Heartland Express Inc 10-Q for FY2023 Q3

Heartland Express Inc (HTLD)

10-Q 2023-11-09 For: 2023-09-30

Added on April 07, 2026

About this 10-Q

Heartland Express Inc filed this 10-Q on November 9, 2023, covering the quarter ended September 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $295.03M; up 7.7% from $273.98M a year earlier
Net loss: $10.7M; compared with net income of $24.42M a year earlier
Diluted EPS: -$0.14; compared with $0.31 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, 2023 and December 31, 2022 (unaudited)			3
Consolidated Statements of Comprehensive Income (Loss) for the Three and N ine Months Ended September 30, 2023 and 2022 (unaudited)			4
Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended September 30, 2023 and 2022 (unaudited)			5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (unaudited)			6
Notes to Consolidated Financial Statements (unaudited)			7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3. Quantitative and Qualitative Disclosures about Market Risk			25
Item 4. Controls and Procedures			26

PART II - OTHER INFORMATION

Item 1. Legal Proceedings			27
Item 1A. Risk Factors			27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			27
Item 3. Defaults Upon Senior Securities			27
Item 4. Mine Safety Disclosures			27
Item 5. Other Information			27
Item 6. Exhibits			28

Signatures			29


HEARTLAND EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited)
ASSETS	September 30, 2023		December 31, 2022
CURRENT ASSETS
Cash and cash equivalents	$	20,101	$	49,462
Trade receivables, net of $2.5 and $3.3 million allowance in 2023 and 2022, respectively	113,945		139,819
Prepaid tires	11,884		11,293
Other current assets	20,738		26,069
Income tax receivable	15,399		3,139
Total current assets	182,067		229,782
PROPERTY AND EQUIPMENT
Land and land improvements	102,223		94,155
Buildings	153,164		143,899
Furniture and fixtures	7,014		6,946
Shop and service equipment	22,203		21,652
Revenue equipment	1,029,351		1,000,472
Construction in progress	15,762		15,070
Property and equipment, gross	1,329,717		1,282,194
Less accumulated depreciation	403,585		308,936
Property and equipment, net	926,132		973,258
GOODWILL	322,597		320,675
OTHER INTANGIBLES, NET	99,799		103,701
OTHER ASSETS	31,979		19,894
DEFERRED INCOME TAXES, NET	1,495		1,224
OPERATING LEASE RIGHT OF USE ASSETS	11,453		20,954
	$	1,575,522	$	1,669,488
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	60,269	$	62,712
Compensation and benefits	29,922		30,972
Insurance accruals	16,058		18,490
Long-term debt and finance lease liabilities - current portion	9,131		13,946
Operating lease liabilities - current portion	7,520		12,001
Other accruals	19,215		18,636
Total current liabilities	142,115		156,757
LONG-TERM LIABILITIES
Income taxes payable	6,318		6,466
Long-term debt and finance lease liabilities less current portion	334,796		399,062
Operating lease liabilities less current portion	3,933		8,953
Deferred income taxes, net	195,300		207,516
Accident and work comp accruals less current portion	31,930		35,257
Total long-term liabilities	572,277		657,254
COMMITMENTS AND CONTINGENCIES (Note 14)
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 2023 and 2022; outstanding 79,022 and 78,984 in 2023 and 2022, respectively	907		907
Additional paid-in capital	4,261		4,165
Retained earnings	1,056,579		1,051,641
Treasury stock, at cost; 11,667 and 11,705 in 2023 and 2022, respectively	(200,617)		(201,236)
	861,130		855,477
	$	1,575,522	$	1,669,488


HEARTLAND EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except per share amounts)
(unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

OPERATING REVENUE	$	295,026	$	273,976	$	932,111	$	613,073

OPERATING EXPENSES
Salaries, wages, and benefits	118,923		97,429		362,566		221,935
Rent and purchased transportation	26,674		17,046		88,285		20,921
Fuel	55,809		53,412		163,205		125,170
Operations and maintenance	16,596		12,273		47,669		23,419
Operating taxes and licenses	5,400		4,343		16,400		10,905
Insurance and claims	9,330		10,794		30,766		22,699
Communications and utilities	2,496		1,876		8,051		4,080
Depreciation and amortization	51,113		34,789		147,919		82,408
Other operating expenses	17,190		14,108		51,443		32,150
Gain on disposal of property and equipment	(1,065)		(6,836)		(15,873)		(92,806)
	302,466		239,234		900,431		450,881

Operating (loss) income	(7,440)		34,742		31,680		162,192

Interest income	276		537		1,352		943
Interest expense	(6,067)		(2,345)		(18,254)		(2,520)

(Loss) income before income taxes	(13,231)		32,934		14,778		160,615

Federal and state income taxes	(2,528)		8,519		5,098		42,520

Net (loss) income	$	(10,703)	$	24,415	$	9,680	$	118,095
Other comprehensive income, net of tax	—		—		—		—
Comprehensive (loss) income	$	(10,703)	$	24,415	$	9,680	$	118,095

