HEARTLAND EXPRESS INC (Form: 10-Q, Received: 11/06/2018 06:05:46)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarter ended September 30, 2018


[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-15087

HEARTLAND EXPRESS INC.

(Exact Name of Registrant as Specified in Its Charter)



Nevada		93-0926999
(State or Other Jurisdiction		(I.R.S. Employer
of Incorporation or organization)		Identification No.)

901 North Kansas Avenue, North Liberty, Iowa		52317
(Address of Principal Executive Offices)		(Zip Code)

319-626-3600

(Registrant’s telephone number, including area code)

Registrant's telephone number, including area code (319) 626-3600

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.



Yes [X]	No [ ]

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).



Yes [X]	No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:



Large accelerated filer [X]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company [ ]	Emerging growth company [ ]

If an emerging company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes [ ]	No [ X ]

As of October 31, 2018 there were 81,926,604 shares of the Company’s common stock ($0.01 par value) outstanding.

HEARTLAND EXPRESS, INC.

AND SUBSIDIARIES

TABLE OF CONTENTS





	Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017 (unaudited)	3
Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2018 and 2017 (unaudited)	4
Consolidated Statements of Stockholders' Equity for the Nine Months Ended September 30, 2018 (unaudited)	5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017 (unaudited)	6
Notes to Consolidated Financial Statements (unaudited)	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures about Market Risk	24
Item 4. Controls and Procedures	25

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	27
Item 1A. Risk Factors	27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3. Defaults upon Senior Securities	27
Item 4. Mine Safety Disclosures	27
Item 5. Other Information	27
Item 6. Exhibits	28

Signatures	29

PART I



HEARTLAND EXPRESS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (unaudited)
ASSETS	September 30, 2018			December 31, 2017
CURRENT ASSETS
Cash and cash equivalents	$	120,000		$	75,378
Trade receivables, net of allowance of $1.5 million and $1.5 million	55,520			64,293
Prepaid tires	9,898			10,989
Other current assets	25,422			13,782
Income tax receivable	5,366			6,393
Total current assets	216,206			170,835
PROPERTY AND EQUIPMENT
Land and land improvements	40,917			40,283
Buildings	50,637			48,657
Leasehold improvements	1,070			2,208
Furniture and fixtures	2,886			3,437
Shop and service equipment	10,043			12,202
Revenue equipment	521,007			555,980
Construction in progress	9,297			3,996
Property and equipment, gross	635,857			666,763
Less accumulated depreciation	210,569			223,901
Property and equipment, net	425,288			442,862
GOODWILL	132,410			132,410
OTHER INTANGIBLES, NET	15,096			17,022
DEFERRED INCOME TAXES, NET	4,424			1,737
OTHER ASSETS	20,091			24,261
	$	813,515		$	789,127
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	26,431		$	14,366
Compensation and benefits	24,200			26,752
Insurance accruals	19,022			21,368
Other accruals	11,811			12,835
Total current liabilities	81,464			75,321
LONG-TERM LIABILITIES
Income taxes payable	5,220			8,147
Deferred income taxes, net	76,443			65,488
Insurance accruals less current portion	55,349			65,526
Total long-term liabilities	137,012			139,161
COMMITMENTS AND CONTINGENCIES (Note 15)
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01; authorized 5,000 shares; none issued	—			—
Capital stock, common, $.01 par value; authorized 395,000 shares; issued 90,689 in 2018 and 2017; outstanding 81,927 in 2018 and 83,303 in 2017	907			907
Additional paid-in capital	3,373			3,518
Retained earnings	739,461			694,174
Treasury stock, at cost; 8,762 shares in 2018 and 7,386 in 2017	(148,702		)	(123,954		)
	595,039			574,645
	$	813,515		$	789,127

The accompanying notes are an integral part of these consolidated financial statements.



HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share amounts)
(unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017

OPERATING REVENUE	$	151,279		$	182,114		$	463,800		$	441,632

OPERATING EXPENSES
Salaries, wages, and benefits	55,126			71,399			174,694			169,020
Rent and purchased transportation	4,067			16,619			15,652			21,301
Fuel	27,460			29,739			85,340			73,731
Operations and maintenance	6,469			9,122			20,970			21,951
Operating taxes and licenses	3,938			5,410			12,039			11,845
Insurance and claims	4,407			5,979			12,862			13,339
Communications and utilities	1,416			1,487			4,852			3,623
Depreciation and amortization	25,133			28,784			75,490			74,318
Other operating expenses	5,287			8,047			17,083			18,674
Gain on disposal of property and equipment	(7,156		)	(7,471		)	(15,410		)	(19,845		)
	126,147			169,115			403,572			387,957

Operating income	25,132			12,999			60,228			53,675

Interest income	586			238			1,351			950

Interest expense	—			(175		)	—			(175		)

Income before income taxes	25,718			13,062			61,579			54,450

Federal and state income taxes	6,662			5,146			11,342			17,882

Net income	$	19,056		$	7,916		$	50,237		$	36,568
Other comprehensive income, net of tax	—			—			—			—
Comprehensive income	$	19,056		$	7,916		$	50,237		$	36,568

Net income per share
Basic	$	0.23		$	0.10		$	0.61		$	0.44
Diluted	$	0.23		$	0.09		$	0.61		$	0.44

Weighted average shares outstanding
Basic	81,965			83,303			82,530			83,296
Diluted	81,992			83,333			82,564			83,336

Dividends declared per share	$	0.02		$	0.02		$	0.06		$	0.06

The accompanying notes are an integral part of these consolidated financial statements.



HEARTLAND EXPRESS, INC
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except per share amounts)
(unaudited)

	Capital		Additional
	Stock,		Paid-In			Retained			Treasury
	Common		Capital			Earnings			Stock			Total
Balance, December 31, 2017	$	907	$	3,518		$	694,174		$	(123,954	)	$	574,645
Net income	—		—			50,237			—			50,237
Dividends on common stock, $0.06 per share	—		—			(4,950		)	—			(4,950		)
Repurchases of common stock	—		—			—			(25,086		)	(25,086		)
Stock-based compensation, net of tax	—		(145		)	—			338			193
Balance, September 30, 2018	$	907	$	3,373		$	739,461		$	(148,702	)	$	595,039

The accompanying notes are an integral part of these consolidated financial statements.



HEARTLAND EXPRESS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
	Nine Months Ended September 30,
	2018			2017
OPERATING ACTIVITIES
Net income	$	50,237		$	36,568
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	76,086			74,379
Deferred income taxes	8,268			3,165
Stock-based compensation expense	374			340
Gain on disposal of property and equipment	(15,410		)	(19,845		)
Changes in certain working capital items (net of acquisition):
Trade receivables	8,773			8,778
Prepaid expenses and other current assets	387			(5,914		)
Accounts payable, accrued liabilities, and accrued expenses	(18,168		)	(13,221		)
Accrued income taxes	(1,900		)	(7,035		)
Net cash provided by operating activities	108,647			77,215
INVESTING ACTIVITIES
Proceeds from sale of property and equipment	84,910			78,046
Purchases of property and equipment, net of trades	(127,526		)	(104,883		)
Acquisition of business, net of cash acquired	—			(87,635		)
Change in other assets	563			(661		)
Net cash used in investing activities	(42,053		)	(115,133		)
FINANCING ACTIVITIES
Payment of cash dividends	(4,950		)	(5,000		)
Shares withheld for employee taxes related to stock-based compensation	(181		)	(198		)
Repayments of debt assumed	—			(23,303		)
Repurchases of common stock	(25,086		)	—
Net cash used in financing activities	(30,217		)	(28,501		)
Net increase (decrease) in cash, cash equivalents and restricted cash	36,377			(66,419		)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period	106,098			150,225
End of period	$	142,475		$	83,806
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for income taxes, net of refunds	$	4,974		$	21,753
Noncash investing and financing activities:
Purchased property and equipment in accounts payable	$	16,977		$	7,000
Sold revenue equipment in other current assets	$	15,900		$	6,313
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	120,000		$	51,291
Restricted cash included in other current assets	3,298			11,600
Restricted cash included in other assets	19,177			20,915
Total cash, cash equivalents and restricted cash	$	142,475		$	83,806

The accompanying notes are an integral part of these consolidated financial statements.

HEARTLAND EXPRESS, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1. Basis of Presentation and New Accounting Pronouncements

Heartland Express, Inc. (the “Company,” “we,” “us,” or “our”), is a holding company incorporated in Nevada, which owns all of the stock of Heartland Express, Inc. of Iowa, Heartland Express Services, Inc., Heartland Express Maintenance Services, Inc., and A & M Express, Inc. Following the acquisition of Interstate Distributor Co. ("IDC") on July 6, 2017, IDC was subsequently merged into Heartland Express, Inc. of Iowa effective October 1, 2017 as was Gordon Trucking, Inc. ("GTI") effective July 1, 2016. We, and our subsidiaries, operate as one segment. We, together with our subsidiaries, are a short-to-medium haul truckload carrier (predominately 500 miles or less per load) with corporate headquarters in North Liberty, Iowa. We primarily provide nationwide asset-based dry van truckload service for major shippers from Washington to Florida and New England to California.

The accompanying consolidated financial statements include the parent company, Heartland Express, Inc., and its subsidiaries, all of which are wholly owned. The consolidated financial results for the three and nine months ended September 30, 2018, include the acquired assets and operating results of IDC while the consolidated financial results for the three and nine months ended September 30, 2017 include IDC results only for the period of July 6, 2017 to September 30, 2017. All material intercompany items and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and notes to the financial statements required by U.S. GAAP for complete financial statements. In the opinion of management, all normal, recurring adjustments considered necessary for a fair presentation have been included. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2017 included in the Annual Report on Form 10-K of the Company filed with the Securities and Exchange Commission (the "SEC") on March 1, 2018. Interim results of operations are not necessarily indicative of the results to be expected for the full year or any other interim periods. There were no changes to the Company's significant accounting policies during the nine month period ended September 30, 2018, except as noted below in regards to the accounting for stock-based compensation, cash flows, and revenue recognition.

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, "Disclosure Update and Simplification", streamlining certain disclosure requirements to reduce redundant, duplicative, or outdated disclosures. In addition, the amendments expand disclosures related to interim-period changes in stockholders’ equity and noncontrolling interests. Management has evaluated the relevant provisions of the Final Rule and intends to adopt and present the expanded disclosures related to interim-period changes in stockholders' equity during the first applicable quarterly period of 2019.

In March 2018, the Financial Accounting Standards Boards (FASB) issued ASU 2018-05, "Income Taxes (Topic 740) which provides for amendments to the SEC issued Staff Accounting Bulletin (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). ASU 2018-05 and SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with ASU 2018-05 and SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate to be included in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately before the enactment of the Tax Act. Management has evaluated the relevant provisions of the Tax Act to the Company and accounted for the federal and state impacts in the financial statements as of September 30, 2018 and have therefore finalized the accounting for the tax effects of the Tax Act.

In May 2017, the FASB issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting," to provide clarity and reduce diversity and complexity of applying the accounting guidance in Topic 718 to a change in the terms or conditions of a share-based payment award. An entity should account for the effects of a modification unless certain criteria are met. The provisions of this update are effective for interim and annual periods beginning after December 15, 2017. We have adopted this standard prospectively for interim and annual periods beginning January 1, 2018. The adoption of this standard did not have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which continues to require an entity to review indicators for impairment, perform qualitative assessments, and analyze the fair value of a reporting unit as compared to the carrying value of goodwill for potential impairment, but eliminates or replaces additional tests and assessments within the prior guidance. The provisions of this update are effective for fiscal years beginning after December 15, 2019, with early adoption permitted for impairment measurement tests occurring after January 1, 2017. Based on our initial assessment, we believe the impact of adoption of the standard will not have a material impact on our financial statements but we have not determined our date of adoption at this time.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash,” which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash. The provisions of this update are effective for fiscal years beginning after December 15, 2017 and we have adopted this standard using the required retrospective adoption method. The adoption of this standard impacted the consolidated statements of cash flows by increasing beginning and ending cash and cash equivalents presented to include our restricted cash balances. The changes in restricted cash are presented within investing activities eliminating the change in designated funds for equipment purchases and change in designated funds for claims liabilities line items. The overall impact of the change was an increase to investing cash flows $10.8 million for the nine months ended September 30, 2017.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The provisions of this update are effective for fiscal years beginning after December 15, 2017 and we have adopted this standard prospectively for interim and annual periods beginning January 1, 2018. The adoption of this standard did not have any impact on our consolidated statement of cash flows.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments". This update requires measurement and recognition of expected versus incurred credit losses for financial assets held. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods therein. Based on our initial assessment, we believe the impact of adoption of the standard will not have a material impact on our financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)". This update seeks to increase the transparency and comparability among entities by requiring public entities to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. To satisfy the standard’s objective, a lessee will recognize a right-of-use asset representing its right to use the underlying asset for the lease term and a lease liability for the obligation to make lease payments. Both the right-of-use asset and lease liability will initially be measured at the present value of the lease payments, with subsequent measurement dependent on the classification of the lease as either a finance or an operating lease. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term.

