, Inc. Reports Operating Results for the First Quarter of 2024
- Heartland Express reported a decrease in operating revenue from $330.9 million in Q1 2023 to $270.3 million in Q1 2024.
- The company experienced a net loss of $15.1 million in Q1 2024 compared to a net income of $12.6 million in Q1 2023.
- Operating ratio for Q1 2024 was 105.3%, higher than the previous year's 93.1%.
- The company aims to improve operating effectiveness through cost reductions and driver utilization improvements.
- Heartland Express is focused on reducing debt and improving financial results in 2024.
- Operating revenue decreased from $330.9 million in Q1 2023 to $270.3 million in Q1 2024.
- Net loss of $15.1 million was reported in Q1 2024.
- Operating ratio for Q1 2024 was 105.3%.
- Debt and financing lease obligations remain at $263.6 million as of March 31, 2024.
Insights
Heartland Express, Inc.'s first quarter results signal a significant downturn, with a swing from
Debt repayment emerges as a strategic focus, with
Nevertheless, dividend consistency since 2003 reflects a shareholder-friendly approach, which may mitigate investor concern. In the context of a retail investor, the balance between debt repayment, asset health and shareholder returns will be key in evaluating the company's resilience and long-term strategy in face of current headwinds.
The underlying market dynamics described by the CEO, including 'excess capacity' and 'weak freight demand', are symptomatic of cyclical downturns in the transportation sector. Investors should note the company's refusal to lower freight rates despite these conditions, which, while potentially safeguarding long-term value, contributes to short-term revenue declines.
Capital expenditures are conservative, with an expectation of
The company's cash dividends, despite the reported losses, might be seen as a gesture of confidence in future recovery. However, investors should remain vigilant about the sustainability of such dividends if profitability does not improve.
The average fleet age increase from 2.1 to 2.4 years for tractors and from 6.2 to 6.7 years for trailers, may not seem significant, but in the transportation industry, newer fleets often equate to better fuel efficiency and lower maintenance costs. Balancing fleet age with capital expenditure is a delicate dance for transportation companies.
Moreover, Heartland Express' focus on 'driver utilization improvements' aligns with industry trends towards maximized efficiency and technological integration. Despite no stock repurchases, the absence of such activity could be interpreted as a strategy to conserve cash in light of the current operating margin pressures.
In summary, investors might view Heartland's strategic decisions as a defensive posture amidst a challenging freight market, emphasizing operational efficiency over expansion during tough economic cycles.
NORTH LIBERTY, Iowa, April 23, 2024 (GLOBE NEWSWIRE) -- Heartland Express, Inc. (Nasdaq: HTLD) announced today financial results for the three months ended March 31, 2024.
Three months ended March 31, 2024:
- Operating Revenue of
$270.3 million , - Net Loss of
$15.1 million , - Basic Loss per Share of
$0.19 , - Operating Ratio of
105.3% and105.6% Non-GAAP Adjusted Operating Ratio(1), - Total Assets of
$1.5 billion , - Stockholders' Equity of
$848.8 million .
Heartland Express Chief Executive Officer Mike Gerdin commented on the quarterly operating results and ongoing initiatives of the Company, "Our consolidated operating results for the three months ended March 31, 2024 reflect the combination of an extended and significant period of weak freight demand, driven by excess capacity in the industry, unfavorable weather early in the quarter, and ongoing operating cost inflation. We point to continued internal efforts, following our two most recent acquisitions completed in 2022, to improve our operating effectiveness through cost reductions, purchasing scale, information systems projects focused on driver utilization improvements, and a continued focus on on-time service. Further, we worked to reduce unprofitable freight, did not rely on broker freight, and refused to lower our freight rates to meet the unsustainable requests of certain customers, all of which had a negative impact on our revenues in comparison to the same period of the prior year. We continue to believe that the freight market will improve as more capacity exits the market so the industry as a whole can return to more disciplined operating decisions and improved financial results."
