ULH - Earnings call transcript Q2 2018 | Universal Logistics Holdings, Inc.

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Operator

Hello, and welcome to Universal Logistics Holdings’ Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. 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. Statements that are forward-looking relate to Universal’s business objectives or expectations and can be identified by the use of words such as belief, expect, anticipate and project. to from uncertainties, those subject could actual are materially differ expectations. statements risks and and results Such

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

Jeff Rogers

customers, The Quarter Universal you for to delivered came joining together focus Universal that leadership improve XXXX great Thanks, Earnings operating goal all execution; and team, Good get great Second Call. The path meaningful service, revenues, per second our morning. Thank in in we deliver our provide Xetania. therefore, in discussions paid goal our earnings started our have to share simplify, for team order increase results. changes quarter quarter. Logistics records the and and to to on Holdings income with to to XXXX service this

On last XX.X%, year’s the $XX.X increased over revenue $XXX million. or to million, line, consolidated top

quarter. of income quarter I’m services was full quarter up the the revenue year both of was by Once Universal delivered the revenue revenue, services brokerage X.X%; and includes growth million Transportation service a our this Earnings again, delivered line per increased operating about up truckload share XX.X%; each up year-over-year. Revenue over was of for XXX%, Fore which XX.X%. second Our were in intermodal highest last very XXX%. proud $X.XX history. increased $XX.X team results

had of value-added increases revenue revenue. our unit additional in businesses Our dedicated X.X% and had XX.X%

and verticals. up truckload XX.X% higher to excludes our in services, In all opportunities X.X% was revenue hauled. in grew across reduction significant total pipeline from includes sales revenue but comes load, per over loads increase which brokerage, $X.XX The revenue X.X%. billion Our our

continued for find very it business. and new XX high our new contractual increased for and is Our services XX.X%. increases this the environment. driven $XX Pricing a down business to on as agents we to driver our million count this difficult run-rate X.X%, segment remained on throughout more nearly drivers year-to-date increases revenue added Brokerage secure basis. increases irregular is in and by double-digit on double-digit firm from over of agent route is XX% of revenue business load spot per and count agents load increases and X.X% year-over-year, all revenue quarter, We

strong July. margins Our nicely in very second so far standalone see the company’s in and brokerage results rebounded we quarter

best that We performance. of exactly we play capacity team intermodal space. increase gives the line quarter increased income. outdo delivered They XX.X%, revenue and in load. loads to operating continues providing per by revenue future the believe services a to do, record our XX.X% themselves. in in year-over-year. is And strengthen Pricing Our XX% that’s continues growth increased another on intermodal for drayage and a top driven part increase us Overall, the best-ever what the XX.X% confidence revenue drayage in great and Dedicated which profitability.

with We current this during capacity our continued having are rates as to environment. customers quarter, negotiate see dedicated in value success most new we of and the the they of

but unit in still to dedicated second expectation. profitability the Our return quarter, below did remains our

continues revenue at XX.X%, elevated operation grew levels. Our as as truck value-added heavy-truck classic to accelerate continues supporting production

production have performance high as based continuing are this this to of the see they and current returned margins, forecast. unit through on overall with We pleased very XXXX, historically we

norms have is our supports in returned retail that business the and grew revenue industrial value-add to team very logistics auto, our aerospace, and historical well. legacy our X.X% margins year-over-year. performing customers, business For The

continues robust, intelligent growth. through year the and for remainder to honestly, that be to and I do be this see been second solid business increase for margin I historical Universal’s focus about will unit driver environment not units in business execution and As our is across The and value-added more quarter with XXXX. this return of industry. all not there in any that throughout has said quarter, shortage to performance significant the improvement will continue continues businesses. the in transportation our anything our capacity last disrupt the The margins

outside the We asset-light have unique, been model working we advantage of and several how in take cyclical our increase transportation years quarter earnings shows space. truckload can diversified on And that very areas last plan. hard of over the our this to deliver

I plenty record quarter improvement. Universal, continued for a opportunity for see was quarter of second yet The

acquisition are on meet very to executing acquire ability our about We good that our our criteria. feel actively strategy, we and companies

good. is momentum Our

We solid. very turn ahead what is I’ll With Logistics. to for about Jude. Universal execution is Our feel over it good that,

