HEARTLAND EXPRESS INC

Previous wording

We primarily provide nationwide asset-based dry van truckload service for major shippers across the United States, along with cross-border freight and other transportation services offered through third party partnerships in Mexico. Our consolidated average length of haul is under 400 miles. We focus on providing high quality service to targeted customers with a high density of freight in our operating areas. We also offer truckload temperature-controlled transportation services and Mexico logistics services, which are not significant to our consolidated operations. We generally earn revenue based on the number of miles per load delivered and the revenue per mile or per load paid. We operate our consolidated operations under the brand names of Heartland Express, Millis Transfer, Smith Transport, and CFI (for services within Mexico). We manage our business based on overall corporate operating goals and objectives that are the same for all of our brands. Our Chief Operating Decision Maker (“CODM”), our CEO and President, evaluates the operational efficiencies of our transportation services, operating performance and asset allocation on a combined basis based on consolidated operating goals and objectives. In addition to consolidated data on a combined basis that has been historically used, our CODM also makes use of available disaggregated operating segment data as well. 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.

Current wording

We primarily provide nationwide asset-based dry van truckload service for major shippers across the United States, along with cross-border freight and other transportation services offered through third party partnerships in Mexico. Our consolidated average length of haul is under 400 miles. We focus on providing high quality service to targeted customers with a high density of freight in our operating areas. We also offer truckload temperature-controlled transportation services, Mexico logistics services, and cross-border services to Canada which are not significant to our operations. We generally earn revenue based on the number of miles per load delivered and the revenue per mile or per load paid. We operate our consolidated operations under the brand names of Heartland Express, Millis Transfer, Smith Transport, and CFI (for services within Mexico). We manage our business based on overall corporate operating goals and objectives that are the same for all of our brands. Our Chief Operating Decision Maker (“CODM”), our CEO and President, evaluates the operational efficiencies of our transportation services, operating performance and asset allocation on a combined basis based on consolidated operating goals and objectives. In addition to consolidated data on a combined basis that has been historically used, our CODM also makes use of available disaggregated operating segment data as well. 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.

Previous wording

We operate in a cyclical industry. Freight demand was degraded throughout all of 2023 and continued to be weak during 2024 and 2025. Trucking capacity has been reduced in the industry and freight rates are currently improving, but meaningful improvement may not fully materialize until later in 2026. We believe that cost improvements and transportation system changes implemented during 2025 will provide a better cost structure and operating visibility to deliver a path toward operating profitability for our consolidated operations over the next twelve months. However, general consumer product output and inventory volatility, consumer demand, the political landscape, governmental regulations and enforcement, potential tariffs, foreign wars, and disruption in oil and diesel markets all could create additional volatility regarding future freight demand, capacity, rates, and fuel prices.

Current wording

We operate in a cyclical industry. Freight demand was degraded throughout all of 2023 and continued to be weak during 2024 and 2025. Trucking capacity has been reduced in the industry and freight rates are currently improving, but meaningful improvement may not fully materialize until 2027. We believe that cost improvements and transportation system changes implemented during 2025 have provided a better cost structure and operating visibility to deliver operating profitability for our consolidated operations. However, general consumer product output and inventory volatility, consumer demand, the political landscape, governmental regulations and enforcement, potential tariffs, inflation, foreign wars, and disruption in oil and diesel markets all could create additional volatility regarding future freight demand, capacity, rates, and fuel prices.

Previous wording

Current government focus on English language proficiency requirements, as well as reviews of CDL status for non-domiciled drivers, will potentially eliminate some level of driver capacity in our industry. We believe this has and will continue to improve current supply and demand dynamics in our industry. However, due to our comprehensive hiring and safety standards, we continue to experience a challenging qualified driver hiring environment.

Current wording

Current government focus on English language proficiency requirements, as well as reviews of CDL status for non-domiciled drivers, has eliminated, and may continue to eliminate, some driver capacity in our industry. We believe this has and will continue to improve current supply and demand dynamics in our industry. However, due to our comprehensive hiring and safety standards, we continue to experience a challenging qualified driver hiring environment.

Previous wording

Managing fuel cost continues to be one of management's top priorities given the volatility in the price of diesel fuel. The Department of Energy ("DOE") average diesel fuel prices per gallon for the three months ended June 30, 2026 and 2025 were $5.35 and $3.56 (a 50.4% increase), respectively. Average DOE price in July was $4.96 but has been above $5.00 each of the last two weeks through the end of July. Average DOE prices were $3.76, $3.70, and $4.75 for the three months ended September 30, 2025, December 31, 2025, and March 31, 2026, respectively. There are many factors that could impact diesel fuel prices including political, economic and geographic events, cyber attacks, potential tariffs, global conflicts, weather events, and other natural disasters. We cannot predict what fuel prices will be for the remainder of 2026, but year-to-date fuel expense is our second highest expense behind salaries, wages, and benefits.

Current wording

Managing fuel cost continues to be one of management's top priorities given the volatility in the price of diesel fuel. The Department of Energy ("DOE") average diesel fuel prices per gallon for the three months ended September 30, 2026 and 2025 were $5.56 and $3.76 (a 48.0% increase), respectively. Average DOE price subsequent to September 30, 2026 was $6.31 and has been above $6.00 each of the last eight weeks, reaching a record high during this period. Average DOE prices were $3.70, $4.12, and $5.35 for the three months ended December 31, 2025, March 31, 2026, and June 30, 2026, respectively. There are many factors that could impact diesel fuel prices including political, economic and geographic events, cyber attacks, potential tariffs, global conflicts, weather events, and other natural disasters. We cannot predict what fuel prices will be for the remainder of 2026, but year-to-date fuel expense is our second highest expense behind salaries, wages, and benefits.

