Heartland Express Inc 10-Q for FY2022 Q2

Heartland Express Inc (HTLD)

10-Q 2022-08-09 For: 2022-06-30

Added on April 07, 2026

About this 10-Q

Heartland Express Inc filed this 10-Q on August 9, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $187.82M; up 21.9% from $154.13M a year earlier
Net income: $76.91M; up 270.8% from net income of $20.74M a year earlier
Diluted EPS: $0.97; up 273.1% from $0.26 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 June 30 , 2022 and December 31, 2021 (unaudited)			3
Consolidated Statements of Comprehensive Income for the Three and Six Mon ths Ended June 30 , 2022 and 2021 (unaudited)			4
Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30 , 2022 and 2021 (unaudited)			5
Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2022 and 2021 (unaudited)			6
Notes to Consolidated Financial Statements (unaudited)			7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures about Market Risk			24
Item 4. Controls and Procedures			25

PART II - OTHER INFORMATION

Item 1. Legal Proceedings			26
Item 1A. Risk Factors			26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 3. Defaults Upon 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	June 30, 2022		December 31, 2021
CURRENT ASSETS
Cash and cash equivalents	$	171,879	$	157,742
Trade receivables, net of $1.3 and $1.1 million allowance in 2022 and 2021, respectively	95,712		52,812
Prepaid tires	8,570		9,168
Other current assets	19,955		9,406
Income tax receivable	—		4,095
Total current assets	296,116		233,223
PROPERTY AND EQUIPMENT
Land and land improvements	71,458		90,218
Buildings	98,877		95,305
Furniture and fixtures	5,187		5,365
Shop and service equipment	16,737		15,727
Revenue equipment	548,541		500,311
Construction in progress	8,951		3,834
Property and equipment, gross	749,751		710,760
Less accumulated depreciation	238,944		222,845
Property and equipment, net	510,807		487,915
GOODWILL	208,800		168,295
OTHER INTANGIBLES, NET	49,230		22,355
OTHER ASSETS	19,454		16,754
OPERATING LEASE RIGHT OF USE ASSETS	28,796		—
	$	1,113,203	$	928,542
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	28,804	$	20,538
Compensation and benefits	27,778		21,411
Insurance accruals	15,859		15,677
Long-term debt - current portion	2,304		—
Operating lease liabilities - current portion	14,318		—
Finance lease liabilities - current portion	7,544		—
Other accruals	16,410		13,968
Income tax payable	13,335		—
Total current liabilities	126,352		71,594
LONG-TERM LIABILITIES
Income taxes payable	6,461		5,491
Long-term debt less current portion	8,623		—
Operating lease liabilities less current portion	14,478		—
Finance lease liabilities less current portion	27,199		—
Deferred income taxes, net	77,262		89,971
Insurance accruals less current portion	34,926		34,384
Total long-term liabilities	168,949		129,846
COMMITMENTS AND CONTINGENCIES (Note 15)
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 2022 and 2021; outstanding 78,936 and 78,923 in 2022 and 2021, respectively	907		907
Additional paid-in capital	4,191		4,141
Retained earnings	1,014,898		924,375
Treasury stock, at cost; 11,753 and 11,766 in 2022 and 2021, respectively	(202,094)		(202,321)
	817,902		727,102
	$	1,113,203	$	928,542


HEARTLAND EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share amounts)
(unaudited)
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021

OPERATING REVENUE	$	187,821	$	154,128	$	339,097	$	306,530

OPERATING EXPENSES
Salaries, wages, and benefits	65,869		62,931		124,506		127,713
Rent and purchased transportation	3,127		1,009		3,874		1,973
Fuel	42,046		24,804		71,758		48,961
Operations and maintenance	6,066		5,670		11,146		11,358
Operating taxes and licenses	3,352		3,413		6,562		7,034
Insurance and claims	6,339		4,678		11,905		10,117
Communications and utilities	1,126		967		2,204		2,193
Depreciation and amortization	24,309		25,956		47,620		52,882
Other operating expenses	12,244		5,204		18,042		10,756
Gain on disposal of property and equipment	(81,712)		(7,855)		(85,970)		(12,088)
	82,766		126,777		211,647		260,899

