Heartland Express reported net income of $5.1 million for the fourth quarter, which included the benefit of $25.6 million in gains from the sale of three terminals. Excluding the gains, which are unlikely to be replicated on an ongoing basis, the company again booked a notable loss.

“This challenging freight environment combined with two acquisitions in the prior year, have pressured our financial results to a level below our historical results and management expectations,” CEO Mike Gerdin said in a news release.

He said the company will continue to “evaluate its real estate portfolio,” which has expanded through acquisitions in recent years. That may mean more asset sales, but analysts are unlikely to consider those as part of recurring earnings per share.

The Iowa-based truckload carrier reported an adjusted operating ratio of 94.9%, which excluded the impacts of fuel surcharges and acquisition-related amortization expense. However, backing out the gains from the terminal sales, the company’s adjusted OR was 105.8%.

The underperformance is tied to back-to-back acquisitions made in 2022. The Contract Freighters Inc. (CFI) and Smith Transport fleets were acquired during a freight recession, which delayed the expected synergies the increased scale would provide Heartland.

The company’s legacy operations and the Millis Transfer fleet, which was acquired in 2019, operated at an 86.9% OR during 2023. CFI and Smith produced a 103.8% OR during the year.

“We project we can improve our consolidated operating results, within three to four years following the 2022 acquisitions to align with our historical operational results,” Gerdin said.  

Heartland (NASDAQ: HTLD) reported a 22% year-over-year decline in revenue to $275 million. The company does not provide operating metrics for utilization and pricing.

“Lower freight volumes, freight rate mix, and an increase in empty miles compared to the same quarter a year ago were products of the continued freight environment weakness,” the news release said.

Heartland generated $165 million in cash flow from operations during 2023. It used $114 million to reduce the balances on its debt and financing lease obligations to $300 million. It has $28 million in cash and an untapped credit line with $88 million in available borrowing capacity.

Table: Heartland’s key performance indicators

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