Heartland Express, Inc. (HTLD): Business Model Canvas [Dec-2025 Updated]

You're looking past the headlines to see the core mechanics of Heartland Express, Inc. as we head into the end of 2025, and the picture is one of asset strength meeting operational headwinds. While they hold a solid foundation with $1.3 billion in total assets and a young fleet, the immediate challenge is clear: the year-to-date operating ratio is sitting at 105.5%, meaning every dollar of revenue is costing more than a dollar to earn. They are actively managing this, focusing on cost control and TMS integration across their four brands, but the margin fight is defintely on. This Business Model Canvas shows you precisely how Heartland Express, Inc. is structuring its operations to turn that ratio around. See the full breakdown below.

Heartland Express, Inc. (HTLD) - Canvas Business Model: Key Partnerships

You're looking at the essential external relationships Heartland Express, Inc. relies on to keep freight moving and manage costs, especially given the challenging industry environment seen through the first three quarters of 2025. These partnerships are critical for everything from acquiring new assets to managing cross-border complexity.

Truck and Trailer Manufacturers like Daimler Truck North America

The relationship with original equipment manufacturers (OEMs) directly impacts the age and efficiency of the fleet, which is a core part of Heartland Express, Inc.'s operational strategy. The company explicitly focuses on purchasing SmartWay certified tractors and trailers, utilizing engine technology improvements to cut fuel use and emissions. This focus on new equipment is a key partnership output.

For instance, the company has a documented relationship where the President and CEO of Daimler Truck North America presented a new truck to Heartland Express, Inc.'s President and CEO, Mike Gerdin, showing direct OEM engagement. The fleet age metrics show the result of this purchasing strategy:

The tractor fleet age, while slightly increasing to 2.5 years by the end of 2024, still reflects a commitment to relatively late-model equipment, which is vital when fuel costs are a major component of the operating ratio, which stood at 103.7% for the three months ended September 30, 2025.

Cross-border Freight Partners, especially in Mexico (CFI Logistica)

Heartland Express, Inc. gained significant cross-border expertise through the acquisition of Mexican entities under CFI Logistica from TFI International in August 2022 for an enterprise value of $525 million. This partnership integration remains a focus, as the CFI division was completing a full fleet telematics transition in the third quarter of 2025, aimed at improving utilization. The carrier expects all four brands to operate on a common Transportation Management System (TMS) by Dec. 31, 2025, a move intended to boost efficiency in 2026. The company's Total Assets stood at $1.3 billion as of September 30, 2025.

EPA's SmartWay Transport Partnership for Sustainability Initiatives

The partnership with the United States Environmental Protection Agency (EPA) is a long-term commitment, evidenced by repeated recognition for environmental performance. Heartland Express, Inc. and its subsidiaries have been awarded the SmartWay Excellence Award six times, including in 2021. This partnership is tied to the company's financial strategy and equipment replacement plan.

Key aspects of this partnership include:

• Operating a fleet of late model tractors designed to meet or exceed EPA requirements.
• Adopting technologies that reduce wind drag and improve trailer fuel-efficiency, such as SmartWay verified products like EcoFlaps.
• Implementing Idling Reduction techniques where possible.
• Using solar energy and/or batteries to power a portion of driver comfort systems to reduce diesel consumption.

The company's commitment to this partnership is a stated part of its strategy to reduce emissions and conserve energy across its operations.

Fuel Suppliers for Nationwide Bulk Purchasing and Discounts

Managing fuel expense is paramount, as it is a significant variable cost. While specific supplier names aren't detailed in the latest reports, the strategy involves nationwide bulk purchasing to secure discounts. The company's focus on fuel efficiency through new equipment is the primary lever to manage this cost, especially as the industry navigates weak freight demand and rising operating costs. The operating revenue for the nine months ended September 30, 2025, was $626.4 million, making cost control through supplier leverage essential.

Third-Party Logistics (3PL) Providers for Overflow and Specialized Freight

Heartland Express, Inc. utilizes third-party partnerships to manage freight outside its core asset-based dry van service, particularly in Mexico. The company has been strategically reducing underperforming lanes and overall fleet size to align with freight demand, which necessitates reliance on external capacity for overflow or specialized needs to maintain service levels for its customers.

