ULH - Earnings call transcript Q3 2019 | Universal Logistics Holdings, Inc.

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Operator

Hello, and welcome to Universal Logistics Holdings Third 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

delivered by Thank Holdings I third good Good proved morning. execution you how start third want Universal the of pretty XXXX Nicole. the Universal's Logistics be difficult for to I Thanks, Universal quarter, results. proud environments in call. quarter earnings to Team We what am for saying very some joining quite one most and of given the in time,

even dedicated throughout by The strike softness the difficult at our our made on business and impact was quarter value largest more GM, great add units. had customer. strike a Continued significant

tentative have that pleased going we are We to the anticipate vote line week. our we be well a the from is and next operations and GM the information on have back reached agreement UAW and

XXXX personal we in a reported Also legal from injury accident. a settlement claims quarter, a previously stemming on the reached third

road, “Always our from or number our has safely were strive facilities changed. the business, our Universal safest on priority. we to the our the will the conduct will in whatever be with While operating been, the be.” focus it disappointed on one decision carriers always court, road, appeals has not employees one always is of

largest million, consolidated reported revenue third impact $XXX.X the Despite Universal strike, quarter ever. the our of of

million. impact quarter estimated earnings included our XXXX legal million the additional income reduced release As operating the strike, charges. $X $XX an of by Universal described the of yesterday, third also of in

legal of $X.XX. an and per the Operating $XX.X with these income X.X% strike of impact increase was excluding estimated earnings charges million, share

environment rate the a Universal today. solid performance impact soft the delivered of these items, Excluding considering

Our EBITDA quarter was margin XX.X% margin items on highest previously mentioned, our excluding those third EBITDA record.

to our and XXX million, $XX and including intermodal $XXX are dedicated consolidated million new pipeline $XX Our in business million close in and business wins truckload year-to-date million million add, and brokerage. new is and in $XX $XX value million sales over

exclude which reduction of $XX.X XX.X decrease million decrease services, of brokerage, of by had Truckload million, in combination in per a loads a revenue an XX.X%. $XX.X was total load or a % X.X%. of of in revenue revenue increase offset The

much the is in revenue load per driven by is being revenue wind significant The higher. per business, increase load as increases in

load Excluding broader is down wind, revenue which our per was X.X% consistent market. the with

for Our truck and down count continued to XX%. was quarter, decline the

in count from We have new September truck seen agent October, stabilize primarily acquisitions. and

$XX.X on in have New a years. agent highest revenue million stands many basis, run the seen we is and at rate

Loan decreased or our revenue revenue of Services in rates have October Brokerage million. improving. and $XX.X X.X% in margins X.X%. out, grew $X.X to load per X% offset been count appear but was million have bottomed far reduction to so gross Spot by

XX.X% up or revenue $XX up million. was X.X%. $XX.X XX.X% services was count per revenue Intermodal to million increased load Load also

growth came quarter. volume the from of All this revenue and acquisitions

We than are better expected. as/or five of with and they to continued our very pleased acquisitions, all perform

very volume month the October higher difficult was encouraged a volume While we soft quarter, are year-over-year slightly comparison. throughout as on is today in

ends. pay once our continue impacted was X.X% largest the dedicated margin our strike strike our $XX.X the to dedicated decision at capacity locations, Strike The of needed the we to adjusted; significantly as during our down to several GM million. to the key services service to strike we customer revenue ensure drivers, was impacted made and had

dedicated teams increased with Strike value the adjusted strike. how well our million. added dealing value revenue million extremely I'm pleased $X added and services with $XX.X to are

far as phenomenal was strike profitability. the quality as before and service performance Our

So ends, expect nothing less. once the strike I

the strike Universal, could lower customer opportunities we once support our for our how attractive opportunity an cost customers, again While costs wage are. become Universal support good Universal’s to creates as unfortunate, alternative direct production. higher do show new it also a to just for creates for goes believe, The I is more new contract services

out unusual third continues through to confident drayage a While acquisition pipeline our and quarter environment, some in had footprint to persistently robust. headwinds soft strategy acquisition freight and I our am intermodal build be our

the a capacity nuclear is real to While catastrophic The market due still insurmountable trucking companies is of small accidents awards and many are the freight is it issue of cost finding trucking increasing market. coming clearly continue to operate. soft, out jury insurance in to

year am know right our about shown I has in over, with profitability the back And track. we significant be and how what pleased we this improvements service. and once business We will Universal. strike value-added I feel future in is good for dedicated the really on see

color our Jude? more around Jude now you will financials. some give

Jude Beres

a litigation. $XX total $X.XX in legal of settlement, of the million $XX.X well $XXX.X related everybody. million reported loss or as or compares to Good revenues on $X.XX Holdings in Included million total operating This share the in loss pre-tax million reported XXXX. income of XXXX. on-going net were million third morning, Jeff. the $X.X net revenues Logistics quarter charges Thanks, $XXX.X per as Universal to share operating on third unrelated per quarter of of of of a

