Heartland Express(HTLD) - 2025 Q2 - Quarterly Results

Company Overview & Executive Summary This section provides an executive summary of Heartland Express's Q2 and H1 2025 financial performance, key strategic initiatives, and the prevailing industry context Q2 & H1 2025 Highlights Heartland Express reported net losses for Q2 and H1 2025 amidst a challenging industry, while maintaining positive cash flow and strategic investments in fleet, debt reduction, and share repurchases Q2 and H1 2025 Key Financial Highlights (USD) | Metric | Q2 2025 | H1 2025 | | :--------------------------------- | :-------------- | :-------------- | | Operating Revenue | $210.4 million | $429.8 million | | Net Loss | $10.9 million | $24.7 million | | Basic Loss per Share | $0.14 | $0.32 | | Operating Ratio | 105.9% | 106.4% | | Non-GAAP Adjusted Operating Ratio | 106.0% | 106.5% | | Total Assets (as of June 30, 2025) | $1.3 billion | N/A | | Cash (as of June 30, 2025) | $22.9 million | N/A | | Stockholders' Equity (as of June 30, 2025) | $786.7 million | N/A | | Shares Repurchased (Q2) | 1 million shares | N/A | | Acquisition-related debt reduction (since 2022) | $300 million | N/A | | Debt & Finance Lease Payments (H1) | N/A | ~$7 million | CEO Commentary & Industry Context CEO Mike Gerdin highlighted sequential improvements despite a challenging industry with excess capacity and weak demand, affirming the company's focus on fleet investment, debt reduction, and operational efficiencies - The industry faces a prolonged and challenging operating environment with capacity outpacing weak freight demand, unsustainable pricing, and rising operating costs, creating significant headwinds[3] - Despite an operating loss, the company maintained positive cash flows from operations, enabling investments in its fleet ($5.8 million, net), debt reduction ($5.6 million paid), and common stock repurchases ($8.9 million paid) during Q2 2025[3] - The company is strategically reducing underperforming freight lanes and overall fleet size to align with current demand, focusing on driver utilization and operating cost reductions[7] - Material improvements in freight demand and customer pricing are not expected until later in 2025, with a positive impact on financial results and freight outlook anticipated in 2026[7] Detailed Financial Performance The company experienced significant declines in operating revenues and increased net losses for Q2 and H1 2025, while maintaining liquidity and strategically managing capital Consolidated Statements of Income Heartland Express reported significant declines in operating revenues and increased net losses for Q2 and H1 2025, with deteriorating operating ratios reflecting challenging market conditions Q2 2025 vs. Q2 2024 Financial Performance (USD) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :--------------------------------- | :-------------- | :-------------- | :-------------- | | Operating Revenues | $210.4 million | $274.8 million | -23.4% | | Fuel Surcharge Revenues | $24.5 million | $36.8 million | -33.4% | | Net Loss | $10.9 million | $3.5 million | +211.4% | | Basic Loss per Share | $0.14 | $0.04 | +250.0% | | Operating Ratio | 105.9% | 99.9% | +600 bps | | Non-GAAP Adjusted Operating Ratio | 106.0% | 99.4% | +660 bps | | Net Loss as % of Operating Revenues | 5.2% | 1.3% | +390 bps | H1 2025 vs. H1 2024 Financial Performance (USD) | Metric | H1 2025 | H1 2024 | Change (YoY) | | :--------------------------------- | :-------------- | :-------------- | :-------------- | | Operating Revenues | $429.8 million | $545.1 million | -21.2% | | Fuel Surcharge Revenues | $50.8 million | $73.0 million | -30.4% | | Operating Loss | $27.3 million | $14.1 million | +93.6% | | Net Loss | $24.7 million | $18.6 million | +32.8% | | Basic Loss per Share | $0.32 | $0.24 | +33.3% | | Operating Ratio | 106.4% | 102.6% | +380 bps | | Non-GAAP Adjusted Operating Ratio | 106.5% | 102.5% | +400 bps | | Net Loss as % of Operating Revenues | 5.8% | 3.4% | +240 bps | Three Months Ended June 30, 2025 (Q2) For the second quarter of 2025, the company reported a substantial operating loss and net loss, primarily driven by a significant decrease in operating revenue and increased operating expenses compared to the prior year Consolidated Statements of Income - Q2 2025 (in thousands USD) | Item | Q2 2025 | Q2 2024 | | :--------------------------------- | :-------------- | :-------------- | | OPERATING REVENUE | $210,387 | $274,754 | | OPERATING EXPENSES | $222,806 | $274,490 | | Operating (loss) income | $(12,419) | $264 | | Interest income | $198 | $288 | | Interest expense | $(2,962) | $(4,574) | | Loss before income taxes | $(15,183) | $(4,022) | | Federal and state income tax benefit | $(4,328) | $(544) | | Net loss | $(10,855) | $(3,478) | | Basic Loss per share | $(0.14) | $(0.04) | | Diluted Loss per share | $(0.14) | $(0.04) | Six Months Ended June 30, 2025 (H1) The first half of 2025 saw a consolidated operating loss and net loss, reflecting a challenging period with reduced revenues and higher expenses compared to the same period in the previous year Consolidated Statements of Income - H1 2025 (in thousands USD) | Item | H1 2025 | H1 2024 | | :--------------------------------- | :-------------- | :-------------- | | OPERATING REVENUE | $429,807 | $545,074 | | OPERATING EXPENSES | $457,124 | $559,194 | | Operating (loss) income | $(27,317) | $(14,120) | | Interest income | $326 | $576 | | Interest expense | $(6,066) | $(9,576) | | Loss before income taxes | $(33,057) | $(23,120) | | Federal and state income tax benefit | $(8,329) | $(4,520) | | Net loss | $(24,728) | $(18,600) | | Basic Loss per share | $(0.32) | $(0.24) | | Diluted Loss per share | $(0.32) | $(0.24) | Balance Sheet, Liquidity, and Capital Expenditures As of June 30, 2025, Heartland Express maintained strong liquidity with increased cash and reduced debt, generating positive operating cash flow for fleet and equipment investments Key Balance Sheet and Liquidity Metrics (in thousands USD) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--------------------------------- | :-------------- | :---------------- | :-------------- | | Cash and cash equivalents | $22,879 | $12,812 | +$10,067 | | Total current assets | $136,201 | $129,448 | +$6,753 | | Total assets | $1,299,372 | $1,334,192 | -$34,820 | | Debt and financing lease obligations | $194,000 | N/A | -$300,000 (since 2022) | | Available borrowing capacity (line of credit) | $88,300 | N/A | N/A | | Total stockholders' equity | $786,737 | $822,599 | -$35,862 | Cash Flow and Capital Expenditure Highlights (H1 2025, USD) | Item | Amount | | :--------------------------------- | :-------------- | | Net cash flows from operations | $46.8 million | | Repayment of debt and financing leases | $6.9 million | | Repurchases of common stock | $8.9 million | | Dividends paid | $3.1 million | | Net property and equipment transactions | $17.5 million | | Expected net capital expenditures (CY 2025) | $35 - $45 million | | Expected gains on disposal of property and equipment (CY 2025) | $12 - $17 million | - The average age of the consolidated tractor fleet remained stable at 2.6 years as of June 30, 2025, while the average age of the consolidated trailer fleet increased to 7.5 years from 6.9 years in the prior year[11] GAAP to Non-GAAP Reconciliation The company provides non-GAAP financial measures, including operating revenue excluding fuel surcharge revenue, adjusted operating income, and adjusted operating ratio, to offer a more consistent basis for comparing operational results by excluding the volatility of fuel prices and non-cash amortization of intangibles GAAP to Non-GAAP Reconciliation (in thousands USD) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--------------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Operating revenue | $210,387 | $274,754 | $429,807 | $545,074 | | Less: Fuel surcharge revenue | $24,509 | $36,828 | $50,830 | $73,039 | | Operating revenue, excluding fuel surcharge revenue | $185,878 | $237,926 | $378,977 | $472,035 | | Operating (loss) income | $(12,419) | $264 | $(27,317) | $(14,120) | | Adjusted operating (loss) income | $(11,165) | $1,518 | $(24,808) | $(11,611) | | Operating ratio | 105.9% | 99.9% | 106.4% | 102.6% | | Adjusted operating ratio | 106.0% | 99.4% | 106.5% | 102.5% | - Non-GAAP measures are not intended to replace GAAP results but supplement them, providing a clearer view of underlying operations by removing fuel price volatility and non-cash amortization of intangibles[13][20] Operational Review & Strategic Initiatives The company's operating brands showed varied performance amidst challenging market conditions, driving strategic fleet reductions and technology investments for future efficiencies Operating Brand Performance The company's four operating brands exhibited varied performance, with Heartland Express and Millis Transfer profitable, Smith Transport improving, and CFI impacted by a major system conversion - Heartland Express fleet remained profitable with sequential financial improvements in Q2 and H1 2025[4] - Both Heartland Express and Millis Transfer fleets operated profitably and improved their operating ratio by approximately 400 bps in Q2 2025 compared to Q1 2025[4] - Smith Transport fleet improved its operating ratio sequentially but did not operate profitably in Q2 2025[4] - CFI fleet completed a major transportation management system conversion and began a full fleet