In July 2018, the FASB issued ASU 2018-10, "Leases (Topic 842) - Codification Improvements" which contains several FASB Codification improvements for ASC Topic 842, including several implementation issues and ASU 2018-11, "Leases (Topic 842) - Targeted Improvements" which provides entities with an additional transition method for implementing ASC Topic 842. Entities have the option to apply the new standard at the adoption date, recognizing a cumulative-effect adjustment to the opening balance of retained earnings along with the modified retrospective approach previously identified, both of which include a number of practical expedients that companies may elect to apply. Under the cumulative-effect adjustment comparative periods would not be restated, and would instead be presented under the legacy ASC Topic 840 guidance. Under the modified retrospective approach leases are recognized and measured under the noted guidance at the beginning of the earliest period presented. The new standard is effective for public companies for annual periods beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. We continue to evaluate our declining portfolio of leases and based on expected further reductions in both terminal and revenue equipment leases during the remainder of 2018, we believe that the impact of this standard will not have a material impact on our financial statements at January 1, 2019. At this time, we have identified January 1, 2019 as our selected date of transition and we intend to apply the cumulative-effect transition method upon adoption of this guidance based on the available transition methods at this time.

In May 2014, the FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), which will replace numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The two

permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. In July 2015, the FASB approved the deferral of the new standard's effective date by one year. The new standard is effective for annual reporting periods beginning after December 15, 2017. We have selected and have implemented the modified cumulative-effect transition method at January 1, 2018, our date of adoption. The effect of adoption was immaterial to retained earnings at January 1, 2018 and to net income for the three and nine month period ended September 30, 2018. See additional discussions on revenue recognition at Note 4.

Note 2. Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. There were no significant changes in estimates and assumptions used by management related to our critical accounting policies during the three and nine months ended September 30, 2018, except in relation to estimated revenue for in-process loads of freight in accordance with the adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). See Note 4 for additional discussions.

Note 3. Segment Information

We provide truckload services across the United States (U.S.) and parts of Canada. These truckload services are primarily asset-based transportation services in the dry van truckload market, and we also offer truckload temperature-controlled transportation services and have previously offered non-asset based brokerage services, neither of which are significant to our operations. We exited our non-asset-based freight brokerage business in the first quarter of 2017, then operated similar services following the acquisition of IDC until the fourth quarter of 2017. Our Chief Operating Decision Maker oversees and manages all of our transportation services, on a combined basis, including previously acquired entities. As a result of the foregoing, we have determined that we have one segment, consistent with the authoritative accounting guidance on disclosures about segments of an enterprise and related information.

Note 4. Revenue Recognition

The Company generates revenue from transportation services under contracts with customers, generally on a rate per mile or per shipment, based on origin and destination of the shipment. The Company’s performance obligation arises when it accepts a shipment order to transport a customer’s freight and is satisfied upon delivery of the shipment. The transaction price may be defined in a transportation services agreement or negotiated with the customer prior to accepting the shipment order. A customer may submit several shipment orders for transportation services at various times throughout a service agreement term, but each shipment represents a distinct service that is a separately identified performance obligation. The Company often provides additional accessorial and other services as part of the shipment (including but not limited to loading/unloading, stops in transit, and tractor and trailer detention) which are not distinct or are not material in the context of the contract; therefore the revenue for these services is recognized with the freight transaction price. Fuel surcharge revenue consists of additional fees earned by the Company in connection with the performance of line haul services to partially or completely offset the cost of fuel. The Company also provided non-asset based brokerage services recorded as other revenue during the three and nine months ended September 30, 2017 before these services were ended in late 2017.

Revenues are recognized over time as control of the promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. Revenue is estimated for multiple-stop loads based on miles run and estimated for single stop loads based on transit time, as the customer simultaneously receives and consumes the benefit provided. Revenue associated with loads delivered but not billed as of the end of an accounting period are also estimated as part of revenue for that period. Revenue recognition methods described align with the recognition of our associated expenses in the statement of comprehensive income.

Total revenues recorded were $151.3 million and $182.1 million for the three months ended September 30, 2018 and 2017, respectively. Fuel surcharge revenues were $21.4 million and $21.1 million for the three months ended September 30, 2018 and 2017, respectively. Accessorial and other revenues recorded in the consolidated statements of comprehensive income collectively represented $3.2 million and $10.7 million for the three months ended September 30, 2018 and 2017, respectively. Total revenues recorded were $463.8 million and $441.6 million for the nine months ended September 30, 2018 and 2017, respectively. Fuel surcharge revenues were $65.3 million and $50.7 million for the nine months ended September 30, 2018 and 2017, respectively. Accessorial and other revenues recorded in the consolidated statements of comprehensive income collectively represented $11.1 million and $18.5 million for the nine months ended September 30, 2018 and 2017, respectively.

Note 5. Cash and Cash Equivalents

Cash equivalents are short-term, highly liquid investments with insignificant interest rate risk and original maturities of three months or less at acquisition. At September 30, 2018, restricted and designated cash and investments totaled $22.5 million, of which $3.3 million was included in other current assets and $19.2 million was included in other non-current assets in the consolidated balance sheet. Restricted and designated cash and investments totaled $30.7 million at December 31, 2017, of which $7.9 million was included in other current assets and $22.8 million was included in other non-current assets in the consolidated balance sheet. The restricted funds represent deposits required by state agencies for self-insurance purposes and designated funds that are earmarked for a specific purpose and not for general business use.

Note 6. Prepaid Tires, Property, Equipment, and Depreciation

Property and equipment are reported at cost, net of accumulated depreciation. Maintenance and repairs are charged to operations as incurred. New tires are capitalized separately from revenue equipment and are reported separately as “Prepaid tires” in the consolidated balance sheets and amortized over two years. Depreciation for financial statement purposes is computed by the straight-line method for all assets other than tractors. We recognize depreciation expense on tractors using the 125% declining balance method. New tractors are depreciated to salvage values of $15,000 while new trailers are depreciated to salvage values of $4,000. At September 30, 2018, there was $15.9 million of amounts receivable related to equipment sales which was recorded in other current assets compared to $0.9 million at December 31, 2017.

Note 7. Other Intangibles, Net and Goodwill

All intangible assets determined to have finite lives are amortized over their estimated useful lives. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows. There was no change in the gross amount of identifiable intangible assets during the three and nine months ended September 30, 2018. Amortization expense of $0.6 million, and $1.9 million for the three and nine months ended September 30, 2018 respectively, was included in depreciation and amortization in the consolidated statements of comprehensive income. Amortization expense was $0.8 million, and $1.8 million for the three and nine months ended September 30, 2017. Intangible assets subject to amortization consisted of the following at September 30, 2018:



	Amortization period (years)	Gross Amount		Accumulated Amortization		Net intangible assets
		(in thousands)
Customer relationships	20	$	13,600	$	2,158	$	11,442
Tradename	0.5-6	8,100		6,712		1,388
Covenants not to compete	1-10	4,200		1,934		2,266
		$	25,900	$	10,804	$	15,096

Changes in carrying amount of goodwill were as follows:



	(in thousands)
Balance at December 31, 2017	$	132,410
Acquisition	—
Balance at September 30, 2018	$	132,410

Note 8. Earnings per Share

Basic earnings per share is based upon the weighted average common shares outstanding during each year. Diluted earnings per share is based on the basic weighted earnings per share with additional weighted common shares for common stock equivalents. During the three and nine months ended September 30, 2018 and September 30, 2017, we had outstanding restricted shares of common stock to certain of our employees under the Company's 2011 Restricted Stock Award Plan (the "Plan"). A reconciliation of the numerator (net income) and denominator (weighted average number of shares outstanding of the basic and diluted earnings

per share ("EPS")) for the three and nine months ended September 30, 2018 and September 30, 2017 is as follows (in thousands, except per share data):



	Three months ended September 30, 2018
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	19,056	81,965	$	0.23
Effect of restricted stock	—		27
Diluted EPS	$	19,056	81,992	$	0.23



	Three months ended September 30, 2017
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	7,916	83,303	$	0.10
Effect of restricted stock	—		30
Diluted EPS	$	7,916	83,333	$	0.09



	Nine months ended September 30, 2018
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	50,237	82,530	$	0.61
Effect of restricted stock	—		34
Diluted EPS	$	50,237	82,564	$	0.61



	Nine months ended September 30, 2017
	Net Income (numerator)		Shares (denominator)	Per Share Amount
Basic EPS	$	36,568	83,296	$	0.44
Effect of restricted stock	—		40
Diluted EPS	$	36,568	83,336	$	0.44

Note 9. Equity

We have a stock repurchase program with 6.9 million shares remaining authorized for repurchase as of September 30, 2018 following the additional authorization of 5.0 million shares by our Board of Directors on May 11, 2018. There were 0.2 million and 1.4 million shares repurchased in the open market during the three and nine months ended September 30, 2018 and there were no shares repurchased during the same periods in 2017. Repurchases are expected to continue from time to time, as determined by market conditions, cash flow requirements, securities law limitations, and other factors, until the number of shares authorized have been repurchased, or until the authorization is terminated. The share repurchase authorization is discretionary and has no expiration date.

During the three and nine months ended September 30, 2018 and 2017, our Board of Directors declared regular quarterly dividends totaling $1.6 million, $5.0 million and $1.7 million, $5.0 million, respectively. Future payment of cash dividends and the amount of such dividends will depend upon our financial conditions, our results of operations, our cash requirements, our tax treatment, and certain corporate law requirements, as well as factors deemed relevant by our Board of Directors.

Note 10. Stock-Based Compensation

In July 2011, a Special Meeting of Stockholders of Heartland Express, Inc. was held, at which meeting the approval of the Heartland Express, Inc. 2011 Restricted Stock Award Plan (the "Plan") was ratified. The Plan is administered by the Compensation Committee of our Board of Directors. Per the terms of the awards, employees receiving awards will have all of the rights of a stockholder with respect to the unvested restricted shares including, but not limited to, the right to receive such cash dividends, if any, as may be declared on such shares from time to time and the right to vote such shares at any meeting of our stockholders.

The Plan made available up to 0.9 million shares for the purpose of making restricted stock grants to our eligible officers and employees. Shares granted in 2014 through 2018 have various vesting terms that range from immediate to four years from the date of grant. Once vested, there are no other restrictions on the awards. Compensation expense associated with these awards is based on the market value of our stock on the grant date. The Company's market close price ranged between $21.72 and $27.47 on the various grant dates during 2014, ranged between $19.93 and $27.29 on the various grant dates during 2015, ranged between $17.06 and $18.78 on the various grant dates during 2016, ranged between $20.53 and $23.37 on the various grant dates during 2017. The Company's market close price was $19.03 for the grant date during the nine months ended September 30, 2018. There were no significant assumptions made in determining the fair value. Compensation expense associated with restricted stock awards is included in salaries, wages and benefits in the consolidated statements of comprehensive income. Compensation expense associated with restricted stock awards was $0.1 million and $0.4 million respectively, for the three and nine months ended September 30, 2018. Compensation expense associated with restricted stock awards was $0.1 million and $0.3 million respectively, for the three and nine months ended September 30, 2017. Unrecognized compensation expense was $0.3 million at September 30, 2018 which will be recognized over a weighted average period of 1.1 year.

The following tables summarize our restricted stock award activity for the three and nine months ended September 30, 2018 and 2017.



	Three Months Ended September 30, 2018
	Number of Shares of Restricted Stock Awards (in thousands)		Weighted Average Grant Date Fair Value
Unvested at beginning of period	35.0		$	20.29
Granted	—		—
Vested	(8.5	)	17.11
Forfeited	—		—
Outstanding (unvested) at end of period	26.5		$	21.31



	Nine Months Ended September 30, 2018
	Number of Shares of Restricted Stock Awards (in thousands)		Weighted Average Grant Date Fair Value
Unvested at beginning of period	53.7		$	21.82
Granted	5.0		19.03
Vested	(30.7	)	22.03
Forfeited	(1.5	)	17.11
Outstanding (unvested) at end of period	26.5		$	21.31



	Three Months Ended September 30, 2017
	Number of Shares of Restricted Stock Awards (in thousands)		Weighted Average Grant Date Fair Value
Unvested at beginning of period	40.5		$	19.69
Granted	—		—
Vested	(9.7	)	17.11
Forfeited	—		—
Outstanding (unvested) at end of period	30.8		$	20.51



	Nine Months Ended September 30, 2017
	Number of Shares of Restricted Stock Awards (in thousands)		Weighted Average Grant Date Fair Value
Unvested at beginning of period	53.0		$	21.53
Granted	3.0		20.53
Vested	(25.2	)	22.07
Forfeited	—		—
Outstanding (unvested) at end of period	30.8		$	20.51

Note 11. Long-Term Debt

In November 2013, Heartland Express, Inc. of Iowa, (the "Borrower"), a wholly owned subsidiary of the Company, entered into a Credit Agreement with Wells Fargo Bank, National Association, (the “Bank”). Pursuant to the Credit Agreement, the Bank provided a five-year, $250.0 million unsecured revolving line of credit which may be used for future working capital, equipment financing, and general corporate purposes. The Bank's original commitment decreased to $175.0 million on November 1, 2016 through scheduled maturity on October 31, 2018. However, on August 31, 2018, Borrower and the Bank entered into the First Amendment to this Credit Agreement. The First Amendment (i) provides for a $100.0 million unsecured revolving line of credit (the “Revolver”), which may be used for working capital, equipment financing, permitted acquisitions, and general corporate purposes, (ii) provides an uncommitted accordion feature, which allows the Company a one-time request, at the discretion of the Bank, to increase the Revolver by up to an additional $100.0 million, (iii) increases the letter of credit subfeature of the Credit Agreement from $20.0 million to $30.0 million, and (iv) extends the maturity of the Credit Agreement to August 31, 2021, subject to the Borrower’s ability to terminate the commitment at any time at no additional cost to the Borrower.

