EX-99.2
3
exhibit992.htm
EXHIBIT 99.2 (HEARTLAND EXPRESS, INC. INVESTOR PRESENTATION)
Exhibit 99.2
Acquisition of Interstate Distributor Co.July 6, 2017
Safe Harbor This report contains forward-looking statements relating to the expected results of acquiring Interstate Distributor Co. ("IDC"), future capital expenditures and debt levels, expected synergies, and financial goals. Forward-looking statements are usually identified by words such as "anticipates", "believes", "estimates", "plans", "projects", "expects", "hopes", "intends", "will", "could", "may", or similar expressions. These statements are based on information currently available and speak only as of the date the statement was made. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are inherently uncertain, and are based upon the current beliefs, assumptions and expectations of management, as well as current market conditions, all of which are subject to significant risks and uncertainties as set forth in the Risk Factors section of our Annual Report Form 10-K for the year ended December 31, 2016, as those risk factors may be updated from time to time. As a result of these and other factors, actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, to update or revise any forward-looking statements to reflect future events, new information or changes in these expectations. 2
Transaction Overview 3 Transaction Highlights Acquired all of the stock of Interstate Distributor Co. of Tacoma, WA ("IDC") IDC total revenue of $325 million and an operating loss in 2016 $113 million enterprise value included $94 million in cash for the equity, $23 million in assumed debt, and $4 million of acquired cashExpands revenue base by approximately 50% in exchange for approximately 6.5% of market capEPS accretion expected in first full quarter of operations Strategic Fit Additional density, particularly in West Coast marketsNearly complete network overlapSimilar service, safety, and driver focus Expected Synergies Operate under Heartland brandNear-term consolidation of operationsElimination of duplicate terminal facilities over the next 18 monthsImprove asset allocation, yields"Heartlandize" costs Financial Impact Purchase funded with available cashAfter repaying IDC debt, Heartland will be debt-free, with $50 million of cash Stepped up tax basis in IDC's physical assets and deductibility of goodwill will provide future cash tax benefits (tax allocation still underway)
Why IDC? 4 Safe carrier with strong driver corps and excellent customersOverlapping terminal network offers straightforward consolidation opportunityStrong visibility to near term improvement and EPS accretionAdditional lane density affords opportunity to improve asset allocation into an improving freight marketHeartland's strengths complement IDC's areas of needYield managementCost controlFleet investment Heartland evaluated numerous acquisition candidates over the past several quarters and IDC rose to the top
Safety and Driver Focus IDC recognized by the Truckload Carriers Association as one of the top three safest fleets in each of the last three years IDC consistently recognized as one of the Best Fleets to Drive For by CarriersEdgeAverage driver tenure with IDC is approximately 3 years 5 Lowe's Platinum Carrier Award2010, 2016Gold Carrier Award2011, 2012, 2015
6 Terminal Consolidation in All IDC Markets Increase density in West; better serve IDC customers in East Optimize load matchingDriver and other employee opportunitiesDeadhead reductionCost savings Consolidation of facilities in/near = Consolidation opportunities = IDC Terminal = Heartland Terminal Sea-Tac OregonSouthern CaliforniaPhoenixNashville
Fleet Overview Approximately 1,570 tractors, which includes approximately 220 owner-operatorsAverage company tractor age: approximately 3.0 yearsApproximately 4,700 trailersAverage trailer age: approximately 7.5 yearsExpect to invest significant capex to bring fleet age toward Heartland's standard and lower operating costs over the next 18 months 7
IDC Blue Chip Customers No customer more than 5% of total and modest overlap with Heartland accounts 8
Focus on Markets 9 9 2016 Revenue Mix 2016 End Market by Industry Intermodal4% Brokerage7% Contact Carrier5% Owner Operator10% Reefer13% Dedicated23% Van38% Other2% Medical3% Manufacturing7% Logistics15% Consumer Products15% Food & Beverage20% Retail38%
Expected Synergies Consolidate back office functions (one brand, one team)Eliminate duplicate terminal locationsImprove yield through density, capacity allocation, and fewer empty milesDownsize non-core business"Heartlandize" costs 10 Direct Path to EPS Accretion; Medium Term Expectation of Low to Mid 80s Consolidated Operating Ratio Expected Synergy Comment Near term and straightforwardConsolidation to start immediately; complete by 1H2019Overlay IDC and Heartland capacity on combined customers and lanes; optimize allocation; trim non-compensatory freightCertain operations amounting to approximately 25% of business are not core to Heartland and will be improved or downsizedPurchasing power; discipline, "wants and needs"
Back to Form 8-K

