Tuesday, July 22, 2008, For Immediate Release

Press Release

Heartland Express, Inc. Reports Revenues and Earnings for the Second Quarter of 2008.

NORTH LIBERTY, IOWA – July 22, 2008 – Heartland Express, Inc. (Nasdaq: HTLD) announced today financial results for the quarter and six months ended June 30, 2008.  Operating revenues for the quarter increased 10.4% to $164.6 million from $149.1 million in the second quarter of 2007.  Net income decreased 13.2% to $17.2 million from $19.8 million in the 2007 period.  Earnings per share were $0.18 compared to $0.20 for the second quarter of 2007. The driving components of the decrease in net income and earnings per share during the second quarter were the continued historical highs in fuel prices and decreases in gains on sales of property and equipment offset by a favorable tax expense adjustment related to the application of Financial Accounting Standards Board (“FASB”) Interpretation No. 48 (“FIN 48”).    Operating income for the quarter was negatively impacted approximately $4.3 million or $0.03 per share due to increased fuel expenditures, net of fuel surcharge revenue passed through to customers and approximately $4.1 million or $0.03 per share due to a reduction in gains on disposal of property and equipment.    Net income for the quarter was positively impacted approximately $1.8 million, as a reduction of income tax expense, or $0.02 per share due to FIN 48.

For the six months ended June 30, 2008, operating revenues increased 7.2% to $313.6 from $292.5 million during the same period in 2007. Net income decreased 24.8% to $31.9 million for the six month period ended June 30, 2008 from $42.4 million in the 2007 period.  Earnings per share were $0.33 in 2008 compared to $0.43 in 2007 for the six month period. Operating income for the six months was negatively impacted approximately $9.3 million or $0.07 per share due to increased fuel expenditures, net of fuel surcharge revenue passed through to customers and approximately $9.1 million or $0.07 per share due to a reduction in gains on sales of property and equipment.    Net income for the six month period was positively impacted approximately $2.3 million, as a reduction of income tax expense, or $0.02 per share due to FIN 48.

The Company experienced a 60.8% increase in average fuel costs per gallon in the second quarter of 2008 compared to the second quarter of 2007.  The average cost of fuel during the quarter ended June 30, 2008 was $4.21 compared to $2.62 in the second quarter of 2007.  The Company experienced a 51.9% increase in average fuel costs per gallon in the six month period ended June 30, 2008 compared to the same six month period of 2007.  The average cost of fuel during the six month period ended June 30, 2008 was $3.80 compared to $2.50 in the six month period of 2007.  The Company continues to stress its fuel cost controlling initiatives.  Such initiatives include the continued purchasing of fuel in bulk for terminal locations and taking advantage of bulk purchases where it is cost effective to do so when compared to over-the-road purchases, reductions in tractor idle time and controlling out-of-route non-billable miles.  All of the Company’s eleven terminal locations have fueling capabilities. 

For the quarter, Heartland Express, Inc. posted an operating ratio (operating expenses as a percentage of operating revenues) of 87.3% and a 10.5% net margin (net income as a percentage of operating revenues) compared to 81.2% and 13.3% for the same period of 2007.  The Company reported an operating ratio of 87.0% and a 10.2% net margin for the six months ended June 30, 2008 compared to 79.7% and 14.5% for the same period of 2007. The increases in operating ratios for the current quarter and six month period were attributable to the increase in fuel costs and lower amounts of gains on disposals of property and equipment as described above.  The Company ended the second quarter with cash, cash equivalents, short-term and long-term investments of $215.2 million, a $20.3 million increase from the $194.9 million reported on December 31, 2007. The Company’s balance sheet continues to be debt-free.  

As of June 30, 2008, the majority of the Company’s $187.0 million long-term investments continue to be invested in auction rate student loan educational bonds backed by the U.S. government and continued to be associated with unsuccessful auctions.  The majority (96.5%) of the underlying investments continue to hold AAA (or equivalent) ratings from recognized rating agencies.  Management continues to believe that current amounts of cash and cash equivalents along with cash flows from operations are sufficient to meet the Company’s cash flow requirements and therefore has chosen to hold such investments until successful auctions resume or the investments are called by the issuer rather than selling the securities at discounted pricing.  The Company’s 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.  There were not any significant changes in fair market value during the quarter ended June 30, 2008.      

During the quarter, Heartland Express declared a regular quarterly cash dividend.  The quarterly dividend of approximately $1.9 million at the rate of $0.02 per share was paid on July 2, 2008 to shareholders of record at the close of business on June 20, 2008.  The Company has now paid cash dividends of $228.4 million over the past twenty consecutive quarters which includes the special dividend of $2.00 per share during the second quarter of 2007. Interest income decreased in the six month period of 2008 compared to the same period in 2007 primarily due to a decrease in average investments balance as a result of the payment of the special dividend in May 2007 of approximately $196.5 million which was primarily funded with the sale of investments.