Finance: draft 13-week cash view by Friday.

Heartland Express, Inc. (HTLD) - Canvas Business Model: Key Activities

Asset-based dry van truckload transportation across North America is the core function of Heartland Express, Inc. The company operates four distinct brands: Heartland Express, Millis Transfer, Smith Transport, and Contract Freighters Inc. (CFI).

Strategic fleet reduction is an ongoing key activity to right-size capacity to weak freight demand. This involves trimming underperforming lanes and shedding assets. The company is actively working on this alignment with current freight demand.

Integrating the four operating brands onto a common Transportation Management System (TMS) is a major focus, with the target set for the end of 2025. As of the third quarter of 2025, the Millis and Smith fleets completed a TMS upgrade, and CFI finished a telematics conversion on its fleet. This common TMS is intended to drive better driver utilization and operational collaboration.

Driver recruitment and training is managed, in part, through the Millis Training Institute (MTI), which provides training for Heartland Express, Millis Transfer, and CFI. MTI previously estimated its 2023 student enrollment between 500-700 students with 131 trainers.

Disciplined cost management is critical, especially given the industry environment. This focus is reflected in the pursuit of operational efficiencies to improve the consolidated 105.5% YTD operating ratio for the nine months ended September 30, 2025.

Here's a look at the financial context and brand performance driving these activities as of late 2025:

The operational focus is also evident in the brand-specific results for the third quarter of 2025:

• Heartland Express, Millis Transfer, and Smith Transport brands were profitable during the quarter.
• Contract Freighters Inc. (CFI) was again unprofitable in the quarter.
• Acquisition-related debt and finance lease obligations were reduced by $309 million from 2022 to $185 million as of September 30, 2025.

Driver compensation examples for various segments illustrate the pay structure supporting recruitment efforts:

• OTR average drivers earned $69,474 per year.
• Shorthaul average drivers earned $55,872 per year.
• Dedicated average drivers earned $52,342 per year.
• Team driving average drivers made $70,681 each per year.

Finance: draft 13-week cash view by Friday.

Heartland Express, Inc. (HTLD) - Canvas Business Model: Key Resources

The foundation of Heartland Express, Inc.'s business model rests on several tangible and intangible assets that support its irregular route, asset-based truckload operations across the United States, Mexico, and Canada.

Tangible Assets and Fleet Strength

Heartland Express, Inc. maintains a significant investment in its physical assets, crucial for service delivery and balance sheet strength. As of the third quarter of 2025, the company reported:

• Consolidated fleet of late-model tractors with an average age of 2.6 years as of September 30, 2025.
• Average age of the consolidated trailer fleet was 7.5 years as of September 30, 2025.

The financial backing for these assets is substantial. As of September 30, 2025, Heartland Express, Inc. reported:

The company supports its operations with a physical footprint designed for proximity to major freight centers. Heartland Express, Inc. operates a network of approximately 30 owned facilities near major freight centers in the U.S.

Intangible and Human Capital Resources

Beyond the physical plant, the operational capability is heavily reliant on its people and proprietary systems. The key intangible resources include:

• An experienced, safety-focused driver workforce.
• Proprietary Transportation Management System (TMS) and telematics, which the company continues to integrate across its consolidated operations.

The commitment to a modern fleet, evidenced by the 2.6-year average tractor age, directly supports the goal of minimizing repair and maintenance costs and reducing service interruptions.

Heartland Express, Inc. (HTLD) - Canvas Business Model: Value Propositions

You're looking at what Heartland Express, Inc. offers its customers and investors right now, late in 2025. It's a mix of established service promises and ongoing fleet and system integration efforts.

High on-time service and safety record, positioning as a core carrier

Heartland Express, Inc. positions itself as a core carrier based on its service standards and safety performance. The company has worked to build solid, long-term relationships with customers by branding itself as an industry leader for on-time service. Evidence of their focus on safety includes receiving the TCA Fleet Safety Award 2024 - 2nd Place (Division VI, 100+ Million Miles) and the PepsiCo - 2024 Carrier of the Year (West) award. As of January 2025, the company had approximately 5,220 drivers and non-driving personnel.

