ULH - Earnings call transcript Q2 2019 | Universal Logistics Holdings, Inc.

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Operator

Hello, and welcome to Universal Logistics Holdings Second 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 belief, expect, anticipate and project. to from uncertainties those subject could actual are materially differ expectations. statements risks and and results Such

As a reminder, this conference is being recorded.

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

Jeffrey Rogers

history. deliver Thank Holdings Team environment. Good million, morning. a you results to second Universal our million $XX.X XXXX Jason. the of Logistics increase X.X% for an second Thanks, Universal Consolidated the and largest call. quarter earnings continued spite our $XXX.X quarter represented great in quarter joining second of or revenue in was freight softer-than-expected in

million $X.X of of up income an million, Operating XX%. $XX.X increase was

margin of third the highest was XXXX. of X% since quarter Our the operating

was and ever the margin highest history. a EBITDA earnings Our for is reported the XX.X% $X.XX share highest per of Universal's of in ever our quarter

and well as an very the environment. we describe all am quarter, Universal can face and of that difficult in second the proud unusual operating especially I in what executed pleased how

revenue million Truckload $XX.X million, $XX.X load per revenue excluding services, surcharge. total The X%, a fuel or in combination a of XX.X%. XX% exclude decrease of decrease which and revenue of a brokerage, in reduction was of had loads decrease of

basis. service continues priority be a on was XX.X% on rate to down the to is count line Truckload new and projected million the over in our Our business on agent agents grow truck is run year-over-year. Bringing $XX and new revenue

appear was per by X.X%; have cases to XX.X%, firming bottomed and down some are $XX.X spot load however, rates in even Rates a or decrease out revenue services this Load million. X.X% do revenue quarter. Brokerage count the $X.X of double-digits were to up. as in in million grew offset growth increased

is in cell our Our me July, our largest of a standalone to and in hopefully in far combination result so half. with count load activity second which brokerage still the brokerage should pretty seen tells strategy ever assets stronger company good connecting has

services We rate million, primarily Intermodal year. from volumes acquisitions to increased due and saw last completed XX% to throughout four second slower the or since the quarter quarter, downward million revenue the lines. pressure steamship especially $XX.X $XX

volumes be Although the strengthening, LA so strategy appear far are to has our expectations. and to proven to continue Long acquisition July effective be port our Beach to the encouraging results meet and in

flat, revenue by services X.X% to increasing was Dedicated basically $XX.X million.

strong of are we this We are margins recovery continued seeing. the business pleased with very and the

our For dedicated the exceeded quarter, margins target of XX%.

will growth year rate second large several accelerate quarter. run in Our the third at implementations of the the will be half as

$XX.X up Value-added from areas was was Class down, revenue decreased support. to we primarily auto for services due Again, first that as slightly, our million from support revenue million. the coming in lower while several the significantly, quarter, of plants down production saw at production truck X revenue we $X to other

We feel to opportunities. and expectations our customers. having the we are good new that that very deliver and Overall, our deliver great value-added value-added delight on conversations service continue services and about quality and customers margins pipeline our existing meet with

close robust overall at Our to remains million. pipeline $XXX sales

across all We lines organic $XXX growth have of secured over new million year-to-date. our service

has greater proven on effective. diversify focus Our stream our margin acquisition our plan higher and to through earnings businesses

billion range billion we the billion. confirms margin to to to freight first earnings to revenue $X.X a in $X.X strategy. of ability in transportation our $X.X environment our the our of softness the lowering year, soft deliver to target billion half from services and strong Our are for record the Due impacting $X.X a year

to Our X% at guidance X%. margin remains unchanged

around now more you will our financials. give color Jude

Jude Beres

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

Consolidated million earlier. compared quarter the compares EBITDA $XX.X $XX.X $X.X $XX.X to to from XXXX, $X.X of million the second million million increased $XX.X operations to in in quarter income second million increased XXXX. million to of one-year which

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

to Looking the businesses, second XXXX Brokerage Intermodal, quarter X.X% of Truckload, which NVOCC revenues $XXX.X our million to our operations last compared $XX.X quarter at our increased second and $XX.X million the rose for from the income in for to quarter segment And year. to operating compared XXXX. includes million Freight performance same-quarter in $XXX.X Transportation million million in segment, of the $X

business, on segment, comprised we our In truck million income to $XX.X increased operating where operations including Class services, XXXX. $XXX.X income of revenues, $XX $XXX.X service heavy our million our in value-added of on Logistics million compared of transportation total million total market and which is from a of X operating operating XX.X% dedicated the to revenue

