ULH - Earnings call transcript Q4 2019 | Universal Logistics Holdings, Inc.

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Operator

Hello. And welcome to the Universal Logistics Holdings’ Fourth 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. project. relate identified business words by belief, anticipate forward-looking and or such are expect, be can the and that to objectives Universal’s expectations as Statements use of uncertainties Such and from statements expectations. to are risks those actual could differ subject results materially and

a being conference is this reminder, As recorded.

Tim President Relations. Chief now and Financial my Mr. Mr. introduce of Officer; Investor Executive Steve your to is Chief Mr. Vice Finance Officer; and It host, Fitzpatrick, pleasure Phillips, Jude Beres,

begin. Thank you. may Mr. you Phillips,

Tim Phillips

Thank for results, revenue Universal million joining morning. XXXX fourth Good share XXXX earnings afternoon quarter Logistics and $XXX.X Regina. Yesterday quarter $X.XX per released in you, Thank topline you reported in fourth with rounding earnings. Universal a call. financial its out

operating of I the Our treatment to Universal that the environment and fourth were the quarter results resilience believe model. fairly Business solid current given

which During finished impacted the of we how matter, coming $X.XX at truck with XXXX. the in have through XXXX settled the happy were these spot share of -- we General quarter. the into rate [ph], Motors a Despite year lot fourth of we quarter, strikes challenges, and persevered effects Mack a and also momentum both the challenges earnings the by approximately present and environment, legal

the new that on-boarding Our optimism is founded on business. fact we continue

for while table Our revenue, the pipeline consolidated our million are million into expect opportunities, wins over setting in fourth remains XXXX we quarter the great account for annualized and in $XX $XXX a over beyond.

to decrease $XX.X the load through truckload XX.X% $XX.X per Truckload an surcharges. and our number lines the service excluding fuel to revenue or group. This in going a of called decrease reflects step decreased starting revenue am the X.X% load of performance million. I each in of XX% Next services, with million

both continue have quarter were in agent softness XXXX a of XX pipeline. and were bright There some to business and terms to thrilled of agents the spots. the truckload fourth We volumes rates. experience onboard in Although, new robust

we business. the very I off optimistic agent-based our truckload kick XXXX, about As am future of

drivers excited the past two made We of sixth Intermodal XX it the operating also XXXX over to have were this well with to on We property. acquisition went intermodal and XXX way extremely integration Roadrunner our process Universal right we brought were and acquisition work of to and Services, years. the November announced team. which our on we In to successful terminals people, acquisitions in were

a surcharges per million. was revenue XX.X% In million was increased fuel $XXX.X count a our to up load Load excluding X.X%. also group revenue and XX.X% Intermodal Services or $XX.X up

group revenue While performed quarter the our acquisitions. Legacy Intermodal majority well from came the in the growth of

are where network. We extremely we into the integration with pleased are the acquisitions and with Universal our

acquisition exceptional customers. strategic employee our in container and tenured group chip volumes domestic decelerate strategy outperformed quarter a provided and Intermodal has along blue and comparison selective talented Universal Our with to saw XXXX. base a that Overall, import in both

competitive very $XX.X down a average Brokerage decreased environment. count was XX.X% load Services was or The load $XX.X X.X%. grew which result rate a to million, revenue XX.X%, revenue while million per of

at compression transportation We saw customers. a purchase also gross on our than as margin from rate rates declined the our slower

with Tennessee, concept will company XXXX, all truckload in pro-brokerage truckload our their backed capacity one-stop our needs. operation January regional asset for integrated forming our The company in terminals with shop fee. brokerage we Beginning eight solutions Nashville, provide X, customers our

about we next new few you We offering over quarters. are will on this excited keep progress our very posted the and

$XX moved to million. XX.X% loads down the compared was We revenue XX.X% services quarter in less to XXXX. dedicated Our

because and of strike until month drivers by over. to margins of was pool compressed Our the the dedicated strike services in revenue were Universal keep first was greatly GM decision the our quarter the affected the

a very in the over hard We very have worked competitive top year market. drivers past recruiting in

run keep to up steam talent clip. with solid continues proved the head a came to network the accelerated of be and back to decision as Our an one GM a

Value-added Mack down Services customer services of million Revenue strike, revenue decreased as closure. $X.X and truck plant the to result ramping of a well as as a by $XX.X a was million. dampened major GM