$XX.X million decreased compares a quarter up to Consolidated in year million income, income third XXXX, in million loss $X.X million the the compared million operating to EBITDA quarter to one from XXXX. $XX.X operations $XX.X million, third of $XX.X which earlier. of decreased to $XX.X of

X% EBITDA for XX.X% XXXX. a XXXX and to quarter total revenues. and the margin X.X% the of in operating X% negative operating These third metrics quarter third compared are margin positive respectively of Our of and

compared same year. quarter intermodal, $XXX.X revenues which our million, segment, last brokerage truckload and $XXX.X to rose Looking XXXX, in our of quarter X.X% at to third the for performance freight our businesses, segment the in includes for NVOCC million transportation operating the quarter

of decreased operating operations an loss $XX the a $XX.X And third to XXXX. to compared of of million, income quarter profit million in $XX.X million from

of pre-tax million settlements the charges mentioned, on-going loss previously legal reported $XX As litigation. included were for in and

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

our week, earnings strike pay continue due and during to to million impacted operating drivers the in earlier, our comments per to period. our Logistics or decided we we was Jeff detailed the $X As $X as UAW million income estimate segments release by strike

of XXX balance our was to $X.X times. million Outstanding $XXX.X $X.X excluding million and lease million cash of we sheet, TTM On the held debt cash issuance securities. to debt totaling net ASC marketable interest-bearing liabilities costs, totaled net related million debt bearing of the interest our adjustments, $X.X period, at X.X end equivalents EBITDA our and of reported

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

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

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

expected close of and dividend January XXXX. to on is is to Xnd, at business on be record payable quarter's Xnd, December paid of This the shareholders XXXX

With questions. that the we're call, to on ready take some

Operator

Wetherbee Citi. have Chris [Operator Instructions] with we First,

Chris Wetherbee

thanks, guys. good Hey, morning

Jude Beres

Chris. morning, Good

Jeffrey Rogers

Chris. morning, Good

Chris Wetherbee

All right.

couple just had make strike a I I it. I of sure to questions understood So about first the guess,

for end of Should assume strike. a any And getting week week it's good this and expenses once there up is quarter. over? two potentially getting, you strike So number and think, That the weeks was at million I we're $X $X million guys think is of the about incremental the third XQ? seen, EBITDA. in hopefully, a we running a the I last of again are week We've talked the

Jeffrey Rogers

period That's Chris. Yes, that good it's million October. a to almost week, of in a miss a we're kind we're assuming going a so question, about $X five-week

and there opportunities, in of to we actually, there don't So a that as a yet. we're know this of point running, sitting far out because up play freight going upside, any our that's is lot get how guessing of lot up lot X-ish see be don't whole And kind and quarter. impact strike. as the the some a on but fourth may cost that's potentially to whole pent their just We just incremental could extra trailers some of activity is yards, create at

Chris Wetherbee

see appreciate markets? And when seeing to it muted get season? do I most that. peak about, what looking the you fourth what then curious How of kind a end helpful. about super of, peak generally, you That's for in up, people in kind of, shaping your think you on think you're sort your I'm and Okay. wanted quarter are, take

Jeffrey Rogers

seeing on volume at I much a probably it pretty Yes, side, would muted call a we're not good the for especially truckload be really would increased and all. peak -- what

increase would call seeing but volumes, I intermodal to certain peak probably good that's that's specific a pretty so muted, areas We word. the very country, are of

Chris Wetherbee

its Okay. couple do the better right rates? How sort is were some the It rates guess we That's a there of process where you are And and start see see kind maybe see then Where coming but truckload capacity specifically. look -- spot truckload in they yet. guess now? like of to out, helpful. I to but bottoming months terms in transportation fundamentals a an market within little trucking not we uplift out in probably of I great beginning -- than sort ago, the market, in of of, general, feels a point maybe can to

Jeffrey Rogers

especially of not have really are is overall definitely -- Yes, worse. with in per getting the seeing a it. little we're We're better, or said. muted. agree rates, perspective a spot it brokerage is. Spot whether bottomed not capacity our else from I rates same seeing rates, truckload think The seeing you dramatic. seeing thing we're nothing still a increase What but everything area I are and be -- se they're I any rates can would contractual lot would hit everybody say any getting not you everything intermodal we're in obviously

of companies insurance. other renew issues as impacting These reason are and as us to just have agent some well insurance, why small guys are doing we're of small insurance people We're impacted these the -- greatly far is get of on that unable because trucking part costs. and the can't fleets acquisition their

what January, out. are it much then is does? capacities and So the it? much does interesting, the very the March into first then impact we're I market. clearly quarter coming into fast be How but spring and that is of How the How out relatively going get, fact is and going because a always we we're us, could capacity as know December to which season, to us it when slow that into obviously for peak coming of coming

