Heartland Express(HTLD) - 2022 Q2 - Quarterly Report

Financial Performance - Operating revenues for the first six months of 2022 were $339.1 million, a 10.5% increase from $306.5 million in the same period of 2021[79]. - Net income for the first half of 2022 was $93.7 million, compared to $34.5 million in the first half of 2021, representing a 171.0% increase[79]. - The operating ratio improved to 62.4% for the first six months of 2022, down from 85.1% in the same period of 2021[79]. - Operating revenue increased by $33.7 million (21.9%) to $187.8 million for the three months ended June 30, 2022, compared to $154.1 million in the same period of 2021[86]. - Net income for the three months ended June 30, 2022, was $76.9 million, representing an increase of 270.8% from $20.7 million in the same period of 2021[85]. - The operating ratio improved to 44.1% for the three months ended June 30, 2022, down from 82.3% in the same period of 2021[85]. - Adjusted operating income was $31.9 million for the three months ended June 30, 2022, compared to $27.4 million in the same period of 2021[85]. - Operating revenue increased by $32.6 million (10.6%) to $339.1 million for the six months ended June 30, 2022, compared to $306.5 million for the same period in 2021[99]. Cash Flow and Assets - The company ended the second quarter of 2022 with cash, cash equivalents, and restricted cash of $186.7 million, an increase of $12.9 million during the first six months[79]. - Cash flow from operating activities for the first half of 2022 was $58.5 million, representing 17.3% of operating revenues, down from 20.5% in the same period of 2021[79]. - Cash flow from operating activities was $58.5 million for the six months ended June 30, 2022, compared to $62.8 million in the same period of 2021, representing 17.3% of operating revenues[115]. - Cash used in investing activities was $42.8 million during the six months ended June 30, 2022, primarily due to the $122.0 million cash outflow for the acquisition of Smith Transport[116]. Acquisitions and Growth - The company completed the acquisition of Smith Transport on May 31, 2022, marking its fourth acquisition in nine years[74]. - The acquisition of Smith Transport on May 31, 2022, contributed to changes in operating revenues and expenses for the periods reported[84]. - The company is focused on expanding driver training programs to address the ongoing shortage of qualified drivers in the industry[76]. Expenses and Costs - Average diesel fuel prices increased by 70.9% year-over-year, from $3.21 per gallon in June 2021 to $5.49 per gallon in June 2022[77]. - Fuel expenses increased by $17.2 million (69.5%) to $42.0 million for the three months ended June 30, 2022, primarily due to higher average diesel prices[90]. - Salaries, wages, and benefits rose by $3.0 million (4.7%) to $65.9 million for the three months ended June 30, 2022, driven by increased driver wage rates and the acquisition of Smith Transport[89]. - Salaries, wages, and benefits decreased by $3.2 million (2.5%) to $124.5 million for the six months ended June 30, 2022, primarily due to a reduction in the number of drivers[101]. - Fuel expenses increased by $22.8 million (46.6%) to $71.8 million for the six months ended June 30, 2022, attributed to higher average diesel prices[102]. - Other operating expenses increased by $7.3 million to $18.0 million during the six months ended June 30, 2022, mainly due to a legal settlement and the acquisition of Smith Transport[106]. Gains and Losses - The company reported a gain on the disposal of property and equipment of $81.7 million for the three months ended June 30, 2022, compared to $7.9 million in the same period of 2021[95]. - Gains on the disposal of property and equipment increased by $73.9 million to $86.0 million during the six months ended June 30, 2022, primarily from a $73.2 million gain on the sale of a terminal property[107]. Tax and Effective Rates - The effective tax rate increased to 26.9% for the three months ended June 30, 2022, from 24.6% in the same period of 2021[96]. Commodity Price Risk - Commodity price risk is primarily related to fuel and rubber purchases[124]. - A $1.00 increase in average fuel price per gallon would decrease income before income taxes by approximately $9.1 million in 2022[124]. - A 10% increase in tire prices would increase tire purchase expenses by $1.4 million, leading to a corresponding decrease in income before income taxes[124]. - Fuel surcharge agreements help limit exposure to commodity price risk, but do not fully offset fuel cost increases[124]. - The company cannot pass through 100% of tire price increases due to the timing and severity of increases[124]. - The company has historically minimized tire price increases through bulk purchases from suppliers[124]. - Fuel costs associated with out-of-route miles, empty miles, and tractor idle time cannot be passed through to customers[124]. - The analysis is based on actual fuel purchases for 2021 adjusted for the acquisition of Smith Transport[124]. - The company expects to maintain consistent miles driven, fuel surcharges as a percentage of revenue, and miles per gallon with adjusted 2021 amounts[124]. - The current rate environment affects the ability to pass through tire price increases[124].