We are in talent degree built to levels also leadership X comparison extremely Services our XXXX. the -- at experiencing line. has slower Value-added Class record in and truck slowing been levels the in about am all I of production excited that

already cost opportunities, many to extremely containment. continued are in group advantage We for the efficiencies to each take we and have pipeline, our of well-positioned new has review of which Value-added operation

entering XXXX. We well are positioned

quarter. we challenges the base. of integrate and assets customer value fourth our optimize to customers, line couple continued face the extreme service and in a Each Understand new to launch provide

soft customers. of share volumes new our the may explore in first Although, win are our half operational we well-positioned and with on XXXX, to freight continue excellence focus market for

evaluate to acquisition continue from and opportunities will We disciplined strategic a very standpoint.

through committed businesses have units few the years. past acquisition are as grow core done we and We to over both organically our

Universal will experience operating of safely, to [ph]. as result nuclear the insurance pressured transportation of continues very industry continue be as a verdicts to premiums, conscious increased

to and to workplace and driver, We time, elevate resources will safety. contractor continue allocate talent continue to

looking each Universal’s am a like forward to thank prosperous every XXXX they I would over and XX,XXX we for do professionals and what to day.

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

Jude Beres

of XXXX. on net quarter $X.XX Holdings million per to or Tim. $X.XX morning, operating on or reported the compares in share per million Universal XXXX. million income operating income of of revenues Good revenues of $X net total Logistics This million the of $XXX.X total quarter in Thanks, $X.X $XXX.X share everyone. of third fourth

to Consolidated was income operations share previously decreased a million per of Included matter. compared for in of our income $X.X income in fourth $X.XX charge to $XX.X operating to legal million XXXX. million, disclosed operating quarter from $X.X or a of pretax $XX.X million XXXX the

XXXX, million million earlier. $X.X million to $XX.X compares EBITDA the in year quarter to $XX.X one increased fourth which

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

$XXX.X for for two-tenths rose fourth In our our businesses, of of intermodal the segment, X% quarter and to million, quarter includes million, from our fourth $XX.X same compared the operations quarter XXXX. performance to year to in last $XXX.X quarter decreased operating million brokerage of income truckload, $XX.X the and XXXX. the in compared freight $X.X which Looking segment at million the million Transportation to revenues

$X.X Logistics the operating in business. comprised loss million million operating including total of the our transportation our million In which from the our $X.X of million $XXX.X revenues, and total service revenue to segment, $X.X operations XXXX. we of to is Value-added Class compared heavy-truck operating million dedicated where of on an market X $XXX.X the Income increased and Services

held million sheet, equivalents On of we cash securities. million our $X.X balance and totaling cash and marketable $X.X

at $XXX.X totaled bearing Our interest debt million of period. of the debt the issuance of end $X.X net cost million

lease ASC Excluding to times. net related our interest XXX bearing liabilities X.X was to debt EBITDA reported

full $XX the for $XX.X totaled the year. million for were and million quarter expenditures Capital

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

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

dividend the X, X, quarter’s be record is payable March XXXX. at expected on on close of business the This April of and to XXXX paid is shareholders to

questions. some With to Regina, take that, are ready we

Operator

[Operator with Instructions] is Chris first Citi. come the Wetherbee Our from question line will

Chris Wetherbee

morning, Good Thanks. guys. Hey.

Tim Phillips

Chris. morning, Good

Jude Beres

morning. Good

Chris Wetherbee

through disruption sense I but understanding early quarter. the progressed first from December is how probably you seeing in the then here in broader in some issues that what customer the far are through market, us maybe quarter, as on things can you of I there went fourth Yeah. want that developed the start to the market, how truckload you guess quarter a guys give so

Jude Beres

Yeah. Chris, this is Jude.

kind weeks So, better a second end where two We week, I think, the second the of the was little a -- public gross to but really incrementally, in bit see was, little it light it a of the it bottom operation all way of in crawl gross through QX. QX. the really year as way of was the soft margins the bit in half other our all last the brokerage have the got the of the reported many through margins the from on did QX slow peers

Chris Wetherbee

you how develop is Okay. things seeing from it or Any too sort XQ? to early comments on tell of

Jude Beres

Yeah.

think mean once in February. or seen. I margins remains be to been January have into late in I of early But little gross kind bit early better it again a January