Chris Wetherbee

let me of of Last it, okay. me question. kind was M&A along just through sort those Okay, question from you lines, the

you feel cropping opportunities flux move How is what market XXXX, little in into there of a that the capacity bit side? about, up? there maybe do obviously you thoughts are As a again churn or plans? of, and sort your and the M&A are new Are

Jeffrey Rogers

truckload that us there been don't We look can tell you, opportunity and Very hard as a in on. increase that of that's for kind see very, of small which opportunities, intermodal type activities at our and the firms has of about, taking continued talked the strategy good yet. strong there. real opportunities pipeline focus of been I about these passed we're things. we've feel I just very a kind still But just an We

forward. there's to going we're what plenty third absolutely and going but direction opportunities stay the to of intermodal, there. opportunities is that we're and our nothing quarter to We change to plenty focused going see So us of happened on going has do and

Chris Wetherbee

the Thanks I for Okay, very time. appreciate that's great. much it.

Jeffrey Rogers

Take right. Chris. All care,

Operator

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

Bruce Chan

Gents, good morning.

Jeffrey Rogers

Bruce. Good morning,

Bruce Chan

and then a to and was the of think, unfortunate your anything it what think to can heavy seeing have then the get just to your whole tough ex-GM also that the auto I on side? there result, shaping call Not customers out there from wanted that's pretty tough you up? you on Is environments, say, decent cycle, the you're on specifically but some might how I and some take lot, going with a regard one-offs truck side,

Jeffrey Rogers

automotive the I car Yes. of is production from down. think mean, aware a I everybody well is cycle

are and all the that do products seeing of backyard but additional their here to huge the seeing area production of business and strong relationship a support the that's and and support OEMs. we're trucks obviously other GM we've hot area in got we a is still still large in we here all selling investment set the strike right the that again cakes, OEM. large Detroit like So we and support the obviously across in that OEMs a expect here that We're booming aside, couple our great pickup that Detroit play in of Detroit new OEMs in making of that's on with are plants one to

So exposure even forward, million I looks really still for lot down, but lot would is the a which coming high though us of a still say is SAAR $XX pretty auto. the of good automotive going generally a darn cars, at and it's number,

in we're So, I going a as And opportunity we're we a think, impacted, pretty it's general not forward. don't strength still the customers, think good on sector retail the for poorly of We don't negatively still as look sector. us. automotive lot far seeing

think my tonnage you a soft we I booming. retail scratch head on is have does, in huge even there, it's the which some I which freight we're We when recession, of the good. And middle so-called and also but freight side, everybody though retail environment yes, look, know the exposure is

So where kind because know really so freight cross-docks. I a is how across it just parts lot interesting whole now. seeing economy, and then ton of the being some don't bought right sold a of of the our and freight, moving other of there we're things aren't is But parts and good just but

Bruce Chan

are And about then about about some production? thinking we heavy start think commentary. good truck OEMs to guys the hear about big a side lower that's on of that? Okay, the what as you How

Jeffrey Rogers

trucks. next That's of significantly. kind year forecast the heavy through we that the dropped for and go that the cycle production forecast Clearly with Yes.

have on a reduction, the haven't drop. pretty We depending the for how don't expect the we year, if this it's -- year steep the rest that of still point, production have end seen into true that I but XXXX I'm visibility a not not reduction out. in through sure the I gangbusters expect -- holds do going but is go of plays been and and actually gangbusters to to

Bruce Chan

familiar outside Okay, that's there that labor contracts ability just that contracts? with you cap it. fair. because And company about outside GM then I -- or that for use not with anything the Is to might the GM? guess just the on Is in there your I'm business concerns anything there

Jeffrey Rogers

the they something to end was to outsource made the Universal. XPLs were eagerly continue contract they as but the the you to of what cannot there the that actually point lower they I And and looking No, contrary, had in Tier when they the that at day, that's that such wages in in there look nothing did commentary, had raise my second said we of at give or up, group. for that and

cost therefore opportunities wage life Universal. So like more their over contract, create should the up which is significantly of companies for this going

Bruce Chan

Clearinghouse. Okay, of to on be half you and anything Jeff, Alcohol the next And and great. thoughts meaningful talked Drug ELD that Is also capacity final That's super phase in Any year helpful. bit. about back a what think? you see from the little you in insurance going

