Heartland Express reports Q2 EPS 10c, consensus 16c

Reports Q2 revenue $306.2M, consensus $322.65M. Heartland Express Chief Executive Officer Mike Gerdin commented on the quarterly operating results and ongoing initiatives of the Company, “I am proud to report our consolidated operating results for the three and six months ended June 30, 2023 and recognize the first anniversary of our acquisition of Smith Transport, which occurred on May 31, 2022. We also look ahead to the first anniversary of our most recent acquisition, Contract Freighters, which will occur during the third quarter of 2023. As a result of these acquisitions and our legacy operations of Heartland Express and Millis Transfer, our operating revenue for the three and six months ended June 2023 has increased significantly by 63.0% and 87.9%, respectively, as compared to the same periods of 2022. We began seeing a general decline in freight volumes beginning in the second half of 2022, with a continued decline throughout the first quarter of 2023. Freight volumes began leveling out near the end of the first quarter of 2023, which followed the strong freight environment for the previous two years. There was no meaningful improvement in general freight demand during the second quarter of 2023. In addition, we are currently being challenged with driving needed operational improvements at both CFI and Smith Transport given the current freight environment. Our legacy operations of Heartland Express and Millis Transfer continue to perform well in the current environment. Heartland Express and Millis transfer combined had an operating ratio of 87.7% during the second quarter of 2023 and an 85.9% operating ratio for the first half of 2023. In contrast, Smith Transport and CFI combined for an operating ratio of 99.8% during the second quarter of 2023 and a 99.6% operating ratio for the first half of 2023. We still see an effective path for future operational improvements at both Smith Transport and CFI and remain confident that we can improve their respective operating ratios to align with our legacy Heartland Express operational expectations. Our financial results relative to these factors, the current operating environment, and our industry peers is evidence of our ability to perform effectively no matter what challenges we are faced with.” Mr. Gerdin continued, “I am proud of our drivers and support teams across all four of our operating brands for battling through these tough times and delivering profitable results during the second quarter. During the second quarter of 2023, we have demonstrated our financial stability and discipline as we were able to continue to generate significant operating cash flows, invest in our fleet and terminal network, and to date have paid down approximately $146 million of outstanding debt and financing liabilities, which originated from the two acquisitions completed in 2022. We continue to serve our strong network of customers that value our long-term commitment and partnership which has been built and proven over many years filled with volatile times. ” “Freight demand during the second quarter is typically stronger than the first quarter due to expected seasonal increases from the spring and early summer months, but current freight demand levels continue to be lower than our expectations for optimal operations. Given what we have experienced and based on feedback from our customers, we expect volatile freight demand for at least the next quarter of 2023 and look to the holiday season of the fourth quarter for potential improvements in the freight demand environment. However, we remain committed to ongoing investments in our drivers and our company, to ensure stability for all of our employees. This includes a rewarding level of compensation, along with the equipment and tools to have a safe and successful career. We are excited about the future and believe we are stronger together and well positioned for the future as Heartland Express, Millis Transfer, Smith Transport, and CFI.”