Chris Wetherbee

Okay. That questions, I if could. more And two makes sense.

you of conceptually on kind been bit busy Intermodal -- how XXXX that have the on side, obviously, shaping business? front. about you the shaking a little Intermodal First see for talk Can you out

Tim Phillips

This Yeah. Tim. is Yeah.

integrate I acquisitions. the very good as some business things. XXXX to front, in think our From that, with of we pipeline we came the we nice continue seen, see really a out fed

So pushing we are optimistic Intermodal on front. forward about

in a we our various there feel things positioned the Yes, some are very pipeline, very and density we places successful the to the there build now. uncertainties year have that we with right front. that Intermodal is of on well because But are going market on out virus

Chris Wetherbee

Okay.

like we sort load about in help we and about, But inorganic growth, of obviously, thinking growth. growth you organic us terms any just and is so load understand can should And of give be in how there thinking Intermodal?

Tim Phillips

our organically acquisition an from Load growth Yeah. positioning is self just standpoint.

to side. footprint, organically year feel the and organization. ability grow the us give for we this base, on very We speaking, on is But front. right will that intermodal the the our look continue customer to It pipeline the strategic organically very

growth positioned marketplace from right So, think are yes, expect would the now. would I organic that we where in we

Chris Wetherbee

Jude, is Class And on Great. mean Okay. question, X the my last I side.

of So, in the certain of of year ends be outlook you around a number lower sort XXXX, variability expectations embedded and guess, some production adopt to numbers market. Class side falling your it do if about Obviously, you there a the going particularly to end? XXXX. to the on weaker that’s I for is conflicting think in up X kind it’s the when for how sort

Jude Beres

is on out. recent came lower that Jude. forecast We end this Chris, Yeah. ACT based at the the numbers Yeah. most

expecting decline business. of I are our Class XX% a we So in X mean roughly XX%

of So the Class relates it X like to production. half

this machining The other we also business relates a to part half as that group. own of that

end continue forecasting the that year-over-year are decline the XX% in to XXXX. rollout will we low business of with that expectations So at ACT

Chris Wetherbee

Okay.

the Thanks for really much and time it. Okay. I very That’s appreciate fair.

Tim Phillips

Chris. Thanks,

Jude Beres

Thank you.

Operator

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

Jeff Kauffman

and Hey. congratulations. Good morning

Jude Beres

you. Thank

Tim Phillips

Thank you, Jeff.

Jeff Kauffman

should the the Can and big Intermodal the rule strength an the geographical take your relative the the markets Roadrunner network. is A I the you on what couple XX-XX but How in and that around Intermodal are is key and kind help commitment footprint exposes from if How where questions. of business standpoint? me understand Post wins side? to the Intermodal some California I of whole density, new acquisition. about and growth word think the and where

Tim Phillips

key Yeah. overall the it’s of California Jeff, XX% about attributable us. market Tim. gross is is a probably for Sure. revenue. It

those and our be other key the would States aligned course, have service We we port of United self wise the as see inland in being what biggest in with geographically size the markets States. United Chicago,

of We over find density Savannah, play through year. the the we acquisition build coast a volumes on large and a we deal organic grow and Intermodal and think to with ourselves are that key east as great have density is the also in continue southeast, Charleston, the

We around places the United and in growth market. are think also need condensed long-term market. continue would Texas potential. And States The have for Houston we Dallas look the those that we additional very density. We to

a main a revenue we playing But please. are fashion. dance say the in are large of have that whole secondary we markets that I another Now tier those would very

Jeff Kauffman

you. Thank Okay.

intermodal on potentially businesses So update is progresses ABX on an can there with strategy what but can what’s a with dray, on it know couple California? other and out you the the depending court? in this going how us your I affect give

Jude Beres

we courts stay of so as and there’s Well, Yeah. pretty the obviously, preemption of the of feel place about past a federal couple number the rules good months. over in

current So die most slow version California. is death a our XX either because that, expectation this likely of of -- will

and going in always drama challenges operating there’s But California. labor-related legal to be

all the We are market that of ourselves we things can. doing extent to to that the in protect

our model legal in operate contractor stay. in an However, in is we long model California business as to independent as and it will that continue is contractor independent

Jeff Kauffman

what a Taking looks CapEx you for with your gears to guidance, the Okay. cash $XX problem do guidance to Can and to trying it Thank you. quality of free your switch about cash. going to depreciation million-ish and flow? out second I figure of have are like

Jude Beres

Yeah.