The Credit Agreement is unsecured, with a negative pledge against all assets of our consolidated group, except for debt associated with permitted acquisitions, new purchase-money debt and capital lease obligations as described in the Credit Agreement. Borrowings under the Credit Agreement can either be, at Borrower's election, (i) one-month or three-month LIBOR (Index) plus a spread between 0.700% and 0.900%, based on the Company's consolidated funded debt to adjusted EBITDA ratio or (ii) Prime (Index) plus 0.0%. There is a commitment fee on the unused portion of the Revolver between 0.0725% and 0.1750%, based on the Company's consolidated funded debt to adjusted EBITDA ratio.

The Credit Agreement contains customary financial covenants including, but not limited to, (i) a maximum adjusted leverage ratio of 2:1, measured quarterly on a trailing twelve month basis, (ii) a minimum net income requirement of $1.00, measured quarterly on a trailing twelve month basis, (iii) a minimum tangible net worth of $250.0 million requirement, measured quarterly, and (iv) limitations on other indebtedness and liens. The Credit Agreement also includes customary events of default, conditions, representations and warranties, and indemnification provisions. We were in compliance with the respective financial covenants at September 30, 2018 and during the nine months then ended.

We had no outstanding long-term debt at September 30, 2018 or December 31, 2017. Outstanding letters of credit associated with the revolving line of credit at September 30, 2018 were $9.2 million. As of September 30, 2018, the line of credit available for future borrowing was $90.8 million.

Note 12. Income Taxes

We use the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Such amounts are adjusted, as appropriate, to reflect changes in tax rates expected to be in effect when temporary differences reverse. The effect of changes in tax rates on deferred taxes is recognized in the period that the change is enacted. A valuation allowance is recorded to reduce the Company's deferred tax assets to the amount that is more likely than not to be realized. We had no recorded valuation allowance at September 30, 2018 and December 31, 2017. Our effective tax rate was 25.9% and 39.4% for the three months ended September 30, 2018 and 2017, respectively. Our effective tax rate was 18.4% and 32.8% for the nine months ended September 30, 2018 and 2017, respectively. The changes in effective tax rate are driven by a lower enacted federal tax rate as a result of the 2017 Tax Act, the timing of the reversal of previously recorded accruals for penalties and interest related to uncertain tax positions where the applicable statute of limitations have now lapsed, and a favorable provision to income tax return adjustment recorded.

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. We record interest and penalties related to unrecognized tax benefits in income tax expense.

At September 30, 2018 and December 31, 2017, we had a total of $4.3 million and $5.8 million in gross unrecognized tax benefits, respectively included in long-term income taxes payable in the consolidated balance sheet. Of this amount, $3.4 million and $4.8 million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate as of September 30, 2018 and December 31, 2017. The net increase in unrecognized tax benefits was $0.3 million and a decrease of $0.1 million during the three months ended September 30, 2018 and 2017, respectively. The net decrease in unrecognized tax benefits was $1.6 million and a decrease of $2.9 million during the nine months ended September 30, 2018 and 2017, respectively. The increase in the three months ended September 30, 2018 was due to the unrecognized tax benefits resulting from current year tax positions. The net decrease during the three months ended September 30, 2017 and the nine months ended September 30, 2018 and 2017, respectively, was mainly due to the expiration of certain statues of limitation net of additions and settlements with respective states. These changes had the corresponding increasing or decreasing effects on the effective state tax rate during these same periods. The total net amount of accrued interest and penalties for such unrecognized tax benefits was $0.9 million and $2.3 million at September 30, 2018 and December 31, 2017 and is included in long-term income taxes payable in the consolidated balance sheets. Income tax expense is increased each period for the accrual of interest on outstanding positions and penalties when the uncertain tax position is initially recorded. Income tax expense is reduced in periods by the amount of accrued interest and penalties associated with reversed uncertain tax positions due to lapse of applicable statute of limitations, when applicable or when a position is settled.

Net interest and penalties included in income tax expense for the three month period ended September 30, 2018 and 2017 was a net expense of approximately $0.1 million and $0.0 million, respectively. Net interest and penalties included in income tax expense for the nine month period ended September 30, 2018 and 2017 was a net benefit of approximately $1.4 million and $1.3 million, respectively. There was an unfavorable impact to income tax expense during the three months ended September 30, 2018. There was a favorable impact to income tax expense during the nine months ended September 30, 2018 and 2017 due to reversals of interest and penalties due to lapse of applicable statute of limitations and settlements, net of additions for interest and penalty accruals during the same period. These unrecognized tax benefits relate to risks associated with state income tax filing positions for our corporate subsidiaries.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	2018
	(in thousands)
Balance at January 1, 2018	$	5,839
Additions based on tax positions related to current year	394
Additions for tax positions of prior years	—
Reductions for tax positions of prior years	—
Reductions due to lapse of applicable statute of limitations	(1,954		)
Settlements	—
Balance at September 30, 2018	$	4,279

A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances. We do not have any outstanding litigation related to income tax matters. At this time, management’s best estimate of the reasonably possible change in the amount of gross unrecognized tax benefits to be a decrease of approximately $0.2 million to a decrease of $0.8 million during the next twelve months mainly due to the expiration of certain statute of limitations, net of additions. The federal statute of limitations remains open for the years 2015 and forward. Tax years 2008 and forward are subject to audit by state tax authorities depending on the tax code and administrative practice of each state.

Note 13. Operating Leases

Rent expense for operating leases for revenue equipment that resulted from our IDC acquisition was $0.9 million and $4.5 million for the three and nine months ended September 30, 2018, and $3.8 million and $3.8 million for the three and nine months ended September 30, 2017. These expenses were included in rent and purchased transportation in the consolidated statements of comprehensive income.

We lease certain terminal facilities under operating leases. A portion of these leases are with limited liability companies, whose members include one of our board members and a commercial tractor dealership whose owners include one of our board members. The related-party rental payments were entered into as a result of a previous acquisition. Rent expenses for terminal facilities were $1.2 million and $3.8 million (including related-party rental payments totaling $0.3 million and $0.7 million), for the three and nine months ended September 30, 2018, respectively. Rent expenses for terminal facilities were $1.5 million and $2.5 million (including related-party rental payments totaling $0.4 million and $1.2 million), for the three and nine months ended September 30, 2017. These expenses were included in rent and purchased transportation in the consolidated statements of comprehensive income. The various leases expire between November 2018 and 2020. A portion of these leases contain purchase options and options to renew. We are responsible for all taxes, insurance, and utilities related to the terminal leases. See Note 14 for additional information regarding related party transactions.

Note 14. Related Party

We lease certain terminal facilities for operations under operating leases from certain limited liability companies, whose members include one of our board members and a commercial tractor dealership whose owners include one of our board members. The terminal facility leases have initial five year terms, which began in November 2013, purchase options and options to renew.

We have sold trailers to and have purchased parts and services from the commercial tractor dealership noted above. We owed the commercial tractor dealership $0.1 million and $0.1 million, included in accounts payable and accrued liabilities in the consolidated balance sheets at September 30, 2018 and December 31, 2017, respectively.

The related payments (receipts) with related parties for the three and nine months ended September 30, 2018 and 2017 (in thousands) were as follows:



	Three months ended September 30,
	2018		2017
Payments for parts and services	$	65	$	172
Terminal lease payments	251		421
	$	316	$	593



	Nine months ended September 30,
	2018		2017
Receipts for trailer sales	$	—	$	(12	)
Payments for parts and services	346		409
Terminal lease payments	712		1,227
	$	1,058	$	1,624

Note 15. Commitments and Contingencies

We are a party to ordinary, routine litigation and administrative proceedings incidental to our business. In the opinion of management, our potential exposure under pending legal proceedings is adequately provided for in the accompanying consolidated financial statements.

The total estimated purchase commitments for tractors, net of tractor sale commitments, and trailer equipment as of September 30, 2018 was $86.2 million.

Note 16. Subsequent Events

No events occurred requiring disclosure.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

This Item 2 contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by such sections and the Private Securities Litigation Reform Act of 1995, as amended. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including without limitation: any projections of earnings, revenues, or other financial items; any statement of plans, strategies, and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; and any statements of belief and any statement of assumptions underlying any of the foregoing. Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “intends,” “may” “could," and similar terms and phrases. In this Form 10-Q, statements relating to general trucking industry trends, including future demand and capacity, freight rates, operating ratio goals, anticipated revenue equipment sales and purchases, including revenue equipment gains and the used equipment market, future customer relationships, future growth and acquisitions, our ability to attract and retain drivers, future driver compensation, the impact of the adoption of new accounting standards, the impact of changes in interest rates and tire prices, expected fuel costs, including strategies for managing fuel costs, the impact of pending litigation, our dividend policy, capital spending, including our mix of leased versus owned revenue equipment, future depreciation expense, future repurchases of our shares, and our internal control remediation plan, among others, are forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled "Item 1A. Risk Factors," set forth in the Company's 2017 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 1, 2018, which is by this reference incorporated herein. Readers should review and consider the factors discussed in “Risk Factors” of the Company's Annual Report on Form 10-K, along with various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.

All such forward-looking statements speak only as of the date of this Quarterly Report. You are cautioned not to place undue reliance on such forward-looking statements. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in the events, conditions, or circumstances on which any such statement is based.

References in this Quarterly Report to “we,” “us,” “our,” “Heartland,” or the “Company” or similar terms refer to Heartland Express, Inc. and its subsidiaries.

Overview

We, together with our subsidiaries, are a short-to-medium haul truckload carrier (predominately 500 miles or less per load). We primarily provide nationwide asset-based dry van truckload service for major shippers from Washington to Florida and New England to California. We focus on providing quality service to targeted customers with a high density of freight in our regional operating areas. We also offer primarily asset-based dry van service to our customers along with temperature-controlled truckload services, which are not significant to our operations. We exited our non-asset-based freight brokerage business in the first quarter of 2017, then operated similar services following the acquisition of IDC in July 2017 until the fourth quarter of 2017. We generally earn revenue based on the number of miles per load delivered and the revenue per mile paid. We believe the keys to success are maintaining high levels of customer service and safety, which are predicated on the availability of experienced drivers and late-model equipment. We believe that our service standards, safety record, and equipment accessibility have made us a core carrier to many of our major customers, as well as allowed us to build solid, long-term relationships with customers and brand ourselves as an industry leader for on-time service.

Competition for drivers, which has historically been intense, has recently escalated due to the decreasing numbers of qualified drivers in the industry, and we have experienced and continue to experience increased difficulties attracting and retaining qualified drivers. We continue to explore new strategies to attract and retain qualified drivers. We hire the majority of our drivers with at least six to nine months of over-the-road experience and safe driving records. In order to attract and retain experienced drivers who understand the importance of customer service, we have sought to solidify our position as an industry leader in driver compensation in our operating markets. We have implemented two driver pay increases within the past twelve months (October 1, 2017 and July 7, 2018). Our comprehensive driver compensation and benefits program rewards drivers for years of service and safe operating mileage benchmarks, which are critical to our operational and financial performance. Our driver pay package includes future pay increases based on years of continued service with us, increased rates for accident-free miles of operation, and

detention pay to assist drivers with offsetting unproductive detention time. We believe that our driver compensation and benefits package is consistently among the best in the industry. We are committed to investing in our drivers and compensating them for safety as both are key to our operational and financial performance.

Containment of fuel cost continues to be one of management's top priorities. Average DOE diesel fuel prices per gallon for the three months ended September 30, 2018 and 2017 were $3.24 and $2.63, respectively. The average price per gallon in 2018, through October 29, 2018, was $3.36. We cannot predict what fuel prices will be for the remainder of 2018. We are not able to pass through all fuel price increases through fuel surcharge agreements with customers due to tractor idling time, along with empty and out-of-route miles. Therefore, our operating income is negatively impacted with increased net fuel costs (fuel expense less fuel surcharge revenue) in a rising fuel environment and is positively impacted in a declining fuel environment. We continue to implement fuel initiative strategies that we believe will effectively manage fuel costs. These initiatives include strategic fueling of our trucks, whether it be terminal fuel or over-the-road fuel, reducing tractor idle time, controlling out-of-route miles, controlling empty miles, utilizing on-board diesel and battery power units to minimize idling, educating drivers to save energy, trailer skirting, and increasing fuel economy through the purchase of newer, more fuel-efficient tractors. At September 30, 2018, all of our over-the-road sleeper berth tractor fleet was equipped with idle management controls. At September 30, 2018, the Company’s tractor fleet had an average age of 1.3 years and the Company's trailer fleet had an average age of 4.2 years.

We continue to focus on providing quality service to targeted customers with a high density of freight in our regional operating areas. Organic growth has become increasingly difficult for traditional over-the-road truckload services given the current shortage of qualified drivers in the industry. We expect the driver hiring market to remain tight for the near future. We continue to evaluate and explore different driving options and offerings for our existing and potential new drivers. This includes increases to driver pay as well as different driving position offerings that allow us to offer more driver home time and flexibility. In addition to organic growth through the development of our regional operating areas, we have completed seven acquisitions since 1987 with the most recent, and second largest, occurring on July 6, 2017, with the acquisition of IDC. These seven acquisitions have enabled us to solidify our position within existing regions, expand into new operating regions, and pursue new customer relationships in new markets. We are highly selective about acquisitions, with our main criteria being (i) safe operations, (ii) high quality professional truck drivers, (iii) fleet profile that is compatible with our philosophy or can be replaced economically, and (iv) freight profile that will allow a path to a low-80s operating ratio upon full integration, application of our cost structure, and freight optimization, including exiting certain loads that fail to meet our operating profile. We expect to continue to evaluate acquisition candidates presented to us. We believe future growth depends upon several factors including the level of economic growth and the related customer demand, the available capacity in the trucking industry, our ability to identify and consummate future acquisitions, our ability to integrate operations of acquired companies to realize efficiencies, and our ability to attract and retain experienced drivers that meet our hiring standards.

