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Classified in: Transportation, Science and technology, Business
Subject: ERN

Universal Logistics Holdings Reports Third Quarter 2020 Financial Results


WARREN, Mich., Oct. 29, 2020 /PRNewswire/ -- Universal Logistics Holdings, Inc. (NASDAQ: ULH), a leading asset-light provider of customized transportation and logistics solutions, today reported consolidated third quarter 2020 net income of $13.6 million, or $0.50 per basic and diluted share, on total operating revenues of $365.0 million. This compares to a net loss of $8.4 million, or $(0.30) per basic and diluted share, during third quarter 2019 on total operating revenues of $375.5 million.  Included in third quarter 2020 results were $0.5 million of pre-tax holding losses, or $0.01 per share, on marketable securities due to changes in fair value recognized in income. 

In the third quarter 2020, Universal reported operating income of $22.1 million compared to an operating loss of $7.4 million in the third quarter one year earlier. Included in the third quarter 2019 reported loss were two non-recurring items: Pre-tax charges of $27.0 million for previously disclosed legal matters, and the estimated reduction of Universal's operating income by $4.0 million resulting from the then-existing labor strike by the United Auto Workers (UAW) against General Motors. As a percentage of operating revenue, operating margin for the third quarter 2020 was 6.0% compared to (2.0%) during the same period last year. EBITDA, a non-GAAP measure, increased by $26.8 million during the third quarter 2020 to $38.5 million, compared to $11.6 million one year earlier.  As a percentage of operating revenue, EBITDA margin for the third quarter 2020 was 10.5% compared to 3.1% during the same period last year. 

"The rapid recovery of North American automotive production was a primary driver behind Universal's solid performance in the third quarter 2020," stated Tim Phillips, Universal's Chief Executive Officer.  "We are confident this rebound has quite a bit of runway, particularly in the light-truck and SUV markets. The continued strength in this space provides the foundation for our dedicated transportation and value-added service businesses, and we expect to build upon this success by launching several new logistics wins over the next few quarters.

"Our intermodal franchise is also producing solid results. We experienced robust activity during the quarter and are most recently seeing a resurgence of imports on the West coast. Although port congestion and a slower-than-anticipated rate of trucks returning to work has caused some pockets to underperform, we have a substantial opportunity to leverage our resources and capitalize on the recovery we are seeing on the West coast.

"Truckload continues to perform well, albeit on lower volumes.  A favorable rate environment and disciplined cost control kept third quarter performance in-line with our margin targets.  While beneficial from a rate perspective, tight truckload capacity adversely impacted our company-managed brokerage business in the third quarter. As we continued to work through our book of business, rationalizing both lanes and customers, persistent margin pressure throughout the quarter led to underperformance in this service line.

"I firmly believe that we are well under way on the road to economic recovery.  This confidence is further evidenced by the Board's decision to reinstate Universal's regular quarterly dividend. We have faced many obstacles this year, and I am proud of the way this organization has overcome each and every one. I look forward to rounding out a successful 2020, and excited for the year to come."

Operating revenues from truckload services in the third quarter decreased $10.4 million to $52.2 million, compared to $62.6 million for the same period last year. Included in truckload revenues for the recently completed quarter were $3.6 million in separately identified fuel surcharges compared to $6.4 million during the same period last year. The decrease in truckload services reflects a decrease in the number of loads hauled, which was partially offset by an increase in average operating revenue per load, excluding fuel surcharges. During the quarter ended October 3, 2020, Universal moved 46,712 loads compared to 56,510 during the same period last year, while its average operating revenue per load, excluding fuel surcharges, increased by 6.2%.

Revenues for the third quarter 2020 from brokerage services decreased $3.9 million, or 4.1%, to $90.6 million compared to $94.4 million one year earlier. The decrease is primarily due to a 10.1% decrease in the number of brokerage loads moved, which was partially offset by a 6.4% increase in average operating revenue per load. During the third quarter of 2020, Universal brokered 54,919 loads, compared to 61,072 loads during the same period last year.