Net (loss) income per share
Basic	$	(0.14)	$	0.31	$	0.12	$	1.50
Diluted	$	(0.14)	$	0.31	$	0.12	$	1.50

Weighted average shares outstanding
Basic	79,021		78,937		79,003		78,933
Diluted	79,103		78,974		79,069		78,962

Dividends declared per share	$	0.02	$	0.02	$	0.06	$	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, 2022	$	907	$	4,165	$	1,051,641	$	(201,236)	$	855,477
Net income	—		—		12,612		—		12,612
Dividends on common stock, $0.02 per share	—		—		(1,581)		—		(1,581)
Stock-based compensation, net of tax	—		32		—		79		111
Balance, March 31, 2023	907		4,197		1,062,672		(201,157)		866,619
Net income	—		—		7,771		—		7,771
Dividends on common stock, $0.02 per share	—		—		(1,580)		—		(1,580)
Stock-based compensation, net of tax	—		(299)		—		426		127
Balance, June 30, 2023	907		3,898		1,068,863		(200,731)		872,937
Net loss	—		—		(10,703)		—		(10,703)
Dividends on common stock, $0.02 per share	—		—		(1,581)		—		(1,581)
Stock-based compensation, net of tax	—		363		—		114		477
Balance, September 30, 2023	$	907	$	4,261	$	1,056,579	$	(200,617)	$	861,130

	Capital		Additional
	Stock,		Paid-In		Retained		Treasury
	Common		Capital		Earnings		Stock		Total
Balance, December 31, 2021	$	907	$	4,141	$	924,375	$	(202,321)	$	727,102
Net income	—		—		16,775		—		16,775
Dividends on common stock, $0.02 per share	—		—		(1,579)		—		(1,579)
Stock-based compensation, net of tax	—		64		—		166		230
Balance, March 31, 2022	907		4,205		939,571		(202,155)		742,528
Net income	—		—		76,906		—		76,906
Dividends on common stock, $0.02 per share	—		—		(1,579)		—		(1,579)
Stock-based compensation, net of tax	—		(14)		—		61		47
Balance, June 30, 2022	907		4,191		1,014,898		(202,094)		817,902
Net income	—		—		24,415		—		24,415
Dividends on common stock, $0.02 per share	—		—		(1,580)		—		(1,580)
Stock-based compensation, net of tax	—		114		—		38		152
Balance, September 30, 2022	$	907	$	4,305	$	1,037,733	$	(202,056)	$	840,889


HEARTLAND EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
	Nine Months Ended September 30,
	2023		2022
OPERATING ACTIVITIES
Net income	$	9,680	$	118,095
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	147,919		82,408
Deferred income taxes	(11,903)		2,171
Stock-based compensation expense	928		504
Debt-related amortization	806		90
Gain on disposal of property and equipment	(15,873)		(92,806)
Changes in certain working capital items:
Trade receivables	25,874		(3,200)
Prepaid expenses and other current assets	4,604		(655)
Accounts payable, accrued liabilities, and accrued expenses	(25,176)		(1,725)
Accrued income taxes	(12,408)		7,668
Net cash provided by operating activities	124,451		112,550
INVESTING ACTIVITIES
Proceeds from sale of property and equipment	94,660		146,376
Purchases of property and equipment	(176,861)		(91,818)
Acquisition of business, net of cash acquired	—		(675,852)
Change in other assets	382		(159)
Net cash used in investing activities	(81,819)		(621,453)
FINANCING ACTIVITIES
Payment of cash dividends	(3,161)		(3,157)
Proceeds from issuance of long-term debt	—		447,343
Shares withheld for employee taxes related to stock-based compensation	(213)		(75)
Repayments of finance leases and debt	(69,887)		(29,195)
Net cash provided by (used in) financing activities	(73,261)		414,916
Net decrease in cash, cash equivalents and restricted cash	(30,629)		(93,987)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	64,478		173,767
End of period	$	33,849	$	79,780
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest expense	$	16,779	$	989
Cash paid during the period for income taxes, net of refunds	$	29,138	$	32,695
Noncash investing and financing activities:
Fair value of revenue equipment traded	$	—	$	428
Purchased property and equipment in accounts payable	$	22,270	$	4,430
Sold revenue equipment and property in other current assets	$	2,089	$	3,058
Common stock dividends declared in accounts payable	$	1,581	$	1,580
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	20,101	$	64,824
Restricted cash included in other current assets	299		880
Restricted cash included in other assets	13,449		14,076
Total cash, cash equivalents and restricted cash	$	33,849	$	79,780


	Amortization period (years)	Gross Amount		Accumulated Amortization		Net finite intangible assets
		(in thousands)
Customer relationships	15-20	$	75,836	$	11,588	$	64,248
Trade name	0.5-10	12,900		10,060		2,840
Covenants not to compete	1-10	5,839		4,752		1,087
		$	94,575	$	26,400	$	68,175


