Universal Logistics Holdings Reports Third Quarter 2019 Financial Results; Declares Dividend

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WARREN, Mich., Oct. 24, 2019 /PRNewswire/ -- Universal Logistics Holdings, Inc. ULH, a leading asset-light provider of customized transportation and logistics solutions, today reported consolidated third quarter 2019 net loss of $8.4 million, or $(0.30) per basic and diluted share, on total operating revenues of $375.5 million.  This compares to net income of $15.1 million, or $0.53 per basic and diluted share, during third quarter 2018 on total operating revenues of $374.3 million.  Included in the reported loss were pre-tax charges of $24.8 million for a previously disclosed legal settlement and an additional $2.2 million charge for unrelated ongoing litigation.  Universal has also estimated the impact of the United Auto Workers (UAW) labor strike against General Motors to have reduced operating income by $4.0 million

Universal Logistics Holdings logo (PRNewsfoto/Universal Logistics Holdings)

The UAW labor strike, which began on September 16, 2019, shuttered activity at Universal's dedicated and value-added operations supporting General Motors across the United States.  However, in order to maintain labor continuity Universal continued to pay employees during strike despite the lost production. The impact of the strike is estimated to have reduced Universal's weekly operating income by $2.0 million per week during the two weeks the strike impacted the third quarter 2019.  The UAW and General Motors announced a tentative agreement has been reached and, if ratified, the strike would end around October 25, 2019.

In the third quarter 2019, Universal reported an operating loss of $7.4 million compared to operating income of $22.5 million in the same period last year.  EBITDA, a non-GAAP measure, decreased $26.6 million during the third quarter 2019 to $11.6 million, compared to $38.3 million one year earlier.  Both Universal's reported operating loss and EBITDA during the third quarter 2019 include the litigation charges and estimated losses from the labor strike.  As a percentage of operating revenue, Universal's operating income margin and EBITDA margin as reported were (2.0)% and 3.1%, respectively.  These metrics compare to 6.0% and 10.2%, respectively, in the third quarter of 2018.  Operating income margin and EBITDA margin for the third quarter 2019 were both reduced 8.3% as a result of the impact of litigation charges and the estimated losses due to the labor strike.

Operating revenues from truckload services decreased $17.6 million, or 21.9%, to $62.6 million, compared to $80.2 million for the same period last year. Included in truckload revenues for the recently completed quarter were $6.4 million in separately identified fuel surcharges compared to $8.7 million during the same period last year.  The decrease in truckload services reflects a 22.7% decrease in the number of loads hauled, which was partially offset by a 1.6% increase in average operating revenue per load, excluding fuel surcharges.  During the third quarter 2019, Universal moved 56,510 loads compared to 73,117 during the same period last year. 

Revenues for the third quarter 2019 from brokerage services decreased $4.4 million, or 4.4%, to $94.4 million compared to $98.8 million one year earlier. The decrease is primarily due to a 9.1% decrease in the average operating revenue per load, which was partially offset by a 5.0% increase in the number of brokered loads moved.  During the third quarter of 2019, Universal brokered 61,072 loads, compared to 58,147 loads during the same period last year, while the average operating revenue load fell from $1,643 per load in the third quarter 2018 to $1,494 during the same period this year. 

Intermodal services revenues increased $27.3 million to $93.0 million in the third quarter 2019, up from $65.7 million during the same period last year.  Included in intermodal revenues were $34.6 million of incremental revenue from acquired companies.  During the third quarter 2019 intermodal fuel surcharges totaled $11.4 million, compared to $8.4 million during the same period last year.  Intermodal services experienced increases in both the average operating revenue per load, excluding fuel surcharges, and in the number of loads hauled.  During the third quarter 2019, Universal moved 154,600 intermodal loads, compared to 119,410 loads during the same period last year, while also increasing its average operating revenue per load, excluding fuel surcharges, by 7.3%.