Intermodal services revenues increased $1.5 million to $94.5 million in the third quarter 2020, up from $93.0 million during the same period last year.  Included in intermodal revenues for the recently completed quarter were $9.4 million in separately identified fuel surcharges compared to $11.4 million during the same period last year.  The increase in intermodal services reflects an increase in the number of loads hauled, which was partially offset by a decrease in the average operating revenue per load, excluding fuel surcharges.  During the quarter ended October 3, 2020, Universal moved 182,803 intermodal loads, compared to 154,600 loads during the same period last year, while its average operating revenue per load, excluding fuel surcharges, fell by 11.0%.

Third quarter 2020 operating revenues from dedicated services increased 20.3% to $39.4 million compared to $32.7 million one year earlier. Dedicated services revenues included $3.4 million in separately identified fuel surcharges in the third quarter 2020 compared to $3.6 million during the same period last year.  During the third quarter of 2020, Universal moved 160,694 dedicated loads, compared to 138,934 loads during the same period last year. The increase in 2020 was attributable to strong volumes in North American automotive production compared to the third quarter of last year which included a UAW labor strike against General Motors. 

Overall, revenues from value-added services decreased during the third quarter 2020 to $88.3 million. This compares to $92.7 million from value-added services one year earlier. Value-added operations supporting heavy-truck production fell $6.8 million in the thirteen weeks ended October 3, 2020 compared to the same period last year. The decrease was partially offset by operations supporting passenger vehicle programs which saw increases due to robust activity throughout the third quarter 2020. Additionally, the prior year was adversely impacted by the UAW labor strike halting vehicle production at several of our value-added operations.

During the third quarter 2020, the transportation segment, which is primarily comprised of truckload, brokerage and intermodal services operations, reported operating income of $10.4 million on total operating revenues of $237.1 million. Both truckload and intermodal services performed well during the period; however, segment results were negatively impacted by continued margin pressures in company-managed brokerage operations. For the thirteen weeks ended October 3, 2020, our company-managed brokerage operations recorded $56.4 million in total operating revenues, and an operating ratio of 104.5%.  During the third quarter 2019, operating losses in the transportation segment included $27.0 million in non-recurring litigation charges for a previously disclosed legal matters.

In the logistics segment, which includes value-added and dedicated services, the rebound of North American automotive manufacturing led to improved performance during the period. These results were however negatively impacted by operations supporting heavy-truck production, which experienced planned shutdowns during the period, as well as launch costs in support of recent business awards. For the third quarter 2020, income from operations in the logistics segment was $11.6 million on total operating revenues of $127.7 million. This compares to $9.8 million of income from operations in the third quarter 2019, during which the then-existing labor strike by the UAW against General Motors is estimated to have reduced operating income by $4.0 million.

As of October 3, 2020, Universal held cash and cash equivalents totaling $8.7 million, and $6.7 million in marketable securities.  Outstanding debt at the end of the third quarter 2020 was $468.3 million and capital expenditures totaled $30.5 million

Universal Logistics Holdings, Inc. also announced today that its Board of Directors has declared a cash dividend of $0.105 per share of common stock.  The dividend is payable to shareholders of record at the close of business on December 7, 2020 and is expected to be paid on January 4, 2021.

Universal calculates and reports selected financial metrics not only for purposes of our lending arrangements but also in an effort to isolate and exclude the impact of non-operating expenses related to our corporate development activities. These statistics are described in more detail below in the section captioned "Non-GAAP Financial Measures."

Conference call:

We invite investors and analysts to our quarterly earnings conference call. 

Quarterly Earnings Conference Call Dial-in Details:

Time:  10:00 a.m. Eastern Time
Date:  Friday, October 30, 2020
Call Toll Free:  (866) 622-0924
International Dial-in:  +1 (660) 422-4956
Conference ID:  9768474

A replay of the conference call will be available beginning two hours after the call through November 6, 2020, by calling (855) 859-2056 (toll free) or +1 (404) 537-3406 (toll) and using conference ID 9768474. The call will also be available on investors.universallogistics.com

About Universal:

Universal Logistics Holdings, Inc. is a leading asset-light provider of customized transportation and logistics solutions throughout the United States, and in Mexico, Canada and Colombia.  We provide our customers with supply chain solutions that can be scaled to meet their changing demands and volumes.  We offer our customers a broad array of services across their entire supply chain, including truckload, brokerage, intermodal, dedicated, and value-added services. 

