Heartland Express Inc 10-Q for FY2021 Q3

Heartland Express Inc (HTLD)

10-Q 2021-11-04 For: 2021-09-30

Added on April 07, 2026

About this 10-Q

Heartland Express Inc filed this 10-Q on November 4, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $152.61M; down 6.0% from $162.28M a year earlier
Net income: $24.47M; up 18.1% from net income of $20.71M a year earlier
Diluted EPS: $0.31; up 24.0% from $0.25 a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	HTLD	NASDAQ


Large accelerated filer [X]						Accelerated filer [ ]
Non-accelerated filer [ ]						Smaller reporting company [ ]
						Emerging growth company [ ]




			Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 (unaudited)			4
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)			5
Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)			6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)			7
Notes to Consolidated Financial Statements (unaudited)			8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3. Quantitative and Qualitative Disclosures about Market Risk			23
Item 4. Controls and Procedures			23

PART II - OTHER INFORMATION

Item 1. Legal Proceedings			25
Item 1A. Risk Factors			25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 3. Defaults U pon Senior Securities			26
Item 4. Mine Safety Disclosures			26
Item 5. Other Information			26
Item 6. Exhibits			27

Signatures			28


HEARTLAND EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited)
ASSETS	September 30, 2021		December 31, 2020
CURRENT ASSETS
Cash and cash equivalents	$	180,366	$	113,852
Trade receivables, net of $1.1 million allowance in 2021 and 2020, respectively	58,538		55,577
Prepaid tires	9,272		8,241
Other current assets	10,398		15,342
Total current assets	258,574		193,012
PROPERTY AND EQUIPMENT
Land and land improvements	83,698		77,525
Buildings	89,375		86,712
Furniture and fixtures	5,282		4,807
Shop and service equipment	14,404		14,380
Revenue equipment	518,505		590,153
Construction in progress	14,238		5,783
Property and equipment, gross	725,502		779,360
Less accumulated depreciation	234,444		240,080
Property and equipment, net	491,058		539,280
GOODWILL	168,295		168,295
OTHER INTANGIBLES, NET	22,953		24,746
DEFERRED INCOME TAXES, NET	—		8,164
OTHER ASSETS	17,400		17,679
	$	958,280	$	951,176
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	14,430	$	12,751
Dividend payable	41,095		—
Compensation and benefits	24,355		22,422
Insurance accruals	13,645		15,837
Other accruals	19,001		18,557
Income tax payable	4,513		1,475
Total current liabilities	117,039		71,042
LONG-TERM LIABILITIES
Income taxes payable	5,385		5,801
Deferred income taxes, net	87,217		104,004
Insurance accruals less current portion	39,823		45,995
Total long-term liabilities	132,425		155,800
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 2021 and 2020; outstanding 78,943 and 80,653 in 2021 and 2020, respectively	907		907
Additional paid-in capital	4,319		4,330
Retained earnings	905,620		890,970
Treasury stock, at cost; 11,746 and 10,036 in 2021 and 2020, respectively	(202,030)		(171,873)
	708,816		724,334
	$	958,280	$	951,176


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,
	2021		2020		2021		2020

OPERATING REVENUE	$	152,612	$	162,282	$	459,142	$	489,473

OPERATING EXPENSES
Salaries, wages, and benefits	62,733		67,178		190,446		205,579
Rent and purchased transportation	950		999		2,922		3,635
Fuel	25,258		21,218		74,220		65,445
Operations and maintenance	5,372		7,118		16,729		21,516
Operating taxes and licenses	3,311		3,664		10,345		11,229
Insurance and claims	5,053		4,827		15,171		16,034
Communications and utilities	1,218		1,398		3,412		4,091
Depreciation and amortization	25,280		27,625		78,162		81,427
Other operating expenses	5,418		6,637		16,173		19,602
Gain on disposal of property and equipment	(15,254)		(5,721)		(27,341)		(8,739)
	119,339		134,943		380,239		419,819

Operating income	33,273		27,339		78,903		69,654

Interest income	181		171		493		704


Income before income taxes	33,454		27,510		79,396		70,358

Federal and state income taxes	8,988		6,796		20,454		17,224

Net income	$	24,466	$	20,714	$	58,942	$	53,134
Other comprehensive income, net of tax	—		—		—		—
Comprehensive income	$	24,466	$	20,714	$	58,942	$	53,134

