Heartland Express acquires Interstate Distributor Co.

July 6, 2017
Heartland Express has acquired 100% of the outstanding stock of Interstate Distributer Co. from Saltchuk Resources.

Heartland Express, Inc. announced it has acquired 100% of the outstanding stock of Interstate Distributer Co. (IDC) from Saltchuk Resources, Inc.

The enterprise value of the transaction was approximately $113 million.  The transaction was funded through $94 million of Heartland's existing cash, plus assumption of approximately $23 million of IDC's debt, and acquisition of $4 million in cash on IDC’s balance sheet. Heartland said it expects to pay off all of IDC’s debt after closing.

“We are excited to add IDC's high quality drivers, experienced personnel, and strong customer base to Heartland's operations,” said Michael Gerdin, chairman, president, and CEO of Heartland. “Our first criterion is always safe and highly qualified professional truck drivers. IDC has an experienced driver base with improving safety results over the past several years, and we are impressed by their culture.  Additionally, IDC is an excellent operational fit, as its terminal network has nearly direct overlap with our current locations.  Heartland will gain significant additional traffic density in the West, and our stronger eastern network will improve service for IDC's customers in the East.”

"Since expanding our footprint and density with the acquisition of Gordon Trucking, Inc. in late 2013, we have invested significantly in a new tractor and trailer fleet, returned our operating ratio to the low- to mid-80s, repaid all of the acquisition debt, and accumulated approximately $170 million in cash,” he added. “With a strong operating base and confidence in the future, we have been carefully evaluating several acquisition candidates and ranked IDC at the top because of the direct path to achieving synergies.  I would like to thank Mark Tabbutt and his colleagues at Saltchuk, as their integrity and professionalism made for a smooth and successful transaction process.”

"Since acquiring IDC in 2012, we have made significant investments in IDC's fleet, personnel, and business practices,” according to Mark Tabbutt, chairman of Saltchuk. “We are very proud of the advancements in safety and customer service on our watch and we appreciate the efforts of IDC's management to improve the business.  Ultimately, we decided to look for a new home for Interstate to allow us to focus investment in other areas of our business. Heartland offered not only a strategic fit for the business that would allow it to grow, but a good cultural match for the team. As we announce this next chapter for IDC, I would like to thank all of the IDC employees for their service to Saltchuk, as they have made us proud."

IDC was founded in 1933 and provides primarily dry van truckload transportation services, including local, regional, dedicated, and transcontinental services. The company’s primary operating territories are the western and southeastern United States. 

IDC's truckload business generated approximately $325 million in total revenue for 2016, including fuel surcharge revenue. IDC generated an operating loss for 2016 and expects an operating loss for the six months ended June 30, 2017. 

IDC's fleet consists of approximately 1,350 company tractors, 220 tractors supplied by independent contractors, and 4,700 trailers.  The company tractors have an average age of approximately three years, and the trailers have an average age of approximately 7.5 years.  IDC’s customer base covers end markets such as retail, food and beverage, consumer products, and transportation and logistics.

Heartland explained it expects to integrate IDC into Heartland's existing operations and operate under the Heartland brand soon after closing.  Administrative, sales and marketing, pricing, recruiting, safety, accounting, information technology, and similar functions will be combined using personnel from both companies to provide seamless service to customers and drivers.

The overlapping Heartland and IDC locations largely will be consolidated over the next 18 months.  Regions with overlap of significant facilities include Seattle-Tacoma, Oregon, Southern California, Phoenix, and Nashville. In addition, numerous IDC drop yards will no longer be needed, as Heartland has a footprint of 21 terminal locations across the U.S. that will be utilized along with numerous drop locations.

From a fleet perspective, Heartland expects to invest in refreshing IDC's tractor and trailer fleet to bring the average age closer to Heartland's normal fleet age.  Heartland's warranty, maintenance, and operating practices with respect to equipment will be implemented.  In addition, purchasing economies in equipment, fuel, tires, parts, over the road services, and other areas are expected.

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