Universal Logistics (ULH) 25 Oct 242024 Q3 Earnings call transcript

Hello, and welcome to Universal Logistics Holdings Third Quarter 2024 Earnings Conference Call.

[Operator Instructions]

During the course of this call, management may make forward-looking statements based on their best view of the business as seen today. Statements that are forward-looking relate to Universal's business objectives or expectations and can be identified by the use of words such as beliefs -- believe, expect, anticipate and project.

Such statements are subject to risks and uncertainties, and actual results could differ materially from those expectations.

conference recorded. this reminder, a is being As It Mr. my pleasure your host, to introduce is now Chief Officer; Phillips, Tim Executive Mr. Jude Beres, Chief Financial Officer; and Mr. President Vice Fitzpatrick, of Investor and Steven Relations. Finance Thank you. Mr. Phillips, begin. you may

for morning, Thank and Earnings everyone, joining Universal's and Call. you, XXXX good thank Joanna, Quarter Third you

by service continue As us our to transportation the Universal's competition the from in results, and set diverse evidenced offerings apart logistics industry.

even the logistics solution us exceptional results enabled transportation has to in downturn again of during once offering extended comprehensive Our sector. this achieve

details the a my to The into Before and performance, take force the the of our team. contractors diving want to work driving employees behind of moment I Universal over hard to gratitude XX,XXX these dedication are our achievements. express and entire

from the of Parsec our our allows service logistics I a would also customers family. like Universal us outstanding leading maintain transportation to associate's employees recent Group to the the welcome commitment to to is and X,XXX the each It deliver that provider. as consistently acquisition position and over

let's solid increased quarter ever by of results once freight going grew the a in again have experienced. earnings X.X%, double-digit to and share compared one discuss period same our This the year. was delivered operating top accomplished delivered per I third XXXX. We margin of Universal XX.X% the the last through recessions Now revenues line by quarter. while prolonged most

with pleased vary. I'm Universal's While to segment overall individual continue results, performance

consistently deliver to cornerstone results, continues achieving operating success. business outstanding been Logistics Logistics Contract the margins. double-digit Our of our Contract has

wind see for operating and over to demand for years in we in results business the heavy-haul weakness strong truckload this achieved X continue the market, solid also has specialized trucking margin the demand to its has propelled segment strong offering. despite Trucking Our highest our overall

intermodal down results underperformance expectations. below perform been our our our This of has continues segment. business to the Weighing

million sequential costs the efficiencies improvement -- operations. quarter, we and remain in off. a In so still And saw of losses However, do, We operating have narrowed to the impact ratio third to are by I'm and the efforts improving results over paying far. period. removing our but work our during encouraged in our $X.X work we intermodal's laser-focused, these some just

we on continued also company-managed We remain of along to decisions that the on with strategy ensure this color During decision of necessary. business prudent Universal's success. impact on the and making deeply to close environment decision long-term it executing closure the our the Jude will a brokerage made the financial made call. difficult quarter later underperformance quarter, had the to depressed freight business, the dedicated the segment add

For our In XXXX, per XX.X% and $XXX.X $XXX.X the quarter Contract operating earnings share revenue of an to largely in was Tennessee. our specialty This million. million due revenues margin third development project and to Logistics $X.XX of of segment, reported Universal Stanton, increased XX%.

And our and lines. At Universal down ratios market-leading quarter the It our drayage Contract of to revenue and segment's our the of acquisition expand of also end X our also annual service straight industries, Contract recent over Parsec, offerings sixth profitable run The terminal enter to for segment acquisition Logistics consistent new Contract This XXth other service provider will rate and managed XX Logistics value-added XX%. programs, allow management billion. below us excited Logistics of real segment in remains of cross-selling and $X.X I'm QX services. most XXXX, will QX the provide XX% operating segment. bring below our was 'XX. a from opportunities about

the industry at despite outlook for with outperformance XX.X elevated for the inventory expect segment automotive for September the million. the in future, We the positive continued is levels, near SAAR

to and XXXX of to $XX production expected with relatively XX.X% Trucking full stable 'XX. Overall, decreased is well revenues remained with excluding XX.X% the surcharge. given million. segment were due also in backlog was X.X% backdrop. a to revenue depressed results large a the business. able decrease a heavy-haul strong this segment decrease for results Trucking load, fuel transportation our per in A Trucking increase our This segment loads were buoyed wind Class year builds performing specialized partially offset hauled. the by from We

throughout full a continue we projects. to this have expect as of wind We QX schedule XXXX

come, too has persist segment Flatbed the broader until Our still insulated exit. much trucking volumes XX.X%. capacity some we a were freight, expect from should down performance market wind fluctuations market. soft. for growth truckload long the to the we business more truckload see market in Outside specialized runway There's and heavy-haul truckload specialized that remains to providing see weakness years in solid capacity of