We ended the first nine months of 2018 with operating revenues of $463.8 million, including fuel surcharges, net income of $50.2 million, and basic net income per share of $0.61 on basic weighted average outstanding shares of 82.5 million compared to operating revenues of $441.6 million, including fuel surcharges, net income of $36.6 million, and basic net income per share of $0.44 on basic weighted average shares of 83.3 million in the first nine months of 2017. We posted an 87.0% operating ratio (operating expenses as a percentage of operating revenues) for the nine months ended September 30, 2018 compared to 87.8% for the same period of 2017. We posted an 84.9% non-GAAP adjusted operating ratio⁽¹⁾ (operating expenses as a percentage of operating revenues, net of fuel surcharge) for the nine months ended September 30, 2018 compared to 86.3% for the same period of 2017. We had total assets of $813.5 million at September 30, 2018. We achieved a return on assets of 11.1% and a return on equity of 15.2% over the immediate past four quarters ended September 30, 2018, compared to 6.5% and 9.5%, respectively, for the immediate past four quarters ended September 30, 2017.

Our cash flow from operating activities for the nine months ended September 30, 2018 of $108.6 million was 23.4% of operating revenues, compared to $77.2 million and 17.5% in the same period of 2017. During 2018, our net investing cash flows used were $42.1 million, which was mainly the result of cash used for revenue equipment purchases partially offset by proceeds received from sale of revenue equipment ($42.6 million used, net), which was partially offset by $0.6 million cash provided by the change in other assets. We used $30.2 million in financing activities mostly related to repurchases of our common stock ($25.1 million) and the payment of dividends ($5.0 million). As a result, our cash, cash equivalents and restricted cash increased $36.4 million during the nine months ended September 30, 2018. We ended the third quarter of 2018 with cash, cash equivalents and restricted cash of $142.5 million.

(1)



GAAP to Non-GAAP Reconciliation Schedule:
Operating revenue, operating revenue excluding fuel surcharge revenue, operating income, operating ratio, and adjusted operating ratio reconciliation (a)

	Three months ended September 30,						Nine months ended September 30,
	2018			2017			2018			2017
	(Unaudited, in thousands)

Operating revenue	$	151,279		$	182,114		$	463,800		$	441,632
Less: Fuel surcharge revenue	21,371			21,082			65,308			50,706
Operating revenue, excluding fuel surcharge revenue	129,908			161,032			398,492			390,926

Operating expenses	126,147			169,115			403,572			387,957
Less: Fuel surcharge revenue	21,371			21,082			65,308			50,706
Adjusted operating expenses	104,776			148,033			338,264			337,251

Operating income	$	25,132		$	12,999		$	60,228		$	53,675
Operating ratio	83.4		%	92.9		%	87.0		%	87.8		%
Adjusted operating ratio	80.7		%	91.9		%	84.9		%	86.3		%

(a) Operating revenue excluding fuel surcharge and adjusted operating ratio as reported in this Form 10-Q are based upon operating expenses, net of fuel surcharge revenue, as a percentage of operating revenue excluding fuel surcharge revenue. We feel that this measure is more representative of our underlying operations by excluding the volatility of fuel prices which we cannot control.

Results of Operations

The following table sets forth the percentage relationships of expense items to total operating revenue for the periods indicated:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Operating revenue	100.0	%	100.0	%	100.0	%	100.0	%
Operating expenses:
Salaries, wages, and benefits	36.4	%	39.2	%	37.7	%	38.3	%
Rent and purchased transportation	2.7	%	9.1	%	3.4	%	4.8	%
Fuel	18.2	%	16.3	%	18.4	%	16.7	%
Operations and maintenance	4.3	%	5.0	%	4.5	%	5.0	%
Operating taxes and licenses	2.6	%	3.0	%	2.6	%	2.7	%
Insurance and claims	2.9	%	3.3	%	2.8	%	3.0	%
Communications and utilities	0.9	%	0.8	%	1.0	%	0.8	%
Depreciation and amortization	16.6	%	15.8	%	16.3	%	16.8	%
Other operating expenses	3.5	%	4.4	%	3.6	%	4.2	%
Gain on disposal of property and equipment	(4.7	)%	(4.1	)%	(3.3	)%	(4.5	)%
	83.4	%	92.9	%	87.0	%	87.8	%
Operating income	16.6	%	7.1	%	13.0	%	12.2	%
Interest income	0.4	%	0.1	%	0.3	%	0.2	%
Income before income taxes	17.0	%	7.2	%	13.3	%	12.3	%
Income taxes	4.4	%	2.8	%	2.5	%	4.0	%
Net income	12.6	%	4.3	%	10.8	%	8.3	%

Three Months Ended September 30, 2018 Compared With the Three Months Ended September 30, 2017

The Company acquired 100% of the outstanding stock of IDC on July 6, 2017 and therefore the operating results of the Company for the three months ended September 30, 2018 include the operating results of IDC while the comparative period of September 30, 2017 include the operating results of IDC for the period of July 6, 2017 to September 30, 2017.

Operating revenue decreased $30.8 million (16.9%), to $151.3 million for the three months ended September 30, 2018 from $182.1 million for the three months ended September 30, 2017. The decrease in revenue was the result of the combined effect of a decrease in trucking and accessorial and other revenues of $31.1 million (19.3%) and a $0.3 million (1.4%) increase in fuel surcharge revenue from $21.1 million in 2017 to $21.4 million in 2018. Operating revenues (the total of trucking and fuel surcharge revenue) are primarily earned based on loaded miles driven in providing truckload services. The number of loaded miles is affected by general freight supply and demand trends and the number of revenue earning equipment vehicles (tractors). The number of revenue earning equipment vehicles (tractors) is directly affected by the number of available company drivers and independent contractors providing capacity to us. During 2017, we acquired IDC and the additional drivers and operations created initial growth to our legacy operating fleet but operational decisions to right-size our fleet, remove less profitable customer relationships, and end the brokerage division impacted our operating results in the periods following the acquisition in 2018. We have also enjoyed a favorable rate environment and the rate per mile charged in the first three quarters of 2018 as compared to 2017 has increased. We expect there to be a favorable balance between demand and capacity during the majority of 2018. Looking ahead, we believe we are positioned to capitalize on the ongoing positive freight cycle and well positioned for future periods. But, we also expect driver attrition to be a challenge during the remainder of 2018, given the driver demographics in our industry, that will require us to continue to monitor and adjust our operating fleet and means of hiring and retaining drivers accordingly, including their compensation and benefits.

Our results for the three months ended September 30, 2018 were our strongest delivered to date since our acquisition of IDC on July 6, 2017. We delivered our lowest quarterly operating ratio (83.4% and 80.7% non-GAAP adjusted operating ratio) showing continued sequential improvement over the last three quarters. See the “GAAP to Non-GAAP Reconciliation Schedule” above for a reconciliation our non-GAAP adjusted operating ratio. Consistent with our acquisition plan of IDC, over the past year, we have integrated IDC into the Company’s platform and culture, focused on the most profitable customers and lanes, reduced our overall cost structure, significantly reduced the costs and operating limitations by ending many revenue equipment lease obligations,

reduced the average age of our tractors and trailers, and heightened the level of service and safety afforded our customers and drivers. Comparing the third quarter of 2018 to the third quarter of 2017, our first quarter of ownership, the results of these efforts are that our operating ratio has been reduced to our historical and targeted levels and our consolidated operating income has nearly doubled on decreased top line revenues.

Our operating revenues are reviewed regularly on a combined basis across the United States due to the similar nature of our services offerings and related similar base pricing structure. The net trucking revenue and accessorial and other services decrease was mainly the result of a 26.3% decrease in miles driven partially offset by an increase in the rate per loaded mile as compared to 2017.

Fuel surcharge revenues represent fuel costs passed on to customers based on customer specific fuel surcharge recovery rates and billed loaded miles. Fuel surcharge revenues increased primarily as a result of a 23.2% increase in the average Department of Energy ("DOE") diesel fuel prices during the three months ended September 30, 2018 compared to September 30, 2017, as reported by the DOE.

Salaries, wages, and benefits decreased $16.3 million (22.8%), to $55.1 million for the three months ended September 30, 2018 from $71.4 million in the 2017 period. Salaries, wages, and benefits decreased primarily due to the reductions of drivers and non-driver employees and related benefit costs following the initial acquisition of IDC. The overall decrease was partially offset by an increase in driver pay implemented to address the demand for drivers as well as unification of the driver pay offerings following the IDC acquisition, where the Company implemented a driver pay increase effective October 1, 2017. This equated to an approximate average increase of 5% per driver on the driver pay component of salaries, wages, and benefits expense. We also implemented a driver pay increase effective July 7, 2018 equating to an approximate average increase of an additional 5% per driver. We expect driver pay to continue to be inflationary, which could result in higher salaries, wages, and benefits expense in future periods.

Rent and purchased transportation decreased $12.5 million (75.5%), to $4.1 million for the three months ended September 30, 2018 from $16.6 million in the comparable period of 2017. The decrease was attributable to a decrease in amounts paid for revenue equipment and other leased property expense of $3.3 million, a decrease in amounts paid to independent contractors of $4.0 million, and a decrease in brokerage and spotting service costs of $5.2 million. These decreases were due to significant reductions in leased revenue equipment and fewer terminal properties under lease agreements, fewer independent contractors, and the decision to end our brokerage operations following the acquisition of IDC. During the quarter ended September 30, 2018, independent contractors accounted for 1.9% of the total fleet miles compared to 5.8% for the same period of 2017. We expect our rent expense related to revenue equipment and terminal facilities will be reduced for the remainder of 2018 resulting from the expected end of existing revenue equipment lease obligations and return to the historical owned asset-based operating fleet in the near future. In connection with the discontinued non-asset based brokerage services, amounts paid to third party carriers on brokered loads is expected to be negligible for the remainder of 2018.

Fuel decreased $2.2 million (7.6%), to $27.5 million for the three months ended September 30, 2018 from $29.7 million for the same period of 2017. The decrease was due to the combined result of a decrease in miles driven partially offset by a 23.2% increase in the average diesel price per gallon as reported by the DOE. Further, there were general reductions in fuel due to increased fuel economy on our tractor fleet, idle management controls, and operational efficiencies that reduced fuel usage.

Depreciation and amortization decreased $3.7 million (12.7%), to $25.1 million during the three months ended September 30, 2018 from $28.8 million in the same period of 2017. The decrease is mainly attributable to a combined decrease in the amount of tractor and trailer depreciation expense. Tractor depreciation decreased $2.4 million due to a 21.0% decrease in the number of tractors being depreciated partially offset by a 11.3% increase in the average depreciation expense per unit during the three months ended September 30, 2018, compared to the same period of 2017. Compared to 2017, trailer and other equipment depreciation and intangible amortization decreased $1.3 million due mainly to a 20.8% decrease in the number of owned trailers partially offset by a 10.1% increase in the average depreciation expense per unit. In the near future, we expect to end existing revenue equipment lease obligations and return to the historical owned asset-based operating fleet, which we expect will lead to increased depreciation expense.

Operations and maintenance expense decreased $2.6 million (29.0%), to $6.5 million during the three months ended September 30, 2018 from $9.1 million in the same period of 2017. The decrease is due mainly to the decrease in miles driven along with the improvement in the average age of our tractor and trailer fleet year-over-year.

Operating taxes and licenses expense decreased $1.5 million (27.2%), to $3.9 million during the three months ended September 30, 2018 from $5.4 million in 2017, due to a decrease in the number of owned and leased revenue equipment units (tractors and trailers) being licensed.

Insurance and claims expense decreased $1.6 million (26.3%), to $4.4 million for the three months ended September 30, 2018 from $6.0 million in 2017, due to the decrease in miles driven and decreased severity and frequency of claims as compared to the prior year.

Other operating expenses decreased $2.7 million (34.2%), to $5.3 million, during the three months ended September 30, 2018 from $8.0 million in 2017. These decreases are due mainly to decreased variable costs during the three months ended September 30, 2018 due to less miles driven, fewer employees and a decrease in professional services, following the acquisition of IDC.

Gain on the disposal of property and equipment decreased $0.3 million (4.2%), to $7.2 million during the three months ended September 30, 2018 from $7.5 million in the same period of 2017. The decrease was mainly the combined net effect of a decrease of $0.4 million in gains on tractor equipment sales offset by an increase of $0.1 million gains on sales of trailer equipment and other property. The decreases in gains on tractor sales was due to selling more units but at significantly lower gains per unit as a significant portion of the equipment sold had been acquired from IDC and was revalued to fair market value as of the acquisition date. We currently anticipate tractor and trailer equipment sale activity to be approximately 10% less units sold than 2017 during 2018 as we expect to continue to refresh our operating fleet, with total gains for 2018 estimated to be in the range of $24 to $25 million, based on current negotiated used equipment prices and our anticipated timing of equipment sales. Expected gains for 2018 could be materially impacted by timing of actual transactions.

