“Freight-ening” Times for Transport As Heartland Express Keeps On Trucking

Trucking company Heartland Express, Inc. (HTLD) reported Q3 financial results that reported disappointing metrics coming in below consensus with EPS of ($0.12) vs FactSet ($0.01) and revenue of $259.9M vs FactSet $268.3M citing a continuation of a challenging freight environment driven by a combination of lower freight demand and excess truck capacity in the marketplace.

Heartland Express CEO Mike Gerdin stated, “We believe that the last four quarters of this current freight cycle are arguably the worst four consecutive quarters experienced in the trucking industry over the Company’s 45+ year history. As a result, our trucking assets have been underutilized. However, in October we have begun to see encouraging signs pointing to the early stages of a potential recovery in freight demand, but we do not expect impactful improvement until 2025.”

During the quarter the company made strides to integrate their 2022 two acquisitions, Smith Transport and Contract Freighters “CFI”. Additionally, Heartland made operational improvements and reduced its acquisition related debt by $94M through the third quarter of 2024 which now totals $289.6M million paid since the acquisition date. The company’s legacy businesses have outperformed their two recent acquisitions but have underperformed compared to their long term historical expectations. These legacy businesses have also produced an operating ratio of 92% over the last four quarters which is higher than their long term expected operating ratio but is belived by management to be the best in its industry during current market conditions.

Gerdin continued, “For the trailing six months ending September 30, 2024 compared to the previous six months ending March 31, 2024, Smith Transport has improved its operating ratio by 6 percentage points and CFI has improved its operating ratio by 5 percentage points. We have accomplished these results solely by cost measures and business alignment initiatives with no additional assistance from freight market demand improvements. We believe that we will need a meaningful turnaround in the freight environment, and the associated increase in demand for our on-time freight service, in order to improve the utilization of our assets and lower our consolidated operating ratio back to our long-term expectations.”