Net income per share
Basic	$	0.31	$	0.25	$	0.74	$	0.65
Diluted	$	0.31	$	0.25	$	0.74	$	0.65

Weighted average shares outstanding
Basic	79,336		81,370		79,795		81,530
Diluted	79,364		81,404		79,839		81,587

Dividends declared per share	$	0.52	$	0.02	$	0.56	$	0.06


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, 2020	$	907	$	4,330	$	890,970	$	(171,873)	$	724,334
Net income	—		—		13,734		—		13,734
Dividends on common stock, $0.02 per share	—		—		(1,599)		—		(1,599)
Repurchases of common stock	—		—		—		(14,537)		(14,537)
Stock-based compensation, net of tax	—		146		—		339		485
Balance, March 31, 2021	907		4,476		903,105		(186,071)		722,417
Net income	—		—		20,742		—		20,742
Dividends on common stock, $0.02 per share	—		—		(1,598)		—		(1,598)

Stock-based compensation, net of tax	—		55		—		150		205
Balance, June 30, 2021	907		4,531		922,249		(185,921)		741,766
Net income	—		—		24,466		—		24,466
Repurchases of common stock	—		—		—		(16,400)		(16,400)
Dividends on common stock, $0.52 per share	—		—		(41,095)		—		(41,095)
Stock-based compensation, net of tax	—		(212)		—		291		79
Balance, September 30, 2021	$	907	$	4,319	$	905,620	$	(202,030)	$	708,816

	Capital		Additional
	Stock,		Paid-In		Retained		Treasury
	Common		Capital		Earnings		Stock		Total
Balance, December 31, 2019	$	907	$	4,141	$	826,666	$	(147,055)	$	684,659
Net income	—		—		13,238		—		13,238
Dividends on common stock, $0.02 per share	—		—		(1,628)		—		(1,628)
Repurchases of common stock	—		—		—		(12,278)		(12,278)
Stock-based compensation, net of tax	—		291		—		406		697
Balance, March 31, 2020	907		4,432		838,276		(158,927)		684,688
Net income	—		—		19,182		—		19,182
Dividends on common stock, $0.02 per share	—		—		(1,628)		—		(1,628)
Stock-based compensation, net of tax	—		174		—		199		373
Balance, June 30, 2020	907		4,606		855,830		(158,728)		702,615
Net income	—		—		20,714		—		20,714
Dividends on common stock, $0.02 per share	—		—		(1,628)		—		(1,628)
Stock-based compensation, net of tax	—		(208)		—		216		8
Balance, September 30, 2020	$	907	$	4,398	$	874,916	$	(158,512)	$	721,709


HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
	Nine Months Ended September 30,
	2021		2020
OPERATING ACTIVITIES
Net income	$	58,942	$	53,134
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	78,286		81,786
Deferred income taxes	(8,623)		9,256
Stock-based compensation expense	959		1,509
Gain on disposal of property and equipment	(27,341)		(8,739)
Changes in certain working capital items:
Trade receivables	(2,961)		(5,785)
Prepaid expenses and other current assets	3,041		(6,645)
Accounts payable, accrued liabilities, and accrued expenses	(9,231)		5,101
Accrued income taxes	2,622		3,370
Net cash provided by operating activities	95,694		132,987
INVESTING ACTIVITIES
Proceeds from sale of property and equipment	98,421		51,473
Purchases of property and equipment	(93,213)		(163,824)

Change in other assets	(181)		72
Net cash provided by (used in) investing activities	5,027		(112,279)
FINANCING ACTIVITIES
Payment of cash dividends	(3,198)		(4,884)
Shares withheld for employee taxes related to stock-based compensation	(190)		(431)

