Heartland Express Inc 10-Q for FY2020 Q1

Heartland Express Inc (HTLD)

10-Q 2020-05-08 For: 2020-03-31

Added on April 07, 2026

About this 10-Q

Heartland Express Inc filed this 10-Q on May 8, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $166.32M; up 19.2% from $139.54M a year earlier
Net income: $13.24M; down 23.6% from net income of $17.32M a year earlier
Diluted EPS: $0.16; down 23.8% from $0.21 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 March 31, 2020 and December 31, 201 9 (unaudited)			4
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2020 and 201 9 (unaudited)			5
Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2020 and 2019 (unaudited)			6
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 (unaudited)			7
Notes to Consolidated Financial Statements (unaudited)			8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			14
Item 3. Quantitative and Qualitative Disclosures about Market Risk			20
Item 4. Controls and Procedures			20

PART II - OTHER INFORMATION

Item 1. Legal Proceedings			22
Item 1A. Risk Factors			22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			22
Item 3. Defaults upon Senior Securities			23
Item 4. Mine Safety Disclosures			23
Item 5. Other Information			23
Item 6. Exhibits			24

Signatures			25


HEARTLAND EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited)
ASSETS	March 31, 2020		December 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$	64,183	$	76,684
Trade receivables, net $1.1 million allowance in 2020 and 2019, respectively	62,849		56,753
Prepaid tires	8,100		9,107
Other current assets	10,996		8,947
Income tax receivable	3,132		323
Total current assets	149,260		151,814
PROPERTY AND EQUIPMENT
Land and land improvements	75,155		60,637
Buildings	76,510		70,603
Leasehold improvements	—		437
Furniture and fixtures	4,396		4,255
Shop and service equipment	14,042		13,726
Revenue equipment	609,199		583,134
Construction in progress	4,935		6,351
Property and equipment, gross	784,237		739,143
Less accumulated depreciation	238,521		212,856
Property and equipment, net	545,716		526,287
GOODWILL	168,295		168,295
OTHER INTANGIBLES, NET	26,538		27,136
DEFERRED INCOME TAXES, NET	5,298		6,006
OTHER ASSETS	18,184		19,393
	$	913,291	$	898,931
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	18,112	$	11,060
Compensation and benefits	25,078		24,712
Insurance accruals	17,364		17,584
Other accruals	11,165		10,051
Total current liabilities	71,719		63,407
LONG-TERM LIABILITIES
Income taxes payable	5,798		5,956
Deferred income taxes, net	100,531		93,698
Insurance accruals less current portion	50,555		51,211
Total long-term liabilities	156,884		150,865
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 2020 and 2019; outstanding 81,345 and 82,028 in 2020 and 2019, respectively	907		907
Additional paid-in capital	4,432		4,141
Retained earnings	838,276		826,666
Treasury stock, at cost; 9,344 and 8,661 in 2020 and 2019, respectively	(158,927)		(147,055)
	684,688		684,659
	$	913,291	$	898,931


HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share amounts)
(unaudited)
	Three Months Ended March 31,
	2020		2019

OPERATING REVENUE	$	166,318	$	139,536

OPERATING EXPENSES
Salaries, wages, and benefits	70,254		53,796
Rent and purchased transportation	1,608		2,412
Fuel	25,941		23,180
Operations and maintenance	6,800		5,845
Operating taxes and licenses	3,842		3,891
Insurance and claims	5,354		4,789
Communications and utilities	1,421		1,223
Depreciation and amortization	26,634		22,227
Other operating expenses	6,909		5,171
Loss (gain) on disposal of property and equipment	229		(3,841)
	148,992		118,693

Operating income	17,326		20,843

Interest income	377		1,145

Income before income taxes	17,703		21,988

Federal and state income taxes	4,465		4,670

Net income	$	13,238	$	17,318
Other comprehensive income, net of tax	—		—
Comprehensive income	$	13,238	$	17,318

Net income per share
Basic	$	0.16	$	0.21
Diluted	$	0.16	$	0.21

Weighted average shares outstanding
Basic	81,870		81,936
Diluted	81,945		81,956

Dividends declared per share	$	0.02	$	0.02


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, 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