Previous wording

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 expect to continue to manage and implement fuel strategies that we believe will effectively manage fuel costs. These strategies 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 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 June 30, 2026, the Company’s tractor fleet had an average age of 2.3 years and the Company's trailer fleet had an average age of 7.1 years compared to June 30, 2025 when the Company’s tractor fleet had an average age of 2.6 years and the Company's trailer fleet had an average age of 7.5 years.

Current wording

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 expect to continue to manage and implement fuel strategies that we believe will effectively manage fuel costs. These strategies 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, educating drivers to save energy, equipment aerodynamics, and increasing fuel economy through the purchase of newer, more fuel-efficient tractors. At September 30, 2026, the Company’s tractor fleet had an average age of 2.3 years and the Company's trailer fleet had an average age of 7.1 years compared to September 30, 2025 when the Company’s tractor fleet had an average age of 2.6 years and the Company's trailer fleet had an average age of 7.5 years.

Previous wording

We ended the first six months of 2026 with operating revenues of $360.4 million, including fuel surcharges, net income of $5.8 million, and basic earnings per share of $0.07 on basic weighted average outstanding shares of 77.4 million compared to operating revenues of $429.8 million, including fuel surcharges, net loss of $24.7 million, and basic net loss per share of $0.32 on basic weighted average shares of 78.3 million in the first six months of 2025. We posted a 96.3% operating ratio (operating expenses as a percentage of operating revenues) for the six months ended June 30, 2026 compared to 106.4% for the same period of 2025. We posted a 94.9% non-GAAP adjusted operating ratio(1) for the six months ended June 30, 2026 compared to 106.5% for the same period of 2025. We had total assets of $1.2 billion at June 30, 2026. We had a loss on assets of 1.8% and a loss on equity of 2.9% over the immediate past four quarters ended June 30, 2026, compared to a loss on assets of 2.7% and a loss on equity of 4.4% for the immediate past four quarters ended June 30, 2025.

Current wording

We ended the first nine months of 2026 with operating revenues of $539.9 million, including fuel surcharges, net income of $6.7 million, and basic earnings per share of $0.09 on basic weighted average outstanding shares of 77.4 million compared to operating revenues of $626.4 million, including fuel surcharges, net loss of $33.0 million, and basic net loss per share of $0.42 on basic weighted average shares of 78.0 million in the first nine months of 2025. We posted a 97.1% operating ratio (operating expenses as a percentage of operating revenues) for the nine months ended September 30, 2026 compared to 105.5% for the same period of 2025. We posted a 95.7% non-GAAP adjusted operating ratio(1) for the nine months ended September 30, 2026 compared to 105.6% for the same period of 2025. We had total assets of $1.1 billion at September 30, 2026. We had a loss on assets of 1.1% and a loss on equity of 1.7% over the immediate past four quarters ended September 30, 2026, compared to a loss on assets of 2.7% and a loss on equity of 4.4% for the immediate past four quarters ended September 30, 2025.

Previous wording

Our cash flow from operating activities for the six months ended June 30, 2026 of $36.0 million was 10.0% of operating revenues, compared to $46.8 million and 10.9% of operating revenues in the same period of 2025. During 2026, we had net cash provided by investing activities of $38.9 million resulting primarily from net property and equipment transactions. We had net cash used in financing activities of $30.6 million resulting primarily from $24.9 million debt repayments associated with debt taken on with our 2022 acquisitions along with $3.1 million for dividend payments and $2.3 million for repurchases of common stock. Our cash, cash equivalents and restricted cash increased $44.3 million during the six months ended June 30, 2026. We ended the second quarter of 2026 with cash, cash equivalents and restricted cash of $75.8 million. Cash and cash equivalents, excluding restricted cash was $62.4 million at June 30, 2026.

Current wording

Our cash flow from operating activities for the nine months ended September 30, 2026 of $55.1 million was 10.2% of operating revenues, compared to $74.4 million and 11.9% of operating revenues in the same period of 2025. During 2026, we had net cash provided by investing activities of $44.4 million resulting primarily from net property and equipment transactions. We had net cash used in financing activities of $69.7 million resulting primarily from $59.9 million debt repayments associated with debt taken on with our 2022 acquisitions along with $4.6 million for dividend payments and $4.6 million for repurchases of common stock. Our cash, cash equivalents and restricted cash increased $29.8 million during the nine months ended September 30, 2026. We ended the third quarter of 2026 with cash, cash equivalents and restricted cash of $61.3 million. Cash and cash equivalents, excluding restricted cash was $48.5 million at September 30, 2026.

Previous wording

Our quarterly operating ratio was 91.0% and 88.3% non-GAAP adjusted operating ratio as compared to the prior year 105.9% and 106.0%. See the “GAAP to Non-GAAP Reconciliation Schedule” above for a reconciliation of our non-GAAP adjusted operating ratio. Our net income was $10.6 million for the three months ended June 30, 2026 compared to net loss of $10.9 million during the period ended June 30, 2025. Our consolidated operating results for the three months ended June 30, 2026 reflect a combination of improved freight volumes, customer pricing, and driver utilization compared to the same period in the prior year due to ongoing industry capacity reductions, as well as strategic disposals of under-utilized assets. The improved freight environment was partially offset by a headwind of higher fuel prices as compared to the 2025 quarter. The DOE average diesel fuel prices per gallon for the three months ended June 30, 2026 and 2025 were $5.35 and $3.56 (a 50.4% increase), respectively. Average DOE price in July was $4.96 but has been above $5.00 each of the last two weeks through the end of July.

