ULH - Earnings call transcript Q1 2019 | Universal Logistics Holdings, Inc.

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Operator

Hello, and welcome to Universal Logistics Holdings First Quarter 2019 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 believe, 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

I'm quarter excited you for announce joining Universal XXXX Thanks, earnings XXXX Good first call. off results. morning. Thank started Zatenia. solid to Logistics we the some Holdings with

our yesterday, As income you saw including Universal making our in from reported QX. per a believe ever. up impacting earnings in first well very growth severe markets strong our executed the operating challenges, we us of the I earnings margin delivered Despite revenues, best quarter Midwest, winter operating XXXX a operating release very in share, first year. for and double-digit weather largest this sets X% Upper and quarter some some

XX.X%, $XX.X services, for drivers. $XXX.X XX.X% and pricing rates issue margin Consolidated clearly are to contractual slightly what demonstrates and or The quarter truckload, measures X.X%. retaining load any increased our in capable EBITDA revenue decrease revenue best in business excludes be in are the increased per last low brokerage, of share million, highest over to spot $XX.X digits increase was the and for by being Our Universal over or single total number income reduction an year is of increased which double one in million $XX.X of of these The irregular of continues offset ever XX.X% in $X.X first the $X.XX decrease three increase All of to history last to is an our million, agent-based XX%. hiring due revenue of million. $XX.X in revenue had of loads future. Truckload digits. was quarter. Overall, Operating unit in million, down of Earnings a by a secured low Team the truckload for million business per XX.X%. of XX.X%.

Our segment was this truck count in XX.X%. down

seen April, encouraged stabilized have decline the We year-to-date. have we're agents in very come the that by and new onboard

down be decrease New to over revenue X.X% services grew our a to in $XX the rate on count was and Load agent $XX.X rates. run is revenue reflecting basis. increased spot million projected XX.X%, $X.X X.X% million million. revenue Brokerage load per or

out the to One strategies which has the of company, laid Cavalry, into the I've we have past, earlier which, incorporating is side standalone, technology-driven in truckload begun business. brokerage our this our asset been year, of execute, just

total needs solution revenue million. million, increased coverage a year. $XX.X last four providing our be due completed forward. powerful to to going tool customers will $XX.X their Mainly or the to acquisitions as capacity transportation Going a single for Intermodal services XX.X%,

acquisition, $XXX margin X.X% Michael's legacy and week, by a to at or million intermodal I'm working of also operate immediately all our accretive. incorporated which and announced still to With services we Cartage, grew with XX.X%. revenue robust to the we to that expect intermodal million. $XX Dedicated now acquisition, at we XX%. intermodal look them. XX% forward have new to Earlier acquisitions, this aboard, our team over fully of be above this our Excluding revenue targeted Michael is we to his business expected fifth have grew excited

was meeting in of business and new plant expectations truck be that a to support the pickup retooled services services to one our up The period month model on an and will our overall margins The year. about the for revenue and while quality a significantly, great down as margin been and running million. from is positive turnaround Class decreased to was this primarily year. quarters our our earnings production dedicated largest have meet For business for Overall, million due other down plants our target this we March. working very delight in delivered and exceeded our coming areas and in close customers. back talking up slightly, quarter, production. for to that $XX.X part revenue our of deliver our goal from they $X.X extended of a revenue margin auto down for deliver continue service value-added many This – X full our our key Value-added of being target that

without The share the in spite the people Easter in sense Yet, executed a weather Equipment came L.A., had new below challenges, calendar work record Port so in late caused significant of doubt real Beach. and and New The the of delivered when our its long impact it's unusual acquisitions had Chinese us. was a well for first not XX The tend well challenges. also Universal and of on zero. to another problems Year quarter. quarter the

pipeline robust. sales Our remains

new new of $XX in new million and $X dedicated business business, over in truckload organic growth across over including secured million all in $XX million lines value-add, year-to-date, have intermodal $XX business. million our We service $X.X in million

and stabilize earnings. working deliver to We hard have been consistent

so good the of business XXXX, execute We high-margin to a revenue $X.X give operating X% to businesses Based of $X.X our the in lines. our XXXX what for issued strategy, year to operating are X% plan service expected like guidance reaffirm billion billion value-add around XX% shape. would the our our seeing from operating of income will and I'm now our will Jude color to M&A and our value-added previously far, continue over little extremely to well, now For margin more financials. dedicated dedicated full intermodal and in come range. on I us with

