Heartland Express(HTLD) - 2021 Q4 - Annual Report

Financial Performance - In 2021, the company generated operating revenues of $607.3 million, a decrease from $645.3 million in 2020, with a net income of $79.3 million compared to $70.8 million in the previous year[167]. - The operating ratio improved to 82.6% in 2021 from 85.5% in 2020, indicating better operational efficiency[168]. - The company achieved a net margin of 13.1% in 2021, up from 11.0% in 2020, reflecting improved profitability[168]. - Operating revenue decreased by $38.0 million (5.9%) to $607.3 million for the year ended December 31, 2021, from $645.3 million in 2020[182]. - Operating income increased to 17.4% of operating revenue in 2021, compared to 14.5% in 2020[181]. - Gains on the disposal of property and equipment rose by $22.6 million (152.4%) to $37.4 million in 2021, driven by a 132.8% increase in trailer sales volume[193]. Cash Flow and Investments - Cash flow from operating activities was $123.4 million, or 20.3% of operating revenues, down from $178.9 million, or 27.7% in 2020[170]. - Cash flows used in investing activities decreased by $108.4 million to $2.6 million in 2021, mainly due to reduced net purchases of property and equipment[200]. - The company had $157.7 million in cash and cash equivalents at December 31, 2021, with no outstanding debt[198]. Cost Management - The company maintains a disciplined approach to cost controls, aiming for a low-80s operating ratio and a debt-free balance sheet[164]. - Salaries, wages, and benefits decreased by $19.5 million (7.2%) to $250.0 million in 2021, attributed to a reduction in the number of drivers[185]. - Fuel expenses increased by $13.5 million (15.7%) to $99.6 million for the year ended December 31, 2021, primarily due to a 28.9% rise in average diesel prices[186]. Driver and Workforce Management - The trucking industry faces a qualified driver shortage, with competition for drivers expected to remain challenging due to decreasing numbers of qualified drivers[173]. - The company plans to continue enhancing driver compensation and benefits to attract and retain experienced drivers, with multiple pay increases implemented over the last three years[173]. Assets and Equity - The company’s total assets were $928.5 million and total stockholders' equity was $727.1 million at the end of 2021, with a return on assets of 8.4% and return on equity of 10.9%[168]. Tax and Compliance - The effective tax rate increased to 25.2% in 2021 from 24.9% in 2020, due to non-recurring favorable adjustments in 2020[194]. - The company paid income taxes of $38.5 million in 2021, an increase from $13.7 million in 2020, primarily due to a federal refund received in 2020 and increased tax liability in 2021[203]. - At December 31, 2021, the company had $4.7 million in gross unrecognized tax benefits, with $3.7 million potentially impacting the effective tax rate if recognized[209]. Debt and Financing - The company entered into a Credit Agreement with Wells Fargo Bank, providing for a $25.0 million Revolver and an uncommitted accordion feature allowing for an additional $100.0 million increase[204]. - The Credit Agreement includes a maximum adjusted leverage ratio of 2:1 and a minimum tangible net worth requirement of $250.0 million, with compliance confirmed for 2021 and 2020[206]. - The company has no outstanding debt as of December 31, 2021, and interest rates on future borrowings will be based on the Secured Overnight Financing Rate plus a spread[220]. Market Risks - The company does not currently use derivative financial instruments for risk management purposes, limiting exposure to market risks[219]. - The company estimates that a $1.00 increase in the average price of fuel per gallon would decrease income before income taxes by approximately $7.0 million[222]. - A 10% increase in tire prices is expected to raise tire purchase expenses by $1.1 million, resulting in a corresponding decrease in income before income taxes[222]. Share Repurchase - As of December 31, 2021, the company has 6.6 million shares remaining authorized for repurchase, with 1.8 million shares repurchased in 2021 and 1.5 million in 2020[202].