Current wording

Our quarterly operating ratio was 98.7% and 97.6% non-GAAP adjusted operating ratio as compared to the prior year 103.7% and 103.5%. See the “GAAP to Non-GAAP Reconciliation Schedule” above for a reconciliation of our non-GAAP adjusted operating ratio. Our net income was $1.0 million for the three months ended September 30, 2026 compared to net loss of $8.3 million during the period ended September 30, 2025. Our consolidated operating results for the three months ended September 30, 2026 reflect a combination of improved freight volumes, customer pricing, and driver utilization compared to the same period in the prior year due to ongoing industry capacity reductions, as well as strategic disposals of under-utilized assets. The improved freight environment was partially offset by a headwind of higher fuel prices as compared to the 2025 quarter. The DOE average diesel fuel prices per gallon for the three months ended September 30, 2026 and 2025 were $5.56 and $3.76 (a 48.0% increase), respectively. Average DOE price subsequent to September 30, 2026 was $6.31 and has been above $6.00 each of the last eight weeks, reaching a record high during this period.

Previous wording

Operating revenue decreased $26.3 million (12.5%), to $184.1 million for the three months ended June 30, 2026 from $210.4 million for the three months ended June 30, 2025. For the three month period, the decrease in revenue was the result of strategic fleet changes throughout the back half of 2025 and early 2026 in response to the weak freight environment in recent years. This led to fewer drivers and a decline in total miles compared to the prior year period, causing the decrease in trucking and other revenues of $33.5 million (18.0%) partially offset by an increase to fuel surcharge revenue of $7.2 million (29.5%) from $24.5 million in 2025 to $31.7 million in 2026. Driver capacity throughout the industry tightened late first quarter of 2026 and pricing improved throughout the second quarter of 2026 as a result. 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 tractors is directly affected by the number of available qualified drivers providing capacity to us. Continued contraction in market capacity has showed signs of favorably impacting pricing in the freight market during the three months ended June 30, 2026. Our operating revenues are reviewed regularly by our CODM on a combined basis due to the similar nature of our services offerings and related similar base pricing structure. In addition to consolidated data on a combined basis that has been historically used, our CODM also makes use of available disaggregated operating segment data as an additional resource of performance review.

Current wording

Operating revenue decreased $17.0 million (8.7%), to $179.5 million for the three months ended September 30, 2026 from $196.5 million for the three months ended September 30, 2025. For the three month period, the decrease in revenue was the result of strategic fleet changes throughout the back half of 2025 and early 2026 in response to the weak freight environment in recent years. This led to fewer drivers and a decline in total miles compared to the prior year period, causing the decrease in trucking and other revenues of $25.6 million (14.9%) partially offset by an increase to fuel surcharge revenue of $8.6 million (35.7%) from $24.1 million in 2025 to $32.7 million in 2026. Driver capacity throughout the industry has tightened since late first quarter of 2026 and pricing improved throughout the second and third quarter of 2026 as a result. 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 tractors is directly affected by the number of available qualified drivers providing capacity to us. Continued contraction in market capacity led to more favorable pricing in the freight market during the three months ended September 30, 2026. We expect further favorable pricing changes to happen throughout 2027. Our operating revenues are reviewed regularly by our CODM on a combined basis due to the similar nature of our services offerings and related similar base pricing structure. In addition to consolidated data on a combined basis that has been historically used, our CODM also makes use of available disaggregated operating segment data as an additional resource of performance review.

Previous wording

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 due to higher average DOE diesel fuel prices (50.4%) partially offset by a decrease in loaded miles during the three months ended June 30, 2026 compared to June 30, 2025.

Current wording

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 due to higher average DOE diesel fuel prices (48.0%) partially offset by a decrease in loaded miles during the three months ended September 30, 2026 compared to September 30, 2025.

Previous wording

Salaries, wages, and benefits decreased $18.1 million (20.7%), to $69.1 million for the three months ended June 30, 2026 from $87.2 million in the 2025 period. Salaries, wages, and benefits decreased primarily due to the reduction of driver payroll as a result of lower company miles, along with a reduction of office and shop employees. We have continued to get more creative in providing better pay, driving opportunities, benefits, equipment, and facilities for our drivers. We expect our ability to attract and retain experienced drivers will continue to be a challenge in the foreseeable future.

Current wording

Salaries, wages, and benefits decreased $11.4 million (14.7%), to $65.9 million for the three months ended September 30, 2026 from $77.3 million in the 2025 period. Salaries, wages, and benefits decreased primarily due to the reduction of driver payroll as a result of lower company miles, along with a reduction of office and shop employees. We have continued to get more creative in providing better pay, driving opportunities, benefits, equipment, and facilities for our drivers. We will continue to further evaluate our driver pay packages. We expect our ability to attract and retain experienced drivers will continue to be a challenge in the foreseeable future.

Previous wording

Rent and purchased transportation decreased $6.3 million, to $21.3 million for the six months ended June 30, 2026 from $27.6 million for the same period of 2025. The decrease resulted from lower contractor miles along with a reduction of leased equipment costs as we eliminated all remaining revenue equipment leases in 2026.