Operating income	105,055		27,351		127,450		45,631

Interest income	260		175		406		312
Interest expense	(174)		—		(174)		—

Income before income taxes	105,141		27,526		127,682		45,943

Federal and state income taxes	28,235		6,784		34,001		11,466

Net income	$	76,906	$	20,742	$	93,681	$	34,477
Other comprehensive income, net of tax	—		—		—		—
Comprehensive income	$	76,906	$	20,742	$	93,681	$	34,477

Net income per share
Basic	$	0.97	$	0.26	$	1.19	$	0.43
Diluted	$	0.97	$	0.26	$	1.19	$	0.43

Weighted average shares outstanding
Basic	78,934		79,906		78,931		80,028
Diluted	78,959		79,957		78,956		80,081

Dividends declared per share	$	0.02	$	0.02	$	0.04	$	0.04


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, 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






	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


HEARTLAND EXPRESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
	Six Months Ended June 30,
	2022		2021
OPERATING ACTIVITIES
Net income	$	93,681	$	34,477
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	47,620		52,977
Deferred income taxes	(12,709)		(5,369)
Stock-based compensation expense	343		800
Gain on disposal of property and equipment	(85,970)		(12,088)
Changes in certain working capital items:
Trade receivables	(10,600)		(3,713)
Prepaid expenses and other current assets	(778)		2,073
Accounts payable, accrued liabilities, and accrued expenses	8,521		(5,502)
Accrued income taxes	18,400		(880)
Net cash provided by operating activities	58,508		62,775
INVESTING ACTIVITIES
Proceeds from sale of property and equipment	129,820		56,030
Purchases of property and equipment	(50,563)		(47,585)
Acquisition of business, net of cash acquired	(122,049)		—
Change in other assets	(9)		(174)
Net cash provided by (used in) investing activities	(42,801)		8,271
FINANCING ACTIVITIES
Payment of cash dividends	(1,579)		(3,198)
Shares withheld for employee taxes related to stock-based compensation	(66)		(110)
Repayments on finance leases and debt	(1,113)		—
Repurchases of common stock	—		(15,022)
Net cash used in financing activities	(2,758)		(18,330)
Net increase in cash, cash equivalents and restricted cash	12,949		52,716
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	173,767		131,140
End of period	$	186,716	$	183,856
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for interest expense	$	159	$	—
Cash paid during the period for income taxes, net of refunds	$	28,310	$	17,715
Noncash investing and financing activities:
Purchased property and equipment in accounts payable	$	1,033	$	6,415
Sold revenue equipment and property in other current assets	$	3,084	$	1,516
Common stock dividends declared in accounts payable	$	1,579	$	—
Right-of-use assets obtained in exchange for operating lease liabilities	$	4,653	$	—
Right-of-use assets obtained in exchange for operating lease liabilities through acquisitions	$	24,143	$	—

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	171,879	$	167,241
Restricted cash included in other current assets	897		1,007
Restricted cash included in other assets	13,940		15,608
Total cash, cash equivalents and restricted cash	$	186,716	$	183,856


	(in thousands)
Trade and other accounts receivable	$	32,300
Other current assets	6,238
Property and equipment	68,196
Operating lease right of use assets	27,133
Other non-current assets	3,848
Intangible assets	28,070
Goodwill	40,505
Total assets	206,290
Accounts payable and accrued expenses	(8,379)
Insurance accruals	(1,946)
Long-term debt	(11,424)
Finance lease liabilities	(35,359)
Operating lease liabilities	(27,133)
Net cash paid	$	122,049