Our effective tax rate decreased to 25.9% from 39.4% for the three months ended September 30, 2018 and 2017, respectively. The decrease as compared to the prior year results from the favorable impact due to the enacted tax rate changes related to the federal Tax Act as well as favorable provision to income tax return adjustments recorded in 2018.

Nine Months Ended September 30, 2018 Compared With the Nine Months Ended September 30, 2017

The Company acquired 100% of the outstanding stock of IDC on July 6, 2017 and therefore the operating results of the Company for the nine months ended September 30, 2018 includes the operating results of IDC. The operating results for the nine months ended September 30, 2017 includes the operating results of IDC for the period of July 6, 2017 to September 30, 2017. Revenues, salaries, wages and benefits, rent and purchased transportation, fuel, depreciation and amortization, and gain on disposal of property and equipment in 2018 are impacted as further explained below.

Operating revenue increased $22.2 million (5.0%), to $463.8 million for the nine months ended September 30, 2018 from $441.6 million for the nine months ended September 30, 2017. The increased revenue was the result of the combined effect of an increase in trucking and accessorial and other revenues of $7.6 million (1.9%) and a $14.6 million (28.8%) increase in fuel surcharge revenue from $50.7 million in 2017 to $65.3 million in 2018. Operating revenues (the total of trucking and fuel surcharge revenue) are primarily earned based on loaded miles driven in providing truckload services. The number of loaded miles is affected by general freight supply and demand trends and the number of revenue earning equipment vehicles (tractors). The number of revenue earning equipment vehicles (tractors) is directly affected by the number of available company drivers and independent contractors providing capacity to us. During 2017, we acquired IDC and the additional drivers and operations created initial growth to our legacy operating fleet but operational decisions to right-size our fleet, remove less profitable customer relationships, and end the brokerage division impacted our operating results in the periods following the acquisition in 2018. During the nine months ended September 30, 2018, we enjoyed a favorable rate environment and the rate per mile charged increased.

The net trucking revenue and accessorial and other services increase was primarily the result of the net effect of a large increase in freight rate per loaded mile partially offset by a 4.9% decrease in miles and the elimination of revenue from non-asset based brokerage services revenue ($7.6 million) as compared to 2017.

Fuel surcharge revenues represent fuel costs passed on to customers based on customer specific fuel surcharge recovery rates and billed loaded miles. Fuel surcharge revenues increased primarily as a result of a 22.3% increase in the average DOE diesel fuel prices during the nine months ended September 30, 2018 compared to September 30, 2017, as reported by the DOE.

Salaries, wages, and benefits increased $5.7 million (3.4%), to $174.7 million for the nine months ended September 30, 2018 from $169.0 million in the 2017 period. Salaries, wages, and benefits increased primarily due to the addition of IDC driver and non-driver employees and related benefit costs initially following the acquisition prior to the partial offset of more ratable reductions in these same areas during the periods in 2018. Further to address the demand for drivers as well as unification of the driver pay offerings following the IDC acquisition, the Company implemented a driver pay increase effective October 1, 2017. This equated to an approximate average increase of 5% per driver on the driver pay component of salaries, wages, and benefits expense.

Rent and purchased transportation decreased $5.6 million (26.5%), to $15.7 million for the nine months ended September 30, 2018 from $21.3 million in the comparable period of 2017. The net decrease was attributable to a decrease in amounts paid to third party carriers on brokered loads of $5.9 million and a decrease of $1.1 million in amounts paid for operating leases of revenue equipment and amounts paid to independent contractors, offset partially by an increase of $1.4 million in amounts paid for property rents. The decreases in brokerage, operating leases of revenue equipment, and independent contractors were due to ending the acquired brokerage operations, significant reductions in leased revenue equipment and fewer independent contractors following the initial increases resulting from the acquisition of IDC. Additional terminal properties under lease agreements associated with the IDC acquisition accounted for the increase in property rents. During the nine months ended September 30, 2018, independent contractors accounted for 2.3% of the total fleet miles compared to 3.3% for the same period of 2017.

Fuel increased $11.6 million (15.7%), to $85.3 million for the nine months ended September 30, 2018 from $73.7 million for the same period of 2017. The increase was due primarily to a 22.3% increase in the average diesel price per gallon as reported by the DOE. This increase was partially offset by a 3.9% decrease in miles driven and further reductions due to increased fuel economy on our tractor fleet, idle management controls, and operational efficiencies that reduced fuel usage.

Depreciation and amortization increased $1.2 million (1.6%), to $75.5 million during the nine months ended September 30, 2018 from $74.3 million in the same period of 2017. Tractor depreciation increased $1.2 million due to an 9.4% increase in the average depreciation expense per unit partially offset by a 6.5% decrease in the number of tractors being depreciated during the nine months ended September 30, 2018, compared to the same period of 2017.

Operations and maintenance expense decreased $1.0 million (4.5%), to $21.0 million during the nine months ended September 30, 2018 from $22.0 million in the same period of 2017. The decrease is mainly due to the decrease in miles driven.

Operating taxes and licenses expense increased $0.2 million (1.6%), to $12.0 million during the nine months ended September 30, 2018 from $11.8 million in 2017, due to offsetting licensing and tax impacts.

Insurance and claims expense decreased $0.4 million (3.6%), to $12.9 million for the nine months ended September 30, 2018 from $13.3 million in 2017, due to decreased severity and frequency of claims as compared to the prior period.

Other operating expenses decreased $1.6 million (8.5%), to $17.1 million, during the nine months ended September 30, 2018 from $18.7 million in 2017. These decreases are due mainly to decreased variable costs during the nine months ended September 30, 2018 due to less miles driven, fewer employees and a decrease in professional services, following the acquisition of IDC.

Gains on the disposal of property and equipment decreased $4.4 million (22.3%), to $15.4 million during the nine months ended September 30, 2018 from $19.8 million in the same period of 2017. The decrease was mainly the combined effect of a decrease of $3.1 million in gains on trailer equipment sales and a decrease of $1.3 million decrease in gains on sales of tractor equipment and other property. The decreases in gains on trailer and tractor sales was due to selling more tractors and a comparable amount of trailers but at significantly lower gains per unit as a significant portion of the equipment sold had been acquired from IDC and was revalued to fair market value as of the acquisition date.

Liquidity and Capital Resources

The growth of our business requires significant investments in new revenue equipment. Historically, except for acquisitions, we have been debt-free, funding revenue equipment purchases with cash flow provided by operating activities and proceeds from sales of used equipment. Our primary source of liquidity is cash flow provided by operating activities and proceeds from the sale of used equipment. We entered into a line of credit during the fourth quarter of 2013, as amended on August 31, 2018, described below, to partially finance an acquisition, including the payoff of debt we assumed. At September 30, 2018, we had $120.0 million in cash and cash equivalents, no outstanding debt, and $90.8 million available borrowing capacity on the Credit Agreement.

Agreement from $20 million to $30 million, and (iv) extends the maturity of the Credit Agreement to August 31, 2021, subject to the Borrower’s ability to terminate the commitment at any time at no additional cost to the Borrower.

Cash flow provided by operating activities during the nine months ended September 30, 2018 was $108.6 million compared to $77.2 million during the same period of 2017. Cash flow provided by operating activities was 23.4% of operating revenues for the nine months ended September 30, 2018 compared with 17.5% for the same period of 2017.

Cash used in investing activities was $42.1 million during the nine months ended September 30, 2018 compared to cash flows used in investing activities of $115.1 million during the comparative 2017 period, or a decrease in cash used of $73.0 million. The net decrease in cash used was primarily the result of a decrease in funds used to acquire IDC ($87.6 million) which occurred in 2017 and $1.2 million increase in cash provided by changes in other assets, which were partially offset by an increase in the net cash used for property and equipment purchases ($15.8 million). We currently estimate a total of approximately $45 to $50 million in net capital expenditures for the calendar year 2018.

Cash used in financing activities increased $1.7 million during the nine months ended September 30, 2018 compared to the same period of 2017 due primarily to $25.1 million additional cash used for repurchases of common stock as 1.4 million shares were repurchased during the nine months ended September 30, 2018 compared to none during the same period of 2017, partially offset by a $23.3 million reduction in cash used to pay off debt assumed related to the IDC acquisition which occurred in 2017. There were no borrowings on the Credit Agreement during the nine months ended September 30, 2018.

We have a stock repurchase program with 6.9 million shares remaining authorized for repurchase under the program as of September 30, 2018 and the program has no expiration date. There were 1.4 million shares repurchased in the open market during the nine months ended September 30, 2018 and no shares were repurchased during the nine months ended September 30, 2017. Shares repurchased were accounted for as treasury stock. Repurchases are expected to continue from time to time, as determined by market conditions, cash flow requirements, securities law limitations, and other factors, until the number of shares authorized have been repurchased, or until the authorization is terminated. The share repurchase authorization is discretionary and has no expiration date.

We paid $5.0 million and $21.8 million for income taxes, net of refunds, in the nine months ended September 30, 2018 and September 30, 2017, respectively due to being in an income tax receivable position at the end of both 2017 and 2016 and the impacts of the Tax Act changes. Management believes we have adequate liquidity to meet our current and projected needs in the foreseeable future. Management believes we will continue to have significant capital requirements over the long-term, which we expect to fund with cash flows provided by operating activities, proceeds from the sale of used equipment and available capacity on the Credit Agreement.

Off-Balance Sheet Transactions

Our liquidity or financial condition is not materially affected by off-balance sheet transactions. We are a party to certain operating leases related to our revenue equipment and terminal facilities. Operating lease expense during the nine months ended September 30, 2018 was $8.3 million.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General

We are exposed to market risk changes in interest rates during periods when we have outstanding borrowings and from changes in commodity prices, primarily fuel and rubber. We do not currently use derivative financial instruments for risk management purposes, although we have used instruments in the past for fuel price risk management, and do not use them for either speculation or trading. Because substantially all of our operations are confined to the United States, we are not directly subject to a material foreign currency risk.

Interest Rate Risk

We had no debt outstanding at September 30, 2018 although we had $90.8 million available borrowing capacity on our Credit Agreement. Borrowings under the Credit Agreement can either be, at Borrower's election, (i) one-month or three-month LIBOR (Index) plus a spread between 0.700% and 0.900%, based on the Company's consolidated funded debt to adjusted EBITDA ratio or (ii) Prime (Index) plus 0.0%. The borrowing rate available on the Credit Agreement at September 30, 2018 was 3.014%. Increases in interest rates could impact our interest expense on future borrowings.

Commodity Price Risk

We are subject to commodity price risk primarily with respect to purchases of fuel and tires (rubber). We have fuel surcharge agreements with most customers that enable us to pass through most long-term price increases therefore limiting our exposure to commodity price risk. Fuel surcharges that can be collected do not always fully offset an increase in the cost of fuel as we are not able to pass through fuel costs associated with out-of-route miles, empty miles, and tractor idle time. Additionally, because our fuel surcharge recovery lags behind changes in fuel prices, our fuel surcharge recovery may not capture the increased costs we pay for fuel, especially when prices are rising. Based on our actual fuel purchases for 2017, assuming miles driven, fuel surcharges as a percentage of revenue, percentage of empty and out-of-route miles, and miles per gallon remained consistent with 2017 amounts, a $1.00 increase in the average price of fuel per gallon, year over year, would decrease our income before income taxes by approximately $6.3 million in 2018. We use a significant amount of tires to maintain our revenue equipment. We are not able to pass through 100% of price increases from tire suppliers due to the severity and timing of increases and current rate environment. Historically, we have sought to minimize tire price increases through bulk tire purchases from our suppliers. Based on our expected tire purchases for 2018, a 10% increase in the price of tires would increase our tire purchase expense by $1.5 million, resulting in a corresponding decrease in income before income taxes.


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures– We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) to ensure that material information relating to us, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Accounting and Financial Officer), of the effectiveness of the design and operations of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to material weaknesses in our internal control over financial reporting described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, our disclosure controls and procedures were not effective as of September 30, 2018. We have continued to implement our remediation plan through the nine months ended September 30, 2018, as noted below, and with continued effective operation of those internal controls through December 31, 2018 we expect that the previously noted material weaknesses will have been fully addressed.

Notwithstanding the identified material weaknesses, management believes the consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with U.S. generally accepted accounting principles.

Changes in Internal Control Over Financial Reporting – There have been no changes in our internal control over financial reporting, except for the implementation of additional controls in connection with our remediation plan, as discussed below, that occurred during the quarter ended September 30, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Remediation Plan - We are committed to remediating the control deficiencies that gave rise to the material weaknesses disclosed in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 by implementing changes to our

internal control over financial reporting in accordance with our remediation plan. Our remediation plan was developed with the oversight of the Audit Committee of the Board of Directors.

In accordance with our remediation plan, we have and will continue to enhance the communication of our internal testing approach, including related procedures and assessment of changes, documentation, and possible expansion of human resources and usage of external resources, for select controls. Additionally, we will implement controls to (i) address and maintain documentation of completeness and accuracy of system generated information used to support the operation of the controls and (ii) improve user access and segregation of duties in relation to general controls over technology.