Reliable, asset-based dry van capacity across the US, Mexico, and Canada

The reliable capacity comes from an asset-based network operating under four brand names: Heartland Express, Millis Transfer, Smith Transport, and CFI. The service area spans the continental United States, with cross-border freight service to and from Mexico. The consolidated average length of haul is under 400 miles. The logistics revenue generated within Mexico represented 3.0% of consolidated operating revenue as of the beginning of 2025.

Here's a look at the recent top-line performance for the nine months ending September 30, 2025, showing the scale of operations:

Financial stability and dividend longevity despite market headwinds

Heartland Express, Inc. maintains a commitment to stockholders through consistent dividend payments, even while navigating challenging market conditions that resulted in net losses through the first three quarters of 2025. The company has paid cumulative cash dividends of $559.9 million, including four special dividends, over the past eighty-nine consecutive quarters since 2003. A regular dividend of $0.02 per share was declared in the third quarter of 2025. The company's total assets stood at $1.3 billion as of March 31, 2025, with Stockholders' Equity at $807.7 million on that date. Furthermore, acquisition-related debt and finance lease obligations have seen a significant reduction, falling from $494 million in 2022 to $185 million as of September 30, 2025, a reduction of $309 million in three years. Cash balances as of September 30, 2025, were $32.7 million.

The dividend history shows longevity:

• Regular dividend declared Q3 2025: $0.02 per share.
• Cumulative cash dividends paid: $559.9 million.
• Consecutive quarters paying dividends: 89.
• Shares outstanding as of Sep 30, 2025: 77.4 million.

Specialized services including temperature-controlled and cross-border logistics

The service portfolio extends beyond standard dry van truckload. Heartland Express, Inc. offers truckload temperature-controlled transportation services. The cross-border expertise was significantly enhanced through the acquisition of CFI Logistica operations in Mexico. The CFI acquisition, completed in August 2022 for a cash enterprise value of $525 million, brought in expertise in cross-border freight, including operations at five major entry points from California through Texas. The CFI team began a full fleet telematics transition in Q2 2025, expected to finish in Q3 2025, to support these specialized and irregular route services.

Modern, fuel-efficient fleet for reduced emissions and reliable transport

Heartland Express, Inc. focuses on fleet modernization to improve efficiency and manage costs. Strategies to manage fuel costs, a top priority due to diesel price volatility, include strategic fueling, reducing tractor idle time, and purchasing more fuel-efficient tractors. As of March 31, 2025, the average age of the consolidated trailer fleet was 7.4 years, up from 6.7 years a year prior. The company plans to dispose of older tractors and trailers, particularly within the Smith Transport and CFI fleets, to align with freight demand and improve operational efficiency. A key operational goal is to have all four brands operating on a common TMS by Dec. 31, 2025, which is expected to boost efficiency in 2026.

Fleet modernization and system integration efforts include:

• CFI fleet telematics transition expected completion: Q3 2025.
• Goal for common TMS across all four brands by: Dec. 31, 2025.
• Focus on reducing overall fleet size to align with freight demand.

Heartland Express, Inc. (HTLD) - Canvas Business Model: Customer Relationships

You're looking at how Heartland Express, Inc. keeps its core business relationships solid, which is key when the broader freight market is still finding its footing, as seen with the Q3 2025 net loss of $8.3 million. The relationship strategy leans heavily on long-term commitments, though the recent performance across its four brands shows where the focus needs to be.

Long-term, contracted relationships with major shippers form the bedrock of the operating model. Historically, this commitment to contracted freight has been a defining feature, with pro forma expectations around the time of the CFI acquisition showing a diversified freight basket with over 95% contracted capacity. While the latest 2025 contract percentage isn't public, customer concentration data from 2021 shows the top 25 customers accounted for approximately 75% of operating revenues, with no single customer exceeding 10.0% that year.