Jude Beres

XXXX. $X.X which Thanks, operations of Jeff. everyone. million on second quarter to income EBITDA increased one Holdings the share to XXXX. $X.XX in This per million net XXXX. the to $X.XX to per increased second of revenues second from reported of $XX.X $XX.X earlier. in million million, share million $XXX.X operating total $XX.X second $XXX.X million net million, quarter morning, million in or compared $XX.X of of year quarter revenues of Consolidated compares the to million, Good $XX.X $X.X on XXXX, in the Universal income Logistics compares income $XX.X of total or quarter operating of million

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

$XX.X securities of totaled $X.X expenditures business, million revenue $XXX.X a Transportation totaling debt our our net to issuance to $XXX.X of increased to $X.X of income of $X.X an the on last year. transportation $XX.X quarter total held dedicated of totaled loss Outstanding logistics, revenues operating operating segment, Looking at businesses, operations XXXX. we the Capital million. million operating million from On and million million. the our $XXX.X marketable where Class on operating Logistics million, quarter of to ratio in quarter intermodal debt-to-EBITDA including the heavy-truck costs market million we million. basis. includes operations and quarter second quarter, same $XX.X segment and which XXXX. from quarter million equivalents million segment, to our brokerage increased million or net XX%, the freight balance $X.X in second the In cash rose our revenues, At cash total $X.X for compared XX.X% A service $XXX.X million on X.X includes $XX of for of debt second and our for times end In million, value-added trailing million, the $XXX sheet, compared compared $XX.X XX-month to performance Income the truckload, XXXX. of which was our in

to regular $X.XXX in the million and expenditures quarterly to capital interest expecting of are Thursday, we range, $XX we expense between dividend $XX declared XXXX, On $XX million. be million per $XX.X Universal’s million For and share.

shareholders XXXX, dividend the with to and August we’re expected is payable close is at XX, take quarter’s paid This XXXX. of to on on Xetania, August to questions. record X, be of business that, some ready

Operator

[Operator Wetherbee the of Chris Instructions] line question your And comes with Citigroup. from first

Chris Wetherbee

morning. good guys, Hey,

Jeff Rogers

Hey, good morning.

Chris Wetherbee

guess, wanted on truckload start, So I to side. the

is help you sort as of years opportunity get today? opportunity to the some So increases. is spot? sort us is rest You taking between mix that what plays to mix pretty what where that contract you talked And your the the sort Can and rate of change? of of understand out about significant mix that

Jeff Rogers

see change don’t I mix. the any in

First owner-operated of the about we’re all, on business, Chris. XX-XX truckload agent

XX-XX. again, but mix, So any it’s change see don’t I in that

contractual things. the at soon. as spot So because much hot. both And is you realize going The go, opportunities change and it’s look stronger, really, – been up as people not can market far is to is I and business think, spot going catching not really hot still anytime real it’s getting has

it’s So they lock better well digits rate rate. might XX%, at be contract. spot the XX% this in a than Even a may double as though contract point,

that’s So how leave that, how I – guess. I’ll

Chris Wetherbee

on what think Okay, were that you the the you bit been total margin sequentially. is margins standpoint? sort little they’ve to that’s inconsistent backdrop and the – over a several helpful. guess, transportations, improvement about So quarters course down need transportation think from in start that? a market meaningful about the last a of the little When the I How seeing of consistent do you side

Jeff Rogers

is Well, the really inconsistency coming from space. dedicated the

from truckload, bit better. back at little agent getting business get the unprofitable, that lot real space for seeing look ever dedicated. But not out the But a the here about successful profitability. we’re about inconsistency this where to expand the We further or automotive you been they legacy been do If has turned we away trying a quarter, are margins struggled and I’ve pretty been that. since on but automotive. not of – and that’s to a and little to that talking Those and quarter And we’ve dedicated a it’s We’ve was of consistent. been bit. automotive really focus lot, last –

So not. or lot that’s because the inconsistency on and running – it from where a margins, of it really plants the our comes up depends

in has extremely been, would always And unit there’s say, inconsistencies what some normal dedicated So space. automotive the I inconsistent. our

the automotive of do opportunities So can advantage trying the away just consistent to are I strategy do swinging that, able customers to a then make it. of I expand willing going are little because on take plenty from to automotive to that been focus at more to of think out so. that And a continue keep yet, and We’ve to bit consistent, we’re basis, just to on but going pay not on to dedicated, that. execute there we’re more and we think, it, there

Chris Wetherbee

Okay.