As of September 30, 2018, we have improved the documentation of our internal controls related to management's review of financial statement accounts which includes maintaining documentation of (i) the review of non-standard manual journal entries and (ii) the level of precision and materiality of review procedures performed. We have implemented more frequent and robust monitoring and testing of user access and segregation of duties within our information systems. We have implemented changes to address information technology general controls, specifically in the areas of user access and change management. We have increased our communication regarding the importance of internal controls and testing within our organization and with our Audit Committee. We have updated the design of our internal controls over the allocation of purchase price and valuation of assets acquired and liabilities assumed, specifically regarding leases, in order to leverage these controls for future acquisitions. We have engaged a third-party consultant and completed updates and enhanced the documentation of our internal controls and implemented improvements to our risk assessment and ongoing internal testing of internal controls. We expect to further enhance and continue to test the operation of our internal controls as a result of this review and overall remediation plan over the remainder of 2018.

PART II

ITEM 1. LEGAL PROCEEDINGS

We are a party to ordinary, routine litigation and administrative proceedings incidental to our business. These proceedings primarily involve claims for personal injury, property damage, cargo, and workers’ compensation incurred in connection with the transportation of freight. We maintain insurance to cover liabilities arising from the transportation of freight for amounts in excess of certain self-insured retentions.

ITEM 1A. RISK FACTORS

You should refer to Item 1A of our Annual Report (Form 10-K) for the year ended December 31, 2017, under the caption “Risk Factors” for specific details on the following factors that are not within the control of the Company and could affect our financial results. These risks and uncertainties have the potential to materially affect our business, financial condition, and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Repurchase of common stock



	(a) Total number of shares purchased	(b) Average price paid per share		(c) Total number of shares purchased as part of publicly announced plans or programs	(d) Maximum number of shares that may yet be purchased under the plans or programs (1)
					7,126,687
July 1, 2018 - July 31, 2018	229,156	$	18.16	229,156	6,897,531
August 1, 2018 - August 31, 2018	—	$	—	—	6,897,531
September 1, 2018 - September 30, 2018	—	$	—	—	6,897,531
Total	229,156			229,156

(1) On November 16, 2015, we announced our share repurchase plan for the purchase of up to 4,750,000 shares. On May 11, 2018, we announced the addition of 5,000,000 shares to the remaining shares authorized for purchase under our share repurchase plan. The share repurchase plan has no expiration date and will remain in effect until the number of authorized shares have been repurchased, or until the authorization is terminated.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Exhibits



	2.1		Stock Purchase Agreement (Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC a copy of any omitted schedule upon request by the SEC.) Incorporated by reference to Exhibit 2.1 of the Company's Form 10-Q for the quarter ended September 30, 2017, dated November 9, 2017.
	3.1		Articles of Incorporation, as amended. Incorporated by reference to Exhibit 3.1 of the Company's Form 10-Q for the quarter ended September 30, 2017, dated November 9, 2017.
	3.2		Amended and Restated Bylaws. Incorporated by reference to Exhibit 3.2 of the Company's Form 10-Q for the quarter ended September 30, 2017, dated November 9, 2017.
	10.1*		First Amendment to Credit Agreement, dated August 31, 2018, by and between Wells Fargo Bank, National Association and Heartland Express, Inc. of Iowa, Heartland Express, Inc., A&M Express, Inc., Heartland Express, Maintenance Services, Inc., and Heartland Express Services, Inc.
	31.1*		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
	31.2*		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
	32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2**		Certification of the Principal Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	101.INS		XBRL Instance Document.
	101.SCH		XBRL Taxonomy Extension Schema Document
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
	101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
	101.LAB		XBRL Taxonomy Extension Label Linkbase Document
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

*Filed herewith.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned thereunto duly authorized.



		HEARTLAND EXPRESS, INC.

Date:	November 5, 2018	By: /s/ Christopher A. Strain
		Christopher A. Strain
		Vice President of Finance
		and Chief Financial Officer
		(Principal Accounting and Financial Officer)

Exhibit No. 10.1

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated August 31, 2018, and is by and between the Persons signatory hereto as borrower (“Borrower”) (individually, collectively, severally and jointly and severally, each a “Guarantor” and collectively the “Guarantors”), the Persons signatory hereto as guarantors and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

RECITALS

WHEREAS, Borrower is the successor by merger to Gordon Trucking, Inc. and to Interstate Distributor Co. and is party to that certain Credit Agreement, entered into as of November 11, 2013, between Borrower, Guarantors and Bank and the Joinder Agreement dated as of August 30, 2017, entered into by and between Interstate Distributor Co., as a Joining Guarantor, in favor of Bank (together, the “Credit Agreement”); and

WHEREAS, Borrower, Guarantors and Bank desire to amend the Credit Agreement on the terms and subject to the conditions set forth in this Amendment.

NOW, THEREFORE, in consideration of the above premises and for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Credit Agreement shall be amended as follows:

1.Definitions. Capitalized terms used and not defined in this Amendment shall have the respective meanings given them in the Credit Agreement.

2. Amendments to the Credit Agreement. The Credit Agreement is hereby amended as follows:

(i)The heading to Section 1.1 and Section 1.1(a) are hereby amended and restated in their entirety to read as follows:

SECTION 1.1. LINE OF CREDIT.

(a) Line of Credit. Subject to the terms and conditions of this Agreement, Bank hereby agrees to make advances to Borrower from time to time (each a “Line of Credit Advance”, and the aggregate principal amount of all Line of Credit Advances outstanding at any time, the “Line of Credit Loan”) up to and including the Termination Date, not to exceed at any time an aggregate outstanding principal amount that is more than the applicable Line of Credit Maximum Borrowing Amount in effect from time to time (the “Line of Credit”). The proceeds of each Line of Credit Advance shall be used on or after the date on which each of the conditions precedent set forth in Section 3.1 either have been

waived by Bank or satisfied or on the date which the initial Line of Credit Advance is made (whichever occurs first, the “Closing Date”): (i) to pay the fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents and the transactions contemplated hereby and thereby and (ii) consistent with the terms and conditions hereof, working capital and lawful and general corporate purposes for Obligated Group Members, including without limitation, to finance capital expenditures and Permitted Acquisitions (provided that in no event shall any part of the proceeds of any loans made to Borrowers under this Agreement be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors). Borrower's obligation to repay Line of Credit Advances and the Line of Credit Loan shall be evidenced by the Line of Credit Note, all terms of which are incorporated herein by this reference.

(ii)The first sentence of Section 1.1(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

(b) As a subfeature under the Reducing Line of Credit, Bank agrees from time to time prior to the Termination Date to issue or cause an Affiliate of Bank to issue standby letters of credit for the account of Borrower (each, a “Letter of Credit” and collectively, “Letters of Credit”); provided, however, that the aggregate amount available to be drawn under all outstanding Letters of Credit shall not at any time exceed Thirty Million Dollars ($30,000,000.00).

(iii)Section 1.1(d) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

(d) Borrowing and Repayment. Borrower may, from time to time prior to the Termination Date, borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions contained herein or in the Line of Credit Note, including without limitation, the limitations on prepayment set forth in Section 1.1(f); provided however, that the sum of the outstanding principal amount of the Line of Credit Loan and the LC Exposure shall at no time exceed the Line of Credit Maximum Borrowing Amount, and notwithstanding anything to the contrary contained in this Agreement, Bank shall have no obligation to make any Line of Credit Advance or issue or cause to be issued any Letter of Credit, if after making such Line of Credit Advance or issuing such Letter of Credit, the sum of the outstanding principal amount of Line of Credit Loan and the LC Exposure would exceed the applicable Line of Credit Maximum Borrowing Amount. As used herein and in the Line of Credit Note, “Line of Credit Maximum Borrowing Amount” means (i) $100,000,000.00, initially and through the day immediately prior to the Termination Date and (ii) $0.00 on and after the Termination Date, provided that the “Line of Credit Maximum Borrowing Amount” shall be (y) $200,000,000.00

beginning on the effective date of the Facility Increase requested by Borrower and approved by Bank in accordance with Section 1.1(g) and thereafter through the day immediately prior to the Termination Date and (z) $0.00 on and after the Termination Date. If the sum of the outstanding principal amount of the Line of Credit Loan and the LC Exposure on any date is greater than the Line of Credit Maximum Borrowing Amount, Borrower shall make a principal payment on the Line of Credit Loan on such date in an amount sufficient to reduce the sum of the then outstanding principal amount of the Line of Credit Loan and the LC Exposure to an amount not greater than Line of Credit Maximum Borrowing Amount. Each payment of principal shall be accompanied by payment of (i) accrued interest on the principal amount paid and (ii) fees required under Section 1.1 (f), if any. The outstanding principal balance of the Line of Credit Loan shall be due and payable in full on the Termination Date.

(iv)The Credit Agreement is hereby amended by adding a new clause (g) to Section 1.1 that reads as follows:

(g) Accordion Feature. At any time prior to the Termination Date, Borrower may make a one-time request to increase the Line of Credit Maximum Borrowing Amount up to not more than $200,000,000.00 (the “Facility Increase”) by written notice in substantially the form of Schedule 1.1 attached (the “Increase Request”). The Increase Request shall (a) indicate the proposed effective date of the Facility Increase which shall be a date not less than 30 days after the date the Increase Request is delivered to Bank, the amount to which Borrower requests the Line of Credit Maximum Borrowing Amount be increased and such additional information as reasonably requested by Bank and (b) be accompanied by such supporting materials as reasonably requested by Bank. The Facility Increase will not be permitted if an Event of Default has occurred and is continuing. For greater certainty, the Facility Increase is uncommitted and Bank may decline the Increase Request in its sole discretion. Not later than 21 days after receipt of the Increase Request, Bank will advise Borrower in writing as to whether or not Bank has agreed to the Facility Increase and, if Bank has agreed to the Facility Increase, Bank will advise Borrower in writing of the date the Facility Increase is to take effect, which shall be no later than 30 days after the date the Increase Request is delivered to Bank.

(v)Section 1.2(a) of the Credit Agreement is amended and restated in its entirety to read as follows:

(a) Interest Rate. The principal balance of the Line of Credit Loan outstanding from time to time shall bear interest (computed on the basis of a 360-day year, actual days elapsed), and the amount of each drawing paid under any Letter of Credit shall bear interest (computed on the basis of a 360- day year, actual days elapsed) from the date such drawing is paid to the date such amount is fully repaid by Borrower, either (i) at a fluctuating rate per annum that is zero

percent (0.00)% above the Prime Rate in effect from time to time, or (ii) at a fixed rate per annum determined by Bank to be the Applicable Rate plus LIBOR in effect on the first day of the applicable LIBOR Period. When interest is determined in relation to the Prime Rate, each change in the rate of interest hereunder shall become effective on the date each Prime Rate change is announced within Bank. With respect to each interest rate selection by Borrower, Bank is hereby authorized to note the date, principal amount, interest rate applicable thereto, and, if applicable, the LIBOR Period applicable thereto and any payments made thereon on Bank's books and records (either manually or by electronic entry) and/or on any schedule attached to the Line of Credit Note, which notations shall be prima facie evidence of the accuracy of the information noted.

(vi)Section 1.2(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

(b) Selection of Interest Rate Options. Subject to the provisions herein regarding LIBOR Periods and the prior notice required for the selection of a LIBOR interest rate:

(i)at any time any portion of the Line of Credit Loan bears interest determined in relation to LIBOR for a LIBOR Period, it may be continued by Borrower at the end of the LIBOR Period applicable thereto so that all or a portion thereof bears interest determined in relation to the Prime Rate or to LIBOR for a new LIBOR Period designated by Borrower,

(ii)

(iii)at any time any portion of the Line of Credit Loan bears interest determined in relation to the Prime Rate, Borrower may convert all or a portion thereof so that it bears interest determined in relation to LIBOR for a LIBOR Period designated by Borrower and

(iv)at the time a Line of Credit Advance is made hereunder,

Borrower may choose to have all or a portion thereof bear interest determined in relation to the Prime Rate or to LIBOR for a LIBOR Period designated by Borrower. To select an interest rate option hereunder determined in relation to LIBOR for a LIBOR Period, Borrower shall give Bank notice thereof (“Interest Rate Selection Notice”) that is received by Bank prior to 11:00 a.m. Des Moines, Iowa time on a Business Day prior to the first day of the LIBOR Period, or at a later time during such Business Day if Bank, at its sole option but without obligation to do so, accepts Borrower’s notice and quotes a fixed rate to Borrower. Such Interest Rate Selection Notice shall specify: (A) the interest rate option selected by Borrower, (B) the principal amount subject thereto, and (C) for each LIBOR selection, the length of the applicable LIBOR Period. If

Bank has not received such Interest Rate Selection Notice in accordance with the foregoing before a Revolving Line of Credit Advance is made hereunder or before the end of any LIBOR Period, Borrower shall be deemed to have made a Prime Rate interest selection for the Revolving Line of Credit Advance or the principal amount to which such LIBOR Period applied. Any such Interest Rate Selection Notice may be given by telephone (or such other electronic method as Bank may permit) so long as it is given in accordance with the foregoing and, with respect to each LIBOR selection, if requested by Bank, Borrower provides to Bank written confirmation thereof not later than three Business Days after such notice is given. Borrower shall reimburse Bank immediately upon demand for any loss or expense (including any loss or expense incurred by reason of the liquidation or redeployment of funds obtained to fund or maintain a Line of Credit Advance or Line of Credit Loan as a LIBOR Loan) incurred by Bank as a result of the failure of Borrower to accept or complete a Line of Credit Advance or Line of Credit Loan as a LIBOR Loan after making a request therefor. Any reasonable, good faith determination of such amounts by Bank shall be conclusive and binding upon Borrower.

