Universal Logistics (ULH) 10 Feb 232022 Q4 Earnings call transcript

Hello, and welcome to Universal Logistics Holdings’ Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. A brief question-and-answer session will follow the formal presentation.

During the course of this call management may make forward-looking statements based on their best view of the business as seen today. and relate identified business the by as expect, forward-looking and or words are believe, be can the anticipate that to objectives Universal expectations such Statements project. use of risks Such statements differ from expectations. those uncertainties actual results materially and are could and to subject

this being As recorded a reminder, today. conference is

you. Fitzpatrick, to Investor your Jude Officer Financial Beres, Mr. now Phillips, Vice of Phillips, and Tim Mr. Steven Finance President is Thank begin It introduce Chief may my Relations. Chief and pleasure host the Executive Mr. you Mr. Officer; call.

agents, team Universal since Thank focusing Welcome minute billion, achieve helped Holdings and and and share. Joe. their the performance earnings all come We top doubled of you, years a results. drivers, quarter remarkable on extremely such almost than employees, on hard to call. reflect $X like to in for commitment far onset the line service and over a increase XX% Logistics income take contractors I'm we XXXX year the have full of XXXX. to who fourth of was of executed more How the Universal’s our I'd quality proud and record revenue excellence, earnings Universal excess to transparent worked operating training, extremely of pandemic ago, which per all three XXXX collaboration. on our

warehouse, reported on Universal our share. associates $XXX.X road. also of in office the income year an but million, per operating not full we XXXX, the cultivation In diluted on record made basic performance, and of $X.XX the and XXXX, great in For financial ongoing only and strides

at which business every market. tight improvement labor a The in and execute associates We the to as continue new a highest and level. to we unfolded willingness to credit expand is effort financial our associate add footprint, train

course foundation in We've added expand to XXXX. a performance set talent number to growth locations continued for our of further train and

lack luster from peak sector and XXXX, by we high inflation was destocking. season Universal’s inventory out not about transportation close brought a insulated As

Brokerage group declined quarter. group experienced Intermodal our loads number volumes. the And the saw Our of rapidly tendered declining import throughout

Truckload Our surcharge elevated their levels. by and pricing retaining group fuel held own

While our operating and expanded our revenue because in includes services income in top which EPS deterioration sector, its and service quarter a we printed transactional segment of logistics transportation, and value-added operating contract offerings, line dedicated diversified saw best our Universal proudly company history. year-over-year fourth margin transportation

remain in our among our service quarter improving Fourth off service and incredible the committed elevating launch a our customers’ employing and various capped the positive process meet We levels to large of identify, automotive the Detroit, needs. city year ultimately reimagined improvements, successfully We processes reshaping skills, of enhancing change. to sectors. employees

set Long set with of by brought with we skilled driver of Beach. the the obtain We diligently a implementation On into We to transition of environment, new entered West work for we the plan new qualified hire state a about California, drivers to employees. the company successfully assets company existing contractors in in Coast, accessing equipment business and ABX. next stage to of for strengthen around Overall, for group expansion. port a partnership prepare to and the of talented have as and Teamsters country steps the help LA associates the a the great we taken course our building fiber tight

million. on fourth of a $XXX.X earnings total quarter, quarter Now operating release revenue of per reported and for $X.XX XXXX the Universal yesterday's share

efficiency to best XXXX. over quarter and the setting XXX% on and Universal’s continued our expansion, increasing the meaningful marks margin compared of income progress. share, reporting quarter We ever each fourth streak fourth operating per record This earnings operational consecutive fourth by quarter,

volumes, in to our well grow was entering XXXX. spot rates positioned decline While we’ we into optimistic and have business re contract transportation the experienced logistics

we segment, the schedule, but of each contract work of provided and logistics improvements in five-day some run. chips consistent experienced in extended still Now for on some which auto to color a the some lines. sector, fluency lacks service parts regard our the In weekend

the remains for still muted strong. While XXXX, throughout vehicles the SAR demand remain

very be the that customers existing new is Class expect operations secret we the early across X solid and -- and in waiting improve. and we auto elevated, orders pleased sector production performance optimistic of no finished our Class continued still operating verticals. in remain XXXX servicing service. various Operational launches with the forecasts plants. produced. cycle are XXX,XXX over regards solid to We X It for XXXX filled. still performance we our with year to a And the remain are units to year those

