Heartland Express Battles Back: Aiming for Turnaround After Sixth Straight Quarterly Loss
Truckload carrier Heartland Express has posted its sixth consecutive quarterly net loss, albeit with signs of potential improvement going forward. The North Liberty, Iowa-based company reported a net loss of $1.9 million or 2 cents per share for the fourth quarter of 2024. When excluding deal-related amortization expenses, this narrows to a 1-cent loss, beating the consensus expectation of a 4-cent loss for the period.
In the prior-year period, the carrier achieved headline earnings per share of 6 cents, supported by nonrecurring gains from the sale of three terminals totaling $25.6 million.
CEO Mike Gerdin highlighted favorable trends early in the first quarter, suggesting a momentum build through the year despite extreme winter weather affecting early 2025 comparisons.
“While it is early in the quarter, we are noticing a positive shift in customer rate and volume negotiations, anticipated to strengthen as the year unfolds,” Gerdin stated.
Fourth-Quarter Financials and Strategy
The fourth quarter saw $6 million in gains from the sale of used equipment, which analysts categorize as recurring operations offsets. These gains heavily skewed toward the fourth quarter accounted for about 80% of the year's total gains, providing approximately a 6-cent benefit with a normalized tax rate.
Heartland's fourth-quarter revenue was $242.6 million, down 11.9% year over year, and fell 8.9% excluding the impact of fuel surcharges. Revenue, minus fuel, dipped by 5.5% from the third quarter.
The company does not offer operating metrics for utilization and pricing. However, it recorded a 98.9% adjusted operating ratio—400 basis points worse than the same quarter in 2023 but an improvement from 105.8% when excluding real estate gains.
Efforts to curtail expenses are evident, with salaries, wages, and benefits dropping 60 basis points year over year, while rents and purchased transportation fell by 220 basis points. However, operations and maintenance costs rose by 190 basis points as the average tractor age increased to 2.5 years from 2.2 the previous year.
Acquisitions and Economic Headwinds
Heartland has faced prolonged challenges, both from the severity of the freight recession and the timing of its acquisitions of two fleets (Smith Transport and Contract Freighters) during the economic downturn in summer 2022.
Legacy operations, including the 2019 acquisition of Millis Transport, posted a 96.3% operating ratio for the fourth quarter, demonstrating improvements over the traditionally weaker first quarter.
Looking Ahead: Strategic Goals
CEO Gerdin is optimistic about substantial improvement opportunities via self-help initiatives and eventual market uplift. The company remains focused on cost reduction, operating systems integration, and asset utilization strategies in anticipation of a favorable spike in freight demand.
Heartland’s ultimate goals include restoring a low- to mid-80s operating ratio, expanding its profitable revenue base, and returning to a debt-free status.
In 2024, the company repaid $100 million in debt, with a total repayment nearing $300 million since acquiring Smith Transport and Contract Freighters in 2022. Heartland concluded the year with $187.9 million in net debt, including financing lease obligations, and no revolving credit facility balance, which has $88.3 million available.
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