Heartland Express, Inc. (Nasdaq: HTLD) announced today financial results for the quarter ended September 30, 2010. Operating revenues for the quarter increased 12.2% to $127.2 million from $113.4 million in the third quarter of 2009. Net income was $18.3 million compared to $14.5 million in the 2009 period, a 26.1% increase. Earnings per share increased 25.0% to $0.20 from $0.16 reported in the third quarter of 2009. For the quarter, Heartland Express, Inc. (the “Company”) posted an operating ratio (operating expenses as a percentage of operating revenues) of 77.2% and a 14.4% net margin (net income as a percentage of operating revenues).
Operating revenues for the nine month period increased 7.2% to $370.3 million from $345.3 million in the 2009 period. Net income was $46.8 million compared to $46.3 million in the 2009 period, a 1.2% increase. Earnings per share increased 2.0% to $0.52 from $0.51 reported in the first nine months of 2009. Net income decreased by $0.07 per share due to a decrease in gains on disposal of property and equipment and increased depreciation expense primarily attributable to the purchase of new tractors during the latter half of 2009. For the nine month period, the Company posted an operating ratio of 81.9% and a 12.6% net margin.
Operating revenues continue to improve as a result of tighter industry capacity. However, the increase in freight demand has leveled off in comparison to the second quarter of 2010 and continues to lag dramatically behind that experienced in 2007 prior to the recent recession. Freight rates have increased this year since reaching bottom in the third quarter of 2009 and appear to be stabilizing. The Company continues to focus on improving utilization and cost controls as is reflected in our third quarter and year-to-date operating ratio and net margin. The industry continues to be challenged by driver recruitment and retention. This challenge is expected to amplify with the implementation of the stringent safety requirements of CSA 2010 (Comprehensive Safety Analysis) and the potential impacts on the carriers in the industry and the number of qualified drivers. The Company has begun the installation of PeopleNet® electronic on-board recorders and is currently transitioning to paperless logs. This on-board computing and communications system is expected to improve safety, equipment utilization, and customer service.