Heartland Express buys Pennsylvania carrier Smith Transport

June 1, 2022

•

Publicly traded Heartland Express has bought dry van truckload carrier Smith Transport Inc. and related entities.

North Liberty, Iowa-based Heartland reported in a news release that it had acquired 100% of the equity of Smith and related companies for a cash-free, debt-free enterprise value of about $170 million.

Roaring Spring, Pa.-based Smith Transport is an asset-based truckload carrier with terminals in Pennsylvania, Georgia, and Indiana. Founded in 1982, Smith primarily provides dry van transportation and other specialized services in the eastern United States.

Smith’s customer base includes Fortune 500 companies including expedited transportation integrators, retailers, beverage manufacturers, and home supply companies, several of which have been customers for over 20 years. Smith operates a fleet of about 850 company tractors, with an average age of less than three years, and approximately 2,000 dry van trailers. The modern fleet is not expected to require any out of cycle investment, Heartland Express reported in the news release.

The Smith companies will continue to operate from Roaring Spring under the leadership of Todd Smith, president, with ongoing support from founder Barry Smith.

“Our plan is to keep Smith the same company that is attractive to customers, drivers and other personnel while using our scale to offer better purchasing, more depth and advantageous cost savings,” Michael Gerdin, chairman, president, and CEO of Heartland Express, said in the news release.

Smith was an S corporation for tax purposes, and the transaction included an election that results in tax deduction benefits over periods of one to 15 years. The Roaring Spring property was acquired from its owners in a separate transaction for $14 million in cash. It includes the trucking terminal and 375,000 square feet of warehouse space that is leased to tenants. The enterprise value for the transaction, including the real estate, reflected approximately five times the estimated run rate adjusted earnings before interest, taxes, depreciation, and amortization and eight times the estimated run rate adjusted operating income.

Heartland Express Inc. is an irregular route truckload carrier that focuses on medium to short haul regional freight. It has been publicly traded since 1986. The company reported first-quarter 2022 income of $16.8 million. It also reported operating revenue of $151.3 million and operating income of $22.4 million, a 22.5% increase from 2021. In addition, it reported having a debt-free balance sheet.

Heartland has terminals in Arizona, California, Colorado, Florida, Georgia, Idaho, Illinois, Iowa, Mississippi, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Virginia and Washington.

FedEx Express awarded Heartland Express a Platinum Award for 99.99% On-time Service and Core Carrier of the Year, Heartland announced in August. Heartland has received Carrier of the Year award from FedEx 14 times in the past 15 years.