Current wording

Rent and purchased transportation decreased $3.0 million, to $9.3 million for the three months ended September 30, 2026 from $12.3 million for the same period of 2025. The decrease resulted from lower contractor miles along with a reduction of leased equipment costs as we eliminated all remaining revenue equipment leases in the first quarter of 2026.

Previous wording

Fuel increased $6.8 million (20.3%), to $40.5 million for the three months ended June 30, 2026 from $33.7 million for the same period of 2025. The increase was due to higher average DOE diesel price per gallon (50.4%), partially offset by lower company miles. We expect fuel prices to remain elevated, compared to historical prices until current conflicts in the Middle East subside. As our fuel surcharge agreements do not cover fuel consumed in out-of-route miles, empty miles, and idle time, we expect fuel prices to negatively impact our operating results until fuel prices reduce to the average DOE pricing of 2025.

Current wording

Fuel increased $9.1 million (26.8%), to $43.2 million for the three months ended September 30, 2026 from $34.1 million for the same period of 2025. The increase was due to higher average DOE diesel price per gallon (48.0%), partially offset by lower company miles. We expect fuel prices to remain elevated, compared to historical prices until current conflicts in the Middle East subside and other economic conditions improve the supply of diesel fuel. As our fuel surcharge agreements do not cover fuel consumed in out-of-route miles, empty miles, and idle time, we expect fuel prices to negatively impact our operating results until fuel prices reduce to the average DOE pricing of 2025.

Previous wording

Operations and maintenance expense decreased $4.6 million (26.7%), to $12.8 million during the three months ended June 30, 2026 from $17.4 million in the same period of 2025. The net decrease is mainly attributable to lower equipment maintenance costs as a result of lower company miles and fewer revenue equipment units, as the age of equipment did not change significantly. At June 30, 2026, the Company’s tractor fleet had an average age of 2.3 years and the Company's trailer fleet had an average age of 7.1 years compared to June 30, 2025 when the Company’s tractor fleet had an average age of 2.6 years and the Company's trailer fleet had an average age of 7.5 years. We anticipate that the average age of our fleet of tractors and trailers will not change significantly by December 31, 2026 as new equipment purchases are largely expected to offset the aging of our existing fleet. Operating and maintenance expense is impacted by the volume and timing of fleet modernization as newer equipment operating under warranty results in less realized maintenance costs.

Current wording

Operations and maintenance expense decreased $3.1 million (20.2%), to $12.3 million during the three months ended September 30, 2026 from $15.4 million in the same period of 2025. The net decrease is mainly attributable to lower equipment maintenance costs as a result of lower company miles and fewer revenue equipment units, as the age of equipment was slightly less. At September 30, 2026, the Company’s tractor fleet had an average age of 2.3 years and the Company's trailer fleet had an average age of 7.1 years compared to September 30, 2025 when the Company’s tractor fleet had an average age of 2.6 years and the Company's trailer fleet had an average age of 7.5 years. We anticipate that the average age of our fleet of tractors and trailers will not change significantly by December 31, 2026 as new equipment purchases are largely expected to offset the aging of our existing fleet. Operating and maintenance expense is impacted by the volume and timing of fleet modernization as newer equipment operating under warranty results in less realized maintenance costs.

Previous wording

Operating taxes and licenses decreased $0.6 million, to $3.8 million during the three months ended June 30, 2026 from $4.4 million in the same period of 2025. The decrease resulted from strategic disposals of under-utilized assets.

Current wording

Operating taxes and licenses decreased $0.4 million, to $3.8 million during the three months ended September 30, 2026 from $4.2 million in the same period of 2025. The decrease resulted from strategic disposals of under-utilized assets.

Previous wording

Insurance and claims expense was $11.8 million during the three months ended June 30, 2026 compared to $14.2 million in 2025. The decrease is due to favorable claim severity and frequency along with insurance program changes. The overall cost to insure our operations has increased in recent years due to a lack of insurance capacity across the transportation industry, mainly as a result of the current legal environment. Certain insurance carriers that provide excess insurance coverage currently and for past claim years have encountered financial issues. In recent years there have been several insurance carriers that have exited the excess reinsurance market. Insurance carriers have raised premiums and collateral requirements for many businesses, including trucking companies. In response to the premium increase trend we have increased retained claim exposure and added corridor features which have the effect of increasing retained exposure. Our premiums are subject to upward or downward adjustments based on claims experience with the opportunity for net savings if we have positive claims experience in our excess layers. As a result, our insurance and claims expense could likely increase with unfavorable claims experience and will be volatile in future periods.

Current wording

Insurance and claims expense was $9.3 million during the three months ended September 30, 2026 compared to $15.3 million in 2025. The decrease is due to favorable claim severity and frequency. The overall cost to insure our operations has increased in recent years due to a lack of insurance capacity across the transportation industry, mainly as a result of the current legal environment. Certain insurance carriers that provide excess insurance coverage currently and for past claim years have encountered financial issues. In recent years there have been several insurance carriers that have exited the excess reinsurance market. Insurance carriers have raised premiums and collateral requirements for many businesses, including trucking companies. In response to the premium increase trend we have increased retained claim exposure and added corridor features which have the effect of increasing retained exposure. Our premiums are subject to upward or downward adjustments based on claims experience with the opportunity for net savings if we have positive claims experience in our excess layers. As a result, our insurance and claims expense could likely increase with unfavorable claims experience and will be volatile in future periods.