Jeff Kauffman

head pay share your your down versus and Can of acquisition repo debt cash now? where about you talk kind versus is right priorities

Jude Beres

Yeah.

down, pay would loving them. great our to label I Those absolutely, debt that Number free obviously the are we will choices. So have cash is go it. am I down debt one All loan. reduce

integrating his and mean, be through six will of with all are Second and acquiring going Tim M&A, businesses, ops those. just team I

So if it’s over not magical pass. we we will it. If it’s jump all will

market third We last then of year. took advantage the And share just repo. be would

If below. at to Xx EBITDA or EBIT like you we trading remember, were or

was reduce But X.X with it about this focus excess table. prudent real take our the to So our leverage year shares free for cash. million us off all is to

Jeff Kauffman

you And to level have target leverage get this do world range we this us, of leverage when priorities say, a for right perfect level? cash okay, you in is a the leverage we now where change

Jude Beres

Yeah.

say levered acquisition times perfect makes us. at we So to in I we be a comfortable EBITDA that, think, I EBITDA, up are very the would if X world for sense levering time would X.X but

around a our we EBITDA are our So a business run on $XXX million is rate -- basis volume. adjusted yearat current

$XXX equal things have to of basis. have are with we flexibility because lot with annual to playing a an on being So all in debt our million going I it’s, as quotes, we mean

are since XXXX over been the was we afraid in Universal not that. business Dearborn. it’s of acquisitive when founded So has

little than down and will have done of XX appropriate. continue then acquisitions we as that and We about the a less business paid period lever over up time to

Jeff Kauffman

Well, and the thank congratulations Okay. challenging in quarter you.

Jude Beres

Jeff. Thanks,

Tim Phillips

you. Thank

Operator

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

Bruce Chan

morning for Good taking guys. the thanks questions. Hey, and

Tim Phillips

Thanks. Good morning.

Bruce Chan

the here truck off first strike. in the we what’s under the still GM pretty tough you going start guidance, obviously, to headwinds the still we looking the the of pressure. probably won’t like are at at backdrop that’s a as as some production and looking want are margin on Just be half to and But auto have big

the got Can going see year? X% the the margin are year. we still numbers which bridge bulk maybe to the and this over or help that outlook, the of up me those just pretty step help X% from of you healthy a have the last cadence us to understand improvement maybe pace is where You and improvement two

Jude Beres

Yeah.

those the of we that to release a earnings with a outlook experienced. performance in that months the guidance, we rate weren’t next XXXX is provided we assumption give collapse we exact quarterly So, don’t, that March the --the that in outlook we have we to we the obviously, XX try same the truckload that over provide see range where business provided in going performance

low-end high-end our in looking at we through as guidance margin service are guidance have and business we that stepped we have. So the lines our one always a each of We and margin we presentations. published a investor

through the of high the go get the report parts you at you expectations margin each service low if look some So X%. and and of to X% that’s of we the the you one how to lines that

the in there’s gap, It’s million million of on income million $XX.X and there XXXX. in strike -- I that there be bridging the for matter XXXX, mean, always or the you you legal reported that be operating headwinds take the won’t $XX no is year, XXXX of if what from environment the wood, won’t -- $XX knock

$XX at related X.X% to million which million, and you you and on adding are are strike, So a that adjusted op about is that $XXX.X of income. legal are taking of basis operating million, you $XX.X an income

ending are the X%. adjusted basis basically we at an So on year

Bruce Chan

needs a to then headed? going Okay. strategy there maybe that right. Tim, and you the change new to business gotten mean, have the the you of to or in That’s here. question. -- All But fair are broader that change is is as And direction accumulated, obviously, kind enough. you feel the anything I company about just fairly

Tim Phillips

No.

set I is strategy already the think sound. that’s that of some ground been up

put different from both some making a executing revenue cost my are and get forth that that the we standpoint from that job sure strategies into standpoint. a will before, one units and job and be containment of the think business I to we

of that position support I are and a we as a out I stepped leadership this base. from across looked place my in the I enterprise prior into standpoint think what in excellent situated have we and standpoint

to of hit had have want -- we the Now we we execute hit. leaders what in just front forth put we have the to points to

with our strategic February to very sit we I XXXX. comfortable going am into where with So approach

Bruce Chan

Okay. tough and time done Great. nicely Well appreciate market. a in the

Jude Beres

Thanks, Bruce.