Third quarter 2019 operating revenues from dedicated services decreased $3.5 million to $32.7 million compared to $36.2 million one year earlier. Dedicated services revenues included $3.6 million in separately identified fuel surcharges in the third quarter 2019 compared to $4.4 million during the same period last year.  The decrease in operating revenues was primarily attributable to the impact the labor strike had on operations supporting General Motors. 

Revenues from value-added services decreased $0.7 million during the third quarter 2019 to $92.7 million.  This compares to $93.4 million from value-added services one year earlier.  Revenues from value-added operations supporting heavy-truck production were relatively flat on a year-over-year basis, growing $0.1 million.  The overall decline in value-added revenues was primarily attributable to the halt in production at operations supporting passenger vehicles from the UAW labor strike. 

Universal's transportation segment was negatively impacted by litigation charges recorded during the third quarter 2019, while the labor strike impacted its logistics segment. During the third quarter 2019, the transportation segment, which is primarily comprised of truckload, brokerage and intermodal services operations, reported an operating loss of $17.2 million, which included the $27.0 million in litigation charges.  In the logistics segment, which includes value-added and dedicated services, third quarter 2019 income from operations decreased 6.7% to $9.8 million, including the estimated $4.0 million in losses related to the strike.

"The third quarter of 2019 proved to be very challenging for Universal," stated Jeff Rogers, Universal's Chief Executive Officer. "While navigating a soft freight environment, Universal's third quarter was further impacted by the settlement of a personal injury case and then a labor strike at our largest customer.  We are pleased that the UAW and GM have reached a tentative agreement, and we look forward to getting these employees back to work very soon.  We have a lot of positive momentum at Universal.  I remain confident in the resilience of our business model and that we have the right teams in place to continue executing our strategy."

As of September 28, 2019, Universal held cash and cash equivalents totaling $6.5 million, and $9.1 million in marketable securities.  Outstanding debt at the end of the third quarter 2019 was $388.8 million and capital expenditures during the quarter totaled $35.6 million.

Universal Logistics Holdings, Inc. also announced today that its Board of Directors declared its fourth quarter cash dividend of $0.105 per share of common stock. The dividend is payable on January 2, 2020 to shareholders of record on December 2, 2019.

Universal calculates and reports selected financial metrics for purposes of our lending arrangements, and 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 25, 2019
Call Toll Free:  (866) 622-0924
International Dial-in:  +1 (660) 422-4956
Conference ID:  8395286

A replay of the conference call will be available beginning two hours after the call through November 22, 2019, by calling (855) 859-2056 (toll free) or +1 (404) 537-3406 (toll) and using conference ID 8395286. The call will also be available on investors.universallogistics.com.

About Universal:

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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," "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




September 28,



September 29,



September 28,



September 29,




2019



2018



2019



2018


Operating revenues:

















Truckload services


$

62,615



$

80,204



$

193,133



$

240,053


Brokerage services



94,442




98,801




269,680




269,446


Intermodal services



93,022




65,710




278,043




167,190


Dedicated services



32,730




36,195




105,618




106,915


Value-added services



92,676




93,382




289,593




291,726


Total operating revenues



375,485




374,292




1,136,067




1,075,330



















Operating expenses:

















Purchased transportation and equipment rent



183,902




186,239




539,584




526,502


Direct personnel and related benefits



91,946




87,189




278,763




260,548


Operating supplies and expenses



30,465




32,119




91,972




90,547


Commission expense



7,991




9,653




23,685




28,298


Occupancy expense



8,380




7,410




27,523




22,574


General and administrative



11,435




7,750




30,309




23,354


Insurance and claims



29,912




7,419




41,215




18,173


Depreciation and amortization



18,807




13,983




53,140




39,448


Total operating expenses



382,838




351,762




1,086,191




1,009,444


(Loss) income from operations



(7,353)




22,530




49,876




65,886


Interest expense, net



(4,077)




(4,303)




(12,545)




(9,810)


Other non-operating income



163




1,746




1,212




1,688


Loss (income) before income taxes



(11,267)




19,973




38,543




57,764


Provision for income taxes



(2,847)




4,918




9,694




14,606


Net (loss) income


$

(8,420)