Previous wording

Depreciation and amortization decreased $9.2 million (22.1%), to $32.3 million during the three months ended June 30, 2026 from $41.5 million in the same period of 2025 as a result of ongoing fleet replacement strategies. We expect depreciation expense in 2026 to be approximately $125 million to $135 million.

Current wording

Depreciation and amortization decreased $7.7 million (20.0%), to $31.0 million during the three months ended September 30, 2026 from $38.7 million in the same period of 2025 as a result of ongoing fleet replacement strategies. We expect depreciation expense in 2026 to be approximately $125 million to $130 million.

Previous wording

Other operating expenses decreased $2.2 million, to $9.5 million during the three months ended June 30, 2026 from $11.7 million in the same period of 2025. The decrease resulted from a reduction of costs associated directly with miles driven as well as general corporate expense initiatives.

Current wording

Other operating expenses decreased $2.6 million, to $8.4 million during the three months ended September 30, 2026 from $11.0 million in the same period of 2025. The decrease resulted from a reduction of costs associated directly with miles driven as well as general corporate expense initiatives.

Previous wording

Gains on the disposal of property and equipment increased $27.8 million, to a gain on disposal of $32.4 million during the six months ended June 30, 2026 compared to a $4.6 million gain on disposal in the same period of 2025. The increase is primarily due to the sale of certain real estate, an increase of tractor and trailer sales volume, and an increase in average gain per unit sold. For the remainder of 2026, we currently expect $13 to $19 million of gains on disposal of property and equipment.

Current wording

Gains on the disposal of property and equipment increased $1.1 million, to a gain on disposal of $7.8 million during the three months ended September 30, 2026 compared to a $6.7 million gain on disposal in the same period of 2025. The increase is primarily due to an increase of tractor gains. For the remainder of 2026, we currently expect $9 to $13 million of gains on disposal of property and equipment.

Previous wording

Interest expense decreased $1.1 million, to $1.9 million during the three months ended June 30, 2026 from $3.0 million in the same period of 2025. The decrease was mainly due to debt repayments and a corresponding decrease to average outstanding debt balances. The interest expense is from the Credit Facilities coinciding with the acquisition of CFI. We eliminated all remaining debt and financing leases assumed through the Smith Transport acquisition during the first three months of 2026. We expect further reductions to interest expense as we continue to pay down the debt.

Current wording

Interest expense decreased $1.3 million, to $1.6 million during the three months ended September 30, 2026 from $2.9 million in the same period of 2025. The decrease was mainly due to debt repayments and a corresponding decrease to average outstanding debt balances. The interest expense is from the Credit Facilities coinciding with the acquisition of CFI. We eliminated all remaining debt and financing leases assumed through the Smith Transport acquisition during the first three months of 2026. We expect further reductions to interest expense as we continue to pay down the debt.

Previous wording

Our effective tax rate was 40.9% and 25.2% for the six months ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate is primarily the result of permanent differences and changes in unrecognized tax benefits generating tax expense which are not correlated to the change in income.

Current wording

Our effective tax rate was 19.9% and 16.5% for the three months ended September 30, 2026 and 2025, respectively. The increase in the effective tax rate is primarily the result of permanent differences generating tax expense which are not correlated to changes in income.

Previous wording

Our operating ratio was 96.3% and 94.9% non-GAAP adjusted operating ratio as compared to the prior year 106.4% and 106.5%. See the “GAAP to Non-GAAP Reconciliation Schedule” above for a reconciliation of our non-GAAP adjusted operating ratio. Our net income was $5.8 million for the six months ended June 30, 2026 compared to net loss of $24.7 million during the period ended June 30, 2025. Our consolidated operating results for the six months ended June 30, 2026, reflect a combination of challenges from adverse weather experienced in the first two months of 2026 while results for the remainder of the period were better, reflecting improved freight volumes, customer pricing, and driver utilization due to ongoing industry capacity reductions, as well as strategic disposals of under-utilized assets. The positive variables were partially offset by a headwind of higher fuel prices. The DOE average diesel fuel prices per gallon for the six months ended June 30, 2026 and 2025 were $4.74 and $3.59 (a 31.7% increase), respectively. Average DOE price in July was $4.96 but has been above $5.00 each of the last two weeks through the end of July.

Current wording

Our operating ratio was 97.1% and 95.7% non-GAAP adjusted operating ratio as compared to the prior year 105.5% and 105.6%. See the “GAAP to Non-GAAP Reconciliation Schedule” above for a reconciliation of our non-GAAP adjusted operating ratio. Our net income was $6.7 million for the nine months ended September 30, 2026 compared to net loss of $33.0 million during the period ended September 30, 2025. Our consolidated operating results for the nine months ended September 30, 2026, reflect a combination of challenges from adverse weather experienced in the first two months of 2026 while results for the remainder of the period were better, reflecting improved freight volumes, customer pricing, and driver utilization due to ongoing industry capacity reductions, as well as strategic disposals of under-utilized assets. The positive variables were partially offset by a headwind of higher fuel prices. The DOE average diesel fuel prices per gallon for the nine months ended September 30, 2026 and 2025 were $5.01 and $3.65 (a 37.3% increase), respectively. Average DOE price subsequent to September 30, 2026 was $6.31 and has been above $6.00 each of the last eight weeks, reaching a record high during this period.