Tim Phillips

it. Appreciate

Operator

Leland of from comes Marmot question line next the Your Instructions] Michael [Operator with Capital.

Michael Marmot

Hi, How doing? are guys. you

Jude Beres

morning, Good How are you? Mike.

Tim Phillips

Good morning.

Michael Marmot

morning. Good

-- First, think don’t I quality this with time, valuation company I obviously, of trade a XX.X% dividend this have, ever at and the of boot. seen have the yield top amount in to along have I size I

these one days that So of itself. will fix

don’t $X.XX free of at You correct? of cash getting I put down have cash translation pay next to I $XXX is done with around roughly the a debt free flow could $X.XX, that XXXX estimate million rough the you your there midpoint. we $X.XX am flow to share million years. that’s modeling two over guidance midpoint for $XXX and And correct. of XXXX am of those in between believe anywhere think this trying to know, I $X XXXX, the of over per about out $X.XX or I that $X, And roughly Is the

Jude Beres

Yeah. think... I mean I

Michael Marmot

Or something missing I there’s here? am

Jude Beres

No.

Michael Marmot

or Ex-acquisitions whatnot?

Jude Beres

Yeah.

from So, would the impacted down by only be additional new CapEx wins. pay think, business debt I

$XX and future. we investments is be obviously, continue So, between make to are in we a to investment business, obviously would us to if require the we customer award continue the that going million to million a that that those we pay to down believe grow win that debt. business if year the number available for $XXX the But

So the factor that would be limiting Mike. only

Michael Marmot

buy, X.X to but Excellent. are it’s times we assume? And -- capital hard at I debt of down and stock, back we the It’s after times EBITDA. pay be buy when use trading hard then X buy not the next not when would look to earnings at that

Jude Beres

-- it’s debt So yeah.

at look this any and So acquiring or shares down issue it’s this of then with just type dividend. redistribution would pay shareholder or we debt M&A

can continue we lighten years. going couple a of to and that next we debt need and to we bit, only if on to are over you going M&A little available that’s up strategy the the have more we do so so what load So the focus

Michael Marmot

Excellent.

here the you, valuations past absurd, year? we looking are the I but at, over are These Okay. acquisitions guess, have done, questions you more for finishing. synergy -- quick Two when three

Jude Beres

have Cartage… last We Michael the past done year. acquisitions We six two. in did two

Michael Marmot

Right.

Jude Beres

…we closed Roadrunner April November. we then closed and in in

Michael Marmot

Excellent.

synergies, the how better a planned detail are going than they we if give you are at are little more those? the when integration, and originally on looking Now they

Jude Beres

phase are I plan. So five we that, a of probably would say in

Phase We are in X. probably about

working still technology are number We synergies. and through the office of back a

-- hanging fruit lot get, we So out a us we of still for of combine some there as operations still larger low there’s together. to especially are market these

if changes we the this can should realize this the So what with do into we done couple but platforms, that making in the with of year over of half of we are past more year, and XXXX. course, technology of our later some we years,

Michael Marmot

Excellent.

you Okay. so is, an And the press just most other adjusted out the not to us give for then, number, have giving apples release a apples through don’t adjusted back in suggestion gives companies number. to all what’s all EPS out go or know group consider find down companies the us an to with make it charges to I there. road to report? of But here add we kind the us

Jude Beres

Mike. Okay,

We it will We consideration. appreciate take under the…

Michael Marmot

Yeah.

Jude Beres

the We appreciate idea.

Michael Marmot

Great job, right. All Sure. guys.

Jude Beres

Mike. Thanks,

Tim Phillips

Thanks, Mike.

Operator

questions time. I And at no to we have the turn will conference back over this management. further

Tim Phillips

I dialing Thanks in. for Well, it. appreciate

Have Look pushing to day. forward forward pleased extremely forward. Thank couple of and speaking in a to our look all positioning self are great you. months. and a you to We

Operator

and this gentlemen, all you call. joining. concludes Ladies Thank today’s for

You disconnect. may now

Universal Logistics (ULH) 7 Feb 202019 Q4 Earnings call transcript