The Company anticipates beginning a tractor fleet upgrade in the third quarter.  The upgrade is expected to include the purchase of approximately 1,600 International ProStar tractors.  Delivery of tractors is scheduled to begin during the third quarter of 2008 and will continue through 2009.  The Company will also take delivery of 400 2009 Wabash trailers during the second half of 2008.  Management believes the Company has adequate liquidity to meet these capital requirements through cash generated through operations and existing cash and cash equivalents.

The Company has recently been awarded five service awards in addition to the six service awards announced during the first quarter of 2008.  These awards evidence the Company’s continued ability to deliver the highest quality of service to the Company’s customers.  Such second quarter awards include 2007 National Carrier of the Year and Platinum Award for Federal Express, Kimberly Clark Carrier of the Year for 2007, Whirlpool Truckload Supplier of the Year for 2007, and General Mills Dry National Carrier of the Year for fiscal 2008.  The award received from Kimberly Clark was the first award of its kind distributed by Kimberly Clark and the Company was honored and extremely proud to be the recipient of this inaugural award.      

This press release may contain statements that might be considered as forward-looking statements or predictions of future operations.  Such statements are based on management’s belief or interpretation of information currently available.  These statements and assumptions involve certain risks and uncertainties.  Actual events may differ from these expectations as specified from time to time in filings with the Securities and Exchange Commission.

 

Contact: Heartland Express, Inc.

Mike Gerdin, President

John Cosaert, Chief Financial Officer

319-626-3600

 

HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
		Three months ended							Six months ended
		June 30,							June 30,
		2008				2007			2008			2007
		(unaudited)							(unaudited)
OPERATING REVENUE		$    164,592				$    149,103			$      313,641			$      292,532
OPERATING EXPENSES:
Salaries, wages, benefits		$      48,591				$      50,951			$        97,183			$        98,964
Rent and purchased transportation		5,144				5,643			10,250			10,865
Fuel		60,495				39,697			110,993			76,510
Operations and maintenance		4,353				3,499			8,316			6,703
Operating taxes and licenses		2,343				2,338			4,585			4,619
Insurance and claims		7,012				5,688			10,795			11,278
Communications and utilities		931				1,013			1,936			1,869
Depreciation		10,663				11,877			21,076			23,581
Other operating expenses		4,139				4,439			8,471			8,564
Loss (gain) on disposal of property & equipment		11				(4,112)			(633)			(9,778)
		143,682				121,033			272,972			233,175
Operating income		20,910				28,070			40,669			59,357
Interest income		2,236				2,906			5,099			6,222
Income before income taxes		23,146				30,976			45,768			65,579
Federal and state income taxes		5,915				11,135			13,874			23,185
Net income		$       17,231				$  19,841			$        31,894			42,394
Earnings per share		$           0.18				$       0.20			$            0.33			$           0.43
Weighted average shares outstanding		96,158				98,252			96,186			98,252
Dividends declared per share		$           0.02				$           2.02			$            0.04			$             2.04

 

HEARTLAND EXPRESS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

		June 30,		December 31,
ASSETS		2008		2007
		(unaudited)
CURRENT ASSETS
Cash and cash equivalents		$             27,753		$               7,960
Short-term investments		460		186,944
Trade receivables, net		53,036		44,359
Prepaid tires		4,760		4,764
Other current assets		5,976		3,391
Income tax receivable		-		57
Deferred income taxes		32,578		30,443
Total current assets		124,563		277,918
PROPERTY AND EQUIPMENT		367,552		370,358
Less accumulated depreciation		151,454		132,545
		216,098		237,813
LONG-TERM INVESTMENTS		187,014		-
OTHER ASSETS		10,491		10,563
		$           538,166		$          526,294
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable & accrued liabilities		$              14,866		$          13,073
Compensation & benefits		15,449		14,699
Income taxes payable		1,136		-
Insurance accruals		65,308		60,882
Other accruals		7,916		6,718
Total current liabilities		104,675		95,372
LONG-TERM LIABILITIES
Income taxes payable		34,130		37,593
Deferred income taxes		49,335		50,570
		83,465		88,163
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; authorized
5,000 shares, none issued		-		-
Capital stock: common, $0.01 par value;
authorized 395,000 shares; issued and
outstanding 96,158 in 2008, 96,949 in 2007		962		970
Additional paid-in capital		439		439
Accumulated other comprehensive loss		(10,159)		-
Retained earnings		358,784		341,350
		350,026		342,759
		$           538,166		$           526,294