Mr. Gerdin continued, "Our current efforts and focus have driven sequential operating revenue and operating ratio improvements for each month of 2024 as we work toward our goal and historical expectation of delivering an operating ratio of 85 or lower. We still have significant work to do, but the progress made during the first quarter of 2024 is a testament to the hard work of our professional drivers and the team that supports them. Interest expense is another significant headwind to our financial results and we have prioritized our capital to reduce the acquisition-related debt by an additional
Financial Results
Heartland Express ended the first quarter of 2024 with operating revenues of
Balance Sheet, Liquidity, and Capital Expenditures
As of March 31, 2024, the Company had
Net cash flows from operations for the first three months of 2024 were
The average age of the Company's consolidated tractor fleet was 2.4 years as of March 31, 2024 compared to 2.1 years on March 31, 2023. The average age of the Company's consolidated trailer fleet was 6.7 years as of March 31, 2024 compared to 6.2 years as of March 31, 2023. During the calendar year of 2024, we currently expect net capital expenditures of approximately
The Company continues its commitment to stockholders through the payment of cash dividends. A regular dividend of
Other Information
During the first quarter of 2024, our family of operating brands continued to deliver award-winning service, safety, and integrity as evidenced by the following awards for our company and our employees:
- Home Depot Truckload Carrier of the Year (Medium Fleet)
- Home Depot Truckload Carrier of the Year (Small Fleet)
- NFI US East Carrier of the Year
- TCA Fleet Safety Award 2023 - 2nd Place (Division VI, 100+ Million Miles)
- Missouri Trucking Association - Safety Award (Over the Road, 15+ Million Miles)
- Newsweek's 2024 Most Trustworthy Companies
Operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio are non-GAAP financial measures and are not intended to replace financial measures calculated in accordance with GAAP. These non-GAAP financial measures supplement our GAAP results. We believe that using these measures affords a more consistent basis for comparing our results of operations from period to period. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP, is included in the table at the end of this press release.
This press release may contain statements that might be considered as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “seek,” “expects,” “estimates,” “anticipates,” “projects,” “believes,” “hopes,” “plans,” “goals,” “intends,” “may,” “might,” “likely,” “will,” “should,” “would,” “could,” “potential,” “predict,” “continue,” “strategy,” “future,” “ensure,” “outlook,” and similar terms and phrases. In this press release, the statements relating to freight supply and demand, future cost inflation, our ability to react to and capitalize on changing market conditions, the expected impact of operational improvements and strategic changes, progress toward our goals, deployment of cash reserves, future capital expenditures, future dispositions of revenue equipment and gains therefrom, future operating ratio, and future stock repurchases, dividends, and debt repayment are forward-looking statements. Such statements are based on management's belief or interpretation of information currently available. These statements and assumptions involve certain risks and uncertainties, and undue reliance should not be placed on such statements. Actual events may differ materially from those set forth in, contemplated by, or underlying such statements as a result of numerous factors, including, without limitation, those specified in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Company assumes no obligation to update any forward-looking statements, which speak as of their respective dates.
| Contact: Heartland Express, Inc. (319-645-7060) Mike Gerdin, Chief Executive Officer Chris Strain, Chief Financial Officer |
| HEARTLAND EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (unaudited) | |||||||
| Three Months Ended March 31, | |||||||
| 2024 | 2023 | ||||||
| OPERATING REVENUE | $ | 270,320 | $ | 330,916 | |||
| OPERATING EXPENSES: | |||||||
| Salaries, wages, and benefits | $ | 112,697 | $ | 123,333 | |||
| Rent and purchased transportation | 23,863 | 33,144 | |||||
| Fuel | 47,321 | 57,528 | |||||
| Operations and maintenance | 16,264 | 15,026 | |||||
| Operating taxes and licenses | 5,315 | 5,543 | |||||
| Insurance and claims | 14,584 | 11,002 | |||||
| Communications and utilities | 2,440 | 2,876 | |||||
| Depreciation and amortization | 46,504 | 48,469 | |||||
| Other operating expenses | 15,626 | 17,891 | |||||
| Loss (gain) on disposal of property and equipment | 89 | (6,786 | ) | ||||
| 284,703 | 308,026 | ||||||
| Operating (loss) income | (14,383 | ) | 22,890 | ||||
| Interest income | 366 | 484 | |||||
| Interest expense | (5,302 | ) | (6,075 | ) | |||
| (Loss) Income before income taxes | (19,319 | ) | 17,299 | ||||
| Federal and state income taxes | (4,211 | ) | 4,687 | ||||
