Monday, October 20, 2008, For Immediate Release

Press Release

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

NORTH LIBERTY, IOWA – October 20, 2008 – Heartland Express, Inc. (Nasdaq: HTLD) announced today financial results for the quarter and nine months ended September 30, 2008.  Operating revenues for the quarter increased 15.9% to $169.9 million from $146.6 million in the third quarter of 2007.  Net income increased 9.2% to $18.7 million from $17.1 million in the 2007 period.  Earnings per share were $0.19 compared to $0.18 for the third quarter of 2007. Operating income for the quarter was favorably impacted approximately $2.4 million or $0.02 per share due to increased gains on disposal of property and equipment. 

For the nine months ended September 30, 2008, operating revenues increased 10.1% to $483.6 from $439.1 million during the same period in 2007. Net income decreased 15.0% to $50.6 million for the nine month period ended September 30, 2008 from $59.5 million in the 2007 period.  Earnings per share were $0.53 in 2008 compared to $0.61 in 2007 for the nine month period. Operating income for the nine months was negatively impacted approximately $7.9 million or $0.05 per share due to increased fuel costs, net of fuel surcharge revenue passed through to customers and approximately $6.7 million or $0.05 per share due to a reduction in gains on sales of property and equipment.    Net income for the nine month period was positively impacted approximately $2.9 million by a reduction of income tax expense due to FIN 48 adjustments or $0.03 per share.

The Company experienced a 46.5% increase in average fuel costs per gallon in the third quarter of 2008 compared to the third quarter of 2007.  The average cost of fuel during the quarter ended September 30, 2008 was $4.03 compared to $2.75 in the third quarter of 2007.  The Company experienced a 50.2% increase in average fuel costs per gallon in the nine month period ended September 30, 2008 compared to the same nine month period of 2007.  The average cost of fuel during the nine month period ended September 30, 2008 was $3.86 compared to $2.57 in the nine month period of 2007.  The Company continues to stress its fuel cost controlling initiatives.  Such initiatives include 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 terminal locations have fueling capabilities. 

For the quarter, Heartland Express, Inc. posted an operating ratio (operating expenses as a percentage of operating revenues) of 83.2% and an 11.0% net margin (net income as a percentage of operating revenues) compared to 81.9% and 11.7% for the same period of 2007.  The Company reported an operating ratio of 85.7% and a 10.5% net margin for the nine months ended September 30, 2008 compared to 80.4% and 13.6% for the same period of 2007. The increased operating ratio for the nine month period was 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 third quarter with cash, cash equivalents, short-term and long-term investments of $249.0 million, a $54.1 million increase from the $194.9 million reported on December 31, 2007. The Company’s balance sheet continues to be debt-free.  

As of September 30, 2008, all of the Company’s $180.6 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.  The majority (96.3% of par value) of the underlying investments continue to hold AAA (or equivalent) ratings from recognized rating agencies. All of the Company’s auction rate security holdings are with financial institutions that have entered into auction rate security settlements with various regulatory authorities.  These settlements focus mostly on small institutions, as defined by the individual settlement agreements.  Although only 3.7% of our portfolio is specifically covered by these settlements, each of the settlements contained clauses that the financial institutions will use their best efforts to liquidate auction rate securities from Company’s not specifically covered by the settlements by the end of 2009.   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 allow the Company to hold these investments to maturity or until they can be sold for par value. 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 value during the quarter ended September 30, 2008.    

The Company began 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 began during the third quarter of 2008 and will continue through 2009. The Company took delivery of 197 new tractors in the third quarter of 2008 and expects to take delivery of 378 new tractors in the fourth quarter of 2008. The Company also took delivery of 248 new Wabash trailers during the third quarter of 2008 and will purchase an additional 152 new trailers in the fourth quarter of 2008.  Management believes the Company has adequate liquidity to meet these capital requirements through cash generated from operations and existing cash and cash equivalents.