	Amortization period (years)	Gross Amount		Accumulated Amortization		Net finite intangible assets
		(in thousands)
Customer relationships	15-20	$	42,582	$	6,497	$	36,085
Trade name	0.5-6	12,900		9,460		3,440
Covenants not to compete	1-10	5,832		4,083		1,749
		$	61,314	$	20,040	$	41,274


Goodwill	(in thousands)
Balance at December 31, 2021	168,295
Acquisition	40,505
Balance at June 30, 2022	$	208,800


	Three months ended June 30, 2022
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	76,906	78,934	$	0.97
Effect of restricted stock	—		25
Diluted EPS	$	76,906	78,959	$	0.97


	Three months ended June 30, 2021
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	20,742	79,906	$	0.26
Effect of restricted stock	—		51
Diluted EPS	$	20,742	79,957	$	0.26


	Six months ended June 30, 2022
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	93,681	78,931	$	1.19
Effect of restricted stock	—		25
Diluted EPS	$	93,681	78,956	$	1.19


	Six months ended June 30, 2021
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	34,477	80,028	$	0.43
Effect of restricted stock	—		53
Diluted EPS	$	34,477	80,081	$	0.43


	Three Months Ended June 30, 2022
	Number of Shares of Restricted Stock Awards (in thousands)	Weighted Average Grant Date Fair Value
Unvested at beginning of period	27.0	$	17.37
Granted	3.0	14.79
Vested	(5.0)	16.60
Forfeited	—	—
Outstanding (unvested) at end of period	25.0	$	17.21


Yes [X]			No [ ]


Yes [X]			No [ ]


Yes [ ]			No [ X ]


(in thousands)	Operating		Finance
2022 (remaining)	$	8,224	$	4,392
2023	12,503		13,317
2024	6,193		8,329
2025	3,003		7,511
2026	151		3,901
Thereafter	—		—
Total minimum lease payments	$	30,074	$	37,450
Less: future payment amount for interest	1,278		2,707
Present value of minimum lease payments	$	28,796	$	34,743
Less: current portion	14,318		7,544
Lease obligations, long-term	$	14,478	$	27,199


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

	Three months ended June 30,						Six months ended June 30,
	2022			2021			2022			2021
	(Unaudited, in thousands)						(Unaudited, in thousands)

Operating revenue	$	187,821		$	154,128		$	339,097		$	306,530
Less: Fuel surcharge revenue	36,377			19,132			60,346			35,916
Operating revenue, excluding fuel surcharge revenue	151,444			134,996			278,751			270,614

Operating expenses	82,766			126,777			211,647			260,899
Less: Fuel surcharge revenue	36,377			19,132			60,346			35,916
Less: Gain on sale of a terminal property	(73,175)			—			(73,175)			—
Adjusted operating expenses	119,564			107,645			224,476			224,983

Operating income	105,055			27,351			127,450			45,631
Adjusted operating income	31,880			27,351			54,275			45,631

Operating ratio	44.1		%	82.3		%	62.4		%	85.1		%
Adjusted operating ratio	78.9		%	79.7		%	80.5		%	83.1		%


			2.1						Stock Purchase Agreement dated May 31, 2022, by and among, Smith Transport, Inc. Employee Stock Ownership Plan and Trust, Smith Transport, Inc., Heartland Express Inc. of Iowa, Heartland Express, Inc., in its capacity as guarantor, and Todd Smith, 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.
			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:	August 8, 2022	By: /s/ Christopher A. Strain
		Christopher A. Strain
		Vice President of Finance
		and Chief Financial Officer
		(Principal Accounting and Financial Officer)