Previous wording

Operating revenue decreased $69.4 million (16.2%), to $360.4 million for the six months ended June 30, 2026 from $429.8 million for the six months ended June 30, 2025. For the six month period, the decrease in revenue was the result of strategic fleet changes in response to the weak freight environment. This led to fewer drivers and a decline in total miles compared to the prior year period, causing the decrease in trucking and other revenues of $72.8 million (19.2%) partially offset by an increase to fuel surcharge revenue of $3.4 million (6.6%) from $50.8 million in 2025 to $54.2 million in 2026. Driver capacity throughout the industry tightened late first quarter of 2026 and pricing improved throughout the second quarter of 2026 as a result. Continued contraction in market capacity has showed signs of favorably impacting pricing in the freight market during the six months ended June 30, 2026. 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 tractors is directly affected by the number of available qualified drivers providing capacity to us. Our operating revenues are reviewed regularly by our CODM on a combined basis due to the similar nature of our services offerings and related similar base pricing structure. In addition to consolidated data on a combined basis that has been historically used, our CODM also makes use of available disaggregated operating segment data as an additional resource of performance review.

Current wording

Operating revenue decreased $86.5 million (13.8%), to $539.9 million for the nine months ended September 30, 2026 from $626.4 million for the nine months ended September 30, 2025. For the nine month period, the decrease in revenue was the result of strategic fleet changes in response to the weak freight environment. This led to fewer drivers and a decline in total miles compared to the prior year period, causing the decrease in trucking and other revenues of $98.4 million (17.8%) partially offset by an increase to fuel surcharge revenue of $11.9 million (15.9%) from $75.0 million in 2025 to $86.9 million in 2026. Driver capacity throughout the industry tightened late first quarter of 2026 and pricing improved throughout the second and third quarters of 2026 as a result. Continued contraction in market capacity led to more favorable pricing in the freight market during the nine months ended September 30, 2026. 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 tractors is directly affected by the number of available qualified drivers providing capacity to us. Our operating revenues are reviewed regularly by our CODM on a combined basis due to the similar nature of our services offerings and related similar base pricing structure. In addition to consolidated data on a combined basis that has been historically used, our CODM also makes use of available disaggregated operating segment data as an additional resource of performance review.

Previous wording

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 due to higher average DOE diesel fuel prices (31.7%), partially offset by a decrease in loaded miles during the six months ended June 30, 2026 compared to June 30, 2025.

Current wording

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 due to higher average DOE diesel fuel prices (37.3%), partially offset by a decrease in loaded miles during the nine months ended September 30, 2026 compared to September 30, 2025.

Previous wording

Salaries, wages, and benefits decreased $42.2 million (23.4%), to $138.2 million for the six months ended June 30, 2026 from $180.4 million in the 2025 period. Salaries, wages, and benefits decreased primarily due to the reduction of driver payroll as a result of lower company miles, along with a reduction of office and shop employees. We have continued to get more creative in providing better pay, driving opportunities, benefits, equipment, and facilities for our drivers. We expect our ability to attract and retain experienced drivers will continue to be a challenge in the foreseeable future.

Current wording

Salaries, wages, and benefits decreased $53.5 million (20.8%), to $204.1 million for the nine months ended September 30, 2026 from $257.6 million in the 2025 period. Salaries, wages, and benefits decreased primarily due to the reduction of driver payroll as a result of lower company miles, along with a reduction of office and shop employees. We have continued to get more creative in providing better pay, driving opportunities, benefits, equipment, and facilities for our drivers. We will continue to further evaluate our driver pay packages. We expect our ability to attract and retain experienced drivers will continue to be a challenge in the foreseeable future.

Previous wording

Rent and purchased transportation decreased $2.5 million, to $10.8 million for the three months ended June 30, 2026 from $13.3 million for the same period of 2025. The decrease resulted from lower contractor miles along with a reduction of leased equipment costs as we eliminated all remaining revenue equipment leases in 2026.

Current wording

Rent and purchased transportation decreased $9.4 million, to $30.5 million for the nine months ended September 30, 2026 from $39.9 million for the same period of 2025. The decrease resulted from lower contractor miles along with a reduction of leased equipment costs as we eliminated all remaining revenue equipment leases in 2026.

Previous wording

Fuel increased $1.7 million (2.3%), to $73.3 million for the six months ended June 30, 2026 from $71.6 million for the same period of 2025. The increase was primarily due to higher average DOE diesel price per gallon (31.7%), partially offset by lower company miles. We expect fuel prices to remain elevated, compared to historical prices until current conflicts in the Middle

Current wording

Fuel increased $10.8 million (10.2%), to $116.5 million for the nine months ended September 30, 2026 from $105.7 million for the same period of 2025. The increase was primarily due to higher average DOE diesel price per gallon (37.3%), partially offset by lower company miles. We expect fuel prices to remain elevated, compared to historical prices until current conflicts in the Middle East subside and other economic conditions improve the supply of diesel fuel. As our fuel surcharge agreements do not cover fuel consumed in out-of-route miles, empty miles, and idle time, we expect fuel prices to negatively impact our operating results until fuel prices reduce to the average DOE pricing of 2025.