The structure supporting these core accounts involves dedicated sales and account management teams. The performance of the legacy Heartland Express brand itself demonstrates the success of this approach, as it remained profitable in Q1 2025, while its acquired counterparts faced headwinds. Here's a look at the brand performance snapshot from Q1 2025:

Heartland Express, Inc. does use transactional spot market freight to optimize backhauls and capacity, although the company does not provide operating metrics for utilization and pricing publicly. This balancing act is critical, especially when the company is strategically shrinking its fleet to align with current freight demand, as noted in Q1 2025.

The focus on service quality translates directly into performance-based relationships to win carrier-of-the-year awards. The dedication to service is evidenced by numerous recent accolades earned for performance in the 2024 fiscal period, which management highlighted in early 2025:

• FedEx Express National Carrier of the Year (achieved for 13 years in a row).
• FedEx Express Platinum Award for 99.98% On-Time Delivery (based on 2024 performance).
• Uber Freight Award National Truckload Carrier of the Year (2024).
• WEX Circle of Excellence (2024).
• Henkel Consumer Brands Logistics Award - Asset Excellence (2024).
• Shaw Floors Outbound 'Class B' Carrier of the Year (2024).
• J.M. Smucker Transportation Award Best On Time National Asset Carrier (2024).
• PepsiCo 2024 Carrier of the Year (West).
• TCA Fleet Safety Award 2024 - 2nd Place (Division VI, 100+ Million Miles).
• SmartWay - High Performer TL/Dry Van Truck Carrier 'All Metrics' Category (2024).

The company is actively working to integrate all four operating brands onto a common transportation management system by December 31, 2025, which is anticipated to drive multiple operating efficiencies in 2026.

Heartland Express, Inc. (HTLD) - Canvas Business Model: Channels

You're looking at how Heartland Express, Inc. gets its value proposition to the customer, which really boils down to physical presence, direct relationships, and modern integration. For a company Heartland Express, Inc., this means a mix of traditional assets and digital hooks into the freight market.

Direct sales force managing long-term customer contracts

Heartland Express, Inc. relies on building solid, long-term relationships with customers, which is a direct channel supported by its sales efforts. While I don't have the exact headcount for the direct sales force as of late 2025, the company's historical commitment to customer service is what built its brand as an industry leader for on-time service. This direct channel is crucial for securing the freight volumes that underpin their operations, which saw Operating Revenue of $626.4 million for the nine months ended September 30, 2025. This direct engagement is key to navigating the current challenged industry environment where current capacity outpaces weak freight demand.

Company-owned terminals and maintenance facilities nationwide

The physical network is a core channel, allowing Heartland Express, Inc. to concentrate on regional freight movements, typically within a 500-mile radius of each location. This structure helps with driver retention by providing more "home time" and ensures efficient fleet maintenance. As of the last reported count, Heartland Express, Inc. operates twenty-four terminal facilities throughout the contiguous U.S., in addition to the corporate headquarters in North Liberty, Iowa. The average age of the consolidated tractor fleet, which these terminals service, was 2.6 years as of September 30, 2025.

Here are some of the key terminal locations that form this physical channel:

• Phoenix, Arizona
• Lathrop, California
• Frederick, Colorado
• Jacksonville, Florida
• Atlanta, Georgia
• Pontoon Beach, Illinois
• North Liberty, Iowa (Headquarters)
• Tacoma, Washington
• Columbus, Ohio
• Medford, Oregon
• Carlisle, Pennsylvania
• Kingsport, Tennessee
• Mt. Juliet, Tennessee
• Alvarado, Texas
• Chester, Virginia

The strategic placement of these facilities is designed to keep equipment close to customer distribution centers and driver domiciles, supporting consistent customer engagement.

Digital freight platforms and electronic data interchange (EDI) for load tenders

To streamline operations, Heartland Express, Inc. uses digital methods for load tenders, which is a standard expectation in the industry for efficiency. While specific utilization percentages for proprietary or third-party digital freight platforms aren't public, the integration of systems across their acquired fleets points to a push for digital efficiency. The company expects to have all four of its brands on a common management system by Dec. 31, 2025, which will drive operating efficiencies. This digital channel is essential for managing the flow of freight in a complex market, especially as the industry sees increased focus on real-time data analytics and transparency.