	Three months ended September 30, 2023
	Net Loss (numerator)		Shares (denominator)	Per Share Amount
Basic loss per share	$	(10,703)	79,021	$	(0.14)
Effect of restricted stock	—		82
Diluted loss per share	$	(10,703)	79,103	$	(0.14)


	Three months ended September 30, 2022
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic earnings per share	$	24,415	78,937	$	0.31
Effect of restricted stock	—		37
Diluted earnings per share	$	24,415	78,974	$	0.31


	Nine months ended September 30, 2023
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic earnings per share	$	9,680	79,003	$	0.12
Effect of restricted stock	—		66
Diluted earnings per share	$	9,680	79,069	$	0.12


	Nine months ended September 30, 2022
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic earnings per share	$	118,095	78,933	$	1.50
Effect of restricted stock	—		29
Diluted earnings per share	$	118,095	78,962	$	1.50


	Three Months Ended September 30, 2023
	Number of Shares of Restricted Stock Awards (in thousands)	Weighted Average Grant Date Fair Value
Unvested at beginning of period	95.0	$	15.23
Granted	—	—
Vested	(15.0)	15.17
Forfeited	—	—
Outstanding (unvested) at end of period	80.0	$	15.24


(in thousands)	Operating		Finance
2023 (remaining)	$	2,663	$	3,899
2024	6,000		8,201
2025	3,003		7,481
2026	150		3,894
2027	—		—
Thereafter	—		—
Total minimum lease payments	$	11,816	$	23,475
Less: future payment amount for interest	363		1,263
Present value of minimum lease payments	$	11,453	$	22,212
Less: current portion	7,520		7,282
Lease obligations, long-term	$	3,933	$	14,930


	2023
	(in thousands)
Balance at December 31, 2022	$	5,744
Additions based on tax positions related to current year	259
Reductions due to lapse of applicable statute of limitations	(391)
Balance at September 30, 2023	$	5,612


Yes			[X]			No [ ]


Yes			[X]			No [ ]


Yes [ ]			No [ X ]



	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating revenue	100.0	%	100.0	%	100.0	%	100.0	%
Operating expenses:
Salaries, wages, and benefits	40.3	%	35.6	%	38.9	%	36.2	%
Rent and purchased transportation	9.1	%	6.2	%	9.5	%	3.4	%
Fuel	18.9	%	19.5	%	17.5	%	20.4	%
Operations and maintenance	5.6	%	4.5	%	5.1	%	3.8	%
Operating taxes and licenses	1.8	%	1.6	%	1.7	%	1.8	%
Insurance and claims	3.2	%	3.9	%	3.3	%	3.7	%
Communications and utilities	0.9	%	0.7	%	0.9	%	0.7	%
Depreciation and amortization	17.3	%	12.7	%	15.9	%	13.4	%
Other operating expenses	5.8	%	5.1	%	5.5	%	5.2	%
Gain on disposal of property and equipment	(0.4)	%	(2.5)	%	(1.7)	%	(15.1)	%
	102.5	%	87.3	%	96.6	%	73.5	%
Operating income (loss)	(2.5)	%	12.7	%	3.4	%	26.5	%
Interest income	0.1	%	0.2	%	0.2	%	0.2	%
Interest expense	(2.1)	%	(0.9)	%	(2.0)	%	(0.5)	%
Income before income taxes	(4.5)	%	12.0	%	1.6	%	26.2	%
Income taxes	(0.9)	%	3.1	%	0.6	%	6.9	%
Net income (loss)	(3.6)	%	8.9	%	1.0	%	19.3	%


GAAP to Non-GAAP Reconciliation Schedule:
Operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio reconciliation (a)

	Three months ended September 30,						Nine months ended September 30,
	2023			2022			2023			2022
	(Unaudited, in thousands)						(Unaudited, in thousands)

Operating revenue	$	295,026		$	273,976		$	932,111		$	613,073
Less: Fuel surcharge revenue	42,928			47,468			134,077			107,814
Operating revenue, excluding fuel surcharge revenue	252,098			226,508			798,034			505,259

Operating expenses	302,466			239,234			900,431			450,881
Less: Fuel surcharge revenue	42,928			47,468			134,077			107,814
Less: Amortization of intangibles	1,301			1,026			3,902			2,221
Less: Acquisition-related costs	—			1,149			—			2,254
Less: Gain on sale of a terminal property	—			—			—			(73,175)
Adjusted operating expenses	258,237			189,591			762,452			411,767

Operating (loss) income	(7,440)			34,742			31,680			162,192
Adjusted operating (loss) income	$	(6,139)		$	36,917		$	35,582		$	93,492

Operating ratio	102.5		%	87.3		%	96.6		%	73.5		%
Adjusted operating ratio	102.4		%	83.7		%	95.5		%	81.5		%


			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.
			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 9, 2023	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, 2023 (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.