Previous wording

Operations and maintenance expense decreased $10.1 million (29.0%), to $24.6 million during the six months ended June 30, 2026 from $34.7 million in the same period of 2025. The net decrease is mainly attributable to lower equipment maintenance costs as a result of lower company miles and fewer revenue equipment units, as the age of equipment did not change significantly. At June 30, 2026, the Company’s tractor fleet had an average age of 2.3 years and the Company's trailer fleet had an average age of 7.1 years compared to June 30, 2025 when the Company’s tractor fleet had an average age of 2.6 years and the Company's trailer fleet had an average age of 7.5 years. We anticipate that the average age of our fleet of tractors and trailers will not change significantly by December 31, 2026 as new equipment purchases are largely expected to offset the aging of our existing fleet. Operating and maintenance expense is impacted by the volume and timing of fleet modernization as newer equipment operating under warranty results in less realized maintenance costs.

Current wording

Operations and maintenance expense decreased $13.2 million (26.3%), to $36.9 million during the nine months ended September 30, 2026 from $50.1 million in the same period of 2025. The net decrease is mainly attributable to lower equipment maintenance costs as a result of lower company miles and fewer revenue equipment units, as the age of equipment was slightly less. At September 30, 2026, the Company’s tractor fleet had an average age of 2.3 years and the Company's trailer fleet had an average age of 7.1 years compared to September 30, 2025 when the Company’s tractor fleet had an average age of 2.6 years and the Company's trailer fleet had an average age of 7.5 years. We anticipate that the average age of our fleet of tractors and trailers will not change significantly by December 31, 2026 as new equipment purchases are largely expected to offset the aging of our existing fleet. Operating and maintenance expense is impacted by the volume and timing of fleet modernization as newer equipment operating under warranty results in less realized maintenance costs.

Previous wording

Operating taxes and licenses decreased $1.5 million (15.8%), to $7.7 million during the six months ended June 30, 2026 from $9.2 million in the same period of 2025. The decrease resulted from strategic disposals of under-utilized assets.

Current wording

Operating taxes and licenses decreased $1.9 million (14.4%), to $11.5 million during the nine months ended September 30, 2026 from $13.4 million in the same period of 2025. The decrease resulted from strategic disposals of under-utilized assets.

Previous wording

Insurance and claims expense was $24.6 million during the six months ended June 30, 2026 compared to $26.1 million in 2025. The decrease is due to favorable claim severity and frequency along with insurance program changes. The overall cost to insure our operations has increased in recent years due to a lack of insurance capacity across the transportation industry, mainly as a result of the current legal environment. Certain insurance carriers that provide excess insurance coverage currently and for past claim years have encountered financial issues. In recent years there have been several insurance carriers that have exited the excess reinsurance market. Insurance carriers have raised premiums and collateral requirements for many businesses, including trucking companies. In recent years we have increased retained claim exposure in response to the premium increase trend and added corridor features which have the effect of increasing retained exposure. Our premiums are subject to upward or downward adjustments based on claims experience with the opportunity for net savings if we have positive claims experience in our excess layers. As a result, our insurance and claims expense could likely increase with unfavorable claims experience and will be volatile in future periods.

Current wording

Insurance and claims expense was $33.9 million during the nine months ended September 30, 2026 compared to $41.4 million in 2025. The decrease is due to favorable claim severity and frequency along with insurance program changes. The overall cost to insure our operations has increased in recent years due to a lack of insurance capacity across the transportation industry, mainly as a result of the current legal environment. Certain insurance carriers that provide excess insurance coverage currently and for past claim years have encountered financial issues. In recent years there have been several insurance carriers that have exited the excess reinsurance market. Insurance carriers have raised premiums and collateral requirements for many businesses, including trucking companies. In recent years we have increased retained claim exposure in response to the premium increase trend and added corridor features which have the effect of increasing retained exposure. Our premiums are subject to upward or downward adjustments based on claims experience with the opportunity for net savings if we have positive claims experience in our excess layers. As a result, our insurance and claims expense could likely increase with unfavorable claims experience and will be volatile in future periods.

Previous wording

Depreciation and amortization decreased $15.6 million (18.8%), to $67.5 million during the six months ended June 30, 2026 from $83.1 million in the same period of 2025 as a result of ongoing fleet replacement strategies. We expect depreciation expense in 2026 to be approximately $125 million to $135 million.

Current wording

Depreciation and amortization decreased $23.4 million (19.2%), to $98.4 million during the nine months ended September 30, 2026 from $121.8 million in the same period of 2025 as a result of ongoing fleet replacement strategies. We expect depreciation expense in 2026 to be approximately $125 million to $130 million.

Previous wording

Other operating expenses decreased $5.7 million, to $18.8 million during the six months ended June 30, 2026 from $24.5 million in the same period of 2025. The decrease resulted from a reduction of costs associated directly with miles driven as well as general corporate expense initiatives.

Current wording

Other operating expenses decreased $8.4 million, to $27.1 million during the nine months ended September 30, 2026 from $35.5 million in the same period of 2025. The decrease resulted from a reduction of costs associated directly with miles driven as well as general corporate expense initiatives.

Previous wording

Gains on the disposal of property and equipment increased $22.3 million, to a gain on disposal of $25.1 million during the three months ended June 30, 2026 compared to a $2.8 million gain on disposal in the same period of 2025. The increase is primarily due to the sale of certain real estate, an increase of tractor and trailer sales volume, and an increase in average gain per unit sold. For the remainder of 2026, we currently expect $13 to $19 million of gains on disposal of property and equipment.