Here's a quick look at the financial scale these channels supported in the latest reporting period:

Cross-border logistics via CFI Logistica for Mexico freight

The acquisition of CFI Logistica operations in Mexico provides a dedicated channel for cross-border freight, capitalizing on nearshoring activity. This segment is integrated but operates under the CFI brand. The acquisition, valued at a cash enterprise value of $525 million, brought this cross-border expertise into the Heartland Express, Inc. family. Furthermore, the CFI team was actively working on a fleet telematics transition during Q2 2025, which was approximately 75% complete, with full completion expected in the third quarter of 2025, enhancing the operational capability of this channel.

The debt reduction tied to the acquisitions shows the financial commitment to integrating these channels:

• Acquisition-related debt and finance lease obligations reduced from $494 million in 2022 to $185 million as of September 30, 2025.
• This represents a total reduction of $309 million in just over three years.

Finance: draft 13-week cash view by Friday.

Heartland Express, Inc. (HTLD) - Canvas Business Model: Customer Segments

Heartland Express, Inc. serves top shippers in America across several key sectors. A majority of its customer base is concentrated in the consumer goods, appliances, food products, and automotive industries. The company operates under brand names including Heartland Express, Millis Transfer, Smith Transport, and CFI to serve these varied needs.

The company provides nationwide asset-based dry van truckload service, which caters to shippers needing high-service, irregular route capacity. This service structure supports the movement of goods to various end-points, such as super-market shelves and manufacturing production lines.

For the nine months ended September 30, 2025, Heartland Express, Inc. reported Operating Revenue of $626.4 million. The Trailing Twelve Month (TTM) revenue as of September 30, 2025, stood at $869M.

The segment requiring high-service, irregular route dry van capacity is a core focus, alongside specialized offerings. The company provides continuous service for long length of haul loads, including dedicated tour or round-trip oriented service in various markets nationwide.

Heartland Express, Inc. also serves customers needing specialized logistics solutions. This includes temperature-controlled truckload services and cross-border freight. The logistics revenue generated from services to and from Mexico represented 3.0% of consolidated operating revenue as of December 31, 2024.

The customer base is characterized by reliance on Heartland Express for critical supply chain functions. You can see the dependency through the industries served:

• Food Products and distribution, such as customers like the Kellogg Company or Quaker Oats.
• Automotive and Manufacturing supply chains, including shippers like Whirlpool.
• Large-scale Retail and Consumer Goods companies, such as potential partners like Walmart or Unilever.

The company's legacy fleets (Heartland Express and Millis Transfer) showed better performance, operating at low-90% operating ratios in Q3 2025, while the acquired fleets (Smith Transport and CFI) continued to present challenges, with CFI being unprofitable in the quarter.

Heartland Express, Inc. (HTLD) - Canvas Business Model: Cost Structure

You're looking at the cost side of Heartland Express, Inc. (HTLD) as of late 2025, and honestly, it's what you'd expect for a major asset-based carrier: high fixed and variable costs that are heavily influenced by the labor market and commodity prices.

The single biggest lever you'll see impacting the bottom line is driver wages and benefits. This is the core variable cost that scales with miles driven, but the underlying rate is a fixed commitment to attract and keep drivers in a tight labor environment. For instance, as of late 2025, the average annual pay for a Heartland Express CDL Driver was reported around $56,259 a year. You also see the high end of that spectrum, with top drivers earning up to $93,900 per year in some regions, which definitely shows the pressure to compensate well. That's the reality of running trucks.

Fuel expenses are always a major line item, though they can fluctuate wildly based on diesel prices and utilization. For the first quarter of 2025, Heartland Express, Inc. reported fuel expenses of $37.9 million. That was down 19.9% year-over-year, partly because of lower diesel prices and reduced driven miles during that period. Still, when you look at the revenue side, fuel surcharge revenues for Q1 2025 were only $26.3 million, meaning the net exposure to price swings is still significant.