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

to our related interest-bearing X.XXx. debt our EBITDA trailing Excluding lease was XX-month to liabilities net ASC XXX,

quarter $XX.X the million. for expenditures Capital totaled

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

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

to and August quarter's This is business at shareholders is the X, payable of XX, record XXXX, on dividend XXXX. to on August expected paid be of close

quarter share Board declared our per well. quarterly Directors dividend third regular as Universal's of $X.XXX for addition, the In

shareholders of at quarter X, expected October record September on payable X, of close and third paid to dividend on be The to is business the is XXXX, XXXX.

we're ready questions. take Jason, that, some With to

Operator

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

is open. line Your

Liam Garrity-Rokous

questions. Hi, this my Chris. is Thank Liam taking you on for for

Jeffrey Rogers

you man? are How Liam. Hey,

Liam Garrity-Rokous

well. Doing

second they truckload were your materialize. into the if activity levels you that saw that improvement throughout wondering to intermodal truckload heard the July. and failed trended I'm highlighted and from just expecting a quarter the we've that they've And in So occur how companies also quarter seasonal and for recently guys few that

Jeffrey Rogers

saw we things. Yes, similar

The second really we really you just you I expect picked have June, the pretty never up in that normally good perspective say transportation, get what would never although a financially is path a would quarter, did in would it June. like for just volume it showed the June from

is that strengthening; from July, intermodal comments. perspective mentioned in my I an

see typical September have truckload. got yet. not little volume seen of a as we are really than, peak firm intermodal that starts into different build up the peak But frame, side on say, any so starting We time August, it's to because July, truckload volume gets in bit

Liam Garrity-Rokous

around your of and Got it. kind And of the following intermodal the up on in dynamics pricing also just truckload. some commentary

So continuing spot bit you that a in bit also, But seeing of up I believe about second rates little highlighted little market half XXXX. of you demand in seeing you're more signs recently. the the diminished talked a firm

looking pricing expect or year-over-year, when your basis how and load recorded kind either thinking are So we about of in half be getting per the to XXXX, on pricing or should thinking elevated down second of metrics them comps reported at you're metrics? about you those per mile

Jeffrey Rogers

to little now, from overall, to going we're again, range seeing thing phenomenal probably – the But depending everybody by what still pointing rate of and and to X% a Yes, was last I I X% think in we're be to you're be the I projecting right that out perspective. I it's a the year it, half down, different are bit on second a think year. but The down year get and segment. the comparing rates still

I'm rates, XXXX we even So as looking compared X% though hey, at those asking higher I'm how than always look tell we're we X%, historically. to at still projecting people, were we XXXX look to to it, be we're going and and down me

no there's rate So a the think below. It's I still it's environment. rates decent question. But are just down,

Now what the same is think the the in real we're seeing seeing I market, thing. everybody spot which decreases

get consistent, So rate get because they in down the in market a are but if up think spot significantly, locked we they the Right side then customers a starting spot also seeing better consistent, could maybe can follows. more I little to been gets they really once market that's has little firm what spot the because bit, contract. now contractual than a a staying the are

Liam Garrity-Rokous

truckload it. that's the primarily the Got like down, X% market, around sounds it half your X%. And back for commentary, to

Jeffrey Rogers

are Intermodal lines to coming are year little Yes, from because see the crusher the the to steamship bit intermodal in the a they're going weaker. of from Most different next lines weakness was the might will deal fuel beginning at rate steamship at the looking what have expect, changes. with It you as of it. truckload. than

cost at they look are So trying to they all everywhere can. reduction

capacity from peak we've as how rate expect the to I we'll get once be gets well. intermodal steamship half change in don't season into may second we much truckload some lines, but as So rates. rates had the and But as just down pressure that the see

Liam Garrity-Rokous

I one question. final just And quick it. Got guess

of companies the from quarter guys you acquired guys or saw kind and also revenue we you that reporting So out were intermodal. calling in gained second the

growth how then, revenue you kind it could Is was about know little of kind talked function sense but organic do you of lot of single-digit getting what's that? that a a to of or does just just organic the [indiscernible] intermodal, guess was I – a And you driving if that, guys range. going kind just of loads? But then, So provide growth I just more like of of you unfold well. as expect that down seem it forward? it I in our pricing pricing exclude if kind bit mid on