Current wording

Gains on the disposal of property and equipment increased $28.9 million, to a gain on disposal of $40.2 million during the nine months ended September 30, 2026 compared to a $11.3 million gain on disposal in the same period of 2025. The increase is primarily due to the sale of certain real estate, an increase of trailer sales volume, and an increase in average gain per unit sold. For the remainder of 2026, we currently expect $9 to $13 million of gains on disposal of property and equipment.

Previous wording

Interest expense decreased $2.0 million, to $4.1 million during the six months ended June 30, 2026 from $6.1 million in the same period of 2025. The decrease was mainly due to debt repayments and a corresponding decrease to average outstanding debt balances. The interest expense is made up of $4.0 million from the Credit Facilities coinciding with the acquisition of CFI while the remaining $0.1 million is the result of debt and financing leases assumed through the Smith Transport acquisition. We eliminated all remaining debt and financing leases assumed through the Smith Transport acquisition during the six months ended June 30, 2026. We expect further reductions to interest expense as we continue to pay down the debt.

Current wording

Interest expense decreased $3.3 million, to $5.7 million during the nine months ended September 30, 2026 from $9.0 million in the same period of 2025. The decrease was mainly due to debt repayments and a corresponding decrease to average outstanding debt balances. The interest expense is made up of $5.6 million from the Credit Facilities coinciding with the acquisition of CFI while the remaining $0.1 million is the result of debt and financing leases assumed through the Smith Transport acquisition. We eliminated all remaining debt and financing leases assumed through the Smith Transport acquisition during the nine months ended September 30, 2026. We expect further reductions to interest expense as we continue to pay down the debt.

Previous wording

Our effective tax rate was 29.6% and 28.5% for the three months ended June 30, 2026 and 2025, respectively. The increase in the effective tax rate is primarily the result of permanent differences and changes in unrecognized tax benefits generating tax expense which are not correlated to the change in income.

Current wording

Our effective tax rate was 38.6% and 23.2% for the nine months ended September 30, 2026 and 2025, respectively. The increase in the effective tax rate is primarily the result of permanent differences and changes in unrecognized tax benefits generating tax expense which are not correlated to changes in income.

Previous wording

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 our primary sources of liquidity, cash flow provided by operating activities and proceeds from sales of used equipment. In conjunction with the acquisition of CFI on August 31, 2022, (the “CFI Closing Date”), Heartland entered into a $550.0 million unsecured credit facility which included a $100.0 million revolving line of credit (“Revolving Facility”) and $450.0 million in term loans (“Term Facility” and, together with the

Current wording

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 our primary sources of liquidity, cash flow provided by operating activities and proceeds from sales of used equipment. In conjunction with the acquisition of CFI on August 31, 2022, (the “CFI Closing Date”), Heartland entered into a $550.0 million unsecured credit facility which included a $100.0 million revolving line of credit (“Revolving Facility”) and $450.0 million in term loans (“Term Facility” and, together with the Revolving Facility, the “Credit Facilities”). The Credit Facilities includes a consortium of lenders, including joint bookrunners JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association (“Wells Fargo”).

Previous wording

We had $134.9 million outstanding on the Term Facility and no outstanding borrowings under the Revolving Facility at June 30, 2026. Outstanding letters of credit associated with the Revolving Facility at June 30, 2026 were $11.2 million. As of June 30, 2026 the weighted average interest rate on outstanding borrowings under the Credit Facilities was 5.1%.

Current wording

We had $99.9 million outstanding on the Term Facility and no outstanding borrowings under the Revolving Facility at September 30, 2026. Outstanding letters of credit associated with the Revolving Facility at September 30, 2026 were $11.2 million. As of September 30, 2026 the weighted average interest rate on outstanding borrowings under the Credit Facilities was 5.2%.

Previous wording

The May 31, 2022 acquisition of Smith Transport included the assumption of $46.8 million of debt and financing lease obligations associated with the fleet of revenue equipment. During the six months ended June 30, 2026 we paid off all remaining debt and financing lease obligations from the acquisition of Smith Transport.

Current wording

The May 31, 2022 acquisition of Smith Transport included the assumption of $46.8 million of debt and financing lease obligations associated with the fleet of revenue equipment. During the nine months ended September 30, 2026 we paid off all remaining debt and financing lease obligations from the acquisition of Smith Transport.

Previous wording

At June 30, 2026, we had $62.4 million in cash and cash equivalents, $134.9 million in outstanding debt, $11.5 million in operating lease obligations, and $88.8 million available borrowing capacity on the Revolving Facility.

Current wording

At September 30, 2026, we had $48.5 million in cash and cash equivalents, $99.9 million in outstanding debt, $14.3 million in operating lease obligations, and $88.8 million available borrowing capacity on the Revolving Facility.

Previous wording

The total estimated purchase commitments for tractors (net of tractor sale commitments) and trailer equipment as of June 30, 2026 was $29.2 million. These commitments extend through the remainder of 2026. We expect continued fleet modernization throughout 2026 and beyond. For the remainder of 2026, we currently anticipate net capital expenditures to be approximately $8 to $14 million and $13 to $19 million of gains on disposal of property and equipment.

Current wording

The total estimated purchase commitments for tractors (net of tractor sale commitments) and trailer equipment as of September 30, 2026 was $35.4 million. These commitments extend into 2027. We expect continued fleet modernization throughout 2026 and beyond. For the remainder of 2026, we currently anticipate net capital expenditures to be approximately $2 to $5 million and $9 to $13 million of gains on disposal of property and equipment.