Heartland Express posts a clean quarter amid “softer freight demand”

Heartland Express, Inc. (NASDAQ: HTLD) reported third quarter earnings of $0.25 per share, in-line with the consensus estimate and $0.02 ahead of the prior year period.

The North Liberty, Iowa-based truckload (TL) carrier reported a 2.2% year-over-year revenue decline in the quarter to $147.9 million. Revenue excluding fuel surcharges was only down 0.3%. Heartland does not provide any operating metrics around utilization and pricing.  

Operating income increased 6.4% year-over-year to $26.7 million, but it’s worth mentioning that the company recorded a $5.4 million increase in gains on the sale of equipment and property compared to the third quarter of 2018. These gains were partially offset by the acquisition impacts of Millis Transfer, a dry van asset-based TL carrier with 850 power units headquartered in Wisconsin primarily serving the Midwest, eastern United States and Texas. All in, Heartland reported an adjusted operating ratio of 79.4%, 130 basis points better year-over-year.

Heartland reported that it combined operations with Millis Transfer at the end of August. Further, the company reported that it plans to return to a debt-free balance sheet by the end of 2019. At the close of the third quarter 2019, Heartland had $111.9 million of cash on hand after $102 million in cash payments to complete the acquisition and pay down a large portion of the acquired equipment debt. After the quarter ended, Heartland paid back another $32 million of the acquired debt, leaving a debt balance of $21.5 million.

“During periods of softer freight demand, we stay focused on freight rate discipline and work to prepare our organization internally for an expected stronger freight environment ahead. Specifically, we continue to refresh our fleet of revenue equipment and our terminal locations to focus on providing updated facilities and comforts for our drivers away from home. We are pleased with our drivers, our team that supports our drivers, and our financial results for the third quarter of 2019,” said Heartland Express’ CEO Michael Gerdin.

The average age of Heartland’s fleet was 1.7 years at the close of the third quarter 2019 compared to 1.3 years in the same period of 2018. Combining the Millis fleet likely resulted in the modest increase in average age. The company’s trailer fleet ended the quarter with an average age of 3.5 years, 0.7 years lower than the 2018 comparable period.

Shares of HTLD are flat on the day.