Acquisitions boost bottom line for Heartland Express
November 2, 2022
•Land Line Staff
Heartland Express finished the third quarter strong, thanks in large part to recent acquisitions.
Company executives noted, however, that freight demand had softened compared to the first two quarters of the year. The third quarter of this year also is less than “the unprecedented levels experienced in the later months of 2021,” according to a company earnings statement.
“I am extremely proud to report our consolidated operating results for the three and nine months ended Sept. 30, 2022. These strong operating results for the quarter include our legacy operations as well as the first full month of operations of Contract Freighters Inc., which was acquired on Aug. 31, 2022. The acquisition of CFI was immediately accretive to our consolidated earnings which reflects the solid operating foundations and the safe and professional CFI drivers that we have admired for many years,” Mike Gerdin, CEO of the North Liberty, Iowa-based Heartland Express“, said in the earnings statement.
“Further, this significant event occurred just a few months after the acquisition of Smith Transport, which was completed on May 31, 2022. These two major acquisitions follow Millis Transfer, which was acquired in 2019.”
Heartland Express notched record operating revenues in the third quarter of 2022. Its consolidated operating revenue of $270 million was 79.5% more than the same period the year before, when it was $152.6 million. The company expects to improve it revenue and cut costs with the recent acquisitions. The company reports a consolidated operating ratio of 87.3% for the third quarter. Its goal is to lower the operating ratio of the low 80s within three years, Gerdin said in the statement. The lower the operating ratio, the more profitable a company can be for the investment in it.
Demand for freight is expected to be volatile in the fourth quarter, the company predicts.
“Freight demand in the third quarter of 2022 softened sequentially compared to the first and second quarters of 2022. While the current levels are down compared against the unprecedented levels experienced in the later months of 2021, we continue to have more opportunities to haul freight than we are able to cover with our existing fleet and available drivers,” Gerdin said in the statement. “Given what we have experienced and based on feedback from our strong group of customers, we expect volatile freight demand for the remainder of 2022, along with minimal incremental lift from the peak holiday season typically experienced during the fourth quarter.
The company reported the average age of its trucks was 2.1 years as of Sept. 30. Trailers averaged 6.2 years old. The average age of the Heartland Express fleet was affected by including of Smith Transport and CFI during the second and third quarters of 2022. The company anticipates spending $45 million to $50 million on equipment and ongoing terminal projects in the fourth quarter of 2022, depending on market conditions. LL