telematics transition (75% complete), but did not operate profitably and saw a negative sequential financial impact[4] Fleet Management & Technology Heartland Express is actively managing fleet size and investing in technology, including a major system conversion for CFI and a goal to unify all brands on a common system by year-end 2025 - CFI began a full fleet telematics transition in Q2 2025, approximately 75% complete, aiming to improve driver utilization and experience, with full completion expected in Q3 2025[4] - All four operating brands are expected to be on a common transportation management system by December 31, 2025, projected to drive multiple operating efficiencies in 2026[6] - The company is strategically reducing its overall fleet size to better align with current freight demand[7] Average Fleet Age | Fleet Type | June 30, 2025 | June 30, 2024 | | :----------------- | :-------------- | :-------------- | | Consolidated tractor fleet | 2.6 years | 2.6 years | | Consolidated trailer fleet | 7.5 years | 6.9 years | Market Conditions & Future Outlook The company faces a challenging industry with excess capacity and weak demand, anticipating material improvements later in 2025 and a positive freight outlook in 2026 - The industry is experiencing a prolonged and challenged operating environment where current capacity outpaces weak freight demand, coupled with unsustainable pricing and rising operating costs[3] - The company has begun to see some encouraging signs in current freight demand and customer pricing[7] - Material improvements are not expected until later in 2025, with a resulting positive impact on future financial results and an improved freight outlook in 2026[7] Shareholder Value & Corporate Governance Heartland Express demonstrates commitment to shareholder value through consistent dividends and share repurchases, alongside receiving industry recognition for service and safety Dividends Heartland Express continues its commitment to stockholders through consistent cash dividend payments, having paid dividends for eighty-eight consecutive quarters since 2003 Dividend Information (USD) | Metric | Q2 2025 | | :--------------------------------- | :-------------- | | Regular dividend declared per share | $0.02 | | Total cumulative cash dividends paid (since 2003) | $558.3 million | | Consecutive quarters of dividends paid | 88 | Share Repurchases The company actively repurchased its common stock during the second quarter of 2025, continuing a trend of returning capital to shareholders and reducing outstanding shares Common Stock Repurchases (USD) | Metric | Q2 2025 | Q2 2024 | | :--------------------------------- | :-------------- | :-------------- | | Shares repurchased | 1.0 million | 0.6 million | | Value of shares repurchased | $8.9 million | $7.3 million | | Total shares repurchased (past 5 years) | 4.2 million | N/A | | Total value of shares repurchased (past 5 years) | $61.6 million | N/A | | Remaining repurchase authorization | 5.0 million shares | N/A | | Outstanding shares (June 30, 2025) | 77.6 million | N/A | Awards and Recognition Heartland Express and its operating brands received multiple awards during the second quarter of 2025, recognizing their commitment to service and fleet safety - Awards received in Q2 2025 include[13][15] - Georgia-Pacific - OTR Van National Carrier of the Year[15] - Mars Pet Nutrition - Carrier of the Year[15] - Molson Coors - National Transportation Supplier of the Year[15] - Shaw Floors - Outbound "Class B" Carrier of the Year[15] - WK Kellogg - WKKC CS&L Supplier Founders Award[15] Legal & Contact Information This section provides disclaimers regarding forward-looking statements and essential contact information for investor and media inquiries Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, emphasizing that actual events may differ materially from projections due to various risks and uncertainties - The press release contains forward-looking statements identified by terms like 'expects,' 'estimates,' 'anticipates,' and 'outlook,' relating to freight supply/demand, market conditions, operational improvements, capital expenditures, profitability, stock repurchases, dividends, and debt repayment[14] - Such statements are based on management's current beliefs and involve risks and uncertainties, and actual events may differ materially due to factors outlined in the company's SEC filings (10-K, 10-Q)[14] - The company assumes no obligation to update any forward-looking statements[14] Contact Information Contact details are provided for investor and media inquiries - Contact for Heartland Express, Inc. (319-645-7060)[15] - Mike Gerdin, Chief Executive Officer[15] - Chris Strain, Chief Financial Officer[15]