Heartland acquires dry van truckload carrier Smith Transport

1st acquisition for Heartland in almost 3 years

A Heartland Express tractor-trailer

Photo: Jim Allen/FreightWaves

Heartland Express has returned to the acquisition market with the purchase of a dry van truckload company, Smith Transport.

In its first acquisition since it bought Mills Transfer in August 2019, Heartland paid approximately $170 million for all of the equity in Smith and related companies. 

“During the pandemic, it was a barren wasteland for mergers and acquisitions,” Heartland Chairman, President and CEO Michael Gerdin said. 

Gerdin said M&A activity began to pick up at the end of 2021 and that is when Heartland began discussions with Pennsylvania-based Smith Transport. 


“We wanted somebody with decent size,” he said. “These guys put up $200 million in gross revenue last year.” 

The acquisition price is slightly below the $187 million in cash that Heartland (NASDAQ: HTLD) had on its books at the end of the first quarter. In its prepared statement, Heartland said the acquisition was funded with existing cash. 

But in the telephone call with FreightWaves, Gerdin and CFO Chris Strain said the cash outlay from Heartland was about $155 million, with the $170 million enterprise value put on Smith Transport being a function of both debt and cash Smith held as well as a separate real estate transaction valued at $14 million. .  

Additionally, the cash position of Heartland at the end of the first quarter has changed significantly, in part because of a sale announced last week of a California terminal the company owned in the Inland Empire. 


Heartland, in a Securities and Exchange Commission filing on the sale, said it netted a pretax gain on the sale of about $73 million. A gain of that size would be close to all of the company’s net income for 2021, which came in at $79.3 million. 

Gerdin said Heartland’s cash position had risen to roughly $300 million before the acquisition of Smith Transport. The timing of the Smith Transport deal and the sale of the warehouse was coincidental, according to Strain. 

The buyer of the California property was Realterm, a Maryland-based company that describes itself as an “independent global investment manager focused on the transportation industry.” 

An article in Commercial Observer, which covers commercial real estate in large cities, described the terminal sold by Heartland in Rancho Cucamonga as a “rare asset trucking facility” and quoted a broker involved in the deal as saying the “property is irreplaceable with Class A improvements. You can’t build this again.” The broker described the price as “top dollar.”

Heartland, in its SEC filing, said it had entered into a two-year lease agreement to continue using the facility. The deal also includes a five-year renewable option.

With the sale and the leaseback, Commercial Observer put the value of the deal at $95.5 million.

Smith is expected to be immediately accretive to Heartland earnings. Heartland earned $16.8 million in the first quarter, or 21 cents per share, up 25.3% from the first quarter of 2021. 

In the announcement of the Smith Transport deal, Heartland said the company had approximately 850 tractors and 2,000 dry van trailers.


Smith Transport will continue to operate as a separate business within Heartland, and the name will not change. The company’s primary activity is east of the Mississippi, “with a lot of business on 95, 70, 81, up and down the East Coast,” Gerdin said. 

“It certainly adds to the density of what we’ve already got out there,” he added.

Gerdin said Heartland “still has more freight than we can haul. We turn down thousands of loads every week. We just don’t have as many to pick from.”

(This article has been updated with comments from Heartland management and additional financial information.)

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