	Capital		Additional
	Stock,		Paid-In		Retained		Treasury
	Common		Capital		Earnings		Stock		Total
Balance, December 31, 2018	$	907	$	3,454	$	760,262	$	(148,651)	$	615,972
Net income	—		—		17,318		—		17,318
Dividends on common stock, $0.02 per share	—		—		(1,640)		—		(1,640)
Stock-based compensation, net of tax	—		(30)		—		207		177
Balance, March 31, 2019	$	907	$	3,424	$	775,940	$	(148,444)	$	631,827


HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
	Three Months Ended March 31,
	2020		2019
OPERATING ACTIVITIES
Net income	$	13,238	$	17,318
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	26,761		22,451
Deferred income taxes	7,541		2,515
Stock-based compensation expense	936		284
Loss (gain) on disposal of property and equipment	229		(3,841)
Changes in certain working capital items:
Trade receivables	(6,096)		(4,324)
Prepaid expenses and other current assets	470		(396)
Accounts payable, accrued liabilities, and accrued expenses	(55)		(158)
Accrued income taxes	(2,967)		1,920
Net cash provided by operating activities	40,057		35,769
INVESTING ACTIVITIES
Proceeds from sale of property and equipment	2,409		13,753
Purchases of property and equipment, net of trades	(42,092)		(34,209)
Change in other assets	51		4
Net cash used in investing activities	(39,632)		(20,452)
FINANCING ACTIVITIES
Payment of cash dividends	(1,628)		(1,640)
Shares withheld for employee taxes related to stock-based compensation	(239)		(107)
Repurchases of common stock	(12,278)		—
Net cash used in financing activities	(14,145)		(1,747)
Net (decrease) increase in cash, cash equivalents and restricted cash	(13,720)		13,570
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	96,076		182,938
End of period	$	82,356	$	196,508
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) during the period for income taxes, net of refunds	$	(109)	$	235
Noncash investing and financing activities:
Purchased property and equipment in accounts payable	$	8,554	$	7,309
Sold revenue equipment and property in other current assets	$	2,000	$	4,611
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	64,183	$	176,303
Restricted cash included in other current assets	1,533		2,638
Restricted cash included in other assets	16,640		17,567
Total cash, cash equivalents and restricted cash	$	82,356	$	196,508


	Amortization period (years)	Gross Amount		Accumulated Amortization		Net intangible assets
		(in thousands)
Customer relationships	15-20	$	23,000	$	3,549	$	19,451
Tradename	0.5-10	12,900		8,380		4,520
Covenants not to compete	1-10	5,300		2,733		2,567
		$	41,200	$	14,662	$	26,538


	Three months ended March 31, 2020
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	13,238	81,870	$	0.16
Effect of restricted stock	—		75
Diluted EPS	$	13,238	81,945	$	0.16


	Three months ended March 31, 2019
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	17,318	81,936	$	0.21
Effect of restricted stock	—		20
Diluted EPS	$	17,318	81,956	$	0.21


	Three Months Ended March 31, 2020
	Number of Shares of Restricted Stock Awards (in thousands)	Weighted Average Grant Date Fair Value
Unvested at beginning of period	52.1	$	20.55
Granted	60.2	20.84
Vested	(38.0)	20.86
Forfeited	(0.5)	19.32
Outstanding (unvested) at end of period	73.8	$	20.66


	2020
	(in thousands)
Balance at January 1, 2020	$	5,010
Additions based on tax positions related to current year	73
Reductions for tax positions of prior years	(201)
Balance at March 31, 2020	$	4,882


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 March 31,
	2020			2019
	(Unaudited, in thousands)

Operating revenue	$	166,318		$	139,536
Less: Fuel surcharge revenue	19,465			17,016
Operating revenue, excluding fuel surcharge revenue	146,853			122,520

Operating expenses	148,992			118,693
Less: Fuel surcharge revenue	19,465			17,016
Adjusted operating expenses	129,527			101,677

Operating income	$	17,326		$	20,843
Operating ratio	89.6		%	85.1		%
Adjusted operating ratio	88.2		%	83.0		%


	(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)
					6,897,461
January 1, 2020 - January 31, 2020	—	—		—	6,897,461
February 1, 2020 - February 29, 2020	64,000	$	17.85	64,000	6,833,461
March 1, 2020 - March 31, 2020	646,376	$	17.23	646,376	6,187,085
Total	710,376			710,376


			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.
			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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Yes [X]			No [ ]


Yes [X]			No [ ]


Yes [ ]			No [ X ]


		HEARTLAND EXPRESS, INC.

Date:	May 8, 2020	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 March 31, 2020 (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.