Depreciation and amortization costs are high because Heartland Express, Inc. maintains a relatively young fleet, which is a strategic choice to minimize maintenance downtime and attract drivers with better equipment. As of March 31, 2025, the average age of the consolidated tractor fleet was 2.6 years. The trailer fleet, however, was a bit older at 7.4 years as of that same date. These assets are the backbone, and their depreciation hits the cost structure hard, especially following recent acquisitions.

To keep that fleet modern, capital expenditures are planned out. For the full calendar year 2025, Heartland Express, Inc. had reiterated expectations for capital expenditures to fall between $40 million and $50 million. Later in the year, the company revised its expectation for net capital expenditures to be approximately $27 to $30 million, factoring in expected gains on asset disposals.

On the financing side, the cost of debt has been actively managed. Interest expense saw a positive reduction, coming in at just $3.1 million for Q1 2025, down from $5.3 million in Q1 2024, largely due to debt repayment efforts. That's a clear win from their deleveraging strategy.

Here's a quick look at some of those key financial figures from the first quarter of 2025:

You can see the cost structure is a mix of operating necessities and strategic asset management. The key cost drivers you need to watch are:

• Driver compensation rates and retention success.
• The net impact of fluctuating diesel prices versus fuel surcharge recovery.
• The ongoing depreciation load from the relatively young tractor fleet.
• The success of cost-right-sizing initiatives across all operating brands.

Finance: draft 13-week cash view by Friday.

Heartland Express, Inc. (HTLD) - Canvas Business Model: Revenue Streams

You're looking at how Heartland Express, Inc. (HTLD) brings in the money, and right now, it's all about moving freight, though the company is seeing some non-core income too. The core of the business is definitely the dry van truckload freight rates, which form the bulk of the revenue base. This is the bread-and-butter service, hauling general commodities in standard trailers across the network.

To give you the scale of the operation through the first three quarters of 2025, the Total Operating Revenue for Heartland Express, Inc. reached $626.4 million for the nine months ended September 30, 2025. That's a significant top line, even with the challenging market environment CEO Mike Gerdin has been discussing.

A critical component of that total revenue is the pass-through mechanism for rising costs. Fuel surcharge revenues are a distinct stream, totaling $75.0 million for the nine months ended Q3 2025. This is separate from the base freight rate. To see the core freight revenue, you look at the revenue excluding this surcharge. Here's a quick look at the revenue components for the nine-month period:

The revenue from temperature-controlled and Mexico logistics services comes primarily through the operations of acquired entities like Contract Freighters Inc. (CFI), which was acquired to expand beyond the core dry van business. While the search results confirm the existence of these services through the acquired brands, a specific revenue breakdown for just these segments for the nine months ended Q3 2025 wasn't explicitly detailed in the latest release. What we do know is that the CFI brand was the laggard in profitability during Q3 2025, despite ongoing integration efforts.

Also feeding into the overall financial picture are non-recurring or less predictable income sources. Gains on disposal of property and equipment are one such stream. For the first three quarters of 2025, Heartland Express reported year-to-date gains on sale totaling $11.3 million. The company expects to double that amount in the fourth quarter through further disposals, suggesting a full-year total potentially near $22.6 million. This type of income helps offset the operating losses seen in the core business.

You should keep an eye on the mix of revenue sources as the company works through its integration strategy. The revenue streams Heartland Express relies on include:

• Primary revenue from dry van truckload freight rates.
• Pass-through revenue via fuel surcharge adjustments.
• Revenue generated by the temperature-controlled segment (CFI).
• Revenue from Mexico logistics operations (CFI).
• One-time income from disposal of assets.

For context on the quarter that makes up the tail end of that nine-month period, the Operating Revenue for the three months ended September 30, 2025, was $196.5 million, which included $24.1 million in fuel surcharge revenue.

Finance: draft a sensitivity analysis on the impact of a 10% drop in the core freight rate revenue ($55.14 million impact) versus the expected Q4 gain on disposal by next Tuesday.