EX - 99 . 2 3 exhibit992 . htm EXHIBIT 99 . 2 ( HEARTLAND EXPRESS , INC . INVESTOR PRESENTATION ) Exhibit 99 . 2 Acquisition of Interstate Distributor Co . July 6 , 2017 Safe Harbor This report contains forward - looking statements relating to the expected results of acquiring Interstate Distributor Co . ( " IDC " ) , future capital expenditures and debt levels , expected synergies , and financial goals . Forward - looking statements are usually identified by words such as " anticipates " , " believes " , " estimates " , " plans " , " projects " , " expects " , " hopes " , " intends " , " will " , " could " , " may " , or similar expressions . These statements are based on information currently available and speak only as of the date the statement was made . Such forward - looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 , as amended . Such forward - looking statements are inherently uncertain , and are based upon the current beliefs , assumptions and expectations of management , as well as current market conditions , all of which are subject to significant risks and uncertainties as set forth in the Risk Factors section of our Annual Report Form 10 - K for the year ended December 31 , 2016 , as those risk factors may be updated from time to time . As a result of these and other factors , actual results may differ from those set forth in the forward - looking statements . The Company makes no commitment , and disclaims any duty , to update or revise any forward - looking statements to reflect future events , new information or changes in these expectations . 2 Transaction Overview 3 Transaction Highlights Acquired all of the stock of Interstate Distributor Co . of Tacoma , WA ( " IDC " ) IDC total revenue of $ 325 million and an operating loss in 2016 $ 113 million enterprise value included $ 94 million in cash for the equity , $ 23 million in assumed debt , and $ 4 million of acquired cashExpands revenue base by approximately 50 % in exchange for approximately 6 . 5 % of market capEPS accretion expected in first full quarter of operations Strategic Fit Additional density , particularly in West Coast marketsNearly complete network overlapSimilar service , safety , and driver focus Expected Synergies Operate under Heartland brandNear - term consolidation of operationsElimination of duplicate terminal facilities over the next 18 monthsImprove asset allocation , yields " Heartlandize " costs Financial Impact Purchase funded with available cashAfter repaying IDC debt , Heartland will be debt - free , with $ 50 million of cash Stepped up tax basis in IDC 's physical assets and deductibility of goodwill will provide future cash tax benefits ( tax allocation still underway ) Why IDC ? 4 Safe carrier with strong driver corps and excellent customersOverlapping terminal network offers straightforward consolidation opportunityStrong visibility to near term improvement and EPS accretionAdditional lane density affords opportunity to improve asset allocation into an improving freight marketHeartland 's strengths complement IDC 's areas of needYield managementCost controlFleet investment Heartland evaluated numerous acquisition candidates over the past several quarters and IDC rose to the top Safety and Driver Focus IDC recognized by the Truckload Carriers Association as one of the top three safest fleets in each of the last three years IDC consistently recognized as one of the Best Fleets to Drive For by CarriersEdgeAverage driver tenure with IDC is approximately 3 years 5 Lowe ' s Platinum Carrier Award2010 , 2016Gold Carrier Award2011 , 2012 , 2015 6 Terminal Consolidation in All IDC Markets Increase density in West ; better serve IDC customers in East Optimize load matchingDriver and other employee opportunitiesDeadhead reductionCost savings Consolidation of facilities in / near = Consolidation opportunities = IDC Terminal = Heartland Terminal Sea - Tac OregonSouthern CaliforniaPhoenixNashville Fleet Overview Approximately 1,570 tractors , which includes approximately 220 owner - operatorsAverage company tractor age : approximately 3 . 0 yearsApproximately 4,700 trailersAverage trailer age : approximately 7 . 5 yearsExpect to invest significant capex to bring fleet age toward Heartland 's standard and lower operating costs over the next 18 months 7 IDC Blue Chip Customers No customer more than 5 % of total and modest overlap with Heartland accounts 8 Focus on Markets 9 9 2016 Revenue Mix 2016 End Market by Industry Intermodal4 % Brokerage7 % Contact Carrier5 % Owner Operator10% Reefer13 % Dedicated23 % Van38 % Other2 % Medical3 % Manufacturing7 % Logistics15 % Consumer Products15 % Food & Beverage20 % Retail38 % Expected Synergies Consolidate back office functions ( one brand , one team ) Eliminate duplicate terminal locationsImprove yield through density , capacity allocation , and fewer empty milesDownsize non - core business " Heartlandize " costs 10 Direct Path to EPS Accretion ; Medium Term Expectation of Low to Mid 80s Consolidated Operating Ratio Expected Synergy Comment Near term and straightforwardConsolidation to start immediately ; complete by 1H2019Overlay IDC and Heartland capacity on combined customers and lanes ; optimize allocation ; trim non - compensatory freightCertain operations amounting to approximately 25 % of business are not core to Heartland and will be improved or downsizedPurchasing power ; discipline , " wants and needs " Back to Form 8 - K