(vii)Section 1.2(d) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

(d) Swap Agreement Adjustments. Notwithstanding anything to the contrary set forth herein or in the Line of Credit Note, at any time when an interest rate swap transaction between Borrower and Bank (a “Swap”) is in effect in connection with the Line of Credit Loan, the following revisions hereto shall apply with respect to an amount of the outstanding principal balance of the Line of Credit Loan equal to the lesser of (i) the outstanding principal balance of this Line of Credit Loan and (ii) the notional amount of the Swap (the “Hedge Portion”):

(i)With respect to the Hedge Portion, no Prime Rate interest rate option or selection shall be available.

(ii)With respect to the Hedge Portion, the following definition of "LIBOR Period" shall apply:

"LIBOR Period" means a period of one (1) month, with the understanding that (i) the initial LIBOR Period shall commence on the later of (A) the effective date of the Swap, and (B) if the outstanding principal balance of the Line of Credit Loan is less than the applicable Hedge Portion, the date on which the outstanding principal balance of the Line of Credit Loan equals or exceeds the applicable Hedge Portion, and shall continue up to, but

shall not include, the first day of the of the immediately following month, (ii) thereafter, each LIBOR Period shall commence automatically, without notice to or consent from Borrower, on the first day of each month and continue up to, but shall not include, the first day of the immediately following month, (iii) if any LIBOR Period is scheduled to commence on a day which is not a New York Business Day, then such LIBOR Period shall commence on the next succeeding New York Business Day (and the preceding LIBOR Period shall continue up to, but shall not include, the first day of such LIBOR Period), unless the result of such extension would be to cause such LIBOR Period to begin in the next calendar month, in which event such LIBOR Period shall commence on the immediately preceding New York Business Day (and the preceding LIBOR Period shall continue up to, but shall not include, the first day of such LIBOR Period), and (iv) if, on the first day of the last LIBOR Period applicable to the Hedge Portion, the remaining term of the Line of Credit is less than one (1) month, said LIBOR Period shall be in effect only until the Line of Credit Maturity Date. A LIBOR Period that commences with respect to a Hedge Portion hereunder shall continue until its scheduled expiration date in accordance with the foregoing notwithstanding the termination of the Swap during such LIBOR Period.

Borrower understands and acknowledges that (i) any Swap constitutes an independent agreement between Borrower and Bank and will be unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of the Line of Credit Loan, except as otherwise expressly provided in the Swap contract, (ii) nothing herein or in the Line of Credit Note shall be construed as a modification of a Swap or create an obligation to amend a Swap, (iii) Borrower may incur losses or reductions in benefits related to differences between any economic terms and characteristics of this Agreement, the Line of Credit Loan or the Line of Credit Note and those of a related Swap (including, without limitation, differences with respect to maturity dates, payment dates and methods for determining interest rates and differences between borrowings hereunder and the notional amount of a Swap), and Bank is under no obligation to ensure that there are no differences or that differences will not arise hereafter, including, without limitation, differences between usage hereunder and the notional amount of a Swap, and (iv) Bank has no obligation to modify, renew or extend the Line of Credit Maturity Date to match the maturity date of a Swap.

(viii)The introduction to Section 1.2(e) and clause (i) of Section 1.2(e) of the Credit Agreement are hereby amended and restated in their entirety, respectively, to read as follows:

(e) Additional LIBOR Provisions. Notwithstanding anything to the contrary contained in this Agreement or the Line of Credit Note:

(i)If Bank determines in good faith (which determination shall be conclusive, absent manifest error) that adequate and fair means do not exist for ascertaining the LIBOR rate because (x) United States dollar deposits of sufficient amount and maturity for advance hereunder are not available to Bank in the London Interbank Eurodollar market in the ordinary course of business or (y) of circumstances affecting the London Interbank Eurodollar market or (z) the rate of interest used by Bank to determine LIBOR is not available or published on a current basis, Bank shall promptly notify Borrower in writing of an alternate calculation of the LIBOR rate made in Bank’s sole reasonable discretion.

(ix)The Credit Agreement is hereby amended by adding a new clause (h) to Section 1.2 to that reads as follows:

(h) LIBOR Successor Rate. Notwithstanding anything to the contrary in this Agreement or in the Line of Credit Note:

(i)if Bank reasonably determines (which determination shall be conclusive, absent manifest error), that:

(A)the circumstances described in clause (e)(i) or (e)(ii) or (e)(iii) above are unlikely to be temporary, or

(B)the administrator of the London Interbank Offered Rate or a foreign or domestic governmental authority having jurisdiction over Bank has made a public statement identifying a specific date after which the London Interbank Offered Rate shall no longer be made available or used for determining the interest rate of loans (such specific date, the “Scheduled Unavailability Date”),

then, reasonably promptly after such determination by Bank, Bank and Borrower may amend this Agreement to replace LIBOR with an alternate benchmark rate (including any mathematical or other adjustments to the benchmark (if any) incorporated therein) and the applicable or new Applicable Rate (any such proposed rate, a "LIBOR Successor Rate"), together with any proposed LIBOR Successor Rate Conforming Changes (as defined below), and any such amendment shall become effective upon execution thereof by all parties to this Agreement as provided in Section 7.5.

(ii)If no LIBOR Successor Rate has been determined and the circumstances under clause (h)(i) above exist or the Scheduled Unavailability Date has occurred (as applicable), Bank will promptly so notify Borrower. Thereafter, the obligation of Bank to make or maintain LIBOR Loans and the option of Borrower to select any LIBOR interest rate shall be suspended, (to the extent of the affected LIBOR Loans or LIBOR Periods). Upon receipt of such notice from Bank, any pending request for a Line of Credit Advance of, conversion to or continuation of LIBOR Loans (to the extent of the affected LIBOR Loans or LIBOR Interest Periods) shall be revoked.

Notwithstanding anything else herein, any definition of LIBOR Successor Rate shall provide that in no event shall such LIBOR Successor Rate be less than zero for purposes of this Agreement, “LIBOR Successor Rate Conforming Changes” means, with respect to any proposed LIBOR Successor Rate, any conforming changes to the definition of “Prime Rate,” “LIBOR Period,” and “Applicable Rate”, timing and frequency of determining rates and making payments of interest and other administrative matters as may be appropriate, in the discretion of Bank, to reflect the adoption of such LIBOR Successor Rate and to permit the administration thereof by Bank in a manner substantially consistent with market practice (or, if Bank determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate exists, in such other manner of administration as Bank determines in consultation with Borrower).

(x)Clauses (a) and (b) of Section 1.3 of the Credit Agreement are hereby amended, respectively, to read as follows:

(a) Unused Commitment Fee. Borrower shall pay to Bank a fee at a rate per annum equal to the Applicable Rate (computed on the basis of a 360-day year, actual days elapsed) times the daily unused amount of the Line of Credit, which fee shall be due and payable by Borrower in arrears within ten (10) days after each monthly billing is sent by Bank.

(b) Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the issuance of each Letter of Credit and each renewal of such Letter of Credit, if any, at a rate per annum equal to the Applicable Rate times the face amount of such Letter of Credit and (ii) fees and charges upon the payment or negotiation of each drawing under any Letter of Credit and fees upon the occurrence of any other activity with respect to any Letter of Credit (including without limitation, the transfer, amendment or cancellation of any Letter of Credit) determined in accordance with Bank's standard fees and charges then in effect for such activity.

The foregoing fees shall be paid to Bank even if a Letter of Credit is or was issued by an Affiliate of Bank.

(xi)Clause (a) of Section 4.9 of the Credit Agreement is hereby amended to read as follows:

(a) Tangible Net Worth as of the end of each Fiscal Quarter at an amount that is not less than $250,000,000.00, with “Tangible Net Worth” defined as the aggregate of Obligated Group Members’ total stockholders’ equity less any intangible assets and less any loans or advances to, or investments in, any Affiliates or Persons related to any Obligated Group Member, that are not eliminated in consolidation, and less all Permitted Investments.

(xii)Section 7.12(a) of the Credit Agreement is amended to restate the definitions of “Business Day”, “Guarantor”, “LIBOR”, “LIBOR Period”, “Obligations”, “Prime Rate”, “Line of Credit Maturity Date”, “Reducing Line of Credit”, “Reducing Line of Credit Advance”, “Reducing Line of Credit Loan”, “Reducing Line of Credit Maximum Borrowing Amount”, and “Reducing Line of Credit Note” and to add new definitions of Applicable Rate”, “LIBOR Loan”, “Line of Credit”, “Line of Credit Advance”, “Line of Credit Loan”, “Line of Credit Maximum Borrowing Amount”, “Line of Credit Note”, “London Business Day”, and “New York Business Day”, respectively, as follows:

“Applicable Rate” means, for any day, with respect to any LIBOR Loan, Letter of Credit Fee and Non-Usage Fee, as the case may be, the applicable rate per annum set forth below, based upon the level into which the Debt to Adjusted EBITDA Ratio then falls in accordance with the following table:



Pricing Level	Debt to Adjusted EBITDA Ratio	Letter of Credit Fee and Non-Usage Fee	LIBOR Loan
Level 1	equal to or less than 0.50 to 1.00	.0725%	0.70%
Level 2	greater than 0.50 to 1.00 but equal to or less than 1.25 to 1.00	0.125%	0.80%
Level 3	greater than 1.25 to 1.00 or greater	0.175%	0.90%

Any increase or decrease in the Applicable Rate resulting from a change in the Debt to Adjusted EBITDA Ratio shall be effective on the first Business Day of the Fiscal Quarter following the Fiscal Quarter during which Bank receives and reviews the consolidated financial statements delivered pursuant to Section 4.3(a) or (b) and the completed compliance certificate delivered pursuant to Section 4.3(d).

“Guarantor” means A & M Express, Inc., Parent, Heartland Express Maintenance Services, Inc., Heartland Express Services, Inc., and each other Person that has executed a Guaranty Agreement in form and substance satisfactory to Bank.

“LIBOR” means, for the purpose of calculating effective rates of interest for loans making reference to LIBOR Periods, the rate of interest per annum determined by Bank based on the rate for United States dollar deposits for delivery on the first day of each LIBOR Period for a period approximately equal to such LIBOR Period as published by the ICE Benchmark Administration Limited, a United Kingdom company, at approximately 11:00 a.m., London time, two London Business Days prior to the first day of such LIBOR Period (or if not so published, then as determined by Bank from another recognized source or interbank quotation); provided, however, that if LIBOR determined as provided above would be less than zero percent (0.0%), then LIBOR shall be deemed to be zero percent (0.0%).

“LIBOR Loan” means any portion of the Line of Credit Loan that bears interest determined or related to LIBOR for a LIBOR Period selected by Borrower.

"LIBOR Period" means a period commencing on a New York Business Day and continuing for 1 or 3 month periods (as designated by Borrower) during which all or a portion of the outstanding principal balance of this Note bears interest determined in relation to LIBOR; provided however, that (i) no LIBOR Period may be selected for a principal amount less than $100,000.00, (ii) if the day after the end of any LIBOR Period is not a New York Business Day (so that a new LIBOR Period could not be selected by Borrower to start on such day), then such LIBOR Period shall continue up to, but shall not include, the next Business Day after the end of such LIBOR Period, unless the result of such extension would be to cause any immediately following LIBOR Period to begin in the next calendar month in which event the LIBOR Period shall continue up to, but shall not include, the New York Business Day immediately preceding the last day of such LIBOR Period, and (iii) no LIBOR Period shall extend beyond the scheduled maturity date hereof.

“Line of Credit” has the meaning specified in Section 1.1(a). Each reference in this Agreement to Reducing Line of Credit, including without limitation, each reference thereto in any other term defined in this Agreement, means the Line of Credit as so defined and the definition of “Reducing Line of Credit” is amended and restated accordingly.

“Line of Credit Advance” has the meaning specified in Section 1.1(a). Each reference in this Agreement to Reducing Line of Credit Advance, including without limitation, each reference thereto in any other terms defined in this Agreement, means a Line of Credit Advance as so defined and the definition of “Reducing Line of Credit Advance” is amended and restated accordingly.

“Line of Credit Loan” has the meaning specified in Section 1.1(a). Each reference in the Agreement to Reducing Line of Credit Loan, including without limitation, each reference thereto in any other term defined in this Agreement, means the Line of Credit Loan as so defined and the definition of “Reducing Line of Credit Loan” is amended and restated accordingly.

“Line of Credit Maturity Date” means August 31, 2021. Each reference in this Agreement to the Reducing Line of Credit Maturity Date, including without limitation, each reference thereto in any other term defined in this Agreement, means the Line of Credit Maturity Date as so defined and the definition of “Reducing Line of Credit Maturity Date” is amended and restated accordingly.

“Line of Credit Maximum Borrowing Amount” has the meaning specified in Section 1.1(d). Each reference in the Agreement to Reducing Line of Credit Maximum Borrowing Amount, including without limitation, each reference thereto in any other term defined in this Agreement, means the Line of Credit Maximum Borrowing Amount as so defined and the definition of “Reducing Line of Credit Maximum Borrowing Amount” is amended and restated accordingly.

“Line of Credit Note” means the promissory note of Borrower in favor of Bank executed by Borrower as of August 31, 2018 executed and delivered in substitution, modification, replacement and extension of and for (but not in payment or satisfaction of) the promissory note of Borrower in favor of Bank executed by Borrower as of November 11, 2013. Each reference in this Agreement of Reducing Line of Credit Note, including without limitation, each reference thereto in any other term defined in this Agreement, means the Line of Credit Note as so defined and the definition of “Reducing Line of Credit Note” is amended and restated accordingly.

