Heartland Express Inc. reported that profits slipped 11% year-over-year after a significant decline in revenue, excluding fuel surcharges, due to fewer miles driven overall during the second quarter.
The truckload carrier made $14.6 million in profits, or 18 cents per share, for the three-month period ending on June 30. The Bloomberg News consensus average forecast of industry analysts was between 18 and 19 cents, essentially matching the actual results.
One year ago, the numbers were $16.4 million in profits, or 20 cents per share.
Revenue plunged 21% to $114.9 million, excluding the impact of fuel surcharges, mainly because fewer miles were driven during the second quarter compared with the same period in 2016. Heartland CEO Michael Gerdin told Transport Topics that while the company doesn't disclose mileage data, the total dropped because there were fewer drivers on the road than a year ago.
Adding back in the fuel, revenue was down 19% to $129.6 million. The average analyst forecast was $142.4 million in revenue, ranging from $132 million on the low end to $160 million on the high side.
However, Gerdin focused his comments on his company’s operating ratio, which improved 120 basis points to 83.6%. A lower percentage is better because the ratio measures how much operating expenses ate into the top-line revenue. Gerdin emphasized that the focus should remain on keeping the ratio consistent year-over-year so that profits recover when revenue grows again.
“This quarter, we achieved our best operating ratio posted over the past two years and achieved our goal of operating in the low 80s without gains during the last month of the quarter. We now look forward to the new opportunities with our recent acquisition of Interstate Distributor Co. This is our second-largest acquisition in our 39-year history and our second large acquisition in less than four years,” Gerdin said.
Heartland Express acquired 100% of IDC’s outstanding stock from Saltchuk Resources Inc. on July 6. The value of the deal was about $113 million, funded through $94 million in cash, an assumption of about $23 million of IDC’s debt and acquisition of $4 million in cash on IDC’s balance sheet. Heartland has announced it plans to pay off IDC’s debt in the third quarter.
Through the first half of the year, revenue and profits were also lower than 2016. Revenue decreased 20% to $259.5 million and profits were down 6.8% to $28.7 million, or 34 cents per share. The operating ratio improved 190 basis points to 84.3%.