Jude Beres

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

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

treatment period. changed our equivalents new of and at the On end first gross XX.X% $X.X of balance total our $XX.X total lease the $XX.X sheet, income in XXXX, in service the services, market new Class operations $XX.X to our first first million million for Outstanding In standard, our current in million business, liabilities where to in Looking cash million $XX.X securities. of of $X.X operations on transportation million million the million and at XXXX. right-of-use increased totaling connection $XXX.X of the balance $XX.X $XXX.X revenues from marketable X operating and the liabilities, $XXX.X considered net million performance on compared quarter revenue In to XXXX. The income truckload, we is we up of of same businesses, to cash asset the totaled for end $XX.X million compared interest-bearing of first and standard last quarter for heavy compared of transportation its which $X.X operating rose Universal the debt Universal to adopted quarter the our issuance balance the quarter of required increased million which XXX liability leases. operating income held truck has and value-added to our from of debt are XXXX, costs segment, lease NVOCC including sheet and and with $XXX.X In our of brokerage assets. quarter which XX.X% XXXX, which in comprised ASC our logistics segment, and sheet. million dedicated Universal the the million to revenues segment freight $X.X accounting million year, operating right-of-use of recorded includes at intermodal, its quarter $XXX.X million for

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

are XXXX, expense to interest For expecting we be $XX $XX between million. million capital in $XX range million the expenditures to and and million $XX

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

record dividend This expected we is shareholders May that, take Zatenia, to of With on XXXX. May to business is be of are some at the paid to XX, X, quarter's ready and XXXX, payable questions. close

Operator

of question comes first Wetherbee [Operator Instructions] from line [Citigroup]. Chris the Your

Chris Wetherbee

morning, thanks. guys. Hi, Good

Jeff Rogers

Hey, good Chris. morning,

Chris Wetherbee

margin. big about bit quarter little a right, talk just obviously X% on of kind so solid first to wanted I picture margins,

year the course of You a in out over there, had to there's of last parts XX new changes full the months of guidance adding the it. been but for business to terms the the lot

to wanted of get stands structure typical how it margins the the we think do given of progress we as a year, through the sense as seasonality just about operating today. current So just business

Jeff Rogers

quarter. be Yeah, I second, When we've hoping when going I quarter would intermodal, first still pieces weakest. added things the added Even the to you still at to in with going – think historically we're historically is forward still Chris. things though third look – is our strongest our those of quarters, the But will be some out. we've quarter, quarter weakest be level to look say first you

you of to I normal what I the pretty looking from in going and – see some but downturns second But third going you're a be second, – the what we're quarter maintains think increase first. so hope stronger that toward, from did. second, third out our is for bit has to which first, quarters, say then plan to at third think will then which third that will We first than probably some to fourth. I the automotive till the a still would offset fourth always awesome, that been of high of part still strongest and of intermodal then seasonality we still still be will little second, and will level level, see,

that's – still much higher just that level same. it a has least plan. hopefully stays up at been, think I to historically So at that's it be But going historically the than the

Chris Wetherbee

that certainly Okay, sense. makes okay,

from Maybe you if the of first might looked like if sort how you. what don't just hadn't of of quarter, a maybe get were, where winter quantify sense the weather know much performance just cost disruptions operations the the had anything generally business they of the terms can thought challenges that – what In – have you to you of speaking trying I were.