Jeffrey Rogers

loads driven weak. the side. I just are a think little it's more Because the Yes, on the especially anything, intermodal there, than pricing is pricing

rates. the down side, and loads we're On truckload

think combination we So still I strong a I as a both as what side. decent maybe the it's think not it's it's just But expected. of truckload on environment,

of right And else. much to now in the have year how rest we'll so noise everything plays on the there's going many knows, out. – geopolitical so so the everybody There's as see and

just see kind we to from the in And some exclude third kind I and So I in out. just expecting expecting increases segment of would we're our get think, of run I think growth start that wait significant to any large because are not will an on growth transportation we plays already from level just But the perspective, because rate we've to it side. means how secured quarter. dedicated the organic very by that, have dedicated

growth So should side. see definitely we on dedicated the

Liam Garrity-Rokous

Great. my very much Thank questions. for you taking

Jeffrey Rogers

You bet.

Jude Beres

Liam. Thanks,

Operator

from comes of Jeff line Loop next Your Kauffman the Capital. question from

is line Your open.

Jeffrey Kauffman

you Good much. everybody. morning, Thank very

Jeffrey Rogers

on, going What's Jeff?

Jeffrey Kauffman

you things. I'll intermodal? in to couple acquisitions Number a big the of when remind of truckload. And some one, can gears anniversaried us So then, we switch

Jeffrey Rogers

Sure.

of February that in acquisition first next September. And and was XXXX. made the So we was SCE, was have was purchased and we then, Fore in the that one

Jude Beres

In August.

Jeffrey Rogers

And XXXX. of which And SRS, December. August in just then Michael And right Container up then was after of you year. we in this April picked Connection that had in then October.

Jeffrey Kauffman

that coming side? down your were Okay. it an mention All discuss like you of you and right. interesting. getting makes the the acquisitions environment And this seemed more sense on press Can release, had they what was in acquisition in like cost market the

Jeffrey Rogers

strategy perspective, talent it We're been going a acquisition our we've a in is our is market within about fit and location that looking us at, think intermodal we've talked be I Well, strategy, give what does it like customer we're targeting. which whether before, change. to not it a new does and not from

this environment think I at So in changes that all. don't

strategy Our going the stay same. to is

it look check? of of the But it just not to plenty slowed it a be accretive is little more we at opportunities down, The not Now, we to out. fit have changing, bit with going has we're see. one Jeff. it's the just see to pipeline happen, of lower still which to of price. have does is get That we'll but our at. So boxes immediately, Is But softer, concerned earnings it may day, plays a the our to so have our strategy? how we'll we opportunities whether little always end strategy

Jeffrey Kauffman

in as It's then as sure calls, and And the to an still switch of look the of lot a too in like anomaly me right. collectively overcapacity to an to are of it day, excuses treating been and capacity industry's earnings of their the lot a But have people there's inventories seems everyone's as giving customers interesting do have. let kind situation, truckload. environment All I at weakness. end fleets. the listening the got much It why you I'm at

this not What are We're see out bounce to of mean, thinking to second capacity how situation the have XXXX? have other and coming as XXXX we in in? how starting an and maybe going enough in trucks out this kind head do as rules thoughts? to got about many right and we we is or half How additions. about regardless I rethink other some strategically here health you cut these you some or loads of do too think And where business back anomaly? of are IMO just we truck companies your orders new we're truckload and even to you think truck

Jeffrey Rogers

of Yes. Keep of operators. side. truckload where we is dedicated in really equipment. that our owner our mind, is Most equipment replacement on That's own

So because else. tractors by not we're somebody obviously those those replacing owned are

little bit a it's different. So

what I GDP it, the come at if X.X%. out look I When think I decent. is mean, today, still economy

of tractors rambunctious been they've slowed I lot get people many So ordering. down still orders I on have or potentially last ordered think year and there's The and a activity. too those think since canceled economic decent over

could an be there So oversupply.

can tell, to struggle you drivers. still we hire I day every

is and that's still uncertainty be may and to as of there decisions a people on now. what making they're driver do So, I going what's do I noise I lot going is shortage. make supply think there forward. hesitant issue feel think But out, a to a It look right

But than back. it's I know, with a very with think But could I we else. rapidly don't expecting, changed anything the I bounce forward happens what that environment. to that decent still It's I it's just going weren't more economy think and Jeff. do it and think

see. we'll So

Jeffrey Kauffman

a on you. Thank quarter. very congratulations solid Well, Okay.