very on sense. the typical happened you a impact is quarter, and help plant and second sort growing that’s XQ those of had third historically that, summer of When had Okay, over lot makes between Could XQ you pace. us of think at the understand rapid because that some quarter dynamic of types a That to your the sort the cadence. business helpful. shutdowns about seasonality

still So the I’m that’s if about right not it. completely way to sure think

help any there would So great? be

Jeff Rogers

model. but value-add, this is of had SUV, changed see heavily support And value-add plants changeover fairly there’s high Sure, because in of it’s their was kind big shutdown. the strange. business, that we same that really have that plants always July There that and so of or year. a actually a the It shutdown then we still that Pickup and two-week still LINC the we’re lot production, we legacy truck still the in that one running automated.

of for they up. just actually, weeks. more And shutdown. versus It was back started the a So coming of were down a July model change couple normal

So a hiccup building. just of strength little it of value-add in a July on seeing beauty we space, we’re clearly is, bit for that’s The to such the are space. intermodal going see the

is brokerage that of the think, as some July, in what’s going seeing getting much quarter there. stronger see on through how even plays we’re strength we’ll So real offsets, And out. so value-add, the I

So a I normally, with quarter, third to the from that agree second see sure yes, hiccup see going not little would bit to but this a we’re I’m that would you year. you quarter of

see So how out. we’ll it plays

Chris Wetherbee

Okay.

I an – think could maybe So acceleration maybe about it little way mean, XQ not see potentially flattish I or a bit guess, is from to to unreasonable XQ? even you

Jeff Rogers

I with agree that. would

Chris Wetherbee

helpful. then right, that’s time. the All Okay. more appreciate two I And here and

forward at do But you of significant bit? over I here. target? XXXX two-part long that margin the higher so What think look to from total And are about margins. quickly XXXX? address was are to guys sort and first-half a standpoint. talked for puts do think of company maybe you run in X%, margins. takes X% strides your can You’ve LINC terms What I how company margins a – it still maybe year, year, through disappointing guess, of that’s Has you Obviously, roughly think then going moved making little returning question the the year are it you potentially though far there? last the the a

Jeff Rogers

I is – we got whether get to the but I Yes, on towards, I going we’re our mean, trying get by back here where from this whether goal office to things mean, done the the through we’re in we and path we definitely XXXX, perspective. I mean get Chris. we’re I XX%. to long-term think, there some mean, And X% – year. that’s focus to a say, progress that’s what again, that technology as to sit I’ll

help us that well delivering the it of that. think, we’re will and I way on

XX% X% by think, by end we the So, I for will then of this and year very shoot is doable XXXX.

Chris Wetherbee

Okay, area acquisitions, more that that’s any just sort a specific subsector or on on? otherwise any Last question of that sort focused helpful. or mentioned you little you’re of bit

Jeff Rogers

before. about that talked We’ve Yes.

see we We We like intermodal. intermodal the that’s in love was space. opportunity. in drayage. there great what think Fore the We

think looking opportunities. we’re obviously, we So there have and we

strategic said, add new but very now or area, at I’ve at to that going do location where either And do. dilute also our and whether not we want do as find doing. that disciplined, we’re we’re businesses than want we a to be because to look we at companies we we fits what footprint, willing, I’m we’re what to better going We’re a have that have within least also to earnings even, not

So that the feel pretty on we right does we limit but our what good targets, plate about have now.

comfortable our we’re So pretty with strategy.

Chris Wetherbee

That it. Yes. really be this for makes to The business. morning, seems sense. much Thanks appreciate in the segment very time I momentum the guys.

Jeff Rogers

bet. You

Operator

from the Bruce next comes Your question of Stifel. with line Chan

Bruce Chan

nice Congratulations, way end Yes. the to morning, Good week here. gentlemen.

a couple questions from Just of me.

pricing truckload. us you imagine bit in you yield color of to low out selective load that the decline action. of You going little mostly that’s we about a should how where expect talked Can kind are bit about a forward? there, that give process? dynamic And of just in kind maybe little I’d talk play

Jeff Rogers

Right.

We’re not love if else, We to, with nothing would we maintain pleased drivers the have. that.

turnover always the in the space the took to XX% XXX% tallies still and is turnover. that truckload in numbers there in we industry So

We’re around typically XX%.

is driver than in. the gone call, we’ve So we’re making few. it find. of Those now in where to call, that likes money rate right to driver the lost what route we pricing, what structure. better goes we’ve drivers will for lost unicorns. lot of drivers, there. every Jude but of the hard think a on And a industry is weeks irregular and therefore, are, out Part But because is I They’re

don’t So I the think it’s necessarily rate.

