Heartland Express returned to profitability in the second quarter, driven entirely by gains from equipment sales that offset ongoing revenue declines, as the U.S. truckload sector continues to navigate a prolonged freight downturn that began in 2023.

The North Liberty, Iowa-based truckload carrier (NASDAQ: HTLD) reported net income of $10.6 million, or 14 cents per share, for the period — a reversal from a net loss of 14 cents per share in the year-ago quarter. However, the turnaround was wholly attributable to a $22 million year-over-year increase in gains from equipment sales, representing a 22-cent-per-share tailwind at a normalized tax rate.

Heartland strategically culled its fleet by disposing of underutilized equipment. "We expect to continue to dispose of excess trailers within our fleet as used equipment market conditions improve," the company said in a news release. The gains reflect a recovery in used equipment values from the depressed levels seen during the depth of the freight recession, when oversupply and weak demand pressured resale prices industrywide.

Revenue totaled $184 million for the quarter, representing a 13% year-over-year decline. Excluding fuel surcharges, revenue fell 18% year-over-year. Heartland does not host a quarterly earnings call and does not disclose operating metrics for utilization or pricing.

The company reported an adjusted operating ratio of 88.3% — the inverse of operating margin. Excluding the outsized equipment-sale gains, the operating ratio was closer to 103%, indicating core operations remained unprofitable. That dynamic underscores the challenge facing Heartland and peers: asset sales can provide temporary financial relief, but are not a sustainable substitute for freight-market recovery.

CEO Mike Gerdin attributed the results to multiple factors. "The improved financial results delivered reflect stronger freight volumes and improved customer pricing resulting from ongoing industry capacity reductions along with reduced operating costs and strategic disposals of under-utilized assets," Gerdin said. The capacity reductions referenced by Gerdin reflect a wave of carrier failures and fleet contractions that have steadily removed trucks from the market, a precondition many analysts view as necessary before freight rates meaningfully recover.

Heartland generated $36 million in operating cash flows during the first half of the year. The company reduced net debt by $33 million to $73 million and ended the quarter with $89 million available on an untapped revolving credit facility. Heartland remained in compliance with its financial covenants.

The carrier's average tractor age declined to 2.3 years, down from 2.6 years in the year-ago quarter.

Shares of HTLD were down 1.6% at 12:42 p.m. EDT on Friday, while the S&P 500 was up 0.4%.