Forward Looking Statements

Some of the statements contained in this press release might be considered forward-looking statements. These statements identify prospective information. Forward-looking statements can be identified by words such as: "expect," "anticipate," "intend," "plan," "goal," "seek," "believe," "targets," "project," "estimate," "future," "likely," "may," "should" and similar references to future periods. Forward-looking statements are based on information available at the time and/or management's good faith belief with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. These forward-looking statements are subject to a number of factors that may cause actual results to differ materially from the expectations described. Additional information about the factors that may adversely affect these forward-looking statements is contained in the Company's reports and filings with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws.

 

UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Condensed Consolidated Statements of Income

(In thousands, except per share data)




Thirteen Weeks Ended



Thirty-nine Weeks Ended




October 3, 2020



September 28, 2019



October 3, 2020



September 28, 2019


Operating revenues:

















Truckload services


$

52,212



$

62,615



$

151,633



$

193,133


Brokerage services



90,568




94,442




239,249




269,680


Intermodal services



94,543




93,022




287,746




278,043


Dedicated services



39,376




32,730




88,986




105,618


Value-added services



88,289




92,676




237,516




289,593


Total operating revenues



364,988




375,485




1,005,130




1,136,067



















Operating expenses:

















Purchased transportation and equipment rent



177,207




183,902




486,674




539,584


Direct personnel and related benefits



88,881




91,946




243,862




278,763


Operating supplies and expenses



31,001




30,465




78,658




91,972


Commission expense



6,756




7,991




18,950




23,685


Occupancy expense



8,674




8,380




26,489




27,523


General and administrative



8,586




11,435




24,090




30,309


Insurance and claims



4,926




29,912




14,655




41,215


Depreciation and amortization



16,894




18,807




54,942




53,140


Total operating expenses



342,925




382,838




948,320




1,086,191


Income (loss) from operations



22,063




(7,353)




56,810




49,876


Interest expense, net



(3,505)




(4,077)




(11,151)




(12,545)


Other non-operating income (loss)



(494)




163




(3,289)




1,212


Income before income taxes



18,064




(11,267)




42,370




38,543


Provision for income taxes



4,486




(2,847)




10,461




9,694


Net income (loss)


$

13,578



$

(8,420)



$

31,909



$

28,849



















Earnings per common share:

















Basic


$

0.50



$

(0.30)



$

1.18



$

1.02


Diluted


$

0.50



$

(0.30)



$

1.18



$

1.02



















Weighted average number of common shares outstanding:

















Basic



26,919




28,263




27,023




28,342


Diluted



26,922




28,264




27,023




28,343



















Dividends declared per common share:


$

?



$

0.105



$

0.105



$

0.315


 

 

UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Condensed Consolidated Balance Sheets

(In thousands)




October 3, 2020



December 31, 2019


Assets









Cash and cash equivalents


$

8,677



$

7,726


Marketable securities



6,699




9,369


Accounts receivable - net



248,965




210,534


Other current assets



50,840




44,214


Total current assets



315,181




271,843


Property and equipment - net



363,449




339,823


Other long-term assets - net



378,236




376,331


Total assets


$

1,056,866



$

987,997











Liabilities and shareholders' equity









Current liabilities, excluding current maturities of debt


$

212,102



$

192,099


Debt - net



466,595




457,612


Other long-term liabilities



150,541




133,069


Total liabilities



829,238




782,780


Total shareholders' equity



227,628




205,217


Total liabilities and shareholders' equity


$

1,056,866



$

987,997


 

 

UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Summary of Operating Data




Thirteen Weeks Ended



Thirty-nine Weeks Ended




October 3, 2020



September 28, 2019



October 3, 2020



September 28, 2019


Truckload Services:

