The XXXX. slowly to beginning In is intermodal intermodal year-over-year million to to QX revenues improve. segment compared XX.X% segment, the $XX.X decreased

experienced Our segment intermodal volume, rates a increased in XX.X% while X.X%. decrease

revenues $X.X decreased Additionally, million $X surcharges fuel assessorial million. charges decreased and

better. sequentially much to compared is the picture QX, to However,

was and with flat Revenue stable, bottomed. segment have the nearly may volumes indicating rates that both

XXX.X% that compared segment's are -- intermodal cost-cutting our in QX our XXX.X% to decreased Additionally, I'm measures operating paying off. sorry, XXXX to QX QX in ratios XXXX XXXX, evidence

streamline We productivity costs where business on a possible. continue taking to the truck with and focus out

order improves. does rate in is the market capacity environment on focus turnaround come Our position also of strong finally capturing ourselves to when a out the and volume for

filled ahead, opportunities. strong sales Looking with by excited pipeline are our we

Specifically, be $XXX desired competencies margin align core Contract opportunities the Logistics and that our pipeline on million. account goals. bids This selective, allows focusing and with to dedicated us over robust for

our Universal. in our take this our of want expectations I financial customers the incredibly our maintaining optimistic employees. confident over of hard to our and Their I about for Jude XXXX. the provide upcoming By some strategic value on success color commitment now in can Jude? turn I proud future. also success. to the opportunity rest want are I'm while and and clients. to approach, ensure quarter our for work long-term I'm continued XXXX the our to trust will this thank of we to third to of in thank quarters. all backbone performance exceptional delivering

of net operating in per million This revenues XXXX. same $X.XX of income third Good Holdings Tim. total to per period million Yesterday, Thanks, million the quarter million total $X.XX consolidated $XX.X net everyone. morning, operating $XXX.X of compares on share on the $XX during income or of reported or Logistics share of Universal year. last revenues $XXX.X

$XX.X operations earlier. $XX.X compares was income year for period to from million which million compared to during million, $XX.X last X the Consolidated $XX.X increased the quarter million EBITDA to $XX.X same million year.

XXXX third operating Our margin of quarter are total XX.X% and and margin the of for XX% operating EBITDA revenues.

the of XX.X%, XXXX. and third quarter in X.X% to compare metrics These respectively,

for to in XXXX value-add Logistics total operations Contract performance of which million segment $XXX.X million our third businesses, the $XX.X million segment, and at transportation of quarter operating revenues. increased on $XX.X from Looking dedicated income our our includes

compares revenue This XX.X% operating in quarter margins operating XX.X% Operating of XXXX. total to year income earlier. of to were third total $XX.X X quarter for compared of operating of on $XXX.X the million million the revenues

progress We specialty development on to make our continue program. Logistics Contract excellent

program quarter the operating brings XXXX, million During our recognized to $XXX.X of million. program. to of related related third we year-to-date operating this to this an revenues $XX.X revenues This additional

and revenues full year XXXX. XXXX, to recognize substantially it by on the continue million complete be during we approximately to operating reminder, $XXX a this total expect to December program of As expect XX,

program of operating reported results quarter this during associated approximately current million costs additional our fourth Contract included this Based value-added the anticipate segment. supplies and on its revenues we the program services XXXX. this are Revenues in cadence, will $XX The generate expense. of generated in in are Logistics in program of and

Our guidance that reflects this I fourth will the quarter. momentarily impact of discuss the during program

to in Operating last Operating segment. loss last the and the of an $XX.X segment, million operating from the year. quarter operations quarter versus XXX.X% quarter an decreased of quarter to $X.X intermodal compares This our quarter $X.X decreased ratios revenues of to third $XX from year. $XX $X.X million increased million same to million last to million million. our $X.X $XXX,XXX to were trucking year, This operating million million for million $XX.X third the $X.X loss compared to to for the On XXXX. in million. same in the $XX.X operations In $XX in revenues compared million to period Income compares operating income of increased XXX.X% XXXX.

the last year. margins were for X.X% quarter X.X% versus Operating

Universal in disclosed on of X-K previously an filing XX, operations its ceased company-managed August As brokerage business.

