Russell Gerdin Retires at Heartland Express; Son Michael Promoted to Chairman, CEO
This story appears in the Sept. 12 print edition of Transport Topics.
Heartland Express announced that Russell Gerdin, founder of the truckload carrier, has retired due to health concerns and passed the chairman and CEO positions to his son, Michael.
“He’s had a rash of things over the last five years, including a liver transplant,” said the younger Gerdin of his father. “He felt he was unable to continue at the level necessary.”
Gerdin, 70, is one of the truckload industry’s first-generation titans who capitalized on the deregulation change of 1980.
Although he also has left the board of directors at Heartland, North Liberty, Iowa, Gerdin will retain the title chairman emeritus. Russell Gerdin also owns 30.8 million of the company’s common shares, or 33.9%, according to the company’s June 13 proxy statement filed with the Securities and Exchange Commission.
The younger Gerdin started working in the Heartland maintenance shop in 1983, while still in high school, and stayed on part-time through college. After graduating in 1992 he joined the company full-time. He has served as president since May 2006.
“We’re going to be the same company going forward as we have been. Our strategies are in place and it’s a matter of continuing to execute them,” Michael Gerdin said in an interview.
The son of a trucker, Russell Gerdin founded Heartland in 1978, specializing in medium-haul, regional transportation in specific lanes. Heartland went public in 1986 and the company ranks No. 45 on the Transport Topics Top 100 list of the largest for-hire carriers in the United States and Canada. It is the 11th-largest truckload carrier on the list.
“Russ Gerdin is one of the giants in our industry and his retirement marks the end of an era and a passing of the torch at Heartland Express,” said Bill Graves, president of American Trucking Associations. “Aside from his business acumen, what I’ve always admired in Russ is his incredible generosity. Russ made a significant lead gift that allowed the ATA to present a $1.5 million donation to the American Red Cross following Hurricane Katrina. He made that lead gift without seeking any credit or public recognition. That is a rare type of leadership that you can’t help but admire and respect.”
The elder Gerdin’s quarterly financial performance was so well known that he developed a following in the truckload industry.
“When you are at a trucking meeting and mention ‘Russ,’ everyone knows you’re talking about Russ Gerdin,” said Lana Batts of Transport Capital Partners, and former president of the Truckload Carriers Association.
“He doesn’t have the biggest trucking company, just the most profitable. He went public at the most appropriate time and then used other people’s money to expand,” Batts said.
For the 12 months ended June 30, Heartland earned net income of $71.1 million on revenue of $521.4 million. During that time the company’s operating ratio — expenses as a percentage of revenue — was 79.3.
Stockholders’ equity, or corporate net worth, was $334.2 million, and the company held cash, cash equivalents and short-term investments of $129.4 million.
In comparison, Batts said, truckload operating ratios of 95 are fairly typical, and if a CEO gets down to 91, “he thinks he’s died and gone to heaven.”
“Russ’ legacy is running a company known for outstanding service, the highest profits and the best driver pay in truckload — and it’s not obvious those would all fit together,” said stock analyst Thom Albrecht of BB&T Capital Markets, who has followed Heartland since the 1990s.
In talking to Gerdin over the years, Albrecht said he learned that Russ’ father often had to struggle with older trucks and too much debt, and that led to Heartland’s emphasis on no debt and a young fleet.
“Russ is incredibly disciplined. He maintained a debt-free balance sheet and scrubbed all expenses. He had a very low cost structure for everything but equipment and driver pay,” Albrecht said.