Jeff Rogers

We perspective. again, nice at transportation which, there. you other some going lost Yeah, got three Chicago, made days look really from We've we on a if there. acquisition things a

Fort really had was Wayne, cold a our shut which down but which or operations, some value-add one is for severe day weather of really, there. really of kind largest they is two, unusual,

of kind be might hard to it quantify. So

I think you a everybody knows days never once revenue, of seems it to come back. couple lose

anywhere not be EPS guessing. $X.XX an super from but from perspective, So could $X.XX it to significant, it's probably I'm

Chris Wetherbee

Okay, a And truckload bit all pricing right, helpful. the want the I as well to in little talk business. then dynamics as that’s about intermodal

pressure a some quarter, certainly the call obviously like out? moving let's the forward. we plays year your see in those as in for, of seen from rest looks should we've decelerating playing as truckload the intermodal is first What it, rate activities out? are rates we're How deceleration expectations growth So

Jeff Rogers

than intermodal truckload, that think is we're to going still stronger now. be I and Yes. seeing

point is would I'm end probably and truckload seeing rate think stated But what some at digits rest saying through out, I continue. just strong. of for on but So X%, knows. the that with don't was very to increases truckload The we're probably I the solid. now then announced last is And coming But intermodal will intermodal, thinking think X% I I like X% what the more on probably seeing. we're – at higher X%, that X% would year, year play do X%, GDP I out be going of X.X%, and consumer say know the another to how mid-single I it maybe expect maybe they who to of we're because

there. So I still out think economic there is strength tremendous

see much worse don't are, they we'll bottoming out I than but how out. see plays So it rates

Chris Wetherbee

there to have lot intermodal last it helpful. still still question, Anything And on Are be done of the outlook of there? Okay, left sort the Would on to a do the side. that’s you What's M&A do here? the for rest the things side? XXXX? then

Jeff Rogers

Absolutely.

still what extremely we going to keep focus – we that made that acquisitions We’re pleased with so as have going the nice are, to we've moving intermodal far, do It's they meet been and targets to just are path. how long been opportunities we've down some continue our performing. We're on as and expectations find there.

keep going keep we're it. to in that plan so just executing And place on and

Chris Wetherbee

Perfect. really appreciate Thanks very the time. for it. much I

Jeff Rogers

You bet.

Operator

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

Bruce Chan

Yes, going on momentum keeping in here good the Congrats morning, gentlemen. XXXX.

Jeff Rogers

Thanks…

Bruce Chan

their some that's the the your whether for one we've of is I regard the the pricing of if affecting having at finding And moving contractor just the don't other much truckload still capacity side but bit so corner effort. to ability that a other seen hand I kind of I'm to on of take I on guess, pool not just loosening of given squeeze to providers Obviously, carriers on much seem drivers much you, that have from some that retaining the trouble get dedicated as have heard keep there. how some you're And there from your needle surprised on out and still that's that or there also turned too then business on and some see up want that the on seeing affecting OEMs, with the independent now. we're loosening a business, least environment little bit large right do little your the business. with rely we've of that auto to out a I

just commentary maybe some So there.

Jeff Rogers

answer I question Sure, will that first.

the if at decline areas, recruit drivers the specific all adding in look when over-the-road drivers, that's them. the as we have their we've you there see in guys to are spend to fact so, my you look and it's rest irregular so lost you drivers, very that about hard of Just tractor. that But at to well. – at really look intermodal, we're the significant time going That's I talk dedicated, where that my

really it So just a different whole is thing.

some some growing things, I we're – think competition, they to as same a adding the going is of if type had dedicated of have And and at you look everybody the we're well. of more there drivers model.

owner-operator in So very difference just really model it's the little on specific side. our a agent,

to in to secure don't to such we and confident So very, one around, on I we've – they see continue. had how that's mentioned we're that for what dedicated with have a of I think those what repriced rough variable dedicated, that our model we've going what with seeing issues the now think They and done we've dedicated, turned something going to and business and them very obviously dedicated is done big fixed I any from right feel had which there switched new, guys. I that XXXX how how last automotive a to quarter try capacity folks is

just two-year. from be good because that, and once for year, one lock those are them pressure of lot continue, So business real much they most going a not see pretty because some guys feel locked sure it's the But a And those of of pressure don't we rate pretty from contract, year next set. we that contracts. guys those will I in to there's in for whole them are

don't doing has They many do very You trucking they companies coming to market our bit piece these XXX might customers a out because plant. market that not see they're support drivers car freight – better inbound some do little the big. into so of to And a into can't go provide in rate. and what one projects them that every can with try where just get spot

what have we'll going guys. year I rates I the for we've – that good far what and and to think we got be able as as dedicated So the secure keep next for pretty forward feel

