Sign in

You're signed outSign in or to get full access.

HE

HEARTLAND EXPRESS INC (HTLD)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue fell to $219.4M and EPS was a loss of $0.18; both missed Wall Street consensus, which expected $240.9M revenue and -$0.095 EPS. Management cited adverse winter weather, tariff uncertainties, and persistent cost inflation as key drivers . Consensus values marked with asterisks; Values retrieved from S&P Global.*
  • Operating ratio deteriorated to 106.8% (adjusted OR 107.1%), versus 99.6% in Q4 2024; net loss margin rose to 6.3% vs. 0.8% in Q4 .
  • Liquidity improved: cash rose to $23.9M (from $12.8M in Q4), debt/finance leases declined to $199.6M (from $200.7M), and operating cash flow was $25.8M (11.8% of revenue) .
  • 2025 guidance reiterated capex of $40–$50M and gains on disposal of $10–$15M; dividend at $0.02 per share maintained, marking the 87th consecutive quarterly dividend .
  • Potential stock reaction catalysts: broad misses vs consensus and sequential margin compression, offset by improving demand signals (rising turndowns), disciplined pricing, and a stable dividend; management does not expect material freight improvements until later in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Liquidity and deleveraging: Cash increased by $11.1M q/q to $23.9M; debt/finance leases held roughly flat and remain far below post-acquisition peaks; operating cash flow of $25.8M supported the quarter .
  • Cost actions and fleet strategy: Management is “strategically shrinking the fleet” and evaluating cost measures across brands to right-size to demand and drive efficiencies over the next 12 months .
  • Customer dialogue improving: CFO noted more constructive rate conversations (flat to +1% on incumbent lanes viewed as a win) and rising turndowns (weekly loads declined due to service-led pricing discipline)—earliest signs of demand firming vs 2024 .

What Went Wrong

  • Broadly weak quarter: Revenue declined 18.8% y/y to $219.4M; OR worsened to 106.8% (adjusted OR 107.1%); net loss of $13.9M (6.3% of revenue) reflects intensified pressure .
  • External headwinds: Significant winter weather disruptions in Jan/Feb and tariff uncertainties in March constrained utilization; CFO quantified deadhead 4–5 points above historical, with ~1 OR point per deadhead point and ~7–8 OR points of OR impact from underutilization alone .
  • Persistent industry imbalance: Excess capacity and procurement-led pricing pressures (favoring cheapest rates) continue to weigh on volumes and mix, delaying parity in supply-demand .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Operating Revenue ($USD Millions)$259.861 $242.576 $219.420
Fuel Surcharge Revenue ($USD Millions)$32.820 $28.001 $26.321
Net (Loss) Income ($USD Millions)$(9.283) $(1.854) $(13.873)
Basic EPS ($USD)$(0.12) $(0.02) $(0.18)
Operating Ratio (%)102.7% 99.6% 106.8%
Adjusted Operating Ratio (%)102.6% 98.9% 107.1%
Net Loss Margin (%)3.6% 0.8% 6.3%
Q1 Year-over-Year ComparisonQ1 2024Q1 2025
Operating Revenue ($USD Millions)$270.320 $219.420
Fuel Surcharge Revenue ($USD Millions)$36.212 $26.321
Net (Loss) Income ($USD Millions)$(15.108) $(13.873)
Basic EPS ($USD)$(0.19) $(0.18)
Operating Ratio (%)105.3% 106.8%
Adjusted Operating Ratio (%)105.6% 107.1%
Net (Loss)/Revenue (%)5.6% 6.3%
Estimates vs Actual (Q1 2025)Consensus*ActualResult
Revenue ($USD Millions)240.900 [Q1 2025]*219.420 MISS
Primary EPS ($USD)-0.0955 [Q1 2025]*-0.18 MISS
# of EPS Estimates4 [Q1 2025]*——
# of Revenue Estimates2 [Q1 2025]*——

Values retrieved from S&P Global.*

Segment breakdown: Company reports consolidated results; no segment revenue by brand disclosed in the quarter’s materials .

KPIs and Balance Sheet

KPIQ3 2024Q4 2024Q1 2025
Cash & Cash Equivalents ($USD Millions)$30.739 $12.812 $23.873
Total Debt & Finance Lease Obligations ($USD Millions)$206.8 $200.7 $199.6
Available LOC Capacity ($USD Millions)$88.3 $88.3 $88.3
Operating Cash Flow ($USD Millions)—$144.3 (FY 2024) $25.8 (Q1)
Op. Cash Flow Margin (%)13.2% (9M 2024) 15.6% (Q4) 11.8% (Q1)
Tractor Fleet Age (years)2.7 2.5 2.6
Trailer Fleet Age (years)7.2 7.4 7.4
Shares Outstanding (Millions)78.5 78.5 78.5
Dividend Declared per Share ($USD)$0.02 $0.02 $0.02