Repurchases of common stock	(31,422)		(12,278)
Net cash used in financing activities	(34,810)		(17,593)
Net increase in cash, cash equivalents and restricted cash	65,911		3,115
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	131,140		96,076
End of period	$	197,051	$	99,191
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid during the period for income taxes, net of refunds	$	26,455	$	4,598
Noncash investing and financing activities:
Purchased property and equipment in accounts payable	$	3,258	$	12,114
Sold revenue equipment and property in other current assets	$	1,423	$	5,195
Common stock dividends declared in accounts payable	$	41,095	$	—
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	180,366	$	81,949
Restricted cash included in other current assets	932		1,097
Restricted cash included in other assets	15,753		16,145
Total cash, cash equivalents and restricted cash	$	197,051	$	99,191


	Amortization period (years)	Gross Amount		Accumulated Amortization		Net intangible assets
		(in thousands)
Customer relationships	15-20	$	23,000	$	5,514	$	17,486
Tradename	0.5-6	12,900		9,100		3,800
Covenants not to compete	1-10	5,300		3,633		1,667
		$	41,200	$	18,247	$	22,953


	Three months ended September 30, 2021
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	24,466	79,336	$	0.31
Effect of restricted stock	—		28
Diluted EPS	$	24,466	79,364	$	0.31


	Three months ended September 30, 2020
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	20,714	81,370	$	0.25
Effect of restricted stock	—		34
Diluted EPS	$	20,714	81,404	$	0.25


	Nine months ended September 30, 2021
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	58,942	79,795	$	0.74
Effect of restricted stock	—		44
Diluted EPS	$	58,942	79,839	$	0.74


	Nine months ended September 30, 2020
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	53,134	81,530	$	0.65
Effect of restricted stock	—		57
Diluted EPS	$	53,134	81,587	$	0.65


	Three Months Ended September 30, 2021
	Number of Shares of Restricted Stock Awards (in thousands)	Weighted Average Grant Date Fair Value
Unvested at beginning of period	44.2	$	19.83
Granted	5.0	16.79
Vested	(21.5)	18.82
Forfeited	—	—
Outstanding (unvested) at end of period	27.7	$	20.07


	2021
	(in thousands)
Balance at January 1, 2021	$	4,937
Additions based on tax positions related to current year	372
Reductions for tax positions of prior years	(179)
Reductions due to lapse of applicable statute of limitations	(533)
Balance at September 30, 2021	$	4,597


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,
	2021			2020			2021			2020
	(Unaudited, in thousands)						(Unaudited, in thousands)

Operating revenue	$	152,612		$	162,282		$	459,142		$	489,473
Less: Fuel surcharge revenue	19,628			14,412			55,544			47,858
Operating revenue, excluding fuel surcharge revenue	132,984			147,870			403,598			441,615

Operating expenses	119,339			134,943			380,239			419,819
Less: Fuel surcharge revenue	19,628			14,412			55,544			47,858
Adjusted operating expenses	99,711			120,531			324,695			371,961

Operating income	$	33,273		$	27,339		$	78,903		$	69,654
Operating ratio	78.2		%	83.2		%	82.8		%	85.8		%
Adjusted operating ratio	75.0		%	81.5		%	80.5		%	84.2		%


Yes [X]			No [ ]


Yes [X]			No [ ]


Yes [ ]			No [ X ]


	(a) Total number of shares purchased	(b) Average price paid per share		(c) Total number of shares purchased as part of publicly announced plans or programs	(d) Maximum number of shares that may yet be purchased under the plans or programs (1)
					4,670,774
July 1, 2021 - July 31, 2021	349,523	$	16.60	349,523	4,321,251
August 1, 2021 - August 31, 2021	575,614	16.68		575,614	6,745,637
September 1, 2021 - September 30, 2021	62,490	15.97		62,490	6,683,147
Total	987,627			987,627


			2.1						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.
			3.1						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.
			3.2						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.
			10.1*						Second Amendment to Credit Agreement, dated August 31, 2021, by and between Wells Fargo Bank, National Association and Heartland Express, Inc. of Iowa, Heartland Express, Inc., Heartland Express Maintenance Services, Inc., Heartland Express Services, Inc., Millis Transfer, LLC, and Midwest Holding Group, LLC.
			31.1*						Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
			31.2*						Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
			32.1**						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.
			32.2**						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.

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		HEARTLAND EXPRESS, INC.

Date:	November 3, 2021	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.


In connection with the Quarterly Report of Heartland Express, Inc. (the "Company"), on Form 10-Q for the period ended September 30, 2021 (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.