“London Business Day” means any day that is a day for trading by and between banks in dollar deposits in the London interbank market.

“New York Business Day” means any day except a Saturday, Sunday or any other day on which commercial banks in New York are authorized or required by law to close.

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Line of Credit Advances and the Line of Credit Loan, all LC Exposure, hedging obligations, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) owed to Bank or any Affiliate of Bank and all other obligations and liabilities, of any Obligated Group Member to Bank or any Affiliate of Bank or any indemnified party associated with Bank or any Affiliate of Bank, individually or collectively, existing on the Closing Date or arising thereafter, direct or indirect, joint or several, joint and several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured,

arising by contract, operation of law or otherwise, arising or incurred under this Agreement or any of the other Loan Documents or in respect of any of the Line of Credit Advances made or reimbursement or other obligations incurred or any of the Letters of Credit or other instruments at any time evidencing any thereof.

“Prime Rate” means at any time the rate of interest most recently announced within Bank at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Bank’s base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Bank may designate. If the rate of interest announced by Bank as its Prime Rate at any time is less than zero percent (0.0%), then for purposes of this Note the Prime Rate shall be deemed to be zero percent (0.0%).

(xiii)Clause (a) of Section 7.12 of the Credit Agreement is hereby amended to read as follows:

(b) Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if at any time any change in GAAP would affect the computation of any covenant (including the computation of any financial covenant) and/or pricing grid set forth in this Agreement or any other Loan Document, Borrower and Bank shall negotiate in good faith to amend such covenant and/or pricing grid to preserve the original intent in light of such change; provided, that, until so amended, (i) such covenant and/or pricing grid shall continue to be computed in accordance with the application of GAAP prior to such change and (ii) Borrower shall provide to Bank a written reconciliation in form and substance reasonably satisfactory to Bank, between calculations of such covenant and/or pricing grid made before and after giving effect to such change in GAAP.

3. Borrower shall pay Bank a one-time, non-refundable fee in the amount of $50,000.00 at the time this Amendment is executed by Borrower (the “Fee”).

4. Limited Effect. Except as expressly provided hereby, all of the terms and provisions of the Credit Agreement, the Line of Credit Note and the other Loan Documents are and shall remain unaltered and in full force and effect and are hereby ratified and confirmed by each Borrower. Neither the amendments nor the modifications contained herein shall be construed as a waiver, amendment, or modification of any other provision of the Credit Agreement, the Line of Credit Note or the other Loan Documents or for any purpose except as expressly set forth herein or as a consent to any further or future action on the part of the Borrower or any Guarantor that would require the waiver or consent of Bank. Borrower and each Guarantor hereby remakes all representations and warranties contained in the Credit Agreement and reaffirms all covenants and agreements set forth therein.

5. Conditions Precedent. This Amendment shall become effective upon the date (the “Effective Date”) on which Bank shall have received:

(a)This Amendment, duly executed and delivered by Borrower and by each Guarantor;

(b) The Line of Credit Note, in the form of Exhibit A attached to this Amendment, duly executed and delivered by Borrower;

(c) From Borrower, payment of the Fee and all other fees and expenses (including without limitation, reasonable fees, disbursements and other charges of counsel incurred in connection with the preparation and documentation of this Amendment not to exceed $5,000.00 in respect of such fees, disbursements and charges);

(d) If requested by Bank, satisfactory evidence that all corporate and other proceedings that are necessary in connection with this Amendment have been taken to Bank and its counsel’s reasonable satisfaction, and Bank shall have received all such counterpart originals or certified copies of such documents as Bank may reasonably request; and

(e) Such other information and documents as may reasonably be required by Bank and its counsel in connection with this Amendment.

6. Representations and Warranties. Borrower and each Guarantor hereby severally represents and warrants to Bank (before and after giving effect to this Amendment) that:

a.Borrower and each Guarantor has the corporate or limited liability company, as applicable, power and authority, and the legal right, to execute, deliver and perform this Amendment.

b.Borrower and each Guarantor has taken all necessary corporate or limited liability company, as applicable, action to authorize the execution, delivery and performance of this Amendment.

c.No consent or authorization of, filing with, notice to or other act by, or in respect of, any governmental authority, arbitrator, court or administrative agency or any other Person is required in connection with this Amendment, the execution, delivery, performance, validity or enforceability of this Amendment, or the performance, validity or enforceability of any Loan Document, except consents, authorizations, filings and notices which have been obtained or made and are in full force and effect.

d.This Amendment has been duly executed and delivered on behalf of such Borrower. This Amendment and the Credit Agreement, as amended by this Amendment, (the “Amended Credit Agreement”) and the Line of Credit Note, as modified by this Amendment, constitute the legal, valid and binding obligations of such Borrower and are enforceable against such Borrower in accordance with their terms, except as

enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

e.Each of the representations and warranties made by such Borrower herein or in or pursuant to the Loan Documents is true and correct on and as of the Effective Date as if made on and as of such date (except that any representation or warranty which by its terms is made as of an earlier date shall be true and correct as of such earlier date).

f.No Event of Default that is not waived by this Amendment has occurred and is continuing, or will result from this Amendment. There exists no condition, act or event which with the giving of notice or the passage of time or both would constitute an Event of Default.

g.Borrower and each Guarantor has performed all agreements and satisfied all conditions which this Amendment and the other Loan Documents provide shall be performed or satisfied by Borrower or such Guarantor on or before the Effective Date.

7. Successors and Assigns. This Amendment shall inure to the benefit of and be binding upon Borrower, each Guarantor and Bank and each of their respective successors and assigns.

8. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Iowa.

9. Counterparts. This Amendment may be executed in any number of counterparts, all of which shall constitute one and the same agreement, and any party hereto may execute this Amendment by signing and delivering one or more counterparts. Delivery of an executed counterpart of this Amendment electronically or by facsimile shall be effective as delivery of an original executed counterpart of this Amendment.

10. Costs and Expenses. Borrower agrees to pay or reimburse Bank for all of its out-of-pocket costs and expenses incurred in connection with this Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby (including without limitation, the reasonable fees, disbursements and other charges of counsel to Bank incurred in connection with the preparation and documentation of this Amendment not to exceed $5,000.00 in respect of such fees, disbursements and charges of counsel) not to exceed $5,000.00.

11. Copies of Documents. Borrower and each Guarantor acknowledges receipt of a copy of this Amendment signed by the parties hereto.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES FOLLOW]

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE ALSO APPLIES TO ANY OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN YOU AND THIS LENDER.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first written above.



BORROWER: HEARTLAND EXPRESS, INC. OF IOWA By: /s/ Michael Gerdin Michael Gerdin President	BANK: WELLS FARGO BANK, NATIONAL ASSOCIATION By: /s/ Casey A. Cason_________________ Casey A. Cason Senior Vice President
GUARANTORS:	GUARANTORS:
HEARTLAND EXPRESS, INC. By: /s/ Michael Gerdin Michael Gerdin Chairman & CEO	HEARTLAND EXPRESS MAINTENANCE SERVICES, INC. By: /s/ Michael Gerdin Michael Gerdin President

[SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT]



GUARANTORS:	GUARANTORS:
HEARTLAND EXPRESS SERVICES, INC. By: /s/ Michael Gerdin Michael Gerdin President	A & M EXPRESS, INC. By /s/ Michael Gerdin Michael Gerdin President

[SIGNATURE PAGE TO FIRST AMENDMENT TO CREDIT AGREEMENT]

Schedule 1.1

Form of Increase Request

See attached.

Increase Request

To: Wells Fargo Bank, National Association

Date of Request: , 20__

This Increase Request is furnished to Wells Fargo Bank, National Association (“Bank”), pursuant to the Credit Agreement entered into as of November 11, 2013 (as amended, restated, renewed or replaced from time to time, the “Credit Agreement”) by and among Heartland Express, Inc. of Iowa (“Borrower”), the parties thereto as Guarantors and Bank. Capitalized terms used but not defined herein have the meaning assigned to such terms in the Credit Agreement.

This Increase Request is irrevocable and represents Borrower’s request for the Facility Increase, and the following information is provided pursuant to Section 1.1(g) of the Credit Agreement:



a)Facility Increase Date:		, 20

b)Additional Information:

c)Line of Credit Maximum Borrowing Amount Requested to be increased to: (not more than $200,000,000)		$_________


	Supporting materials requested by Bank accompany this Increase Request.

Borrower, and the undersigned officer to the best of his or her knowledge in such officer’s capacity as an officer of Borrower, each certify that:


a)	No Event of Default has occurred and is continuing as at the date hereof or would arise immediately after giving effect to or as a result of the Facility Increase.


b)	The representations and warranties made under the Credit Agreement are true and correct as at the date hereof, except to the extent that any such representation or warranty specifically relates to a different date, in which case such representation and warranty will be true and correct as of such date.

BORROWER:

HEARTLAND EXPRESS, INC. OF IOWA

By:_________________________________

Print Name:__________________________

Print Title:___________________________

EXHIBIT A

Form of Line of Credit Note

See attached.

LINE OF CREDIT NOTE

Des Moines, Iowa

August 31, 2018

FOR VALUE RECEIVED, HEARTLAND EXPRESS, INC. OF IOWA, an Iowa corporation (“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at 666 Walnut, 2^nd Floor, Des Moines, IA 50309, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the aggregate unpaid principal amount of all outstanding Line of Credit Advances (as defined in the Credit Agreement referred to below) made to Borrower by Bank pursuant to such Credit Agreement, with interest thereon as set forth in such Credit Agreement.

CREDIT AGREEMENT:

This promissory note (the “Note”) evidences the Line of Credit Loan and Line of Credit Advances defined as such, and referred to, in and made pursuant to the Credit Agreement between Borrower and Bank dated as of November 11, 2013, as amended, restated, extended, supplemented or otherwise modified from time to time (the "Credit Agreement"), is the Line of Credit Note defined as such and referred to in the Credit Agreement and is subject to the terms and conditions of the Credit Agreement, including without limitation, the limitations on the maximum principal amount that may be outstanding under this Note from time to time. Capitalized terms used and not defined in the Note shall have the meanings given them in the Credit Agreement. In instances where any term or condition of this Note conflicts with any term or condition of the Credit Agreement, the terms and conditions of the Credit Agreement shall control.

INTEREST:

The outstanding principal balance of this Note shall bear interest from the date hereof until the Line of Credit Loan is paid in full, payable at the rate(s) and at the time(s) set forth in the Credit Agreement.

PAYMENTS:

The outstanding principal balance of this Note shall be due and payable in full on August 31, 2021 and prior to August 31, 2021 is subject to repayment at the times and on and subject to the terms set forth in the Credit Agreement.

Each payment made on this Note shall be credited to interest or principal as provided in the Credit Agreement.

EVENTS OF DEFAULT:

Any defined event of default under the Credit Agreement shall constitute an "Event of Default" under this Note.

MISCELLANEOUS:

(a) Remedies. Upon the occurrence of any Event of Default, the holder of this Note, at the holder's option, may declare all sums of principal and interest outstanding hereunder to be immediately due and payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of dishonor, all of which are expressly waived by Borrower and may exercise the remedies under the Credit Agreement. Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of the holder's in-house counsel), expended or incurred by the holder in connection with the enforcement of the holder's rights and/or the collection of any amounts which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity.

(b) Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Iowa without application of its conflicts of law principles that might require the application of the laws of another jurisdiction.

(d) Renewal. This Note is executed and delivered in substitution, modification, replacement and extension of and for (but not in payment or satisfaction of) a previous note of Borrower to Bank.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

HEARTLAND EXPRESS, INC. OF IOWA

By: /s/ Michael Gerdin

Michael Gerdin

President

[SIGNATURE PAGE TO NOTE]

Exhibit No. 31.1

Certification

I, Michael J. Gerdin, certify that:



1.	I have reviewed this quarterly report on Form 10-Q of Heartland Express Inc. (the “Registrant”);

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and we have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

	d)	Disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant's fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s independent registered public accounting firm and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.



Date:	November 5, 2018	By:	/s/ Michael J. Gerdin
			Michael J. Gerdin
			Chairman, President and Chief Executive Officer
			(Principal Executive Officer)

Exhibit No. 31.2

Certification

I, Christopher A. Strain, certify that:



1.	I have reviewed this quarterly report on Form 10-Q of Heartland Express Inc. (the “Registrant”);

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.	Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly report;

4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the Registrant and we have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

	d)	Disclosed in this quarterly report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant's fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s independent registered public accounting firm and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.



Date:	November 5, 2018	By:	/s/ Christopher A. Strain
			Christopher A. Strain
			Vice President-Finance
			Treasurer and Chief Financial Officer
			(Principal Accounting and Financial Officer)

Exhibit No. 32.1

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Heartland Express, Inc. (the "Company"), on Form 10-Q for the period ended September 30, 2018 (the "Report"), filed with the Securities and Exchange Commission, I, Michael J. Gerdin, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	November 5, 2018	By:	/s/ Michael J. Gerdin
			Michael J. Gerdin
			Chairman, President and Chief Executive Officer

Exhibit No. 32.2

CERTIFICATION OF

PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Quarterly Report of Heartland Express, Inc. (the "Company"), on Form 10-Q for the period ended September 30, 2018 (the "Report"), filed with the Securities and Exchange Commission, I, Christopher A. Strain, Vice President-Finance, Treasurer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



Date:	November 5, 2018	By:	/s/ Christopher A. Strain
			Christopher A. Strain
			Vice President-Finance, Treasurer
			and Chief Financial Officer