Jeffrey Rogers

Thanks, Jeff.

Operator

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

open. Your line is

Bruce Chan

Good Steve. all's Hope Jeff, Jude, morning. well.

Jude Beres

Yes, good.

Jeffrey Rogers

happening you? are What's Yes. How Bruce?

Bruce Chan

the living well, Doing dream.

of is Just now company But value-added can you it bit can much business Universal to and differences in down yourself want us help the to during on services position and mean, do little And talk some focus what those how cycle guys in XX then different a between logistics years the maybe now than performed think defensively. through a a obviously particular you business. was maybe about I before? ago.

Jeffrey Rogers

put business talking we years in been had one, the historical really about different we We've what again wanted a value to get on on, or Well, what try back focus and several margins that weren't is because Right. to that past. done to, emphasis we're margins. which add making going the that we for

a from about is The very, a and we because perspective. but we've growth is of where growth work. is there now automotive So We value-add perspective. that we're on done the just lot slowed, feel very good down from right are an margin the us for production

because for production We probably end of year X the strong, such even side the the do expect But have a production next towards right the into still year. and this though Class X Class sales get now, is on declined they to slowdown backlog.

to thing there variable. and key value-add, our is The remember is there Bruce, in is fixed

and cars, end fixed production we too. down on bit, the paid of when may all costs, though in at slows at equipment, seeing down little of SUVs facilities, going even side gangbusters that production and get automotive But some So maybe even day, are go slows trucks for the the point which the supervisors, a down. still we're our still

the for flat most you still margins you, phenomenal we the margins. your can the saw. was part. were what our It's for So is though maintain revenue to even revenue just value-add hit which Obviously,

So it is interesting.

to in continues be aerospace, industrial automotive out grow value-add expand side, which grow on to seeing. of goal other Our the in we're segments and

offset of and the new a be we production We're times or we're that glitch certain business, whether see bit that retail that the standpoint. downturn little helps pretty it year, in getting business the of way aerospace, works, always automotive definitely that of an automotive even production bit secured slowdown a little from perspective, are a model from margins in but a a

that. think I good So about we feel pretty

Jude Beres

Bruce, this is Jude.

Just the those acquiring holes fill of well, one have in on as been why with there That's another a downturn. businesses the we comment to is that. intermodal when production reasons attempt it value-add as

more with there bit year the this is into of what at war annuity kind an little course intermodal thought a as volumes view country, that we trade of of coming where situation. we So consistent the

with the reduction where normalize volume of high strategy is if sector. even and of our acquisition business earning, there course, those looking in dovetails intermodal volumes the is But a to we're on even side value-add the there kind if in automotive the keep

Bruce Chan

maybe Okay, great. LA being from are coming That's down pre-tariff talked you more Any make have But saw? about really as idea draw volumes July, restocking that? that do the to we Beach as Long this in up helpful. pre-tariff that any the sense the of Jeff, that's little of And for far that then, Is what a some bit in from to related shipping you whether shipping? already. some

Jeffrey Rogers

That's hard Bruce. to say,

honest I to you. be be all think could that, of it with

inventory definitely I now think the of kind down drawn forward, flat. saw then I that and we the and is is pull high we think saw been the inventory too

to So just be it's last is volumes definitely you very, but of said, know the they've that coming I very LA, exactly July than kind All through difficult for been peel understand couple what uptick. Long the could year-over-year creating and that higher onion Beach. are what's of the months of in it

so. So for that's good a thing us,

Bruce Chan

Great Well, in here. right. appreciate a job tough environment All it.

Jeffrey Rogers

Bruce. you, Thank

Operator

back There further the this are over at to no time. questions turn call presenters. I the

Jeffrey Rogers

we care. right. to and Thanks, talk support dialing all Take Jason. next will we you All again everybody's in, Again, sure and quarter. appreciate

Operator

today's conference concludes call. That

now disconnect. may You

Universal Logistics (ULH) 26 Jul 192019 Q2 Earnings call transcript