$X.X pretax adversely the incurred quarter XXXX, unit million by losses million $X.X During $X.XX margin points, diluted approximately share. income basic or million, the basis per XXX impacted of this losses including $X.X of operating These by business third of impairment net charges. and company's noncash

from going no operation expect this negative further financial We impact forward.

This truckload to expected Universal we acquisition EBITDA XX, strategic our acquired approximately a wind quarter, formerly acquisitions. company-managed the to managed business the agency convert accrete segment. X million and also Texas the September is Heavy agency During our specialized additional an of On business. $X operation Trucking XXXX, assets to of that will East made Haul,

Next, million volume. on XXXX, American Parsec, America. North We EBITDA our all of a were railroads anticipate be revolver. nearly accretive acquisitions these we also whose rail for X operations X across approximately Class XX% September of ramps extend all in includes operator largest XX, lift of It and terminal rail the acquired accounts North on annually of million our contract segment. and $XXX to financed this acquisition top availability logistics will with additional of to line immediately Both and add $XX approximately

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

quarter million. related was reported liabilities lease to interest-bearing the debt our for EBITDA TTM $XX net ASC XXX, totaled to X.Xx. expenditures Capital Excluding

on of $XX year, fourth and operating million line the in between XXXX, to and to full $XXX million the top $XXX the earlier, expecting million we to the Based capital expected program and expenditures operating in in logistics and margins range revenues and for to expense current new $XX come XX% the contract million. we range. the I between quarter $XXX million X% mentioned are $XXX For million cadence are environment expecting interest the be of

moving specialty company-managed of how brokerage throughout project, in business also development see year, longer-term our to the of acquisitions, XXXX. Given pieces guidance and of the recent business in performing the wanted some the we we offer our number roll-off on closing the including our

XX%. year between expectations full operating the XXXX and $X.X our operating billion and to billion, margins XX% between of ahead, are $X.X for Looking revenues

capital in the are expecting real range of million purchases to and full come also strategic before in $XXX to year $XXX XXXX, the million. expense and to be estate $XX million interest of For between million any expenditures we $XX

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

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

Instructions] [Operator

Your first Bruce Stifel. question from comes at Chan

here of start the wanted opportunity operations just the to guess I what I Parsec. see here? to of new know you what the guys I term, in to forward going some business? see Bruce. for wanted kind expand terminal a opportunity what an out with to release, of between profile synergy may on kind you the idea Cox margins you rest you Andrew kind get and is moment but synergy This business of margin long of to you understand just noted ago. just beyond the things have laid And opportunity what

the will this that thorough, touch synergies overall is how truly to what beyond there there's We chain. there business. in of it above and additional our Tim. onboarding allow have and process was Parsec points us Andrew, thoughtful we Yes, Yes, believe mentioned, supply a affect

think I blue going do of intermodal front that along to the going some our new from exposure new come that of opportunities an and are drayage other of be what some think the with their that to that services already customers new on chip partnership. We intermodal we -- to there's standpoint. blue-chip involvement

a about excited fit Parsec overlap Universal to cultural and Group there's current the really our because business, group. it of We're the no good and it's really

to we've it it I immediately you as determining mentioned, was think people on that would other acquisitions, back as thought fit that but the that Universal a that a the accretive, was right side into of hiccup. on peel onion it, family we factors human one the could the be, it also we listen the really of felt without synergies push there good we

that. about excited extremely So

have And EBITDA opportunity, also, its EBITDA And cross-selling a well in in that as all rail, programs we're in big very any that what to Universal a within things our profile about of of those absolutely. way So within out, offer going a difficult to margins of pretty our have can expecting we fits balance other they with Contract the right? number them drayage really business can in now pointed existing really this they're Logistics. to good help really, double-digit excited business, similar is to offload addition that sheet to we that at. Yes, of business, with Logistics particularly large services something our is in any type we're Tim Contract the the partner

contract as seems structure-wise well. a good It Great.