Bruce Chan

super quarter-to-date just more about whether what's heard as the TL month-to-date been and brokerage Great, that’s what but the you're of perhaps curious in talked that’s And some and I'm April. But with environment. especially softness softness surprising, about just for the or experience maybe people has on And some – seeing talk XXXX outlook your then into we've well. one I businesses, helpful. question. that persistent and bit some going across know you a rate

Jeff Rogers

I interesting calendar year was thing. And that unusual. mentioned the this Yeah, very just

get first happen have we just this not last of until didn't yet. that any Easter spring surprised a I But obviously, pickup didn't quarter, So the little we am of because seen much week. uptick real a

point based in it it will any is are we do economy I Now don't it's the spring, consumer here see almost on at some here and some May. consumer and unbelievable, the still why the things at and price pick Michigan, wouldn't. reason cold the to point, strength of expect I and I mean be which up.

think just a very it Bruce. is part odd I just of So calendar, – it's

So was have can't I would we'll last of it's see, remember but softer actually little bit April. April XXnd than expected. in But a the I clearly Easter time the

couple So the we'll over see what happens weeks. next

Bruce Chan

it, a still Got pretty so normal peak season? expecting

Jeff Rogers

seasonal Yeah, fully May, to June, expect be it see a it I uptick. good don't why I still reason any wouldn't. I would say

Bruce Chan

All we’re appreciate I time weekend… and hope but so have guys right, today, a you doing well, hard, that [indiscernible] the good

Jeff Rogers

Thanks, for us Bruce. letting Thanks know.

Operator

Capital the Mike question And your next Instructions] of [Operator Vermut from [Newland line Management].

Mike Vermut

a It’s sure. guys. four were ago than job three, years company Great Hey, for different here. two, we

Jeff Rogers

Mike. Thanks,

Mike Vermut

– look just you. two through guess you got then second I – And is these going? on, They acquisitions. that One see fantastic. has business go all it where questions you you a had how mix we've I for come evolved? Can for question that how And

to out is there? we If you discuss have we've know what go And years. a competitive you whether have they couple the can Where are what that? free about thinking flow been and And deployed can huge math, them for been paying pipeline how we’re else don't the and going don't that I next for doing have of if then huge gets – cash acquisitions, number bids? a over if you –

Jeff Rogers

Mike. Yeah, cool. Thanks

look what for So to that at going of I've the I I'm don't feel shoot and the as have What focused and the we a what growing for in percent think best – again is mix, growth. business a the I head if we're margin we're as to I provide best areas trying my opportunity before, we're this on far stated mix.

that the I they that to with us their we're margin. think again, of We're how far that's for have Brokerage in such with year. difficult. to – continues year so our because brokerage And truckload incorporate, day. that good And been margin how I forward, going area the grow. because best perspective the a every with they just opportunity last And tremendous That's think that touching assets area of growth and provides some grow is they're that going from up to tie for can in intermodal. is technology about value-add. tie talked a I with irregular we're been to have and many better margins. we still customers driver going continues what if The changes the But just seeing had

the what get paid will So to other don't Keep what we our made. to you how an side acquisitions. our When stay that these the strategy ultimately we've the the good continue to the end multiples talked we're where we for changing? on mind have about and margin the involved auction. mix question We on fact that areas want I about we feel paying. not businesses. the in flip exactly very, going last our ends in don't and other commitments much talk up the to based We increase grow about to very know opportunity I we up best focused than into

the working owner we're with investment directly banker. their therefore, and So business

us. a that, more opportunities, with create plenty that getting little perspective, involved forward, grounded pipeline our just had see closing an – We and our up seems new That don't So keeps of in get all and mind, kinds opportunities going at for time we're still it that bit feel every plenty of from of need our we're going all. to things Mike. to end continue full, opportunities in and now We've we strategy. acquisition, we to the is