concern until is to that turnover is it. a That’s kind or industry, to whistle just the hop it just capacity lot up around don’t that been I supply, with folks be think, And of within about of somebody has bell going going I and next offer catches consistent a driver our lot you the because of got There made companies. why really is I comment. in it. somebody see increased

add somebody but that few think added And drivers. from else. over in saw else here, in may went those of probably we some are a but So coming over space, I case, somebody few a drivers that lots to drivers somebody they be drivers may

area because intermodal, quality night. better seeing call every what because driver We’re for they’re just much driver, a I on home would increases that’s a of life

We’re seeing in drivers dedicated increase the side. on

ability So job right it’s a of more really comfort to of the get about, I now. level them go think, they want the driver wherever and the basically

little And difficult in so space. seeing very therefore, decline we’re that very, a a bit of

Bruce Chan

that. in of for influence change you So at getting little your outlook first, that, just equalize? the do two difficulty to level that is there stretching quick rest capacity and Class or maturing then, then production for and just market on the XXXX? and the this to into can matter down average I a does anything all, turnover guess, is to your come maybe try for waiting and drivers, out A this follow-ups year bit of a just question for second given outlook And tightness the is that that

Jeff Rogers

good Sure, question.

driver thing sure So pay, their things not planning maximize we’re from that the doing asset, give that the drivers’ drivers. of done opportunity we make trying them our we’re offer we’re their years and better do, the so trying what at that equal different get time. that in those to day, benefits, competitors out at to we’re We’ve The past. is maximize in we to a to – review doing are least we’re first all what that all go – constantly

focused a really to triangulation on have their backhaul or we’re the to on their trying load load improve for better whatever. or ability next a weeks So two

really perspective. right we’re a focused on planning So that now from

We’re the also going believe, moving in that, forward some with to we that’s technology, near-term. help

little drivers focused what bit So make remind about next second like more again, the me we’re part… on what a question, that. the really, it’s I we to can do The better and think,

Bruce Chan

truck? A Class

Jeff Rogers

actually XXXX that truck. we forecast least, right XXXX, a A truck than the Oh, now, From Class the look build perspective. at through XXXX see the forecast for replacement, primarily are bought being is at Class Bruce, because what of is trucks higher are A that’s what we’re I when all from doing.

fleet it older the be better seemed buy you’re worse gallon on the on got wasn’t fuel always getting new the replacing years because per tractors miles mileage ago. We’re which case. now, because past People that tractor, to the that was new and to years hated

safety the the mileage, in you now, technology you tractor. fuel of all because performance better get better new So get

I and I’ve all fleet to the conference everybody is So much our we’re thing. replacing cycle. same on getting calls, what heard the pretty life our believe, saying

the cycle People and life additional opinion, and capacity got getting tax. though in is to and provide to in life and even And of be driver beneficial any are going their why benefits more focus tight going there you the to drivers, are – in CapEx significance not that replacing my replacing on also out So it’s near-term. a the cash tax their came fleet. their your cycle reduction to get still

of see changes don’t I the that over next couple any So in years.

X% A Class strong stays I looks like long change and the that build coming know as as production sure don’t today. So GDP with economy truck out why over significantly would

So lot cycle. this that that long-run that there’s a a things are of is me – tell

Bruce Chan

on length customers Great. progression, decline nature of good or wondering kind length of two then a the for And decrease, focus of of on far And there you that the a yield to result any of kind just the as the kind of from in Well, I’m haul. the of color. have you’re very dedicated. Is change health customer haul just then questions here as is at that’s last of with customers? mixed if isolating your new maybe Are business? read-throughs length that adding? a that haul existing differences

Jeff Rogers

it’s dedicated, customers the believe, the and their going I really to mix on Yes, just shorter shuttles. changing

We’re they’re their we’re going to some long and – with haul want to lost we links local this of do the – of bid, going business. shuttle to of us maybe more

in depending four I doing, the just a all stayed the years. same into mix wouldn’t are much space customers customers XX time because changes dedicated in of pretty it So the those for read really we that, customer. a it’s on because automotive what change ton with the the

just mix. So change their a in it’s really

Bruce Chan

right, time. very you I thank Okay. great. Well, and much All appreciate the

Jeff Rogers

You bet. Take care, Bruce.

Operator

there this further at Instructions] And [Operator questions are no time.

Jeff Rogers

Super. look Well, we quarter appreciate again, great you, talking and weekend. forward time. to We third to a the everybody, everyone’s end have of Take care. at the

Operator

This conference call. concludes today’s

now may You disconnect.

Universal Logistics (ULH) 28 Jul 182018 Q2 Earnings call transcript