The Company purchased a terminal location in Dallas, Texas during the quarter. This terminal will not only strengthen the company’s presence in the Southwest but will also complement the Company’s recent expansion to the western United States. The office and shop facility, situated on approximately seven acres of land, is located on the southeast side of Dallas on Highway 175 in Seagoville. An adjacent five acre tract of land was acquired for future expansion.  Property renovations are underway and operations are scheduled to begin in the fourth quarter of this year. The opening of this facility will mark the beginning of the Company’s tenth regional operation.

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 October 2, 2008 to shareholders of record at the close of business on September 19, 2008.  The Company has now paid cash dividends of $230.4 million over the past twenty-one consecutive quarters which includes the special dividend of $2.00 per share during the second quarter of 2007. Interest income decreased in the nine 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.

On October 14, 2008, Forbes magazine named Heartland Express one of the “Best 200 Small Companies in America.”  The Company has been recognized seventeen times during its twenty two years as a public company, and has made the list the past seven consecutive years.  The Company was recently recognized as the United Sugars’ dry van carrier of the year for the second consecutive year. In addition, the Company received Bremner Foods’ large carrier of the year, the Federal Express SmartPost national carrier of the year award and was recognized for 100% on time service by Federal Express Ground for their fiscal year 2008. Also, for the sixth consecutive year the Company received the dry van Quest for Quality award from Logistics Management. These awards exemplify the quality of service provided to our customers.       

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							Nine months ended
		September 30,							September 30,
		2008				2007			2008			2007
		(unaudited)							(unaudited)
OPERATING REVENUE		$   169,935				$   146,575			$     483,577			$     439,107
OPERATING EXPENSES:
Salaries, wages, benefits		$     51,462				$     48,096			$      148,646			$     147,060
Rent and purchased transportation		4,725				5,252			14,975			16,117
Fuel		58,393				40,747			169,386			117,257
Operations and maintenance		4,051				3,253			12,367			9,957
Operating taxes and licenses		2,323				2,552			6,908			7,170
Insurance and claims		6,443				2,826			17,237			14,104
Communications and utilities		856				996			2,792			2,865
Depreciation		11,504				12,365			32,580			35,946
Other operating expenses		4,456				4,472			12,928			13,036
Gain on disposal of property & equipment		(2,899)				(493)			(3,533)			(10,271)
		141,314				120,066			414,286			353,241
Operating income		28,621				26,509			69,291			85,866
Interest income		1,943				1,741			7,042			7,963
Income before income taxes		30,564				28,250			76,333			93,829
Federal and state income taxes		11,841				11,105			25,715			34,290
Net income		$     18,723				$  17,145			$        50,618			59,539
Earnings per share		$          0.19				$          0.18			$            0.53			$            0.61
Weighted average shares outstanding		96,158				97,499			96,177			97,998
Dividends declared per share		$        0.020				$        0.020			$          0.060			$          2.065

 

 

 

HEARTLAND EXPRESS, INC.

AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

		September 30,		December 31,
ASSETS		2008		2007
		(unaudited)
CURRENT ASSETS
Cash and cash equivalents		$             67,820		$               7,960
Short-term investments		545		186,944
Trade receivables, net		47,169		44,359
Prepaid tires		5,697		4,764
Other current assets		6,058		3,391
Income tax receivable		473		57
Deferred income taxes		33,033		30,443
Total current assets		160,795		277,918
PROPERTY AND EQUIPMENT		378,117		370,358
Less accumulated depreciation		154,798		132,545
		223,319		237,813
LONG-TERM INVESTMENTS		180,622		-
OTHER ASSETS		10,437		10,563
		$           575,173		$          526,294
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable & accrued liabilities		$             28,712		$          13,073
Compensation & benefits		16,254		14,699
Insurance accruals		67,061		60,882
Other accruals		7,746		6,718
Total current liabilities		119,773		95,372
LONG-TERM LIABILITIES
Income taxes payable		35,023		37,593
Deferred income taxes		52,015		50,570
		87,038		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
Retained earnings		375,584		341,350
Accumulated other comprehensive loss		(8,623)		-
		368,362		342,759
		$           575,173		$           526,294