| Net (loss) income | $ | (15,108 | ) | $ | 12,612 | ||
| (Loss) Earnings per share | |||||||
| Basic | $ | (0.19 | ) | $ | 0.16 | ||
| Diluted | $ | (0.19 | ) | $ | 0.16 | ||
| Weighted average shares outstanding | |||||||
| Basic | 79,044 | 78,987 | |||||
| Diluted | 79,122 | 79,022 | |||||
| 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 | 2024 | 2023 | |||||
| CURRENT ASSETS | |||||||
| Cash and cash equivalents | $ | 23,823 | $ | 28,123 | |||
| Trade receivables, net | 107,932 | 102,740 | |||||
| Prepaid tires | 9,417 | 10,650 | |||||
| Other current assets | 13,842 | 17,602 | |||||
| Income taxes receivable | 5,128 | 10,157 | |||||
| Total current assets | 160,142 | 169,272 | |||||
| PROPERTY AND EQUIPMENT | 1,316,391 | 1,319,909 | |||||
| Less accumulated depreciation | 474,940 | 434,558 | |||||
| 841,451 | 885,351 | ||||||
| GOODWILL | 322,597 | 322,597 | |||||
| OTHER INTANGIBLES, NET | 97,283 | 98,537 | |||||
| OTHER ASSETS | 15,467 | 14,953 | |||||
| DEFERRED INCOME TAXES, NET | 1,401 | 1,494 | |||||
| OPERATING LEASE RIGHT OF USE ASSETS | 14,144 | 17,442 | |||||
| $ | 1,452,485 | $ | 1,509,646 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| CURRENT LIABILITIES | |||||||
| Accounts payable and accrued liabilities | $ | 35,704 | $ | 37,777 | |||
| Compensation and benefits | 29,739 | 28,492 | |||||
| Insurance accruals | 24,153 | 21,507 | |||||
| Long-term debt and finance lease liabilities - current portion | 8,986 | 9,303 | |||||
| Operating lease liabilities - current portion | 7,740 | 9,259 | |||||
| Other accruals | 21,146 | 17,138 | |||||
| Total current liabilities | 127,468 | 123,476 | |||||
| LONG-TERM LIABILITIES | |||||||
| Income taxes payable | 6,238 | 6,270 | |||||
| Long-term debt and finance lease liabilities less current portion | 254,616 | 290,696 | |||||
| Operating lease liabilities less current portion | 6,404 | 8,183 | |||||
| Deferred income taxes, net | 179,850 | 189,121 | |||||
| Insurance accruals less current portion | 29,119 | 26,640 | |||||
| Total long-term liabilities | 476,227 | 520,910 | |||||
| COMMITMENTS AND CONTINGENCIES | |||||||
| STOCKHOLDERS' EQUITY | |||||||
| Capital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in 2024 and 2023; outstanding 79,051 and 79,039 in 2024 and 2023, respectively | 907 | 907 | |||||
| Additional paid-in capital | 4,518 | 4,527 | |||||
| Retained earnings | 1,043,404 | 1,060,094 | |||||
| Treasury stock, at cost; 11,638 and 11,650 in 2024 and 2023, respectively | (200,039 | ) | (200,268 | ) | |||
| 848,790 | 865,260 | ||||||
| $ | 1,452,485 | $ | 1,509,646 | ||||
(1)
| GAAP to Non-GAAP Reconciliation Schedule: | |||||||||
| Operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio reconciliation (a) | |||||||||
| Three Months Ended March 31, | |||||||||
| 2024 | 2023 | ||||||||
| (Unaudited, in thousands) | |||||||||
| Operating revenue | |||||||||
| Less: Fuel surcharge revenue | 36,212 | 49,647 | |||||||
| Operating revenue, excluding fuel surcharge revenue | 234,108 | 281,269 | |||||||
| Operating expenses | 284,703 | 308,026 | |||||||
| Less: Fuel surcharge revenue | 36,212 | 49,647 | |||||||
| Less: Amortization of intangibles | 1,254 | 1,291 | |||||||
| Adjusted operating expenses | 247,237 | 257,088 | |||||||
| Operating (loss) income | (14,383 | ) | 22,890 | ||||||
| Adjusted operating (loss) income | $ | (13,129 | ) | $ | 24,181 | ||||
| Operating ratio | 105.3 | % | 93.1 | % | |||||
| Adjusted operating ratio | 105.6 | % | 91.4 | % | |||||
(a) Operating revenue excluding fuel surcharge revenue, as reported in this press release is based upon operating revenue minus fuel surcharge revenue. Adjusted operating income as reported in this press release is based upon operating revenue excluding fuel surcharge revenue, less operating expenses, net of fuel surcharge revenue, and non-cash amortization expense related to intangible assets. Adjusted operating ratio as reported in this press release is based upon operating expenses, net of fuel surcharge revenue, and amortization of intangibles, as a percentage of operating revenue excluding fuel surcharge revenue. We believe that operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio are more representative of our underlying operations by excluding the volatility of fuel prices, which we cannot control. Operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio are not substitutes for operating revenue, operating income, or operating ratio measured in accordance with GAAP. There are limitations to using non-GAAP financial measures. Although we believe that operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio improve comparability in analyzing our period-to-period performance, they could limit comparability to other companies in our industry if those companies define such measures differently. Because of these limitations, operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio should not be considered measures of income generated by our business or discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis.
FAQ
What was Heartland Express' operating revenue for Q1 2024?
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