we'll how we revenue there? any So the for if the should here, could. is dive about P&L. guess, the Is mean I into the timeline that into the wind brokerage business the segments see of piping completely now? done closure of I organization? just think down And to other we this the flowing Or that's there

forward. that I wanted about So just think modeling we going how to know

absolutely. Yes,

that is legacy they they an truckload So to cover business, remember, X say, Universal that the can their They're own with brokerage agent-based model, tendered has really where a right, X space brokerage handled In loads arrangement business. to, only our brokerage X with and have is customer. capacity. aspects that overflow in our

X And brokered. throw those be to so out they'll other loads

some was so a our price didn't services similar an we of except in So there Nashville. And it predominantly became overflow other This company operation that was Universal business specific really our have what as of to lot offer it customers business in truckload acquired was that that other XXXX, a see to that could legacy stand-alone a aggregator, out player. really piece a within piece exist of located brokers we for large business. our managed business, continue that really they will you very the

in of million as you in million look decisions, So a business were we operated at with end ], couple [ $X our difficult right? this that in if results really the over sight, XXXX, lost quarter at million one about comments. of past $X.X Tim and his And really no million, years, year it's $XXX mentioned losing $X and those between

expect about on worth in medicine, if to our operation impact August, if what we took So that any we million about is you $X.X did related the was business think expenses, We don't we that down shut further which it. of of related this million replaced at business, the that just have EBITDA you acquisitions about the our we that $XX with about about, year, brokerage made. to million results, X so of what, look we've additional we losses with $XX

businesses swing the going and other to about about shutting have $XX able in year-over-year, buy down to our offer customers of being that think you something EBITDA we're a business million actually we So it, impact our have that to than price.

that are own. have Tim these because that to is decisions difficult have as business So it's although his very on we the performing, have their they look to how at in and involved, make we and all to mentioned people there comments, stand

to part in which those businesses really grow where than and can these a of something our we was look Universal strategy just business combination to are So business X customers their our industrial-type our continue closing other noncore the brokerage, a of core adding at price. down on of offer acquisitions quarter, other is which the sticky

makes a That a And follow-up lot that. it. sense. just Got on of

there. that trade-off a So forward margin to result XXXX guidance, looking you've expansion expected the the made that between and the of Is brokerage kind mainly the of acquisitions? X is

Exactly. Yes.

operate ]. operated yes, we're that range XXX with will in [ So businesses that margin at the businesses trading XX%

it. Got

Okay.

heavy-haul, impact in no at And there's business. the the truckload here? from I that hurricanes assume so checking is business contracts into and into there any FEMA

quarter Just executives kind efforts. here the commentary they're some some that with recovery we've -- in heard other of wondering from seeing some benefit fourth other

to have know you if there. exposure wanted Just any

will business hurricane doing response and effects maybe to nature. see of exposure pumps that of our did of things normal of industrial no things delivered when bit We some from an pickup that FEMA and a response and that like emergency a from an some on of emergency standpoint, Yes, little van or those some whatnot. generators be standpoint

impact X business, heavy-haul on far its there impact business. As the that as was on

then question. a I guess, will broader I here Okay. end with, And just

portfolio? to of there are forward? is With excuse you offerings sorry Now -- thinking new envision guys the any areas strategic service about changes sale of brokerage, positioning focus? Do any moving of that. the structure you the the and about me, you how guys How have

No. and comments Tim in. that a and business hit I see as think businesses better that is the if of ago. only in a get mean we like number of we're over the to from to And business. expected that financial headwind intermodal And volumes the I quarters little our I years his turnaround better continue bit couple of some we has that just targets mentioned really we think we price, the continually can left past we'll real the back then that maybe have of kind

I about no, from on And that also, think still you side So Contract the where we're we very in that Logistics, see all-star the specialized can portfolio. portfolio. investing, albeit a which all we our the in We're large good pretty we think investment made right? feel of and is I business, believe investing truckload real

I we're the very no, time where for with being, we happy stand. think So

[Operator Instructions]

We to closing have turn I over call Tim no for further back questions. comments. the will Phillips

in extremely front Thank what you, I'm of Joanna. us. about excited is

provide you. thank look continue approach. With port offer forward we engineered and Universal chain logistics to our next call solutions Thank quarter. From We with our the supply talking you additions that to to for joining bolster evaluate solutions customers. that, is strategic a that precision you plant, able to I to customer-centric today

we We you for disconnect for participating, lines. and your that please Ladies conference gentlemen, this and you your concludes thank ask today.