Truckload carrier Heartland Express reported a third-quarter net loss on Tuesday as it continues “to be hampered by a challenging freight environment.”
A $9.3 million net loss (12 cents per share) marked a fifth consecutive quarter in the red for the North Liberty, Iowa-based company when excluding one-time gains from real estate sales. Analysts were calling for just a 1-cent loss.
Lower gains on the sale of used equipment were a 1-cent headwind (assuming a normalized tax rate) versus the year-ago quarter.
Revenue was 11.9% lower year over year to $260 million. Weak demand, underutilization of equipment and unfavorable rates weighed on the period.
Heartland (NASDAQ: HTLD) does not provide operating metrics for utilization and pricing.
It recorded a loss on the operating line as well.
A 102.6% adjusted operating ratio (operating expenses expressed as a percentage of revenue) was 20 basis points worse y/y and 320 bps worse than the second quarter. Salaries, wages and benefits (as a percentage of revenue) increased 100 bps y/y. Maintenance expense was 180 bps higher as the average tractor age increased from 1.9 years in the 2023 third quarter to 2.7 years in the recent period.
Insurance and claims expense was 120 bps higher.
The string of poor results not only stems from a downturn in the freight market but also from inferior results at the two fleets it acquired in the summer of 2022 – shortly after the start of the freight recession.
“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,” CEO Mike Gerdin said in a Tuesday news release.
A $5.9 million adjusted operating loss compared to adjusted operating income of $1.5 million in the second quarter.
Heartland said its legacy fleets have operated at a 92.3% OR over the past year, much better than the acquired companies (Smith Transport and Contract Freighters), but still well off the low-80s OR it is targeting. The acquired fleets have seen sequential (from the six months ended March 31 to the six months ended Sept. 30) OR improvements of 600 bps and 500 bps, respectively.
The company said the improvement has been solely tied to cost cutting and that market improvement is needed to improve margins.
“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,” Gerdin said.
He did point to “encouraging signs” in October but said that he’s not expecting “impactful improvement until 2025.”
Heartland has cut its debt load by more than half since leveraging up to make the acquisitions. It generated $107 million in cash flows from operations in the first nine months of the year, closing the third quarter with $207 million in debt and financing lease obligations.
Robert Davies
I did this same kind of lease with Rocor back in 1999 with a company that no longer exist they will fill you with all types of promises better pay a better life and some companies have trapt new drivers into a lease purchase new out of orientation this is a part of trucking that has been reported many times to fmcsa law makers and state agencies for years but yet it continues to go on. Some drivers have lost everything house family personal vehicles and become stranded till there is nothing left and our law makers they know this. I recommend staying away from the lease bigger companies try to find private fleet type companies to work for there are not many good trucking companies to drive for these days try to pick up on the turnover rate on any company you drive for we live in an industry you have to protect yourself from these type of employers. Thnx and good luck
Jennifer
To Outlaw:
Heartland DOES have broker freight! I have literally ran loads all over the 48 States (in one year, just this past one in fact; I’d say about 50% of my loads were under broker freight) recently left this company in Sept.
To Edward:
Count your blessings, you didn’t get hired on with them.
To Raquis:
If you are a driver, I truly hope this was a rhetorical question. If it had to be spelled out to you and you drive…turn in your license and get off the roads, please…we don’t need anymore steering wheel holders out here!
To Mike:
Not nice at all. They did me so dirty and I just quit in Sept (had enough abuse), but I would never wish they go bankrupt and shut down business …not until my future winning lawsuit is paid out, anyway lmao 🤣
To Dave:
You said it spot on! I’m one of those and decided I was done (when I was told by different company I was hired, I gave notice and quit)…the professional way and made sure I did things to keep my side of the street clean and not messy like them.
They still found a way to continue to pound me, based on lies and fraud statements, but it’s ok they will see their day in the near future! I’m entitled to what I earned and what they promised me. I’m gonna get it too.
Jennifer lee
This explains why my paychecks were unpredictable each week and on an average $0 – $768 with $1250 being a thing of the past; (even though I accepted their offer during hiring process for their “guaranteed minimum pay” of $1250 weekly since I signed on as OTR-48 States).
Also explains why they had me in 96 degree heat in Central Florida third week of June, on truck waiting for repairs at Loves with no a/c for four days (rather than typically a hotel paid for breakdown or repairs that take this long)…then not only didn’t pay me for breakdown pay, but sent me paystub showing I owed them!!!!!! WTF. I literally informed all departments in all ways possible that the a/c compressor was on its way out, pls have it replaced before summer gets here and I’m stuck with it completely broke.
ALL THIS FELL UPON DEAF EARS!
When I returned to my hometime terminal for which they require I park my truck for my 47 hrs off after running 12wks5dys and only making $4479….i decided to just remove all my personal belongings, place them in storage near terminal and detail:disinfect and wash inside and outside. Video’s taken showing condition (cleaner and no repairs needed other than the windshield still) than when it was handed to me…also have video when I received the truck. I was supposedly hired on with another smaller company, so I would’ve continued with employment (they ended up backing out last minute, so I’m not thrilled with them either)…I ended up not getting last paycheck from Heartland (I expected as much given their shadiness when it came to my lack of income with them), but to put on paystub their justification for not paying me is for truck recovery costs…Is a flat out LIE and fraudulent!!! I was
Going to leave well enough alone and move on lesson learned with these large carriers, but they have officially pushed it too far! I’ll be hiring an attorney for reimbursement of all expenses I paid out of pocket for their equipment for which they never gave me a dime in return bc excuse after excuse (THEIR ARE NO EXCUSES ITS NOT MY TRUCK AND IM DRIVING AS A VOLUNTEER OR TO FULFILL COMMUNITY SERVICE HOURS)!
Dee Wright
Is this the reason you are blocking all ESOP money from the sister companies ? This money was earned prior to you buying them out. But now the drivers (even drivers that have retired, left, fired,). Unable to access funds for several years ? Is that your cushion money for when it all goes under? If so I pray you change your look on it. Let those company employees have their money. I have a feeling some will be contacting a legal consultant over this.