We continue to sales SUV partners get in ‘XX space, over and are forecast and low resilient digits levels. truck single increase light in positive to to vehicle our year-over-year production inventory low guidance due demand from new

logistics expanded position and our efficiently in are contract accumulated talent Our the to last has new year confident over extremely business. we operate

and deliver industrial, in and from We new with $XX rate. The were awarded are technology X opportunities agricultural, country. new run experience exceeding confident We team around are full pipeline. expanded top execute will facilities five value-added Class management operations awards our once our million nearly continue recently revenue on automotive to line and the supporting

highlighted of expanded Our projects that shape active to automotive sure value-added over future the production. by the almost same several pipeline large has time XX% are year, by last EV

line top high providing transportation best-in-class grow margin its service. to dedicated velocity group revenue by continued and Our

we the our Here talent road the expanded pool office. and on in both

continued period QX its same XX.X% of Our expanding over XXXX, by count trajectory upward the has XXXX. in in dedicated driver

tractor We rationalize new replaced of a equipment successfully but allocations continue to tight in our XX% environment, over fleet.

in tractors new programs XXX new adding While XXXX. into

We adding to dedicated XXXX. as for and transportation the see We as dedicated XXX an segment. also invest well will facility, continued into from trailers fleet the continue opportunity underperforming in shifted new in trailing equipment

we year. a several full first We topline half with expectations will revenue million over $X need of in run the the $XX XXXX a equipment as new of launched around with opportunities additional rate potential million

potential forward. the moving opportunities. quality and solutions The pipeline transportation with robust dedicated on bullish very remains We're win

lower import imports our but The by average volume operating still which down revenue $XX.X LA our more in ports. and was bill reduced to operating headwind to or biggest well off by line million experience decrease line as XX.X% XX% quarter, business the led chain move. drayage by increased were load average and to revenue driver company XX.X% headwinds Long during in into a intermodal top caused per largest charges group decrease in and our ’XX was in due a XX.X%. the top Our by environment. excluding Intermodal costs fuel declining to $XX.X storage the California the Declining accessorial influenced ABX per quarter, transition as independent revenue a contributing million congested and was less QX demurrage in traffic caused normalized factor is supply the over the sequentially compliant Beach dm, owner massive above model, fall to in operator model from a But did

in $X.XX million. revenues and the were This XX% Southern an share per quarter. drayage cost last of us Our California from year, were down estimated QX over down in $X.X operating profits

drivers While QX in year-over-year count were driver experienced the about XXX volumes XXXX. intermodal from our a or we increase increase X.X% headwind, of

elevated same period by driver contractor the more January from XX% in XXXX. of Our pipeline than and remains

propositions while extremely in coming to shift network. first new various the intermodal allowing a opportunities, for seen has servicing part explain of creation Sales the needs, have the for supply our in aggressive mining an customer chain been chassis terminal company year. in value us including additional back expansive We have value authority into remain their We adding customer network. drivers on volumes of our obtained our through own base definitely focused who current

current Our several strong customer drayage in pipeline XXXX completing remains bids, of with large QX

same of created inflation some Our destocking. inventory the trucking by volume experienced segment headwinds

While steel deteriorated the over and held for specialized metal XX% our Open rate deck the but most remained levels open part and elevated. on loads were have deck van division, in quarter. quarter, the rates pricing over our down

over On thing $X.X and the Top was with slipping million revenue our good XX.X% of increase quarter, was more. income the million over slightly period down year. while $XX an down of same retail last operating line consumer million of $X.X prices XX%, van the side, for was

a its operator down with ‘XX. consistent top the at revenue. suit count year, end XX% period structure broker variable low of purchase and bends as it was cost the in with in trends. Our delivers almost same operator single decrease followed truckload Owner agent consistent the low margins Owner base line down over remain count costs model with digit XX.X%

in $XX.X opportunities. pipeline is brokerage saw top equal We to trailing quarter of revenue The current the in and to by contractors. size agent committed network segment’s business The our opportunities been pipeline. busy are the has the consumption XX% and million truckload increasing agents and XX.X% created of the the XX-month as adding inflation expanding segment’s independent tender team evaluating leads development line new Company-managed dropped revenue. to less about

spot operating better over than We per on quarter continued $X,XXX XX.X%. period and XX.X% additional balance of as the opportunity, load per was margin revenue down to XX% shifted ‘XX. Operating Gross their margin and was for the in put an was was approach the load, discipline margin contractual XX.X% decreased count to same load in regard freight. XX.X% strain

on to announce environment quarter awarded the and We a leveling spike one our The awaiting year upcoming our pricing and performance. to holidays. customers volume are mid has Purchase Christmas have entering we around others quarter transportation the current and award. several from aligned team a were decline continued yet significant who of but the for a top saw their

We offering continue of to build XXXX power only part our CapEx. and plan as units our on additional

carrier to expecting continue of service. a base to expectations high with price realistic our level will while We partner drive

general the consumer environment economic the evolve. the on XXXX, destocking cautious are of inflation, continue mood and customer We to entering

brokerage add our We to take truckload will intermodal and density help look our segment. out agent cost and for variable to of optimization costs opportunities segments

we headwinds, our margin we face are term segment. contract on near optimistic of logistics high While growth extremely transportation continued

