Heartland Express Inc. on Wednesday, April 15, announced financial results for the quarter ended March 31. As previously announced, the quarter started with negative freight trends from the fourth quarter of 2008. Freight demand remained depressed throughout the first quarter of 2009.
However, Heartland Express posted an operating ratio (operating expenses as a percentage of operating revenues) of 83.4 percent and a 12.3 percent net margin (net income as a percentage of operating revenues), both significant improvements over the prior-year comparative period. The company reported an operating ratio of 86.7 percent and a 9.8 percent net margin for the quarter ended March 31, 2008.
Operating revenues for the quarter decreased 22.8 percent to $115.0 million from $149.0 million in the first quarter of 2008. The North Liberty, Iowa-based company said the significant reduction in fuel prices period over period translated into lower fuel surcharge revenue, which accounted for about half of the decline in total operating revenues. Lower miles driven by lower load counts attributed to overall general economic conditions accounted for the other half of the reduction in operating revenues. Net income was $14.1 million compared to $14.7 million.
Heartland Express said there continues to be excess capacity in the market, and this, combined with declines in overall freight demand, continued to place extreme pressure on freight rates throughout the quarter. Further, the company said it has not seen any strong indicators of improvements in the demand for freight services that would affect its levels of business in the near future. The company said it remains opportunistic about the steps it took during the first quarter to position itself for future growth and opportunities when freight demand returns. Heartland opened its 10th regional operation near Dallas in the first quarter.
During the current turbulent economic conditions, the company said it continued to demonstrate its confidence in its financial strength, which was reflected in its continued tractor fleet upgrade program that began in 2008 and is expected to be completed by the 2009 yearend. The company took delivery of 45 new tractors in the first quarter, which brings the total purchases under the current upgrade program to 620 tractors. Management believes the company has adequate liquidity to meet the capital requirements of the current fleet upgrade through cash generated from operations and existing cash and cash equivalents. The company said the fleet upgrade is another example of how it is positioning itself for the future.
Despite spending $45.4 million on repurchasing stock, the company said it ended the quarter with cash, cash equivalents, short-term and long-term investments of $216.2 million, an $11.8 million decrease from the $228.0 million reported at Dec. 31. The company said its balance sheet continues to be debt-free.
