Heartland Express announced Thursday, Jan. 22, financial results for the quarter and year ended Dec. 31. Operating revenues for the quarter decreased 7.0 percent to $142.0 million from $152.8 million in the fourth quarter of 2007. Net income increased 16.4 percent to $19.4 million from $16.6 million.
For the year ended Dec. 31, operating revenues increased 5.7 percent to $625.6 million from $591.9 million during the same period in 2007. Net income decreased 8.1 percent to $70.0 million from $76.2 million.
Freight demand in the fourth quarter was down, according to the North Liberty, Iowa-based company. “Many in our industry hoped for an increase in freight volumes historically experienced from fall through Christmas; however, excess capacity and the continued economic downturn presented our industry with unprecedented negative freight trends throughout the quarter,” Heartland said.
“The first quarter is off to a dismal start. Freight volumes have continued to decline from those experienced in the fourth quarter. With the current economic environment, we believe freight volumes are not likely to improve in the near term.” Given the recent trends and current economic conditions, the company said it is prepared to downsize its fleet through attrition if the demand for freight services worsens.
The decline in freight volumes came on the heels of high fuel prices that were unprecedented in the second quarter and early third quarter of 2008, Heartland said. As fuel prices increased, the company said it became clear that fuel surcharges originally instituted to shelter carriers from fuel spikes were not sufficient. “High fuel prices, a tightening economy and tight credit drove many in the industry to bankruptcy,” the company said. “The precipitous decline in fuel beginning in the third quarter provided needed cost relief to many. Though fuel cost has recently declined, it remains high compared to past years. This, along with the harsh realities of declining freight volumes, will make it an even tougher operating environment and more difficult for the weaker carriers to survive.”
Heartland said it is focused on managing cost and improving efficiencies and customer service in preparation for the rebound in the economy and industry consolidation. The company said that as of Dec. 31, all of its $171.1 million long-term investments continue to be invested in auction-rate student-loan educational bonds backed by the U.S. government, and continue to be associated with unsuccessful auctions.
Heartland said its average rate of return on these investments continues to exceed the current rates of return on other AAA-rated short-term tax-free security investment options. The company said that during the fourth quarter, it received $9.5 million in calls, at par, of these investments; there were not any significant changes in the status of the fair value during the quarter ended Dec. 31.
The company said it took delivery of 378 new tractors and 152 new trailers in the fourth quarter, and that the tractor fleet upgrade is expected to continue in 2009 with the purchase of about 1,025 International ProStar tractors. As announced in the third quarter, the company purchased a terminal location near Dallas, and property renovations have been completed; the startup of this new regional operation and shop facility began this month.