And foundation progress our Finally, that extremely enough employees, say I'm agents performance happy the were and with our the of Universal the success. results. team. I XXXX contractors, of equals team about cannot of

with positioned XXXX talent We and as opportunities levels at are well we challenges. all navigate

value like view to needs. solutions. over continue of to Our supply people call Jude? and capital to our and create financial performance to turn would now driven Universal for customer efforts continue team's the return. will detailed shareholder Jude new I

from quarter net operating the was EBITDA last or Good million, morning, on total $XX.X the Consolidated compared year. or earlier. quarter for Tim. operating million $XX.X share to of Thanks million on compares fourth income total $XXX.X same $XX.X the XXXX. increased million one of year million, $XX.X million to last $XX period $X.XX revenues million to same share period which operations in the of This year. to of Holdings net million during income million Logistics compares everyone. $X.XX reported per during Universal $XX.X to $XX.X income per consolidated $XXX.X of revenues Yesterday,

of XX.X% metrics and margin operating margin EBITDA of quarter and in X.X% fourth respectively, of for to XXXX XX.X% operating X.X%, and revenues. the fourth total These Our the are quarter XXXX. compared

million XXX fourth $X quarter of total businesses, the income XX.X% logistics basis the of fourth Looking at operating the the and disclosed segment’s were $XX.X our adversely that $X.X of segment segment, revenue margins quarter last compares million previously and operating million logistics includes from in million operations transportation $XXX.X margin versus performance XXXX quarter operating our contract total to Operating increased by This which included contract of for fourth to to The $XXX.X quarter operating of X.X%. million pretax of dedicated our income $XX.X and points. value-add losses for revenues. million impacted in XXXX, XXXX. of year.

$XXX.X operating segment, million $XX.X Operating $XX.X from intermodal XXXX. last to $X.X X.X% for to of and to income operating year. in compares million year, versus quarter And fourth revenues margins million million. to X% operations the decreased period in million compared income the $XX.X million of were the same last quarter decreased our $XXX.X This

previously quarter segment, operating in revenues million, million million. increased compares of million $X.X versus our from that for million year, XXX fourth Operating X.X% compared $XX quarter operations to the to same X.X% and to points. decreased income XXXX operating year. pretax in $X.X adversely This of the of fourth $X.X XXXX. quarter $X.X last by margins Also In were trucking margin the operating to million the income to disclosed $XXX.X $XX.X for included last segment’s charges impacted the this basis of quarter million quarter

$XX income $XX.X In brokered year, decreased to quarter million fourth $X.X margins operating versus compared income while to operations in revenues to $X.X the decreased from last X.X% million compared year. for X% in XXXX. for million segment, same our of the Operating the last to operating quarter $XXX,XXX to million quarter quarter $XX.X were million company-managed the of

of cash end and securities. net held marketable $XX equivalents On of debt our balance the issuance million totaled million and million totaling costs at cash of the $XX.X we $XXX.X $X.X million Outstanding sheet, period. interest-bearing debt of

operating net to to XXXX. the was $XX.X line full X.Xx. were top Based reported and expecting first are our liabilities in for operating $XXX of trailing for to on million quarter the totaled interest-bearing the quarter million are we related for lease $XXX the X% Capital $XXX million EBITDA environment, current and ASCXXX, range. revenues XXXX, of margins Excluding million XX% XX-month year debt expenditures between and the

Given current in forecast in volatility it somewhat space, macroeconomic headwinds environment. remains transportation to and the this difficult

for fourth is offset brokered our forecast by digit quarter contract our trucking, Our to XXXX. business intermodal compare environment low and revenue company-managed of on declines predicated stable logistics operating it the segments double in

in in the be $XX come For million the expect for $XX year million year of interest expenditures is range $XXX to we and to expense the between and expected million. full XXXX, capital

Universal’s of declared regular dividend. Wednesday, Board $X.XXX Finally, quarterly per share our Directors

This quarter’s Joe, X, close shareholders be expected record dividend ready business to questions. of paid we're some XXXX. on payable of to and take X, XXXX, is to is the With on that at April March

[Operator Instructions]

will question Wetherbee from here with And Chris come our Citigroup. first

little the Good side. first the the a for color thanks. outlook bit guys. maybe want to quarter intermodal morning, Hey, the just deeper Appreciate on and dig

we XXXX. to that sense Just ongoing issues much want about the both of to will about be maybe ring-fence as versus how well profitability business of get quarter how some a you the I much of year XQ as want think are quarter the in to think clear full as specifically the headwinds be the to

