Heartland Express dismissed its longtime accounting firm KPMG after KPMG’s year-end 2017 report for Heartland stated that the truckload carrier didn’t maintain internal controls over financial statements and access to its technology as it prepared to purchase Interstate Distributor Co. last July.
According to a Heartland filing with the Securities and Exchange Commission, KPMG’s report indicated that Heartland’s failure to maintain effective control over financial reporting and user access to its technology led to “ineffective controls over the allocation of the purchase price for Interstate Distributor Co. to the assets acquired and liabilities assumed.”
Heartland paid $113 million for Interstate, a Tacoma, Wash.-based truckload carrier with 1,375 company- owned tractors. Prior to its purchase Interstate Distributor was ranked No. 75 on Transport Topics list of Top 100 for-hire carriers in North America with revenues of $370 million.
The acquisition proved problematic, however. Heartland CEO Michael Gerdin acknowledged in the company’s 2017 earnings report that the deal was causing “challenging effects on our financial results” and that it had to spend more in the fourth quarter that year to integrate Interstate into the firm. Gerdin said Heartland had ended Interstate services related to intermodal, brokerage and contract carriers, and “eliminated the overuse of brokers and third party logistics customers.”
In addition, Heartland reported an $11 million drop in operating income in the fourth quarter due to the negative impact of the Interstate consolidation.
Last November Heartland named Christopher Strain its vice president of finance, treasurer and CFO, replacing John Cosaert, executive vice president of finance, treasurer and CFO, who retired. Cosaert was one of the company’s founding employees in 1978.
Heartland hired Grant Thornton to replace KPMG, which had served as its public accounting firm since 2002.
Heartland ranks No. 52 on Transport Topics list of Top 100 for-hire carriers in North America.