$

15,055



$

28,849



$

43,158



















Earnings per common share:

















Basic


$

(0.30)



$

0.53



$

1.02



$

1.52


Diluted


$

(0.30)



$

0.53



$

1.02



$

1.52



















Weighted average number of common shares outstanding:

















Basic



28,263




28,382




28,342




28,388


Diluted



28,264




28,392




28,343




28,396



















Dividends declared per common share:


$

0.105



$

0.105



$

0.315



$

0.315


 

 

UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Condensed Consolidated Balance Sheets

(In thousands)





September 28,

2019



December 31,

2018


Assets









Cash and cash equivalents


$

6,485



$

5,727


Marketable securities



9,139




9,333


Accounts receivable - net



212,010




215,991


Other current assets



39,158




44,207


Total current assets



266,792




275,258


Property and equipment - net



317,623




303,234


Other long-term assets - net



350,314




264,655


Total assets


$

934,729



$

843,147











Liabilities and shareholders' equity









Current liabilities, excluding current maturities of debt


$

232,357



$

169,266


Debt - net



386,557




400,452


Other long-term liabilities



117,900




64,130


Total liabilities



736,814




633,848


Total shareholders' equity



197,915




209,299


Total liabilities and shareholders' equity


$

934,729



$

843,147


 

 

UNIVERSAL LOGISTICS HOLDINGS, INC.

Unaudited Summary of Operating Data





Thirteen Weeks Ended



Thirty-nine Weeks Ended




September 28,



September 29,



September 28,



September 29,




2019



2018



2019



2018


Truckload Services:

















Number of loads



56,510




73,117




179,025




220,961


Average operating revenue per load, excluding fuel
surcharges


$

1,000



$

984



$

957



$

963


Average operating revenue per mile, excluding fuel
surcharges


$

3.34



$

3.03



$

3.29



$

2.85


Average length of haul



299




325




291




339


Average number of tractors



1,470




1,772




1,541




1,813



















Brokerage Services:

















Number of loads (a)



61,072




58,147




172,391




157,246


Average operating revenue per load (a)


$

1,494



$

1,643



$

1,499



$

1,650


Average length of haul (a)



661




613




648




588



















Intermodal Services:

















Number of loads



154,600




119,410




484,539




311,907


Average operating revenue per load, excluding fuel
surcharges


$

526



$

490



$

504



$

474


Average number of tractors



1,821




1,185




1,790




1,059


Number of depots



14




14




14




14



















Dedicated Services:

















Number of loads (b)



138,934




139,116




433,937




415,215



(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




September 28,



September 29,



September 28,



September 29,




2019



2018



2019



2018


Value-added Services

















Average number of direct employees



3,373




3,664




3,613




3,869


Average number of full-time equivalents



1,435




1,413




1,590




1,385


Number of active programs



54




49




54




49



















Operating Revenues by Segment:

















Transportation


$

254,129



$

248,529



$

752,610



$

688,794


Logistics



120,981




125,385




382,541




385,431


Other



375




378




916




1,105


Total


$

375,485



$

374,292



$

1,136,067



$

1,075,330



















Income from Operations by Segment:

















Transportation


$

(17,224)



$

11,885



$

8,601



$

32,273


Logistics



9,796




10,503




40,955




32,950


Other



75




142




320




663


Total


$

(7,353)



$

22,530



$

49,876



$

65,886


 

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




September 28,



September 29,



September 28,



September 29,




2019



2018



2019



2018




( in thousands)



( in thousands)


EBITDA

















Net (loss) income


$

(8,420)



$

15,055



$

28,849



$

43,158


Provision for income taxes



(2,847)




4,918




9,694




14,606


Interest expense, net



4,077




4,303




12,545




9,810


Depreciation



14,479




12,480




40,655




36,218


Amortization



4,328




1,503




12,485




3,230


EBITDA


$

11,617



$

38,259



$

104,228



$

107,022



















EBITDA margin (a)



3.1

%



10.2

%



9.2

%



10.0

%


(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:

  • EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;
  • EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
  • EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
  • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
  • Other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

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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