Chris, Tim. this is

transition Southern think saw then a And onboarding, conjunction includes fourth quarter operation, was I I California is costs, equipment costs. what the we profile. in driver training our which that prepared accompany in recruiting driver phase my leaving remarks with explained for transitional to driver

our count, in comes also goods. that customer our it customers California. saw about We into our to the load was dip XX% retail profile a is coming dip top Southern in on consumer of And list imports about combination a XX% and inbound of eight as XX

So sharp falloff a we that. saw in

the line a take look January on deterioration side. you that at as and XXXX into we of overall saw we see some top count if intermodal still whole, So it revenue load as and

the their their they committing and telling vest it customers into that us some Year. the rebound are Chinese they're to Our tight goods summer New that in expect retail on little But consumer a and not as looks after what holding of we cards space, legs ‘XX. they're like stretch our

import in see with course on to probably out share. at make we're push be to market prepared for additional we're any lower sure the containing quarter, hunt we're And a our going to that we we're equally have to So as going first levels the good rate means there of then company, forward. costs which

the I doable close business? year that? think you're differences Is between of than quarters mid-teens there let's model about for model it in Okay, three I an that to model guess is in I margins. call running running, the think something the that employee employee that lower Or you're and it first before as business,

take No, first first the I, crunch of that, byte of let's that. the

a the we that lot think it in very a to in full had assets I model’s we drivers. the only the obtaining Southern also California, we run did but employee And in have of obtainable in model, that jar there's of quarter fourth and the an out can contractors in assets is port. the runway so whole not tight has optimize employee and market, of be

put huge training recruitment of can onboarding the drivers to so of cost those successful. they came in them company be assets and new So our with

it's to go an troublesome, in imports and properly opportunity downturn get our new also and sea the guess to our it's I legs why drivers, compliant. get So trained ready

that enjoy once we margins. good that. to run that is I this at feel about So assets, we'll full of you'll type the think full, think But jar optimize still rate, is same the company have the I ability

then be sort would maybe the bigger Okay, back guess And thinking taking I and final maybe question a that's just picture. helpful. step of

side your recovery? with that a the dampen of don't it know freight, generally whether if sense offsets year-over-year, strength. a that the sort largely to we I exposed industrial maybe business, on general could that's the but particularly retail occurred stands sequential degree there's of get as or sense, maybe of least through think retail late piece think of want frankly, that how your spring, potential that might potential some, of return for meaningful are there second I you currently. going to at half there's the inventories you have on normalization that normalization And a by in too about and of be think

we said, get retail Chinese close, that are will ordering New the that the they some be the on in should don't I again, pretty the be Year, this the expect of challenged, out QX exactly we cards their like what we to the to feel Yes. of it prior side, think you any we put customers normalization, rebound but holding start there kind don't know And we of QX, to when yet. second half as degree, year. see

troughs. would because retail be last of the normal said of couple But the type many mean, Some there's a years, over so season. been what's normal peaks that and customers there

I a So second down indications Class a automotive the than better very the Inventories into of will there first of half run positionally, a think the let's that of half serviced. of further strong that to we that little that that, we be a year. on think half think All And first think demand but going products I year. rising, strong plants the plants into for seems cadence And year. half those space, for is year. the though the that we're the solid are break I second the be in on year definitely a industrial we've of lot serve will its the X,

good feel that. about we So

Our pretty and counts positive if stout. although And One that steel still encompass think transportation load and goods you somewhat, area agriculture there, some I there's see haul had and industrial A, But that if degree supply we machinery for there's decreased together, some industrial, you XXXX issues whether in linger forecasts think automotive, is I is perspective, our remained the of from XXXX. a cadence, demand. heavy issues business not think to feel pricing feel maybe all has space, the agriculture that we it's there we you'll auto disruption an out we think I with saw cause ask a heavy that machinery, still chain and still comfortable Class they on I part the overall XXXX. but our out

closing will remaining question-and-answer no this back conclude with And remarks. any management for conference I'd session. over questions, turn to the our to like

Thank everyone the you, call I Joe. appreciate into today. dialing

As contract opportunities restocking of which half are XXXX. programs inventory I about the will and hit logistics cautiously optimistic ‘XX, in growth. in new about second already mentioned, the help of ground I'm extremely running the front Universal with in excited We've transportation drive

our supply everyone as to our look I model seasonally. you. to cannot forward deliver to XXXX on wait valued to Thank chains, customers Finally, import volumes company our into April. talking Southern grow California in see QX driver call compliant certainty I

attending very now today's Thank for presentation. has you concluded. conference much The

lines. You disconnect your now may