Heartland Express Profit Drops Despite Sales Gain

Heartland Express Profit Drops Despite Sales Gain

Net profit dropped 19.1 percent at Heartland Express to $18.2 million, as the trucking firm increased second quarter revenue 1.8 percent to $139.7 million.

The slow increase in revenue, compared with a 5.6 percent gain for Heartland in the first quarter, is another sign of slower economic growth.

“The modest year-over-year gain was the highlight of the report, particularly against the backdrop of a freight economy that is moving sideways,” Jefferies analyst Peter Nesvold said.

“Our best sense is that (Heartland’s) rates were up only in the low single digits and that volumes were flattish,” Nesvold said in a July 19 note to investors.

Despite the year-over-year earnings drop, Heartland remained a highly profitable truckload carrier, with a 13 percent net margin and 80.9 percent operating ratio.

Heartland’s operating ratio in the previous two quarters was 82.4 percent and 79.5 percent, a sign that overall profitability improved from the first quarter.

The company has maintained a net margin in the 12 to 13 percent range over the past three quarters. Last year, Heartland generated a $69.9 million net profit.

The North Liberty, Iowa-based company said a $7.8 million decrease in gains on the disposal of property and equipment helped account for the lower quarterly profit.

The $528.6 million company expanded its fleet, adding new tractors to bring the overall age of its vehicle pool down to 2.2 years at the end of June, the company said.

The average age of its trailer fleet is 3.5 years, and Heartland plans to add 1,000 new Wabash trailers this year, replacing 2003 and 2004 model-year trailers.

Contact William B. Cassidy at wcassidy@joc.com. Follow him on Twitter at @wbcassidy_joc.