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Heartland Express beats in Q1, sees ‘volatile freight demand’ in 2022

Carrier notes some softening in demand but at levels higher than it can accommodate

A Heartland Express rig on the highway (Photo: Jim Allen/FreightWaves)

Truckload carrier Heartland Express reported first-quarter earnings per share of 21 cents Thursday after the market opened. The result was 2 cents better than consensus and 4 cents higher year-over-year. Revenue excluding fuel surcharges was 6% lower in the period at $127 million.

Heartland (NASDAQ: HTLD) does not provide operating metrics for utilization and pricing in its quarterly reports.

“Freight demand has continued to be strong even though demand has reached lower levels during the first quarter,” CEO Mike Gerdin stated in a press release. “While the current levels are down compared against the unprecedented levels experienced in the later months of 2021, we continue to have significantly more opportunities to haul freight than we are able to cover with our existing fleet and available drivers.”

Expenses as a percentage of revenue were down throughout the income statement, with salaries, wages and benefits declining 370 basis points. Presumably, higher rates and cost management led to an adjusted operating ratio of 82.4%, 410 bps better year-over-year.

The Millis Transfer fleet, which was acquired in 2019, made progress toward an internal goal of achieving an 85% or better OR within three years of the transaction. The outfit posted an 87.7% OR in the quarter.

Table: Heartland’s key performance indicators

Heartland has managed to lower its fleet age even as production schedules at the original equipment manufacturers continue to be pushed out due to parts and labor shortages. Heartland ended the quarter with an average tractor age of 1.5 years compared to 1.7 years in the 2021 first quarter. It expects to record $10 million to $15 million in capital expenditures, after disposals, on revenue equipment in 2022.

Heartland generated $38 million in cash flow from operations in the quarter. The company had $187 million in cash, a $29 million increase since the end of 2021, and no debt on the balance sheet.

“Given what we have experienced and based on feedback from our strong group of customers, we expect volatile freight demand throughout 2022 but at volumes that will continue to exceed our available capacity,” Gerdin said.

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.