Truckload carrier Heartland Express reported a net loss for the third quarter on Friday, its ninth straight quarterly loss (excluding one-time real estate gains). The North Liberty, Iowa-based company noted a sequential improvement in operations but said a meaningful recovery is unlikely until next year.
A net loss of 11 cents per share, or $8.3 million, was 1 cent ahead of consensus and the year-ago result. The period benefited from a $6.2 million year-over-year increase in gains on equipment sales.
Through the first three quarters of 2025, the company’s net losses totaled $33 million, compared to losses of $27.9 million through the same period last year.
“While we have begun to see some encouraging signs related to market capacity, freight demand still lags behind available capacity. Therefore, we do not currently expect material market improvements until sometime in 2026,” Heartland CEO Mike Gerdin stated in a news release.
Heartland’s (NASDAQ: HTLD) revenue fell 24% y/y to $197 million, $13 million shy of the consensus estimate.
(Heartland does not provide operating metrics for utilization and pricing.)
Operating headwinds easing?
A 103.5% adjusted operating ratio (inverse of operating margin) was 90 basis points worse y/y but 250 bps better than the second quarter.
Insurance and claims expenses as a percentage of revenue were up meaningfully (340 bps higher y/y) as were depreciation and amortization expenses (up 240 bps). Salaries, wages and benefits expenses (down 200 bps) and rents and purchased transportation expenses (down 80 bps) provided some relief.
Gains on sale total $11.3 million year-to-date. The company expects to double that amount in the fourth quarter through further disposals. (Full-year gains on sale are forecast at $21 million to $24 million.)
Heartland’s legacy fleet and its Millis Transfer fleet operated at low-90% ORs in the quarter. The two fleets Heartland acquired at the onset of the freight recession in 2022 – Smith Transport and Contract Freighters Inc. (CFI) – continued to underperform. The Smith fleet returned to profitability in the quarter, but CFI was again unprofitable.
Some of the operational overhangs on the organization are now in the rear view. The Millis and Smith fleets completed a TMS upgrade in the quarter while CFI finished a telematics conversion on its fleet. (CFI completed its TMS swap in the second quarter.)
“We believe that this common transportation management system will drive better driver utilization, better operational collaboration, and reduce unproductive miles to improve our overall operating efficiency as an organization to combat continual market weakness,” Gerdin said.
Generating cash flow, deleveraging balance sheet
The company continues to generate cash and has deleveraged the balance sheet through the downturn.
Year-to-date operating cash flows totaled $74 million, down from $107 million through the same period last year.
Heartland reduced net debt (inclusive of financing lease obligations) by $18 million in the quarter to $153 million outstanding. It has reduced debt obligations by more than $300 million since the acquisitions were made. Heartland ended the quarter with $88 million available on an untapped revolving credit facility and remains in compliance with financial covenants.
An average tractor age of 2.6 years remains elevated by Heartland’s historical standards.
Shares of HTLD were up 2.5% at 11:34 a.m. EDT on Friday compared to the S&P 500, which was up 0.6%.
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