Heartland Express (NASDAQ: HTLD) announced it has acquired family owned Millis Transfer and related companies for approximately $150 million, including debt. Including the payoff of all assumed debt, which is expected by December 31, 2019, the transaction was all cash except for approximately $750,000 in Heartland stock.
Dry-van operator Millis operates 11 terminal locations ad five MTI driver school locations. The company generated approximately $152 million in revenue in the 12 months ending June 30, 2019.
“We are very pleased to welcome everyone at Millis to Heartland Express. We are impressed with the high quality of the driving professionals and the organization’s safety profile,” Michael Gerdi, chairman, president and CEO of Heartland, said in a statement. “In addition, the regional coverage, equipment, conservative and disciplined management style, and culture are all very compatible with our approach. The current Millis Family management team has over 113 years combined experience and will remain with the business in their current roles. We expect Millis to contribute to our ongoing success immediately, and with opportunities for further improvement, get even better over the long term.”
According to the Federal Motor Carrier Safety Administration’s SaferWeb, Millis has approximately, 840 drivers ad 850 power units. The company is based in Black River Falls, Wisconsin.
Gerdin said Heartland expects to end 2019 with approximately $50 to $60 million in cash.
The deal is helped by Heartland’s debt-free financials and a tractor fleet age, including the Millis fleet, of approximately two years for tractors and four years for trailers.
“Our capital expenditure requirements for the next several quarters are modest, absent opportunistic purchases,” Gerdin said. “Millis has an outstanding fleet of equipment and we look forward to utilizing their fleet and professional drivers to serve our combined group of customers.”
In the company’s second-quarter earnings release, Gerdin remarked on the company’s balance sheet.
“Our cash balances have increased to $205 million, up from $176 million at the end of the first quarter of 2019 and is our highest level of cash reserves since September of 2012. We now have nearly $100 million more cash on hand than we had at June 30, 2018.”
Heartland’s second quarter operating ratio was 79.6% and 76.6% non-GAAP Adjusted Operating Ratio.
Millis is a third-generation family business. It has terminal locations in Georgia, New York, North Carolina, Ohio, Texas, Virginia, Illinois, and Wisconsin. Operating primarily in the Midwest, Eastern United States and Texas.
Millis has been nominated as a Truckload Carriers Association Best Fleets to Drive For fleet and has a driver turnover rate under 50 percent, Heartland said. Its Millis Training Institute was established in 1989 and has locations in Ohio, Georgia, Wisconsin, Texas, and North Carolina.
In a joint statement, Dave Millis, president; Steve Millis, chief operating officer, and Dan Millis, vice president of compliance and safety, commented on the excitement the family feels joining Heartland.
“From the first time we met with Mike Gerdin and some of his executives we knew that this was the right decision for our drivers, employees, and family,” the statement read. “We are very excited to continue providing the high quality of service that our customers have come to expect. We believe the current culture that was started by our father, Bill Millis, 35 years ago and still exists today, will complement Heartland. We look forward to contributing and growing their business through our combined networks and customer relationships.”