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Capital Expenditures ($USD Millions)FY 2025N/A$40–$50 New
Gains on Disposal of Property & Equipment ($USD Millions)FY 2025N/A$10–$15 New
Dividend per Share ($USD)Quarterly (Q1/Q2 2025)$0.02 (Q1 declared Mar 14, 2025) $0.02 (Q2 declared Jun 13, 2025) Maintained

Management outlook: Early recovery signals observed; material improvement not expected until later in 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Demand/Supply BalanceProlonged freight recession; excess capacity; slight sequential improvement in Q4 Early signs of recovery; turndowns rising; stronger South/Southeast lanes; material improvement later in 2025 Improving gradually
Pricing/Rate NegotiationsPrice/mix pressure; customers pushing rate cuts; disciplined pricing maintained Incumbent lanes flat to +1% is a win; customers seeking capacity amid tightening Constructive vs 2024
Asset Utilization/DeadheadUnderutilized assets; OR elevated due to weak demand Weather and tariffs disrupted networks; deadhead +4–5 pts vs historical; ~7–8 OR pts impact from underutilization Mixed (near-term pressure)
Integration/Cost ActionsIntegration progress and cost control driving OR improvements in legacy vs acquired brands Fleet shrink and cost measures across brands to achieve profitability over 12 months Ongoing self-help
Cross-border & TariffsNot a major focus in Q3/Q4 disclosuresMexico now 5–10% of business via CFI; activity slowing amid tariff uncertainty Watch risk
Capital AllocationSignificant debt repayment; cash generation supporting deleveraging Liquidity up q/q; continued debt reduction; 2025 capex and disposal gains targeted Balanced/liquidity supportive

Management Commentary

  • CEO on Q1 drivers: “adverse weather experienced in January and February, tariff uncertainties amongst our customers in March, along with prolonged industry-wide challenges where operating cost inflation continued to outpace customer freight demand” .
  • CEO on actions: “We are strategically shrinking the fleet… evaluating all cost measures… path toward operating profitability for our consolidated operations over the next twelve months… we do not expect material improvements until later in 2025” .
  • CFO on cycle and demand signals: “we are… the most optimistic sitting here today than we’ve been in the last 3 years… turndowns… about 1,100 a week… we need… 5,000+” .
  • CFO on utilization and OR: “deadhead is 4 or 5 percentage points higher… 1 deadhead point equals 1 OR point… OR impact… around 8 points-ish” .
  • CFO on pricing: “hold our volume flat… keep incumbent lanes at a flat rate to maybe up 1%, that’s a win” .

Q&A Highlights

  • Demand indicators and seasonality: Management is monitoring March–April developments; turndowns trending up from ~700–800/week in Q4 2024 to ~1,100/week, with meaningful equilibrium closer to 5,000/week .
  • Weather impact quantification: Underutilization and elevated deadhead increased OR by ~7–8 points; fixed-pay components during shutdowns added OR pressure .
  • Capacity correction and industry pain: Capacity exiting more slowly than expected; prolonged downturn (~3 years) worse than 2008–2009; increased inquiries from carriers seeking sales/M&A .
  • Tariffs and Mexico: Mexico exposure now 5–10% via CFI; shippers delaying amid tariff uncertainty; OEMs’ pricing may reflect component tariffs; 2027 emission standards could raise truck costs 15–20% .
  • Capex priorities: Keep tractor age ~2.5 years; lower trailer age; consider prebuy ahead of 2027 emissions; rebalance trailer ratio using disposals .

Estimates Context

  • Q1 2025 results missed consensus on both revenue and EPS: $219.4M vs $240.9M*, and -$0.18 vs -$0.0955*; 4 EPS estimates and 2 revenue estimates contributed to consensus *.
  • The magnitude of the miss is attributable to weather disruptions, tariff-related demand uncertainty, and underutilization across acquired brands; management expects self-help and gradual demand improvement later in 2025 to aid profitability .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Broad miss vs consensus with sequential OR deterioration vs Q4 (106.8% vs 99.6%); near-term earnings risk persists until demand tightens and utilization improves *.
  • Liquidity strengthened q/q (cash +$11.1M) and debt edged down; balance sheet flexibility supports continued self-help and disciplined pricing .
  • Management executing fleet right-sizing and cost controls across brands with a 12‑month path back to profitability; watch for utilization and deadhead improvements as leading indicators .
  • Pricing discipline remains intact; early signs of constructive rate talks (flat to +1%) could stabilize revenue mix as capacity tightens .
  • Capex and asset disposal plans ($40–$50M capex; $10–$15M gains) focus on maintaining a young tractor fleet and reducing trailer age/ratio; potential prebuy ahead of 2027 emissions may pull forward spend .
  • Cross-border exposure is manageable (5–10%) but tariff uncertainty is dampening activity; monitor policy developments and OEM pricing impacts on equipment costs .
  • Dividend maintained at $0.02/share; consistent capital return amid cycle trough provides yield support while margins recover .

Values retrieved from S&P Global.*