Jeffrey Rogers

not I a I'm it place well period away and huge get move jump, place. convinced because from is going and whole do could, what they where to go ship can not is very to impact, can have think be, that somebody around that take going could is Clearinghouse It but XX-day caught, the to

to that but trucking telling hurt be up eliminate capacity. going much the small to is much is I'm capacity, how the is don't sure may going carriers. I'm because to costs, for I going and overall Clearinghouse do how people what is I impact for think to that's that that medium able it the anymore, that impact not companies. It What's sure talked is insurance they're going unbelievable sized and you, about insurance going because realize not

Bruce Chan

there? couple And is calling competitive the of in out anything question here A commented peers on you the worth final on -- Okay. fairly think space then brokerage have your that environments side. do

Jeffrey Rogers

seen that's our margins we brokerage like we've and been have compressed this compressed Well, year what same I the mean there. our see for business. We got thing, what

mean, going improving of the and see I out rates and we're I to integrate bit. focused about talked technology up starting firm a cost to getting spot kind little on think our I We're turn, that's think we're that really I sale to I where and continue trying and out. about, there first having play to we're some for I integrate talked and asset last call, time, brokerage the success will that think and

just we in the customers. and of your that us for solve say, So hey, needs front us transportation a go can customer works and whichever can we do total, and in way it best let

in year. it's opportunities the but I this brokerage been difficult there's there, So think extremely us some for market

Bruce Chan

Awesome. Have one. good a as Well, always. appreciate the time

Jeffrey Rogers

See you, Bruce. right. All

Operator

of Your end. next Jeff, Kauffman the is line question be you your your Capital Markets. Jeff from may on line muted is with open; Loop

Jeff Kauffman

I congratulations. sorry guys, you muted. Hey was and Thank

as pretty of questions has nothing think despite a on headwinds, I the you lot showing asked, solid yet underlying ABX. but mentioned. A

So wondering, it you I so is there, what are an some How to seeing think are and because what for brokerage reacting operations it? intermodal will and ULH? of the if give you And going do update, impact what us far? thoughts could out people kind of, the strategy you're be your to was

Jeffrey Rogers

ports a we've ABX, aware in contractors Long that I of it, conversation mean every think LA there well Well, if about Beach about that we're is day. of had XX,XXX hit lot the

are So obviously by all impacted XX,XXX ABX. of those

one well business is are as size California yet. All and of really their any No taking in as a scale of wait our Universal competitors, changing approach. or see just model

will that impact some point. at though Even know we ABX

in it's ninth December. wait play there's to of see of to in a front heard lot the think because I out, pending. be got legalities we've think circuit And how I lawsuits and the

rules, federal what on bit we're under that and whole hoping or pre-emption the from a the for the which little pre-emption BOT banking the place were federal we'll is So on in stays there -- what that excluded see happens ABX.

how we'll end get mean all playing changes, Why and the at level, the the where make to the in out at to we're it increases. has there first of go Because to cost any everybody, that's no ABX yet rate level impacted out we apply up rates the everybody. Jeff. to But if becomes end everybody change And day, the I and the see plays is wants for going and know built have take is nobody of jump day that our right one be increase the without to making therefore structure associated are. still the one because is customers and we it's the

you because can't only there, And to the you give a to first change. a increases the because guy rate no you going be increase yet, want customer if is making out one you're don't give rate

we're happens to the approach circuit, a wait and to and change then everybody and going happens. So it's see have wait what make Supreme wait what that point, going some to sure happen? We see not. have We'll hope going or going And at Court. ultimately, see a is may to with years. and what's because not take think to we're so Obviously, the go ninth to multiple to take we

Jeff Kauffman

much. very you Thank

they're -- behavior oddities legislative step any big look As changes, industry changes on got the got the and seeing and on warehouse. mean, changes how got just your negotiations? approaching so many are levers, back I at happening. customers of we bigger in there's we've terms testing What you air increases, insurance we've kind We've of

picture, negotiations? are just intermodal. there's the the the a customers you because their businesses, changing lot I they that rates rebid have brokerage, you're I feel Are in contracts, been approach in some been in is out service, turning you're and value-added trying in at bigger know customers to market the But all are of down. mean, to you're because

Jeffrey Rogers

haven't No, -- Clearly this think Jeff, normal the because perspective. I I'm seen rebidding. a think perspective, honest, significant from to of call year. of potentially a would get of seen what anything that any the not be But customers happen that time change I the always kind you we are of change year I But that's next could on lot cycle customers' rebids.

Jeff Kauffman

and you. thank congratulations Okay. Well,

Jeffrey Rogers

All Jeff. right. Thanks,

Operator

[Operator questions at Instructions] audio this show further We no time.

Jeffrey Rogers

I All And for right, appreciated the thanks joining call. sure us. by

again in good weekend. talk care will We have February. a Take and

Operator

call. and conference you for thank does ask conclude disconnect you participation This please line. your today's your We that

Universal Logistics (ULH) 25 Oct 192019 Q3 Earnings call transcript