Number of loads



46,712




56,510




139,844




179,025


Average operating revenue per load, excluding fuel surcharges


$

1,062



$

1,000



$

1,021



$

957


Average operating revenue per mile, excluding fuel surcharges


$

3.53



$

3.34



$

3.51



$

3.29


Average length of haul



301




299




294




291


Average number of tractors



1,275




1,470




1,340




1,541



















Brokerage Services:

















Number of loads (a)



54,919




61,072




163,768




172,391


Average operating revenue per load (a)


$

1,590



$

1,494



$

1,427



$

1,499


Average length of haul (a)



627




661




614




648



















Intermodal Services:

















Number of loads



182,803




154,600




537,365




484,539


Average operating revenue per load, excluding fuel surcharges


$

468



$

526



$

478



$

504


Average number of tractors



2,012




1,821




2,241




1,790


Number of depots



14




14




14




14



















Dedicated Services:

















Number of loads (b)



160,694




138,934




357,912




433,937




(a)

Excludes operating data from freight forwarding division in order to improve the relevance of the statistical data related to our brokerage services and improve the comparability to our peer companies.

(b)

Includes shuttle moves.

 

 

UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Summary of Operating Data - Continued

(Dollars in thousands)




Thirteen Weeks Ended



Thirty-nine Weeks Ended




October 3, 2020



September 28, 2019



October 3, 2020



September 28, 2019


Value-added Services

















Average number of direct employees



3,380




3,373




3,423




3,613


Average number of full-time equivalents



1,329




1,435




1,182




1,590


Number of active programs



57




54




57




54



















Operating Revenues by Segment:

















Transportation


$

237,065



$

254,129



$

677,569



$

752,610


Logistics



127,666




120,981




326,502




382,541


Other



257




375




1,059




916


Total


$

364,988



$

375,485



$

1,005,130



$

1,136,067



















Income from Operations by Segment:

















Transportation


$

10,405



$

(17,224)



$

32,544



$

8,601


Logistics



11,572




9,796




24,012




40,955


Other



86




75




254




320


Total


$

22,063



$

(7,353)



$

56,810



$

49,876


 

 

Non-GAAP Financial Measures

In addition to providing consolidated financial statements based on generally accepted accounting principles in the United States of America (GAAP), we are providing additional financial measures that are not required by or prepared in accordance with GAAP (non-GAAP). We present EBITDA and EBITDA margin, each a non-GAAP measure, as supplemental measures of our performance. We define EBITDA as net income plus (i) interest expense, net, (ii) income taxes, (iii) depreciation, and (iv) amortization. We define EBITDA margin as EBITDA as a percentage of total operating revenues. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis.

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, we are presenting the most directly comparable GAAP financial measure and reconciling the non-GAAP financial measure to the comparable GAAP measure. Set forth below is a reconciliation of net income, the most comparable GAAP measure, to EBITDA for each of the periods indicated:



Thirteen Weeks Ended



Thirty-nine Weeks Ended




October 3, 2020



September 28, 2019



October 3, 2020



September 28, 2019




( in thousands)



( in thousands)


EBITDA

















Net income


$

13,578



$

(8,420)



$

31,909



$

28,849


Income tax expense



4,486




(2,847)




10,461




9,694


Interest expense, net



3,505




4,077




11,151




12,545


Depreciation



13,593




14,533




43,521




40,709


Amortization



3,301




4,274




11,421




12,431


EBITDA


$

38,463



$

11,617



$

108,463



$

104,228



















EBITDA margin (a)



10.5

%



3.1

%



10.8

%



9.2

%



(a)

EBITDA margin is computed by dividing EBITDA by total operating revenues for each of the periods indicated.

 

We present EBITDA and EBITDA margin because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance.

EBITDA has limitations as an analytical tool. Some of these limitations are:

Because of these limitations, EBITDA and EBITDA margin should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and only supplementally on EBITDA and EBITDA margin.

 

SOURCE Universal Logistics Holdings, Inc.


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