Heartland Express: Q2 in line despite revenue weakness

Adjusted operating ratio breaks 80%

Heartland Express' cash balance grows as trucking M&A deals get bigger

Heartland Express' cash balance grows as trucking M&A deals get bigger (Photo: Jim Allen/FreightWaves)

North Liberty, Iowa-based truckload carrier Heartland Express reported an 8.1% year-over-year decline in second-quarter revenue (excluding fuel) Monday. Earnings per share were in line with analysts’ expectations at 26 cents.

Even with the top-line weakness, Heartland Express (NASDAQ: HTLD) recorded 330 basis points of operating ratio improvement when compared to the prior year. The 79.7% adjusted OR was driven in part by increased gains on the sale of revenue equipment. Gains were $4.6 million higher year-over-year, producing nearly 300 bps of OR improvement or 4 cents per share of net earnings.

Heartland Express does not provide any operating metrics around utilization and pricing.

Heartland Express CEO Mike Gerdin said, “Hiring and retaining safe and professional drivers will be the number one challenge in order to fully capitalize on the expected freight demand.” He continued in the press release, “Freight demand continued to be strong throughout the second quarter of 2021 and is expected to continue to be strong for the remainder of 2021.”


Table: Heartland Express’ key performance indicators

The second-quarter operating performance was the best for the carrier since the third quarter of 2019. It acquired Millis Transfer at the end of August that year. The Heartland Express fleet operated at a mid-70% OR during the second quarter on an adjusted basis with the Millis fleet still operating at a low-90% OR.

Gerdin said operations at Millis have “shown continued improvement over the 22 months since the acquisition” but that additional improvements are required to reach the three-year target of an OR of 85% or better at Millis.

The company ended the quarter with $167.2 million in cash and no debt on the balance sheet.

Heartland Express has acquired several fleets in the past, including three large acquisitions in the last decade: Interstate Distributor in 2017, Gordon Trucking in 2013 and Millis.


At the time Heartland Express acquired Millis, its cash balance was $205 million.

It will be interesting to see if Heartland Express follows in the steps of other carriers, which have announced big M&A deals recently. Knight-Swift Transportation’s (NYSE: KNX) $1.35 billion transaction in the less-than-truckload space and Werner Enterprises’ (NASDAQ: WERN) purchase of two regional carriers are the most recent large transactions in trucking.

Heartland Express could also continue down its current path of repurchasing shares ($15 million so far in 2021) or paying a special dividend like it has done in the past as a means of distributing cash to shareholders. Net cash flows from operations were $62.8 million through the first half of 2021.

Shares of HTLD were down 1.6% at noon Monday in line with the S&P 500, which was off 1.5%.

Click for more FreightWaves articles by Todd Maiden.

Exit mobile version