Article 1 PURCHASE AND SALE			5
1.01 Purchase and Sale.			5
1.02 Calculation of Final Consideration.			6
1.03 The Closing.			8
1.04 Closing Deliveries by Seller and Smith.			8
1.05 Closing Deliveries by Buyer.			10
Article 2 REPRESENTATIONS AND WARRANTIES OF THE SELLER			11
2.01 Good Standing; Organization.			11
2.02 Power and Authority; Authorization.			11
2.03 Enforceability.			11
2.04 Title.			11
2.05 Brokerage.			11
2.06 No Conflicts (Seller); Litigation.			11
2.07 Other Matters.			12
Article 3 REPRESENTATIONS AND WARRANTIES OF SMITH			12
3.01 Organization; Good Standing.			12
3.02 Authorization; Enforceability.			12
3.03 Subsidiaries.			12
3.04 Capitalization.			12
3.05 Financial Statements; Undisclosed Liabilities; Internal Controls.			13
3.06 Accounts Receivable.			13
3.07 Absence of Certain Developments.			13
3.08 Real and Personal Properties.			15
3.09 Tractors and Trailers.			16
3.10 Contracts and Commitments.			17


3.11 Intellectual Property.			20
3.12 Litigation.			22
3.13 Employee Benefit Plans.			22
3.14 Insurance.			26
3.15 Compliance with Laws.			27
3.16 Environmental Matters.			27
3.17 No Conflicts (Entities).			28
3.18 Sufficiency of and Title to Assets.			28
3.19 Employee Relations.			28
3.20 Drivers.			29
3.21 Licenses.			29
3.22 Banking.			29
3.23 Loans to Officers and Directors.			29
3.24 Fair Competition.			29
3.25 Capital Expenditures; Dispositions.			30
3.26 Taxes.			30
3.27 Affiliated Transactions.			32
3.28 Brokerage.			32
Article 4 REPRESENTATIONS AND WARRANTIES OF BUYER			33
4.01 Good Standing.			33
4.02 Power and Authority; Authorization.			33
4.03 Enforceability.			33
4.04 No Conflicts.			33
4.05 Brokerage.			33
4.06 Investment Representation.			33
4.07 R&W Insurance Policy			33
4.08 Exclusive Representations and Warranties of Seller.			34


Article 5 INDEMNIFICATION			34
5.01 Indemnification Obligations of Seller.			34
5.02 Indemnification Obligations of by Buyer.			34
5.03 Indemnification Procedure.			35
5.04 Claims Period.			36
5.05 Liability Limits.			36
5.06 Recovery Priority; Source of Recovery.			37
5.07 Exclusive Remedies.			38
5.08 Obligations to Mitigate Damages.			38
5.09 Release of Escrowed Amounts.			38
5.10 Tax Treatment.			39
Article 6 ADDITIONAL AGREEMENTS			39
6.01 Tax Matters.			39
6.02 Further Assurances.			42
6.03 Access to Books and Records.			42
6.04 Repayment of Guarantied Obligations; Release of Guaranties.			42
6.05 Limitation on Damages.			43
6.06 Schneider Downs Audit and Consent.			43
6.07 Director and Officer Insurance			43
6.08 Maintenance of R&W Insurance Policy..			44
6.09 Employee Benefits.			44
6.10 Captive Insurance Company.			44
Article 7 DEFINITIONS			45
7.01 Definitions.			45
7.02 Other Definitional Matters.			56
Article 8 MISCELLANEOUS			56
8.01 Press Releases and Announcements.			57


8.02 Expenses.			57
8.03 Notices.			57
8.04 Assignment.			58
8.05 Severability.			58
8.06 Construction and Disclosure.			58
8.07 Captions.			59
8.08 Amendment and Waiver.			59
8.09 Complete Agreement.			59
8.10 Counterparts.			59
8.11 Governing Law.			59
8.12 JURISDICTION; SERVICE OF PROCESS.			59
8.13 WAIVER OF JURY TRIAL.			60
8.14 No Third-Party Beneficiaries.			60
8.15 Payments Under Agreement.			60
8.16 Seller’s Representative.			60
8.17 Electronic Delivery.			62
8.18 Parent Guaranty.			62
8.19 Enforcement of Agreement.			62
8.20 Non-Recourse			63
8.21 Legal Privilege.			63


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 June 30, 2022 (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.