Heartland Express(HTLD) - 2025 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION Financial Statements For the first quarter ended March 31, 2025, Heartland Express reported a decrease in operating revenue to $219.4 million from $270.3 million in the prior year's quarter, recording a net loss of $13.9 million, or ($0.18) per diluted share, a slight improvement from Q1 2024 Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $140,418 | $129,448 | | Cash and cash equivalents | $23,873 | $12,812 | | Property and equipment, net | $766,762 | $764,407 | | Goodwill | $322,597 | $322,597 | | Total Assets | $1,344,711 | $1,334,192 | | Total Current Liabilities | $155,501 | $119,559 | | Long-term debt and finance lease liabilities | $188,842 | $191,707 | | Total Liabilities | $536,986 | $511,593 | | Total Stockholders' Equity | $807,725 | $822,599 | Consolidated Statement of Comprehensive Income (Loss) (in thousands, except per share data) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Operating Revenue | $219,420 | $270,320 | | Operating Expenses | $234,318 | $284,703 | | Operating Loss | ($14,898) | ($14,383) | | Net Loss | ($13,873) | ($15,108) | | Diluted Net Loss Per Share | ($0.18) | ($0.19) | | Dividends Declared Per Share | $0.02 | $0.02 | Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $25,843 | $30,976 | | Net cash provided by (used in) investing activities | ($11,499) | $1,952 | | Net cash used in financing activities | ($3,008) | ($36,723) | | Net increase (decrease) in cash | $11,336 | ($3,795) | Notes to Consolidated Financial Statements The notes clarify that the company operates as a single reportable segment providing truckload services, with Q1 2025 total revenues of $219.4 million, and an effective tax rate of 22.4% - The company operates as a single reportable segment, providing asset-based dry van truckload services across the U.S., Mexico, and parts of Canada[26] - Total revenues for Q1 2025 were $219.4 million, down from $270.3 million in Q1 2024, with fuel surcharge revenues decreasing to $26.3 million from $36.2 million[29] - As of March 31, 2025, the company had $184.0 million outstanding on its Term Facility and nothing outstanding under its $100.0 million Revolving Facility, with a weighted average interest rate of 6.0%[49] - The effective tax rate was 22.4% for Q1 2025, compared to 21.8% for Q1 2024, attributed to fewer permanent differences offsetting the tax benefit in 2025[54] - As of March 31, 2025, the company had purchase commitments for tractors and trailers totaling $38.8 million for the remainder of 2025[60] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the Q1 2025 net loss to a prolonged weak freight environment, where operating cost inflation outpaced freight rates, compounded by adverse weather, leading to an operating ratio of 106.8% - The freight market remained weak through Q1 2025, though management sees encouraging signs of a potential recovery, and the company is strategically shrinking its fleet to align with current freight demand[67] Q1 2025 vs. Q1 2024 Performance | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating Revenue | $219.4M | $270.3M | | Net Loss | ($13.9M) | ($15.1M) | | Basic Net Loss per Share | ($0.18) | ($0.19) | | Operating Ratio | 106.8% | 105.3% | | Non-GAAP Adjusted Operating Ratio | 107.1% | 105.6% | - Operating revenue decreased by $50.9 million (18.8%) due to a weak freight environment, fewer drivers, and significant winter weather disruptions[79] - Salaries, wages, and benefits decreased 17.3% to $93.2 million due to lower company miles, while fuel costs decreased 19.9% to $37.9 million due to lower diesel prices and fewer miles driven[81][83] - For the full year 2025, the company anticipates net capital expenditures of approximately $40 to $50 million and gains on disposal of property and equipment of $10 to $15 million[104] - The company ended Q1 2025 with $23.9 million in cash and cash equivalents, $189.5 million in outstanding debt, and $88.3 million available borrowing capacity on its Revolving Facility[102] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks are related to interest rate fluctuations on its variable-rate debt and commodity price volatility for fuel and tires, with no derivative instruments currently used for risk management - The company has $184.0 million in debt subject to variable interest rates, where a hypothetical 1.0% increase in the SOFR rate would decrease annual income before taxes by approximately $1.8 million[112] - The company is exposed to commodity price risk for fuel, where a $1.00 increase in the average price of fuel per gallon would decrease annual income before taxes by approximately $14.4 million[113] - A 10% increase in the price of tires would increase tire purchase expense by $2.2 million, correspondingly decreasing income before income taxes[113] Controls and Procedures Based on an evaluation by management, including the CEO and CFO, the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[115] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[117] PART II - OTHER INFORMATION Legal Proceedings The company is involved in ordinary and routine litigation incidental to its business, primarily related to personal injury, property damage, cargo, and workers' compensation claims, maintaining insurance coverage for liabilities exceeding its self-insured retention amounts - The company is a party to ordinary, routine litigation and administrative proceedings incidental to its business, mainly involving claims from transportation of freight[120] Risk Factors This section updates the risk factor concerning self-insurance, noting that the company self-insures a significant portion of its claims, which increases earnings volatility, and recent changes to its insurance program could lead to increased volatility in insurance and claims expenses - The company self-insures for a significant portion of its claims exposure, which could significantly increase the volatility of its earnings[122] - In April 2025, the company's auto liability retention limit was increased, and an additional corridor was added where the company retains liability of $5.0 million for the first accident exceeding $20.0 million[124] - Aggregate excess liability coverage was reduced from $80.0 million to $75.0 million in April 2025, with the company retaining any liability in excess of $75.0 million[124][125] Unregistered Sales of Equity Securities and Use of Proceeds None reported for the period - None[127] Defaults Upon Senior Securities None reported for the period - None[128] Mine Safety Disclosures Not applicable - Not applicable[129] Other Information During the first quarter of 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025[130] Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, and XBRL data files - The report includes a list of filed exhibits, such as CEO and CFO certifications and XBRL data files[132]