So we don't opportunities good feel us. of there is shortage for any

Mike Vermut

been look with we Should businesses, the coming should we down? – that's think Excellent. see when at company the cyclicality Excellent. issues of past. one I the in the we the

getting pieces? smooth now that the other out we're is as So growing

Jeff Rogers

keep everybody piece years. the bigger mean, I probably I truckload think, was what business, absolutely. mind, realizes much most six of anymore. we a our Well, back not is go It's cyclical do. which five, of in part four, That

would truck Our the come in the automotive be the it the guys have of even such July whether their the value-add August. they side moment And it of pieces be as business. year whether would from those intermodal, – and Class bigger in though X guys

– be level trying the activity out the weaker to where economic out. So truckload what earlier plants shutdown. to such is because out. And different we're with industry purpose there my quarter. a from just There will doing quarter still be and going doing is general is that – a as first But activity be of But Chris good some cyclicality, cyclical was that impact we're job. there's point really normal fourth just and going we're just take periods of to the of level still trying pretty the think may a is to I first –

Mike Vermut

last back going then And with just Excellent. the capital question allocation.

you look Xx and the putting look getting trading what at do stock versus It's it we're this something You you absurd, at go forth earnings. When that at year back buyback how capital in into to range. Xx, acquisition? allocation, be between

Jeff Rogers

our allocate special But we from year looked at did pretty to we we’re everything we and feel dividend. to dividend our this policy going the capital. different know, continue about good talk point we always want and for You about options a how last at have to what

use business that and in to like getting perspective, going on that from that's give back other opportunity our a capital of reinvestment best is from there things opportunities always So in equipment the perspective an we're to that. right facilities with and the But feel to the than we capital be still shareholders. acquisition now,

Mike Vermut

Excellent.

guys. job fantastic quarter. well, Okay, Great

Jeff Rogers

Mike. Thanks,

Operator

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

Bruce Chan

thanks. Yeah,

you Just quick a follow if mind. don't ups, couple

on integration tying as Have truckload into pushback community any from Just that those Cavalry together? two agent seen as the far the you business.

Jeff Rogers

I'm and to Cavalry Well, that the agents in the going with company keep in grow truckload other stand-alone of mind, the business expectation have control and business. to with be separate. portions And what integrate the is going We're the other the business. businesses their contact the will to is dedicated. of we're going customer agent the – of portion My the business the areas my do business as that brokerage intermodal, really involves the such and business keeping

the it's going with really agents. interacting So to not be

Bruce Chan

no Got then? it, so change there real

Jeff Rogers

No.

Bruce Chan

And one then more. just

I first far the being in pipeline billion. a so is that neighborhood think is any trending in grown? just quarter bit settlement? Has want somewhere the to sales $X.XX know you little here How last that if about second quarter, there that fairly of And talked consistent? quarter? Is

Jeff Rogers

not there little mean more customers opportunities right brokerage bit I brokerage where everybody just from stronger. side, I turning expect. it’s Yeah, would would they are can. to say more as if a the seeing more and We're

So there. opportunities of there plenty is

my seen. fifth I've year that which $X.XX actually new business is that would about say the say, that was of The here we've obtained talked up that on actual looking can since thing is coming year-to-date of year-to-date, secured plus. – over million I strong billion honestly business back still So I it's exciting I this $XX

feel really about good so. we So that,

Bruce Chan

up. Great. All appreciate right, follow well, I the

Jeff Rogers

You bet.

Operator

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

Jeff Rogers

in Zatenia, thank soon. you so again to of I you everybody Take appreciate your appreciate Universal. and dialing much. We'll support care. talk

Operator

call. in for participation today’s conference you your Thank

You disconnect. may now

Universal Logistics (ULH) 26 Apr 192019 Q1 Earnings call transcript